Nuclear power in ‘reverse renaissance’

The rise of wind, solar and other renewable energies, as well as surging operating costs and potential risks are precipitating the end of the nuclear age, with global atomic energy production dropping 12 percent below its historic maximum over the past year

By Mycle Schneider and Antony Froggatt  / 

Mon, Sep 09, 2013 - Page 9

In June last year, International Atomic Energy Agency (IAEA) Director-General Yukiya Amano said: “Nuclear power will make a significant and growing contribution to sustainable development in the coming decades.”

However, as this year’s World Nuclear Industry Status Report highlights, recent trends paint a very different picture.

Duke Energy, the US’ largest utility, has shelved plans to build two reactors in Florida, after having spent US$1 billion on the project. The decision came only three months after the company abandoned investment in two new units in North Carolina.

This year, four US utilities have decided to shut down a total of five reactors permanently — the first closures in the country in 15 years. One of the units, the Kewaunee Power Station in Wisconsin, was abandoned after massive investment in upgrades and a 60-year license renewal because it simply could not generate power at competitive prices. For the same reasons, Vermont Yankee, another plant with a license to operate through 2032, is now scheduled to close next year.

Similarly, state-controlled French utility Electricite de France (EDF) — the world’s largest nuclear operator — announced its impending withdrawal from nuclear power in the US, after having sunk approximately US$2 billion into aborted projects. To help offset soaring operating costs, which resulted in losses of 1.5 billion euros (US$2 billion) last year, EDF will raise electricity prices this year for its French customers by 5 percent on average and by another 5 percent next year.

Over the five years ending in March, EDF lost 8 percent of its share value. Likewise, the world’s largest nuclear builder, French state-run AREVA, shed up to 88 percent of its share value between 2008 and last year. Not surprisingly, investors have welcomed new strategic plans by both companies, as well as EDF’s withdrawal from the US market. The downward pressure on their share prices has eased, although for how long remains to be seen.

The nuclear energy industry’s decline began decades ago. However, since the March 2011 triple-meltdown at Japan’s Fukushima Dai-ichi nuclear power plant, the pace of the decline has accelerated significantly. Last year, annual nuclear power generation worldwide dropped by an unprecedented 7 percent, exceeding the previous year’s record-breaking drop of 4 percent and bringing total annual nuclear power generation to 12 percent below its historic maximum, achieved in 2006.

Although Japan accounts for three-quarters of this decline, with only two of the 50 units that are officially in operation there actually producing power, 16 other countries — including the world’s top five nuclear generators — also decreased their output. As a result, nuclear power’s share of global electricity generation dropped to about 10 percent last year, compared with its 1993 peak of 17 percent. Only the Czech Republic reached its historic maximum nuclear share last year.

Moreover, of the 66 reactors under construction worldwide, two-thirds are located in just three countries: China, India and Russia, with China accounting for 28. Nine of the 66 have been listed as “under construction” for more than two decades. The Watts Bar 2 reactor in Tennessee, in the US, holds the record, having been under construction for 41 years. An additional four projects have been underway for more than 10 years.

In total, at least 23 of the 66 units currently under construction have encountered delays, many of which have lasted for several years. Whether the other projects, all of which have been initiated in the past five years, are on schedule remains to be seen. As a result of such delays, only three new units began operating last year, half the number of reactors that were shut down. The average age of the world’s reactor fleet now stands at 28 years and continues to increase steadily.

By contrast, new renewable technologies are gaining traction, illustrating a fundamental shift in international energy policy and investment strategies. Last year, China, Germany, Japan and India generated more power from renewables than from nuclear for the first time. In China and India, wind alone outpaced nuclear energy.

Since 2000, global onshore wind power generation has averaged 27 percent annual growth, while the growth rate for solar photovoltaics has been 42 percent. Last year, an additional 45 gigawatts of wind energy and 32 gigawatts of solar power were installed worldwide, compared with a net addition of 1.2 gigawatts of nuclear power.

The shift to renewables has been particularly pronounced in the world’s major advanced economies. For example, Germany’s ongoing nuclear phase-out has been complemented by accelerated renewables implementation, with up to 3,000 megawatts of solar photovoltaic capacity connected to Germany’s power grid in a single month. As a result, the price per installed solar kilowatt has dropped by three-quarters over the past seven years.

Even in the US, where cheap shale gas is reshaping the energy industry, more wind power was connected to the grid last year than gas and, in the first three months of this year, more than 80 percent of new capacity was renewable.

Over the past decade, the nuclear industry has attempted to capture global leaders’ attention with a promotional campaign centered around the notion of a “nuclear renaissance.” However, their promises — including investment costs of US$1,000 per installed kilowatt and building times of four years — have proved to be false.

Since the industry launched its public relations campaign in the early 2000s, cost estimates have increased roughly sevenfold and profits have declined. The 34 reactors that started up over the past decade had a mean construction time of nearly 10 years, but contributed just 26 gigwatts — one-third of what solar and wind added in one year.

The IAEA’s optimistic rhetoric cannot obscure fundamental arithmetic: skyrocketing maintenance expenses and, in many cases, post-Fukushima upgrade costs, together with the impossibility of building competitive new capacity without massive government subsidies, are devastating the nuclear industry.

As economist Mark Cooper has put it, nuclear power is actually undergoing a “renaissance in reverse.”

Mycle Schneider, an independent international consultant on energy and nuclear policy, is a project manager and the lead author of the World Nuclear Industry Status Report. Antony Froggatt, an independent European energy consultant, is a senior research fellow at the Royal Institute of International Affairs, Chatham House, London.

Copyright: Project Syndicate