Nuclear energy is enjoying a renaissance. This is believable after knowing that worldwide more than 60 new plants totalling more than 50 gigawatts (GW) of power generation capacity are currently being built, while another 150 reactors have been either ordered or planned. Collectively, the global nuclear industry is likely to invest anywhere between $400 billion and $600 billion in the next decade.
New nuclear plants are mushrooming worldwide, from emerging economies such as China and India through West Asia to developed nations in North America and Europe.
Last year, the United Arab Emirates awarded the South Koreans a $20-billion contract to build four reactors capable of producing 5.6 GW of electricity by 2020.
“The green giant” China is currently building 25 reactors, which will triple the number of its operating units. Moving towards its aspirational goals of 80 reactors and as much as 400 GW of nuclear plant capacity by 2020 and 2050, respectively, China is rapidly perfecting indigenous capabilities in nuclear plant design, engineering, and manufacturing.
A new wave of development is anticipated in India, which has cleared the decks through a deal with the US.
These are remarkable advances because, “[a]t the dawn of the 21st century, nuclear power appeared to be drawing its last breath,” as Aaron Wiener had written in Foreign Policy magazine last September before cataloguing a number of nuclear plant closures. This turnaround is being driven by four major themes:
IMPROVEMENTS IN TECHNOLOGY
“There is no alternative”: There is growing realisation in policy, investment, and business communities that material cuts in carbon emissions without seriously compromising energy supply and its affordability will require sizeable supplies of nuclear energy.
For example, the International Energy Agency projects a 50 per cent increase in global nuclear capacity to merely meet the Copenhagen Accord's mild goals of a 17 per cent reduction in carbon emissions relative to 2005 levels by 2020. With no other renewable source having the energy density of nuclear and, barring one or two, being capable of supplying electricity consistently, reliably, and cheaply, “there is no alternative” to nuclear energy.
Step-change technology improvement: Most of the world's nearly 440 nuclear reactors are of the Generation II type and were deployed prior to the 1990s. Although new projects came to a halt in the past two decades, technology development, fortunately, continued. In recent years, the US Nuclear Regulatory Commission has approved at least four Generation III reactors, which demonstrate step-change improvements in safety, performance, and cost. These new reactors are often described as “inherently safe” to reflect their use of a number of passive safety systems that can be deployed without operator involvement and, therefore, significantly reducing meltdown risks.
Further, several Generation III reactors have been designed to use significantly fewer materials and components, making them cheaper. Finally, companies such as Toshiba and Babcock & Wilcox are pioneering small, modular, and low-maintenance reactors ranging from 10 to 125 megawatts of capacity. Their successful regulatory approval and commercialisation can facilitate the market penetration of cheap, safe, and fit-for-purpose nuclear generation capacity.
Operational excellence: In the decades when nuclear power was in the wilderness, the industry focused on improving operational excellence. For example, the hundred odd nuclear plants in the US increased their capacity factor from around 60 per cent to 90 per cent in the past few decades, equivalent to increasing generating capacity by 25 per cent. A more significant improvement was in extending plant life from 40 to 60 years, significantly improving the economics of nuclear energy. Finally, the industry has been able to drive these improvements at low cost and without compromising safety.
CHALLENGES AHEAD
In spite of the growing robustness of nuclear energy, government support is critical to drive new investments. A typical nuclear energy plant takes about 10 years to build, operates for 50-60 years, and is decommissioned over 10 years. Businesses cannot commit to such 70-80 year projects without strong and perceivably consistent government support. Fortunately, government support for nuclear power has grown globally. In the US, regulatory approvals are being streamlined, loans guaranteed, and new projects incentivised. China is supporting its nuclear reactors with the same gusto as it is encouraging solar and wind farms. In India, liability risks are being mitigated with new legislative bills.
The path forward, however, is going to be challenging because of several reasons. First, nuclear energy is unique in being the most misunderstood by the society. The safest of nuclear plants face significant siting challenges. Second, nuclear waste processing is poorly understood and, notwithstanding the numerous technological advances, continues to be a leading source of risk. Third, there is a global shortage of industry talent and professionals. Finally, businesses and investors have not forgotten the 2-4X cost overruns witnessed during the build-out of the existing fleet of nuclear plants.
Even so, we may not have a choice in adopting nuclear energy. Dr Homi Bhabha, the father of India's nuclear energy establishment, is reported to have said, “No energy is more expensive than no energy.” The meaning of this aphorism is not lost on the emerging economies of Asia, Latin America, and Africa whose soaring demand for energy cannot be met by traditional supplies of oil, gas, and coal alone. They may have to exercise the nuclear option – meaningfully.
(The author is CEO of ADI Analytics LLC, a boutique energy consulting firm with offices in Houston and New Delhi).