Looking Forward
One of the challenges that the use of nuclear energy for electricity generation has to face is that in some countries there is a lack of long-term visibility over their energy policies, as governments can change every 4–5 years, and sometimes with them their countries’ energy policies, depending on the orientation of the political party heading the state. It is, therefore, difficult for utilities and investors under such conditions to make long-term asset development plans, especially regarding the construction of new nuclear power plants, as we talk about plants that will pro- duce decarbonized electricity for at least 60 years.
The future of nuclear power within the European region depends on the country considered. There are several groups of countries that can be identified. These groups are the following:
• Countries using nuclear power and with plans to expand the use of this type of energy for electricity production in the coming years. These countries are Bulgaria, Finland, France, Hungary, Lithuania, Romania, the Russian Federation, Slovakia, Slovenia, UK, and Ukraine;
• Countries using nuclear power, but without approved plans to expand the use of this type of energy for electricity production in the coming years: Belgium, the Netherlands, Switzerland, Spain, and Sweden;
• Countries not using nuclear power, but with plans to introduce the use of this type of energy for electricity production in the coming years: Poland;
• Countries not using nuclear power and without plans to expand the use of this type of energy for electricity production in the coming years: Albania, Austria, Bosnia and Herzegovina, Croatia, Cyprus, Denmark, Estonia, Federal Republic of Yugoslavia, Greece, Holy See, Iceland, Ireland, Island, Latvia, Liechtenstein, Luxembourg, Monaco, Montenegro, Serbia, and the former Yugoslav Republic of Macedonia.
An important element that has a significant impact in the future of nuclear power programs is the capital cost increases. Construction costs are a key determinant of the final nuclear electricity generating costs and many projects are significantly over budget. Investment cost estimates have increased in the past decade or so from US$1,000 to around US$8,000 per installed kilowatt. The latter, record figure is for the two EPRs at Hinkley Point in the U.K. Construction cost estimates increased in virtually all countries, including China, Finland, France, and the United Arab Emirates.
Another important element that has a significant impact in the future of nuclear power programs is the operating cost increases. In some countries (including France, Germany, and Sweden), historically low inflation-adjusted operating costs—especially for major repairs—have escalated so rapidly that the average reactor’s operating cost is barely below, or even exceeds, the normal band of wholesale power prices. The largest nuclear operator in the world, the French state-controlled utility EdF experienced an income deficit of about €1.5 billion in 2012, because tariffs did not cover the running costs (Schneider et al. 2014).
According to the French Court of Accounts, the cost of generating nuclear power increased by 21 % between 2010 and 2013, from €49.6 to €59.8 per MWh, an increase of 16 % in real terms. In Germany, operator E.ON decided to close one of its nuclear power reactors, seven months earlier than required by law because of projected income does not cover the costs. In Sweden, income from electricity sales for at least three reactors was below production costs in two of the past four years. In Belgium, operator ELECTRABEL (GDF-Suez) lost its legal case against a nuclear fuel tax and wonders whether the future operation of its seven plants is still worthwhile.
The life extension of a nuclear power plant is another important element with significant impact in the future of nuclear power programs.9 The extension of operating periods beyond the original design basis is handled differently from country to country. While in the USA, about three quarters of the reactors have already received license extensions for up to a total lifetime of 60 years, in France, only ten-year extension is granted and the safety authorities made it clear that there is no guarantee that all units will pass the 40-year in-depth examinations. The initial design lifetime of French reactors was 40 years. However, according to the French regulatory framework, there is theoretically no time limit for nuclear power reac- tor operation. Every ten years, the French Nuclear Safety Authority (ASN) per- forms a PSR consisting of conformity checks and safety reassessments. In France, 34 reactors of the PWR-900 series obtained a license extension of ten years in 2002, and 20 units of the PWR-1300 series were granted a ten year license extension in 2006. The total investment in all the fleet of 58 reactors until 2025 is about US$70 billion. In the Russian Federation, the original lifetime (license) of Russian nuclear reactors was 30 years. Several reactors of different technology and designs (VVER-440, VVER-1000, RBMK, and sodium-cooled BN-600) have obtained a 15- to 25-year extension of their original design lifetime. For example, the older PWR/VVER-440 reactors have obtained a 15-year extension, and larger VVER- 1000 has obtained a 25-year lifetime extension (OECD 2012). According to one assessment, the costs of upgrading the plants for operating beyond 40 years could vary between €1 billion and €4 billion per reactor. Furthermore, the proposals for lifetime extensions appear in conflict with the French government’s target to reduce the nuclear share from the current 73.28 % reached in 2013 to 50 % by 2025.
The Fukushima Daiichi nuclear accident forced all governments to review all safety measures in enforced in each country. This important task adds significant costs arising from upgrading and back fitting measures following the lessons of the Fukushima Daiichi nuclear accident and the amount of these costs remain uncertain and vary widely according to the requirements of the safety authorities in various countries. At least in some countries, including Japan and France, they will significantly affect the economic competitiveness of the use of nuclear power for the generation of electricity.
Other important elements that have a significant impact in the future of nuclear power programs are income, debt, and credit. In 2013, for the first time in its 60-year history, German utility RWE filed a loss of €2.8 billion (US$3.8 billion) after writing down the value of its conventional power plants by close to €5 billion (US$6.8 billion). Debt level remains very high among the European nuclear utilities. The two largest French groups (EdF and GdF-Suez) and the two largest German utilities (E.ON and RWE) share about equally a total of more than €127 billion in debt. On the other hand, over the past year, few changes were observed in the credit ratings of 11 assessed nuclear utilities: GdF-Suez was downgraded by credit- rating agency Standard and Poor’s from A to BBB+, while for Finish utility and EPR builder TVO, the outlook changed to negative. Moody’s perceived Czech utility CEZ’s decision to abandon a new build project as “credit positive” and considers nuclear construction projects generally as “credit negative.”
The economic assessment of long-term operation of nuclear power plants should take into account various factors and parameters reflecting current and future financial conditions of operation, political and regulatory uncertainties, the state of the plant’s equipment, and the general role of nuclear in the country’s energy policy. The OECD/NEA Ad Hoc Expert Group on Economics of Long- Term Operation of Nuclear Power Plants has selected the following criteria as appropriate for the assessment of long-term operation programs:
• Production and asset portfolio;
• Predictability of future electricity prices;
• Need for nuclear power plant equipment upgrade and replacement;
• Impact of refurbishment activities of the decennial average of the energy avail- ability factor;
• Risk and uncertainty (site-dependence, political, financial, and regulatory);
• Overnight cost of refurbishment;
• Levelized cost of electricity generation after long-term operation activities;
• Country’s carbon policy and security of energy supply.
Factors that affect the economics of long-term operation include replacement of obsolete equipment, safety upgrades to current standards, and the aging of irreplaceable components such as the reactor pressure vessel or containment building. The general characteristics listed above are considered valuable in assessing the different options that the utility or government might consider.
Finally, it is important to consider the so-called “share value”. Since 2008, Europe’s top ten utilities have lost half of their €1 trillion share value. A regional comparison shows Asian utilities have recovered little with their average share value still almost half of the 2008 value, European utilities still 30 % down, while US utilities are almost 30 % above the level of five years ago even though total US electricity use has been drifting down since 2007 (Schneider et al. 2014).
According to a report by the German broadcasting service ARD, and in a change in the EC policy, nuclear power plants are included on the preliminary project list of the investment program for the European economy, which has been pro- posed by the President of the European Commission Jean-Claude Juncker.11 The list of projects proposed for funding includes the construction of new nuclear power plants. Nine countries are applying for a total of €100 billion investment subsidies for nuclear power plants. The projects include refurbishments as well as new installations. Romania, for example, wants to modernize a nuclear power plant, the UK has three nuclear power reactors on the project list, and Poland would like to use the funding to enter the nuclear energy market.
As a result of the fact that member states are expected to participate in the pro- gram, the German government could end up phasing out nuclear energy in its own country and funding nuclear power plants in others.
In the following paragraphs, a brief description of nuclear power programs in a selected group of European countries is included.