Global nuclear power capacity could plunge by two-thirds over the next 20 years.
Even as investment in solar and wind is surging, nuclear power has been the main source of carbon-free electricity for decades. “However, in advanced economies, nuclear power has begun to fade, with plants closing and little new investment made, just when the world requires more low-carbon electricity,” the International Energy Agency warned in a new report that takes stock of the nuclear industry.
The IEA says that achieving the goals laid out in the Paris Climate Agreement “is already a huge challenge,” but without nuclear power it will be vastly more difficult. In 2018, nuclear power accounted for 10 percent of global electricity supply.
But in the years ahead, nuclear is set to decline without help. In the U.S., nuclear power’s share of the electricity mix could fall from 20 percent to 8 percent by 2040.
One of the main reasons why nuclear power is in decline is that the vast majority of the plants online were built decades ago. Most are now aging and nearing the end of their original intended operating lives. As a result, nuclear plants, particularly in advanced economies, are beginning to shut down. Adding to the industry’s woes in the U.S., nuclear has suffered from a decade of cheap shale gas. Meanwhile, the rise of renewable energy everywhere has significantly undercut the case for new nuclear.
But two major events have struck a devastating blow to the nuclear industry from which it never really recovered. The 1986 nuclear explosion at Chernobyl ground nuclear construction to a halt worldwide. The events have been depicted in a riveting miniseries by HBO, set to wrap up in a week, which has captivated audiences around the world. The show has received critical acclaim, but leaves viewers with a stomach-churning dread. The timing of the show is not optimal for the nuclear industry, which is reeling from shutdowns, cost inflation, uncertainty and lack of interest.
The Chernobyl incident nearly killed the industry, and choked off new investment for years. After dozens of reactors were constructed in the U.S. in the 1970s-1980s, very few moved forward following Chernobyl. The handful of projects that did receive a greenlight came in the next wave of investment in the 2000s, when electricity prices were rising, concerns about climate change emerged, and memories of Chernobyl and Three Mile Island began to fade.
But the “nuclear renaissance,” as the resurging interest in the early 21st century has been dubbed, was just about killed off before it started. In 2011 an earthquake and tsunami struck the Fukushima Dai-Ichi plant in Japan, causing an explosion and meltdown. Japan closed more than 50 of its nuclear reactors, which not coincidentally led to a spike in global LNG prices and also pushed up demand for oil and coal. Meanwhile, the Fukushima disaster reverberated around the world. In Europe, and in Germany in particular, the disaster accelerated plans to shut down reactors. Again, without nuclear, Japan and Germany had to rely on more fossil fuels, despite the rapid increase of renewable energy.
Back in the U.S., nuclear plants faced a different and arguably more insurmountable problem. Cost overruns and delays, which have long plagued the industry, have proven to be just about fatal. In South Carolina, ratepayers have been stuck with a $9 billion tab to build a nuclear project, but after a decade of work, the project has been shelved and the state has nothing to show for it.
Southern Company, which has presided over the budget-busting and oft-delayed Vogtle nuclear plant in Georgia, now sounds very regretful about its project. Just a few weeks ago Southern’s CEO said that the company won’t pursue nuclear again until maybe the 2040s. To slash carbon emissions, “we do need, as a nation, to continue to invest in nuclear technology. But, for us, that won’t be my administration’s call,” Southern’s Tom Fanning said. “It will be in the ’30s and ’40s when I think we need to add more nukes.”
Fittingly, the Three Mile Island site, which almost saw a nuclear meltdown in 1979, is set to close this year, after its owners unsuccessfully sought a bailout from the Pennsylvania legislature. The closure of the project almost certainly will lead to higher consumption of natural gas, which highlights the conundrum that the world faces in its race to slash emissions.
The IEA sounded the alarm in its new report, arguing that climate goals will be exceedingly difficult if nuclear is killed off. The agency argues that the world needs an 80 percent increase in nuclear generation through 2040 in order to slow climate change.
But, as it stands, nuclear power is riskier, more expensive and takes infinitely longer to bring online than renewable energy. Very few, if any, utilities will want to move forward on new nuclear projects when they have cheap solar and wind to turn to. “Plans to build new nuclear plants face concerns about competitiveness with other power generation technologies and the very large size of nuclear projects that require billions of dollars in upfront investment,” the IEA said. “Those doubts are especially strong in countries that have introduced competitive wholesale markets.”
That last point is worth noting. If nuclear power is going to survive, let alone thrive, it will need a hefty dose of support from government policy because the industry is increasingly uncompetitive. The IEA pleaded with governments to rescue the industry. “It has become increasingly clear that the construction of a new wave of large-scale Generation III reactors in all European or North American electricity markets is inconceivable without strong government intervention,” the IEA said in its report.
By Nick Cunningham of Oilprice.com