On the afternoon of Friday 11 March 2011 the Great East Japanese Earthquake set off global convulsions for the nuclear industry, yet continuing global investment suggests its outlook remaining promising, with enduring prospects for growth in Europe and vast opportunities in Asia.

How fatal was the Fukushima incident for the nuclear revival that – until this spring – the power industry had confidently anticipated? In the immediate aftermath of the plant’s failure, advocates for nuclear technology were asking how the industry could eventually get back on track and overcome this severe blow.

Now, though, the question could almost be ‘What blow?’ For Jonathan Robinson, senior consultant, Energy, Environment & Building Technologies at Frost & Sullivan, even in the industry’s unquestioned setbacks, the reverberations of Fukushima are muffled by other factors.

“Germany has phased out – which is bad news – but Italy was always in the ‘maybe’ column, even before Fukushima, and Switzerland didn’t need to build any new plants for ten years anyway,” he said. “Most countries that are serious about new nuclear will go ahead. For those that don’t, it’ll be more a question of finance than fears over safety.”

An indicator of the enduringly positive outlook for the nuclear sector can also be seen in financial analysts’ recent forecasts for the price of uranium. A roundup by The Australian found that CIBC, Credit Suisse, Merrill Lynch and Deutsche Bank all expect uranium to climb to between $70 and $75/lb by 2014.

Globally, more than 60 reactors are now under construction in 14 countries, according to the World Nuclear Association (WNA). Plant upgrading is also adding substantial capacity while plant extension programmes – especially in the USA – are keeping current capacity online.

A containment vessel ring is installed at Haiyang in China Source: Westinghouse Electric Company
A containment vessel ring is installed at Haiyang in China Source: Westinghouse Electric Company

EUROPE WOBBLES

Outside Japan, arguably no region felt the impact of the Fukushima Daiichi plant’s failure than Western Europe – home to 143 nuclear plants – where public opinion will inevitably play a key role in how a looming generation crisis is resolved.

Germany’s solution to this challenge will now almost certainly exclude nuclear power, after Chancellor Angela Merkel announced on 30 May 2011 that the country will aim to phase out its entire nuclear fleet by 2022. The government also ordered that Germany’s oldest reactors be shut down immediately over a three-month period.

In Italy, also, nuclear power’s tarnished public image has apparently cost the industry dear – in this case, by defeating an attempted nuclear relaunch. In 1987 Italy was obliged to abandon nuclear generation after a public referendum held in the wake of the Chernobyl disaster in Ukraine in 1986. But, under an agreement between Enel and EDF, Italy’s government planned to start construction on four nuclear plants in 2013 with a goal of nuclear supplying 20 per cent of the country’s electricity by 2020 to reduce a heavy reliance on imported fuel and electricity.

In the face of gathering political discontent, a statutory amendment on 9 April 2011 put these plans on hold, extending a moratorium on the construction of new reactors indefinitely. Yet this move failed in its apparent purpose of heading off a referendum on nuclear power. On 11–12 June, more than 94 per cent of participants in a referendum on the topic voted to block the nuclear revival.

Yet, argues Robinson, it could be a mistake to read these developments as due exclusively to Fukushima. Along with altered convictions – “As a supporter of the peaceful use of nuclear energy, my view on nuclear energy has changed since the events in Japan,” said Merkel – the German government’s decision to reverse its nuclear reprieve reflected the ruling coalition’s political calculations as Green Party support surged in crucial regional elections.

Other national nuclear projects that might appear victims of a post-Fukushima backlash may also have died of other causes, argues Robinson. “For places like Bulgaria, Romania and Lithuania, it was always more an issue of cash,” he says.

Perhaps frustratingly for Germany’s Greens, Merkel’s voltface on nuclear power can only enhance nuclear’s market opportunity in the country’s neighbours. The Czech Republic, from where Germany will draw increasing amounts of power, signed a nuclear co-operation deal with France on 19 May that could smooth the way for Areva to extend the Temelin nuclear power plant in southern Bohemia. An assessment commissioned by Czech utility CEZ decided two larger reactors could be built at the site.

Lithuania’s nuclear plans, on the other hand, seem to have enjoyed a substantial windfall from Germany’s nuclear phase out, which appears to have sweetened a deal with GE-Hitachi in July to build a 1.3 GW nuclear plant at Visaginas by 2020. The firm has since leveraged this agreement signed a memorandum of understanding with Energoprojekt Warszawa to get construction underway on Poland’s first nuclear plant by 2016.

France’s commitment to nuclear – which provides about 80 per cent of its electricity – appears entirely undiminished by the Fukushima incident. In fact, the knock-on effects of Fukushima have arguably boosted investment by raising French nuclear plants’ export market in Germany.

In the immediate aftermath of Fukushima President Sarkozy called for greater transparency and safety in the next generation of nuclear power plants, but he also stressed that France has chosen nuclear power to ensure its energy security and cut its greenhouse gas emissions. On 27 June he then announced a $1.43 billion investment in nuclear power, despite the swell in anti-nuclear sentiment following the Fukushima disaster. Abandoning the development and building of new reactors would make no sense, he argued. “There is no alternative to nuclear energy today,” he told reporters.

The UK’s government would appear to agree. Post-Fukushima, the Committee on Climate Change’s Renewable Energy Review noted that, “Nuclear generation in particular appears to be the most cost-effective form of low-carbon power generation in the 2020s, justifying significant investment if safety concerns can be addressed”. The report also indicated that 40 per cent of UK electricity generation will come from nuclear over the coming decades. ‘Contract for difference’ feed-in tariffs proposed in the electricity market reform white paper also seemed designed to promote nuclear. Eleven sites for new reactors have been identified and Frost & Sullivan sees a likelihood of between five and seven new plants over the next 20 years.

Across Europe, in fact, the WNA reports a steady rise in capacity. This is largely through uprating. Finland, Spain, Switzerland and Sweden are all engaged in – or have recently completed – projects to boost capacity at existing plants. But new plants are also being planned or built in Bulgaria, Finland, Romania and Slovakia. In Hungary, Paksi Atomeromu – the country’s sole nuclear plant, built with Soviet technology – sailed through post-Fukushima stress tests and is set for a 2 GW expansion to be completed between 2020 and 2025.

Turkey is also picked as a lead contender among more than 45 countries that the World Nuclear Association lists as seeking to move into nuclear power. The country is working on two projects. Rosatom and Atomstroyexport ZAO have been picked to build a 4.8 GW plant in the town of Akkuyu on the Mediterranean coast. A 5 GW plant in the Black Sea region of Sinop is due to be built with either Japanese or Korean technology.

A reactor vessel is uploaded in Sanmen Source: Westinghouse Electric Company
A reactor vessel is uploaded in Sanmen Source: Westinghouse Electric Company

‘MOTHER NATURE’ TESTS NORTH AMERICAN PLANTS

Since Fukushima the nuclear power industry in the United States can justly claim to have undergone some tough testing at the hands of Mother Nature. In June, the swollen Missouri river threatened to flood two nuclear power plants – the Fort Calhoun and the Cooper nuclear stations – while wildfires raged near the Los Alamos National Laboratory in New Mexico. Then on 22 August a 5.8-magnitude earthquake knocked out power to the North Anna nuclear plant in Virginia and prompted 12 other stations to declare “unusual events”, the lowest-level emergency designated by the US Nuclear Regulatory Commission.

Yet Marvin Fertel, president and CEO of the Nuclear Energy Institute, expressed an upbeat view in a July briefing to investors. Since March he noted that power uprates to improve efficiency had been approved at two facilities while operating licence renewals had been approved for nine of the nation’s 104 reactors. Construction also continues in Tennessee, Georgia and South Carolina on new reactors that should begin operating between 2013 and 2019. “Our estimate for the past three years has been that, between 2016 and 2020, we were going to add four to eight new reactors in this country. We believe, pre-Fukushima, that was realistic. We believe, post-Fukushima, that is very realistic,” he said.

More than 20 new reactors have been proposed in the US and 12 combined construction and operating licence applications are under review, according to the WNA. In Canada 2200 MW in nuclear capacity is due to be added in Ontario and other projects have been proposed for Alberta and New Brunswick.

NEW MARKETS BECKON

In South America, despite raised safety concerns since the Fukushima incident, Argentina, Brazil and Mexico have all continued with nuclear programmes. Argentina announced a deal in August with Candu to extend the life of its 650 MW Embalse reactor by up to 30 years. A third plant is also due to come online later this year, adding 750 MW, and a fourth plant with two units of 740 MW each is due to operate from 2016–17.

Brazil has responded to Fukushima by initiating a five-year programme to improve safety at its sole nuclear plant. Yet plans for expanding nuclear capacity remain in place. These include a third reactor at the Angra plant as well as the start of construction of a four-reactor plant in the country’s northeast from 2015. Mexico, which has just completed an uprating at its 1.6 GW Laguna Verde plant, aims to build up to ten nuclear plants that could meet almost a quarter of its energy needs by 2028.

African nations are also eyeing nuclear power with keen interest. The host of countries on the continent now turning towards nuclear energy include Tunisia, Morocco, Algeria, Sudan, Ghana, Senegal, Kenya, Uganda and Namibia. Rosatom is angling to build Africa’s second nuclear plant in Nigeria, which holds 7 per cent of the world’s uranium resources, and has secured an intergovernmental agreement. But South Africa, home to the continent’s only nuclear plant, looks best placed for hosting its second too. The country aims to build 9.6 GW of new nuclear capacity over the next two decades. These nuclear plans took a step forward in the week preceding the Fukushima incident, when a visit to France by South Africa’s president led to the signing of a memorandum of understanding on a new training institute for South African power engineers.

In the Middle East, no second thoughts seem likely to derail a determined move into nuclear generation. Since 2008, when the Gulf Co-operation Council (GCC) authorized the development of nuclear power by its members, all six Gulf nations have signed high-level co-operation deals that could swiftly transform virgin territory into significant markets. The UAE is currently leading the move into nuclear. In 2009 the Emirates Nuclear Energy Corporation (ENEC) entered into a contract with Korea Electric Power Corporation (Kepco) for developing four nuclear power plants in the UAE. Completion and operation of the UAE’s first nuclear plant is targeted for 2017, while the remaining three plants should operate by 2020. Despite the incident at Fukushima, the director general of the Abu Dhabi Water and Electricity Authority confirmed on 28 March 2011 that plans to develop a civilian reactor would continue.

The region’s other nuclear frontrunners include Jordan and – controversially – Iran. Jordan has received bids from Atomstroiexport, SNC-Lavalin International and a joint venture between Areva and Mitsubishi Heavy Industries of Japan to build its first nuclear plant. This 1 GW plant would reduce the country’s almost total reliance on imported energy and exploit its estimated reserves of 100 000 tonnes of uranium.

After a series of delays, Iran’s Bushehr nuclear plant is currently on the verge of connecting to the country’s grid, according to Tehran. Local media also claims Russia has proposed further plants in Iran. Saudi Arabia has described atomic energy as “essential to meet the Kingdom’s growing requirements for energy to generate electricity, produce desalinated water and reduce reliance on depleting hydrocarbon resources”. The King Abdullah City for Nuclear and Renewable Energy (KA-CARE) announced plans to construct 16 nuclear power reactors over the next 20 years – two on line in ten years and two per year to 2030.

The state of nuclear power generation worldwide, as of August 2010 Source: IAEA
The state of nuclear power generation worldwide, as of August 2010
Source: IAEA

ASIA AND RUSSIA UNDERWRITE NUCLEAR POWER’S FUTURE

With the exception of Japan, where prime minister Naoto Kan declared on 13 July that his country should aim “for a society that does not depend on nuclear power”, Asia has maintained a commitment to nuclear new build.“No policy change, but some delay due to reappraisal of regulations,” is how the WNA terms the likely outlook.

“With China and India, the expectation is that they will press ahead,” says Robinson. “They just desperately need power and – as in every aspect of power generation – they will be leading.”

The immediate wave of new build is being driven by China, South Korea and Russia, none of which show any post-Fukushima jitters. China has 26 reactors under construction. South Korea aims to complete seven by 2016. Russia aims to double nuclear output by 2020 and has ten reactors are now under construction. India, with 20 operating reactors, has four under construction and plans for at least another 20.

Interest in nuclear new build is widespread across Asia. Vietnam is poised to become the first of several Southeast Asian nations to realize its nuclear power aspirations. Construction on its first plant is due to start in 2014 so that the 1–1.2 GW Ninh Thuan 1 can operate from 2020. By 2030 14 nuclear reactors are scheduled to supply 10 per cent of national capacity. In South Asia, Bangladesh has signed with Rosatom to get its first nuclear plant – the 2 GW Rooppur nuclear power plant (RNPP) – online by 2017–18. Pakistan is also pressing on with plans to raise its limited nuclear capacity of 725 MW up to 8 GW by 2030.

LESSONS OF FUKUSHIMA

A roundup of nuclear activity suggests policymakers were far less influenced by the Fukushima incident than the mainstream media forecast. Just as significantly, perhaps, public opinion withstood the tide of alarmism.

“I think interest in the issue has faded,” says Robinson. “I don’t think it’s something that people have prime concern over. I think there was some loss of support for nuclear, but it wasn’t as dramatic as people expected.”

Still, the fact that even China put its nuclear approvals on hold in the aftermath of Fukushima proves that the nuclear industry must not only be safe but – like Caesar’s wife – beyond suspicion. The collapse in public faith in the industry in Japan attests to that. Nuclear’s resilience should perhaps be viewed as a lucky escape rather than grounds for complacency.

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