The Nuclear Energy Ice Age Appears to Be Over
The global scope and division of market segments for the international nuclear energy industry are becoming more clear.
As nations seek to replace fossil fueled power plants with reliable 24×7 CO2 emission free sources, global interest in nuclear energy has made a major turnaround in the past two years.
It has gone from being vilified over Fukushima that froze new efforts to a warming trend of investment commitments to major new projects. The nuclear ice age appears to be over. Unlike the brief “nuclear renaissance” of the first decade of this century, which disappeared in a cascade of falling naturel gas prices, this time the existential threat of global warming has convinced nations and their peoples that decarbonization in all its forms is here to stay.
Here’s a quick round the world tour of some of the more significant nuclear market segments by geographic region.
Starting in Europe, within the past several months several countries which share borders with Germany, which is famous for its strident anti-nuclear policies and actions, have taken actions that will over the long haul dramatically increase the number of new nuclear power plants in Europe.
While Germany is temporarily keeping its remaining three reactors open, make no mistake – the government wants to close them sooner rather than later. It is the threat of being cut off from Russian gas that has given these plants their brief reprieve from being closed. Germany has said it will only run the last three units from its fleet until April 2023. Depending on how aggressively Russia uses gas supplies as a weapon against the West in its war in Ukraine, these reactors could run well past that self-imposed deadline.
Yet, countries that share borders with Germany are ramping up their plans to build new reactors. Within a decade or less, Germany may have no operating nuclear reactors and yet may be able to buy all the nuclear powered electric generation power it needs from its neighbors.
France – As the worst energy crisis in generations grips Europe, French President Emanuel Macron announced the country will build six “next generation” 1600 MW EPRs. He told EDF’s new CEO, who heads the French state-owned enterprise in charge of the nation’s nuclear reactors, to break ground for the first unit by 2027. The other five EPRs are set to be built over the next decade with all of them completed by 2035. It is one of the most ambitious schedules for deploying new nuclear generating capacity so far this century. The country has the benefit of long experience with its current nuclear fleet and a workforce to boot to make it happen.
Poland – Within the past two weeks the government of Poland has inked separate MOUs with Westinghouse and South Korea to build a total of seven full size nuclear reactors at four separate sites. US government export agencies are reported to be working with Poland’s government to partially support the financing of the Westinghouse bid. South Korea’s KHNP has offered to take a minority equity stake in its project.
Polish officials have not been specific about how the government will finance its share of these projects. It is still a long road to line up the money for all of these plants, and sign off on terms sheets with vendors and EPCs, but this time it looks like that is an achievable goal. Poland will also need to move quickly up the learning curve to understand what it will take to manage the people and materials to build this fleet.
Czech Republic – In addition to its current open tender for one new 1200 MW PWR at the Dukovany site, the government recently announced long term plans for multiple new units at the Temelin site. The usual bidders – Westinghouse, KHNP, and EDF are all in the hunt for these contracts.
Significantly, Russia and China have been sidelined from pursing any of these opportunities in Europe.
Germany’s de Facto Nuclear Colonialism Policy May Work
What’s interesting about these developments in France, Poland, and the Czech Republic is that while the main purpose of these new reactors is to replace aging coal fired power stations, there will be plenty of power left over in all of these countries to sell it to Germany should it desire to buy the power after eventually closing all of its nuclear reactors.
The de facto essence of Germany’s policy is what is sometimes referred to as “nuclear colonialism.” This is a phenomenon in which anti-nuclear political jurisdictions engage in the self-destructive closure of their nuclear fleets and then buy electricity from their neighbors which is generated by nuclear energy. If all of these projects are financed, and built, one clear benefit is that Germany might shut down its disastrously dirty lignite mines for good.
New Energy Iron Curtains
In addition to developments in France, Poland, and the Czech Republic, Romania is moving ahead on two fronts. It has taken essential first steps, following up on its MOU with NuScale, to develop small modular reactors. Also, it recently signed on to an agreement for bilateral support from the US and Canada to finish construction of its two partially built 700 MW CANDU type PHWRs at Cernavoda.
All of these developments are driven by the imperative to get off of Russian gas supplies, which are subject to repeated bouts of political interference by the Kremlin over the war in Ukraine. Natural gas will still be needed in all of these countries, but once the reactors are built, and in revenue service, by the mid 2030s, Russia’s influence over energy security for these countries will be measurably diminished.
Russia Remains a Significant Export Power
In Europe only Hungary remains inside Rosatom’s grasp for new nuclear reactors. Last August the government issued a license for construction of two 1200 MW VVER to be built at the PAKS II site by the Russian state owned enterprise.
Elsewhere Rosatom is headed towards completion of all four 1200 MW VVER at Turkey’s Akkuyu site and is in preliminary dialog with Turkey’s energy ministry about taking over the Sinop project on the Black Sea coast which was abandoned by a Japanese led consortium without ever breaking ground.
Also, in Egypt Rosatom has finally, after much tape and delay, broken ground at the El Dabaa site, about 200 miless northwest of Cairo, which will be home to four 1200 MW VVER.
The key to Rosatom’s success in Turkey and Egypt is that it is financing both sites upfront. The plan on paper is that after 15 years of operation the plants will be sold to equity investors. However, Rosatom plans to retain its role of being the sole source supplier of nuclear fuel for these reactors for their expected 60 year service lives.
Russia has also more or less locked up the market for foreign direct investment in new nuclear reactors in India. It built and commissioned two 1000 MW VVER at Kudankulam, is building two more, and has units 5 & 6 on the drawing boards.
Separately, India is building a fleet of at least 10 and as many as 17 700 MW PHWRs. The reason is the reactors do not need the large forgings of PWRs. Also, the CANDU type reactors can be fueled with natural uranium which all but eliminates the need for sourcing enriched uranium via the Nuclear Suppliers Group. Finally, all of the major systems and components for the reactors, turbines, switchyard, etc., can be supplied by Indian firms thus creating tens of thousands of jobs to build the reactors and at supply chain firms.
While French President Emmanuel Macron plans to visit India this winter to pitch construction of six 1600 MW EPRs at the Jaitapur site, it is unlikely that he will succeed. The trade off between the French champagne and caviar class EPRs and India’s tea and beans PHWRs is way too stark for him to make headway in this quest.
Note that by comparison with Russia, China has not yet landed a fully commercial export deal for its 1000 MW Hualong One PWR. While it has built one unit for Pakistan and will finish another next year as part of its self-financed Belt & Road program, it lost its chance to build one at the Bradwell site in the UK. An MOU to build one in Argentina has not moved to a signed contract over Argentina’s request for China to pay for the entire project as a loan. Given Argentina’s habit of giving haircuts to investors in its debts, China has balked at the request.
What About Small Modular Reactors?
US Plans and Prospects – In the US many energy experts agree that after the collapse of the V C Summer project in South Carolina, which left rate payers with a $9 billion debt and no new power, plus the Nantucket sleigh ride of cost escalation and delays for the Voglte project in Georgia, no electric utility CEO who wants to collect his stock options is going to commit to commit build a new full size reactor for quite a long time.
A quick review of COLs issued by the NRC to utilities for new nuclear reactors projects that have not broken ground makes this point. Natural gas rates would have to go through the roof and interest rates for new capital would have to drop to pre-inflation numbers before any “prudent investor” absent government support would be willing to write any checks.
However, utility executives are interested in small modular reactors. Recently, TVA’s CEO said the utility, which is planning to building a first-of-a-kind GE Hitachi BWRX300 at Clinch River, may eventually build as many as 50 SMRs over the next two decades.
In Idaho UAMPS remains steadfast in its commitment as the customer for NuScale’s six pack approach to lining up SMRs at a site at the Idaho National Laboratory. The firm has gone public, a first for an nuclear energy startup in the current era.
A number of state legislatures have removed decades old bans on new nuclear power plants in order to explore building SMRs.
The Department of Energy through its Advanced Reactor Demonstration Program (ARDP) is throwing two reactors designs against the wall to see if they will stick. In Wyoming TerraPower is building a first of a kind sodium cooled 345 MW reactors, with attached energy storage, to replace an aging coal fired power plant. In Washington X-Energy is planning to build a small high temperature gas cooled reactor near the Columbia Generating Station.
TerraPower thinks it has a repeatable model and recently announced with its partner PacificCorp a plan to build five more of its Natrium reactors in rocky mountain states at sites within PacificCorp’s service area replacing coal fired power plants in the bargain.
In Canada Ontario Power Generation (OPG) has just last week submitted an application for a construction license for the GE Hitachi (GEH) BWRX 300 to the Canadian Nuclear Safety Commission. The utility has plans to build the SMR at its Darlington site.
OPG is collaborating with TVA sharing lessons learned about design and licensing the BWRX300. In Canada the GEH reactor is still in Phase 2 of the CNSC Vendor Design Review (VDR) process. Similarly, in the US GE Hitachi continues to work with the NRC submitting topical reports as part of a pre-licensing dialog. OPG will proceed with non-nuclear work at the Darlington site for now.
Other SMR developers are working on projects that will build first of a kind advanced reactors at the Canadian National Laboratory and one or two more at the Point Leprau nuclear site in New Brunswick province.
Overall, Canada, which has just 10% of the population of the US, is punching above its weight when it comes to nuclear power commitments for SMRs.
Middle East May Be South Korea’s Best Opportunity
With three of the four 1400 MW PWRs commissioned in the United Arab Emirates, and the fourth to be completed soon, South Korea has staked a credible claim to being the go to nation for building new reactors in the Middle East. South Korean firms are doing everything they can to win the tender for two new reactors by Saudi Arabia. It could be a doorway to build as many as 14 more over the next two decades.
From a geopolitical perspective, the US would prefer South Korea wins the business thus locking out Russia, and particularly, China, from establishing a foothold in the desert kingdom. The decision time frame, and the selection of a vendor are impossible to predict and much depends on the price of oil.
The UK Will Build Sizewell C
In the UK the new government late last week swatted back rumors it planned to cancel the Sizewell C project which is composed of two EDF EPRs. The project is nearing the finish line for a funding profile that will be a combination of French and UK government money and private investment. A plan for equity investment in the project by Chinese state owned enterprises is long gone over security concerns.
Separately, UK’s Rolls-Royce is ramping up to build a a fleet of 16 470 MW PWRs across the UK providing baseload power for all those offshore wind projects and grid resiliency for the nation.
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