Money runs short for nuclear energy's survival
The single most important fact in the industry’s demise is that its main rivals in the business of generating electricity – gas, wind and solar – are getting ever cheaper as nuclear costs only rise.
The political tide is turning against nuclear power in previously leading countries. Newly elected governments in South Korea and France, the two democratic countries most enthusiastic about the atom, are looking to reduce the role of nuclear in their energy mix.
South Korea’s new president Moon Jae-in has vowed to scrap all existing plans for new nuclear power plants and cancel lifetime extensions for aged reactors, heralding a major overhaul for the country’s energy policy.
“We will abolish our nuclear-centred energy policy and move towards a nuclear-free era,” Mr Moon said on 19 June, in the coastal city of Busan, marking the closure of the country’s first nuclear reactor, built in 1977.
“So far, the country’s energy policy focused on low prices and efficiency. But this should change now with our top priority on public safety and the environment.”
France’s new president, Emmanuel Macron, has said he will continue the previous government’s policy of reducing the country’s 75% reliance on nuclear power for its electricity production to 50%.
Even in the United Kingdom, where theoretically the government is still planning as many as ten new reactors, it is clear the companies that are supposed to build them are getting cold feet. The bankruptcy of Westinghouse, the US nuclear giant, has led to fears that attempting to finance new nuclear build is risky, if not impossible.
Three Westinghouse reactors were due to be built at Moorside in northwest England, but since the company filed for bankruptcy the project has been put on hold. Toshiba, Westinghouse’s Japanese parent company, has doubts about how it could finance the project, and it is being “reviewed”.
The expectation that the project will never go ahead has prompted the National Grid to postpone its project to build 100 miles of new power lines to carry the electricity generated across the country.
With Toshiba itself still teetering on the edge of financial disaster because of its investment in new nuclear stations, the rival Japanese nuclear company Hitachi is also having second thoughts about its plans to build reactors in the UK. These are planned at Wylfa off the coast of Wales and Oldbury in the West of England.
In theory the projects will produce enough power for 10 million homes, but Hitachi announced earlier this month that it wanted to sell most or all of its wholly-owned subsidiary, Horizon Nuclear Power, which is supposed to be building them.
The company has given itself two years to find partners to take on the financial burden of building the reactors, or else it will suspend the project.
This leaves the heavily indebted French giant EDF, which has already started building two giant reactors at Hinkley Point in the West of England, the only company in the free world likely to continue to try to finance nuclear new build in Britain. It plans another two reactors in Suffolk in eastern England, but these have not yet been started.
EDF, mostly owned by the French state, has 58 ageing reactors, most in need of refurbishment and extra safety features as a result of the Fukushima disaster of 2011.
The company remains publicly committed to building new reactors in Britain, but how it can finance all its projects is not explained.
Another blow is that the UK’s National Audit Office, which monitors government expenditure, has just released a report saying that the Hinkley Point project was “risky and expensive” and not value for money for British consumers. This will make it difficult for the government to support further nuclear ventures.
Part of EDF’s problem is that the company is still struggling to get its latest reactor design, the giant European Pressurised Reactor, up and running. The one being built at Flamanville in northern France is three times over budget at €10.5 billion and six years late, with no start date in sight.
There are still doubts about the safety of various reactor components after flaws were found in the steel.
An extra problem for the French and for the operators of nuclear power stations elsewhere, particularly in the US, is that the cost of producing electricity from older nuclear reactors is greater than its current wholesale price.
A report by Bloomberg, the financial reporting service, says that more than half the US reactors currently in operation are losing money, and most of the rest are struggling to break even.
This has led to a debate about whether older reactors should be subsidised by the state in order to keep carbon emissions down. But even if that were to happen, the older reactors would not generate enough revenue to finance new build.
One of the last hopes of the nuclear industry was South Korea. It has a reputation for building its own design reactor on time and on budget.
However, its new president, Moon Jae-in, seems unlikely to sanction any investment in nuclear stations outside the country. This had been one of the last hopes of the UK government.
South Korea has the world’s sixth-largest fleet of nuclear reactors, generating about one-third of its energy needs from 25 reactors. But concerns over safety have intensified since Japan’s Fukushima disaster and a major earthquake in the country’s southeastern city of Gyeongjulast year.
With democratic governments with free markets increasingly sceptical about the benefits of nuclear power, only Russia and China remain committed to it. In neither case is it possible to discover the true cost of their industry, or whether both governments intend to continue building nuclear plants.
China has announced ambitious plans for new reactors, but is pressing ahead faster with cheaper renewables, and planned start-ups of new nuclear stations have been delayed.
The global nuclear industry appears to be fading away.