These days it seems I cannot travel far without having a discussion about nuclear. At a recent meeting to develop this year’s conference programme for Power-Gen Asia, our organising committee posed the question: “With high oil prices and high coal prices, is it time for nuclear?”
A week later in Paris in an interview with Areva, the case for nuclear was again stated, although, considering the interviewee, this came as no surprise. Areva is the world’s biggest player in the nuclear sector with sales of €6.6 billion ($8.5 billion) in 2004 – about 30 per cent of the global market. Vincent Benoit, director of financial communications, commented: “…to manage baseload, nuclear has to be part of the mix…”
That same week, Tomasz Podgajniak, Poland’s deputy environment minister, said: “If we can’t base [energy generation] on coal, then what can we base it on? … I am definitely in favour of developing nuclear power in Poland – I see no alternative.”
The minister’s words came in response to the European Commission’s call for Poland to reduce its CO2 emissions by 16.5 per cent between 2005 and 2007. For Poland, with a power industry that relies heavily on coal, this is nigh on impossible.
And therein lies the irony. It was the environmental argument that killed nuclear; and it is the environmental argument that will bring it back. Certainly, environmental policies have had a positive effect in terms of the development and breakthrough of renewables into the energy mix. But, whether those policies have had an effect on reducing CO2 emissions is debatable. In a recent report, scientists taking measurements at the Mauna Loa climate change centre in Hawaii found that concentrations of greenhouse gas in the atmosphere had actually increased and showed no signs of slowing down.
No doubt this will present a serious dilemma to governments that have signed up to Kyoto. A dilemma which Benoit is only too quick to point out: “There are only two [nuclear] plants under construction in Europe but we may see a return for nuclear in Europe. Germany cannot replace its nuclear capacity by fossil-based generation plant and meet its Kyoto commitments. Italy is re-thinking its nuclear strategy; the UK White Paper may leave an opening for nuclear and now this announcement in Poland. In the US, the Bush Administration wants a new nuclear plant under the ‘Nuclear Power 2010’ programme. The public may need convincing but a reactor in the US would be the signal that the world needs.”
But while Areva may be hoping to introduce a new reactor in the US, there will probably be no investment before the new energy bill is introduced. Indeed the investment required for nuclear has been a stumbling block, although nuclear proponents always put forward a convincing economic case even when considering the back-end costs. Figures put forward by Areva puts the average cost of generation at €27/MWh compared to gas at €30/MWh ($3Mbtu) and coal at €35-45/MWh. Benoit adds: “The new 1600 MW EPR in Finland has been announced by TVO for a global cost of €3 billion. This amount includes the cost of equipment, civil works and turbine. Of course that price could be much more interesting for a series of EPRs.”
The overall costs may stack up but €3 billion is still a huge upfront sum for any investor. The International Energy Agency (IEA) sees a case for nuclear but also concedes that attracting investment is a key issue. The IEA recently published a study that compares the investment needed for each generating technology. According to the study, most coal fired power plants have overnight construction costs ranging between $1000/kW and $1500/kW. Gas fired plant (CCGT) range between $400/kW and $800/kW while nuclear costs between $1000/kW and $2000/kW.
However, where nuclear wins out is in the overall cost of generation. Another economic plus is, the cost of generation from nuclear is fairly immune to uranium price fluctuation. According to the IEA study, when considering investment costs, operation and maintenance costs and fuel costs; nuclear power costs in the region of $25/MWh. This compares to about $30/MWh for coal and almost $40/MWh for CCGT plant. When the impact of emission trading is taken into account, the cost of generation from gas and coal increases still further.
Another study carried out by the French ministry in charge of energy concluded that nuclear power is the cheapest option for 5000 hours of operation per year (57 per cent load factor) or more, while gas is the cheapest option for 5000 hours or less.
The case for nuclear seems clear, almost inevitable – unless the environmentalist can think of another alternative. There is also the argument that the political powers will throw into the mix – nuclear also reduces a growing dependence on gas and oil imports from Russia and the Middle East.
I would bet money that a new, clear day is coming.
Publisher & Editorial Director