The Status of the Nuclear Industry in the World – Dawn or Dusk?
Paris, March, 2014
Germany phases out nuclear power. Easy enough, many thought, the country will import nuclear power from neighboring France. Three years after German Chancellor Angela Merkel, a former Environment Minister in charge of nuclear reactor safety and a physicist by training, decided to shut down half of the nuclear fleet in the country, reality is dramatically different. Germany never exported more power than in 2013, about 33 TWh2 net. Amongst Germany’s best customers… France. In fact, France, while also a net power exporter, imported throughout the past year almost 10 TWh more electricity from Germany than it exported to its eastern neighbor. These German exports are partially generated by renewables but also by polluting coal and lignite plants, a side effect of the shale gas revolution in the US that led to massive coal imports to Europe and to the shutdown or mothballing of about 50 GW of much cleaner natural gas fired power plants throughout the EU. This trend is a perfect illustration of the lack of an appropriately designed and regulated carbon market but has nothing to do with nuclear plants being taken off the grid. Germany has built up a huge renewable energy capacity of over 75 GW, roughly equivalent to its peak load, mainly wind and solar. But the four traditional large utilities E.ON, RWE, EnBW and Vattenfall that operate the nine remaining nuclear power plants, hold only 5 percent of the renewable capacity. The big four clearly missed the renewables train — so far. There are now over 1.3 million electricity generators in the country, including households, farmers, coops and municipalities. In 2012, for the first time, renewable sources provided more electricity than nuclear plants in Germany. The same happened in China, India and Japan. Thus three of the four largest economies in the world generated more power from wind, solar and biomass than from nuclear fission. In 2013, at least one more country joined the club, Spain, which generated more power with wind turbines alone than with any other energy source. In the EU as a whole a total of 23 GW of renewables have been added to the grid in 2013 alone, while 11 GW of coal, oil and natural gas plants were closed for good.
France, nuclear dreamland par excellence, is under increasing pressure. The French nuclear industry, which has profited from unlimited and uninterrupted public support for the past forty years, is struggling with high debt loads, increasing costs, potent competitors and stagnating electricity consumption. State controlled EDF has to deal with a €35.5 billion ($49bn) debt burden and increasing operational costs, estimated by the national Energy Regulatory Commission at 4.5 percent annually since 2007. In 2012, tariffs did not cover the costs, which created a loss of €1.5 billion ($2bn). That does not include yet massive additional post-3/11 (post-Fukushima) upgrading requested by the Nuclear Safety Authority. As a consequence the regulator asked for large power price increases — a measure about as popular as increasing the price of the baguette — which are expected to reach around 30 percent between 2013 and 2017. At that point, Enercoop, a 100-percent renewable power provider that used to be the most expensive distributor in France but never increased its tariffs, will sell power at a lower price than nuclear EDF. In addition, the largest nuclear operator in the world is struggling with a rapidly widening skills gap as about half of the nuclear staff is eligible for retirement over a five-year period up to 2017. EDF admitted that it will be confronting an extremely difficult period with a “forecasted doubling of expenditures between 2010 and 2020 (operation and investment)” and with “a peak of departures for retirement coinciding with a peak in activities”.3 AREVA, the pride of the French State-controlled nuclear establishments and largest nuclear builder in the world, filed a loss for the third year in a row. After a staggering €2.5bn loss in 2011, and €100m in 2012, another €0.5bn were lacking to break even in 2013. The main cause for last year’s meager result is the lasting saga of the EPR4 construction site in Olkiluoto, Finland. A decade ago planned to cost hardly more than €2bn a piece, estimates have skyrocketed to €8.5bn. In the latest developments, AREVA refused to come up with a new projected startup date, originally planned for 2009, delayed to 2016 two years ago. A follow-up project in Flamanville, France, is not doing any better. Even the third and fourth EPR, under construction in Taishan, China, for a long time believed to be on schedule, is now reportedly delayed for 13 and 15 months respectively.
Interestingly enough, it was first Business Week5 that reported that EDF “is having to cut production from its reactors to accommodate higher European wind and solar output, potentially curbing future earnings from atomic power”. In a more spectacular manner, on 26 March 2014, the government’s most senior administrator for energy, Laurent Michel, Director General for Energy and Climate at the Ministry of Ecology, told a stunned enquiry committee at the National Assembly, the country’s parliament, that current projections for stagnating or even decreasing electricity consumption could lead to the “non-need or electric uselessness of about 20 reactors” by 2025. What is somewhat awkwardly expressed here is that the increase in other areas, and notably renewables inside and outside the country, combined with low consumption levels render these reactors obsolete or uneconomic. These projections are perfectly in line with the French President’s target of reducing the share of nuclear power from the current three quarters to about half in the generation mix by 2025. However, the task — which dwarfs the German nuclear phase-out commitment for nine units by 2022 — will be economically, socially and organizationally challenging. On the other hand, whatever the French policy will finally look like after a new energy bill is voted on likely before the end of the year, the competitiveness of operating nuclear power plants is increasingly threatened by rising costs and rapidly changing market conditions. This is also true for the US as well as for Europe as a whole. German operator E.ON just announced its intention to shut down the Grafenrheinfeld unit in Bavaria in May 2015, seven months earlier than scheduled. Just as a number of coal- and gas-fired plants, the reactor is not anymore economic to operate. In fact, the German nuclear phase-out might go faster in practice than required by law.
The comparison between France and Germany is interesting in many ways. While French electricity prices generally remain below the average in Germany, the situation confronted by consumers is quite different. If “cheap nuclear electricity” was to allow for the competitiveness of the French industry, Germany produces the world’s largest trade surplus approaching staggering €200bn ($275bn) in 2013 outpacing even China, France stumbles from one record trade deficit to the next, reaching over €60bn ($84bn) in 2013. Ironically, France is Germany’s largest trading partner and contributes 18 percent of its surplus or, in other words, the trade deficit with Germany represents over almost 60 percent of France’s deficit. The French industry now complains about market disadvantages over their German competitors. Indeed, energy intensive industries in Germany profit of a number of advantages over average consumers and other large industries profit of a spot market price that has constantly decreased since 2011 and is now significantly lower than in France. French households have access to lower average electricity prices but have higher bills because they consume more their German counterparts. Electric space heating, hardly existing in Germany, installed in 30 percent of French dwellings, is driving households into poverty.6 An estimated four million households in France have troubles paying their energy bills, most of them for electricity. Electric space heating and hot water supply was massively promoted starting in the 1980s to drive up consumption when EDF realized that it was in the course of significantly overbuilding their nuclear generating capacity. The winter peak load in France is around 100 GW compared with Germany’s 75 GW and a population that is 15 million people larger. When the thermometer drops by 1°C in France, the capacity need increases by 2.4 GW, a temperature sensitivity that renders the French power system very fragile. In February 2012, during a cold weather wave, France imported power from all six neighboring countries, including the UK, to save the grid from collapsing.
Developments in France and Germany, in 2012 the world’s second and fifth largest nuclear power generators, reflect a global trend. The role of nuclear power has been on the decline for a long time. As of 1 January 2014, there were 430 nuclear reactors considered “in operation” in the world7, preliminary analysis indicates (see Figure 1.).
Figure 1. Source: IAEA-PRIS, MSC, 2014
The number is identical to the situation one year ago but 14 below the historic peak in 2002. In the European Union, the number of operating reactors reached its maximum with 177 in 1988 and dropped by 46 to 131 today.
The main changes in world nuclear statistics during the year 2013 include four new units connected to the grid — three in China (Hongyanhe-1 & -2) and Yangjiang-1, and one in India (Kudankulam-1) — while four units were announced as shutdown definitely. In comparison, in the pre-Chernobyl years 1984-85, a total of 33 new reactors were connected to the grid (see Figure 2).
Figure 2. This chart represents grid connections and withdrawals from the grid. Therefore, while their definitive shutdown was only decided in 2013, the San Onofre units are added to the 2012 closures as they did not generate any power in 2013.
Thus, in 2013, the number of units considered "operational" remained stable, while in 2012 retirements outweighed the number of startups. An entirely new development lies in the fact that all four shutdown reactors (Crystal River-3, Kewaunee and San Onofre-2 and -3) are located in the US and are the first retirements of nuclear units in the country in 15 years. An additional unit in the US, Vermont Yankee, is scheduled to be disconnected from the grid in 2014 because, just like in the case of Kewaunee, the unit is not anymore economic to operate. These cases are particularly significant as both units had obtained a license renewal for operation up to 2032 and 2033 respectively.
The number of reactors in the world generally considered as “in operation” is increasingly misleading because of the situation in Japan, resulting from the Fukushima events in March 2011. In 2013, only two of the then officially 50 “operating” reactors8 have generated electricity and no unit in Japan has produced any power since September 2013. The global number of 430 units does not include the ten Fukushima reactors, but incorporates the remaining 44 Japanese units, most of which have not generated electricity for two years and more.
The generation of nuclear electricity in the world reached its historic maximum in 2006 with 2,660 TWh. Mainly due to the decline in output in Japan and Germany, nuclear generation had dropped in 2012 by 12 percent to 2,336 TWh. The relative share of nuclear power in the electricity mix peaked already in 1993 at 17 percent and slowly declined to around 10 percent in 2012 (see Figure 3). Only one country, the Czech Republic, peaked in 2012, all other countries reached the maximum share of nuclear power in the grid often many years ago, the US in 1995 with 22.5 percent and even China already in 2003 with… 2.2 percent. The nuclear share in world commercial primary energy dropped to 4.5 percent, the lowest level in 30 years.
Source: IAEA-PRIS, MSC, 2014
New developments can also be reported on reactor construction. For the first time in three and a half decades concrete was poured for new build projects in the US (Virgil C. Summer-2 and -3, Vogtle-3 and -4). However, at this point, these seem to remain exceptions in the country that are implemented under specific conditions (legal possibility to pass on cost increases to the consumer, loan guarantees, etc.). Construction on Belarusian-1 started in Belarus, the first nuclear plant in a country heavily impacted by fallout from the Chernobyl accident in 1986. Three more units got underway in China (Tianwan-4, Yangjiang-5 and -6), while the UAE started work on Barakah-2 and South Korea on Shin-Hanul-2. This brings the total of nuclear reactors “under construction” to 69 as of 1 January 20149, compared to 64 a year earlier and nine more than two years ago.
As illustrated in subsequent World Nuclear Industry Status Reports, most of the building projects are subject to considerable delays. This is no doubt one of the explanations why the increase in numbers of construction sites does not automatically translate into increasing numbers of operating nuclear power plants. The current number of reactors “under construction” compares with the highest historic level of construction registered in 1979 with 234 units, 48 of which have been abandoned at various stages of advancement.
For the first time, there is now an official admission that all of the reactor building projects in China started prior to 2011 are also behind schedule (see Figure 4). The most significant delays are reported for the Westinghouse AP1000 projects Sanmen-1 (21 months) and -2 (>9 months), as well as Haiyang-1 (21 months) and -2 (18 months).
Figure 4. From Nuclear Intelligence Weekly, March 14, 2014.
The World Nuclear Industry Status Report also looks into comparative data for the development into renewables. It is remarkable to see that the only country massively investing into nuclear power is China with 29 of the 69 units under construction at the beginning of the year is also the country that invests by far the most into the development of renewable energies. China is leading the top-ten renewable energy investors with an estimated $61.3bn outpacing the US with $48.4bn spent in 2013. Wind power alone, with an estimated installed capacity of 90 GW outpaced nuclear production again and the targets are 100 GW by 2015 and stunning 200 GW by 2020. The Chinese solar photovoltaic (PV) target has been raised by a factor of seven since 3/11 to 35 GW by 2015. Some analysts expect annual additions in China on the order of close to 10 GW of PV in the near future.
Nuclear power is being driven out of the global market place, too big, too expensive, too slow. System costs per installed solar kilowatt have decreased in Germany by three quarters in only seven years, while operating and new nuclear plants become increasingly expensive. The record quantity of PV connected to the grid in one month is 3 GW, while the average construction times for nuclear reactors is on the order of 10 years. Countries like Germany and China still rely heavily on coal and considerable challenges in grid and system upgrading remain ahead. But the current dynamic is clearly most favorable to small and medium size natural gas and renewable energy plants, including in the US, where both sources combined account for 88 percent of the new capacity connected to the grid in 2013. And only a handful of projects exceeded 0.2 GW in size. In the European Union, net additions of new plants in 2013 were almost 100 percent renewables.
The events of Fukushima did not trigger the crisis of the international nuclear industry but make it considerably worse. While there is a lot of talk about plans and projects, potential newcomer countries and the revival of the nuclear industry, a thorough reality check shows that many of these plans have been dreams for decades and are likely to remain in the realm of fantasy. Current concrete projects are far from able to reverse the global trend. The global nuclear industry is well in the dusk with little prospect of seeing the dawn again.
1 Mycle Schneider is an independent international energy and nuclear policy consultant, based in Paris. He is the convening lead author of the World Nuclear Industry Status Reports.
6 Electric space and water heating is extremely inefficient. You lose up to two thirds of the primary energy in the fuel as waste heat in a thermal power plant and another ten percent in electricity transport and distribution just to reheat air or water. Central or urban heating systems limit losses to 15 percent or less, compared with the three quarters of the electric heating system. The environmental implications are obvious.
8 In January 2013, the Japan Nuclear Energy Safety Organization (JNES) placed 47 of the Japanese units in the IAEA’s “Long-term Shutdown” category. But the operation was reversed two days later (see “IAEA-Japan Reactor Status Incident: ‘Clerical Error’ Explanation Not Credible” and linked preceding articles on the issue).
9 One additional plant started construction in February 2014, a small 25 MW reactor in Argentina. However, since the reactor that started up in January 2014 is not under construction anymore, the total number of units under construction as of early 2014 remains at 70.
These contributions have not been peer-refereed. They represent solely the view(s) of the author(s) and not necessarily the view of APS.