Speech: The business case for nuclear energy

"If you compare the percentage of electricity generated with low-carbon energy sources that we had at the beginning of the century with what we have today it is more or less exactly the same - essentially about 36%. So, despite the enormous investment in renewable energy sources, it doesn’t seem that we have moved forward very much.

Nuclear continues to be the second largest source of low-carbon electricity worldwide and among OECD countries nuclear is the first source of low-carbon generation. Why is that? Because nuclear energy continues to grow and to perform extremely well. In fact, in 2019, global electricity generated from nuclear grew by 95 terawatt hours despite the fact that total capacity went down by 5 gigawatts. This tells us that the average capacity factor of nuclear power units has increased. In other words, we continue to improve how well we operate and how much energy we extract from the current fleet of nuclear power plants.

Not only that, but construction has started at 10 new units since the beginning of 2019, and 10 more have been connected to the grid. Of the latter, two are small reactors aboard the first purpose-built floating nuclear power plant, which is moored at Pevek in northeast Russia and which are supplying both electricity and heating to the local community. Two weeks ago, we had the world's first unit of the Hualong One design - Fuqing 5 – was grid connected in China.

So, nuclear continues to grow and to do very well. However, when we look at the scenarios that many organisations are putting forward in order to meet not only the decarbonisation goals of the Paris Agreement, but also the global Sustainable Development Goals that aim to ensure everyone in the world can achieve at least a reasonable standard of living, we notice that most analysts expect the contribution of nuclear energy will need to grow significantly.

For example, if you look at the projections of the IPCCC in their 1.5 Degrees report released in 2018, in the Middle-of-the-Road scenario you see that nuclear energy would need to grow six-fold by 2050 in order to represent even just 25% of total electricity generation.

That means we are going to need all kinds of nuclear technology. First of all, we're going to need the long-term operation of the existing fleet of nuclear power plants. This will ensure continuity from the current fleet to the next generation of reactors as they become available. But we will also need to build new reactors of all sizes. In this case we are focusing on electricity, but nuclear energy is the only low-carbon energy source that in addition to electricity can also produce low-carbon heat. That's fabulous because it can help decarbonise other sectors that are difficult to abate, including industrial applications like chemicals, hydrogen and synthetic fuel production, and also be used for residential and district heating. And, depending on the different applications, we may be able to use nuclear energy in remote locations. So, the opportunities are only growing.

Beyond the SMRs being developed in North America, that are being discussed in other sessions during this conference, I want to make a summary of SMR designs that are being developed elsewhere in the world. I would highlight Argentina's CAREM-25, which is a very small pressurised water reactor (PWR) currently under construction; China's HTR-PM, which is a high-temperature reactor currently undergoing cold testing; and Russia's launch last year of two floating reactors that have been connected to the grid in Pevek, where they are supplying electricity and heat; also in China, there is the Yanlong DHR, which is a pool reactor specifically for district heating, that is under development; in France, we have the Nuward, a PWR currently under development; in South Korea we have SMART, which is a PWR that has already received design approval from the Korean regulator; in the UK there is Rolls-Royce's small PWR under development; and the Seaborg molten salt reactor in Denmark, the main application of which being considered is as floating units that can be deployed almost anywhere.

The pandemic has shown the important role of reliable electricity supply and not only that, but also that the post-COVID economic recovery that many governments are preparing along with stimulus packages is going to give us a once-in-a-lifetime opportunity to improve our economies in a way that at the same time accelerates the transition to a low-carbon energy future. Nuclear is well-positioned for this because, as was shown in a joint report published this week by the International Energy Agency and the OECD Nuclear Energy Agency on the projected costs of electricity between 2020 and 2025, nuclear has significantly reduced its levelised cost of electricity.

The long-term operation of nuclear power plants is currently the lowest cost option of all forms of low-carbon energy resources. We have also seen that the levelised cost of electricity of new nuclear plants is expected to become competitive with all other energy sources, including renewables. This tells us that nuclear energy provides a great opportunity, not only to contribute to continued decarbonisation and to help all countries to meet their SDGs, but also in the short term to help stimulate economic growth.

Nuclear provides many socio-economic benefits throughout the wider economy. This is not only the jobs that are directly created by nuclear projects during construction, or the jobs created during the operation of a new power plant over 80 years, and then afterwards throughout the decommissioning, nuclear used fuel and waste management phase, but also that nuclear projects produce a significant economic trickle-down effect throughout the entire economy. We have seen numerous times how such large infrastructure projects have galvanised socio-economic benefits in a number of countries. And it's important to note that jobs in the nuclear sector are typically high-quality, high-paying, long-term jobs and, even more importantly, local jobs. These projects mean being able to jumpstart the supply chain with a very large localisation factor.

Nuclear, like most other low-carbon energy sources, is a high capital cost investment, but the largest part of this is actually the cost of finance. This means that if nuclear projects had access to affordable financing, the overall levelised cost of electricity that we can generate with nuclear energy would be even more cost competitive. We have identified that governments can have a key role in creating the appropriate frameworks so that they can incentivise investment in public-private partnerships, but also lower risk situations in which the cost of financing nuclear projects would be significantly lower. Again, this would result in a lower levelised cost of electricity.

There are several ways that governments can do this. There is direct finance support that can take various forms, such equity and debt. It could be transitional and doesn’t have to be a long-term process. It could be an initial quick start process to incentivise private investment. And then there are other mechanisms for indirect financial support, such as contracts-for-difference used in the UK or the Mankala model in Finland. And finally there is another way under consideration in the UK, which is the regulated asset base.

The issue of affordable financing is key for new nuclear and this is particularly important when we talk about nuclear newcomer countries, for whom access to cost-effective financing is going to be very important for their deployment of new nuclear. We need to have consistent messages from governments to instill confidence and trust in the overall system which will support long-term planning and investment.

It's also important that multi-lateral banks and export credit agencies consider nuclear energy and what they can do to help newcomer countries start their plans to use nuclear energy for sustainable development and to decarbonise their electricity systems. There is a need to develop technology neutral criteria for financial support. In that way countries will be able to make their own choices. I can't emphasise this enough. As we move forward, multi-lateral development banks, national credit export agencies and financial institutions looking into environmental social  and governance (ESG) criteria must have criteria that are technology neutral. Only with a level playing field can we determine which technologies are sustainable and which are not.

Policymakers must incentivise investment and facilitate low-cost financing for all kinds of nuclear projects - long-term operation is a no-brainer as the lowest cost low-carbon energy that we have, but also new build projects for large, small and micro-reactors."

Sama Bilbao y León 

World Nuclear Association represents more than 180 organisations throughout the entire nuclear fuel cycle in 43 countries on all continents.