Nuclear is the only reliable source of low carbon energy, without which decarbonisation targets simply cannot be met at affordable prices, writes Tim Yeo,
Tim Yeo is chairman of the pro-nuclear group New Nuclear Watch Europe (NNWE).
The recent International Energy Agency (IEA) report, ‘Tracking Clean Energy Progress’, highlights the extent of the current challenge facing the civil nuclear power sector. In fact, the IEA’s verdict is nothing short of alarming. Without positive action global nuclear capacity will fall 70-90GW short of the 2025 two degrees scenario target (the target to cut emissions to a level that will keep global warming below 2°C above pre-industrial temperatures), unless annual grid connections double compared to the 2016 rate.
The challenges identified by the IEA are more acute when looking at the situation in the EU-28. NNWE’s estimates show that if the current combination of market and regulatory factors persist, some 45GWe, almost one-third of the current nuclear fleet, will be lost. Nuclear taxes in countries such as Sweden and Spain, which discourage investment in new build projects, nuclear phase-out in Germany and nuclear reduction targets in France all combine to paint this gloomy picture for the nuclear sector.
According to the EU reference scenario, which is the model for meeting the 2030 decarbonisation target, an aggregated nuclear capacity of 109.9GWe is required in the target year. That means at least 34GWe of new capacity needs to be connected to the grid in the meantime.
Today, only 4GWe is under construction, leaving a massive 30GWe new build programme to bridge the gap. A further 12GWe is firmly planned, which means the final investment decision has been taken and the contracts are in place. However, worryingly, these projects, which include Hinkley Point in the UK and Paks in Hungary, are under constant attack by anti-nuclear groups and governments. The remaining 18GWe are either on hold due to financial or political difficulties or are not even proposed.
Given the risk of delay, which unfortunately is not uncommon in the sector, if no positive action is taken we will be looking at a shortfall of some 20GWe of nuclear capacity. And that shortfall will have profound implications for the EU’s decarbonisation target or the final price of electricity to the end consumer, or both.
Bridging the gap with fossil fuel generation would mean additional CO2 emissions of over 100 million tonnes a year and a badly missed decarbonisation target. Whereas, filling the gap with low carbon solutions other than nuclear, such as wind and solar coupled with the associated energy storage and system and balancing costs at current prices, would result in an increased spend of over €50 billion compared with even the most pessimistic nuclear cost projections.
The question is not whether we can afford new nuclear, but whether we can afford not to have new nuclear in Europe. With only 12 years left, the EU and member state governments must act now. And the action that is needed is becoming all too apparent.
Without foreign technologies and foreign finance nuclear new build does not seem viable in the EU. All of the EU nuclear new build projects that are next in the pipeline have foreign involvement. Rosatom is scheduled to start building two units in Hungary and a unit in Finland with Russian financial backing, while China is backing and building two units in Romania and has taken a one-third interest in Hinkley Point in the UK.
Only technology vendors from Russia, China and South Korea are offering competitive technology-finance packages enabling reasonable final electricity prices within the range €55-75/MWh.
The message is clear, the EU and member state governments should revisit their policies to encourage foreign investment in nuclear, not discourage it. Political risk can only be reduced by setting our clear and transparent rules. Establishing clear guidelines will reassure investors that decisions will be taken on the basis of objective criteria related to energy policy.