The Technological and Economic Future of Nuclear Power

Transitions to sustainable, renewable energy supply are the major components of serious climate policy framed by the aims and constraints of sustainable development. The Paris Agreement does not provide the strategy, actions, instruments, or means to boost the transition processes in global North and South. The world’s rich countries and people continue to exert rights to pollute the atmosphere with greenhouse gases. A spearhead climate policy can trigger fast elimination of energy-related carbon dioxide emissions, with full de-carbonization of the electricity supply as priority. Atomic power and flow renewable power (wind, solar, running water) are simply juxtaposed as the two major low-carbon supply options. In reality they are mutually exclusive in fully decarbonized power generation systems. They are hard to match technically while their major mutual impact is that they undermine the economic case for each other.

One of the major historical arguments of the promoters of the use of nuclear power was its low cost compared to other electricity generation technologies. For a long time, it was argued that a strong nuclear power contribution to electricity supplies was the best way to achieve a reliable and affordable electricity supply. However, from the first wave of nuclear reactors deployed, construction costs have been on an escalation course.

The core objective of this paper is to analyze the historical development of the costs – especially the investment costs – of nuclear power plants. With respect to these in recent years in Western countries there is a strong perception: Realized costs has always been higher than forecast costs and construction times promised have almost never been met. Given the reasons identified for these cost increases – and their irreversibility – we conclude that the time of “cheap” electricity from nuclear power is undoubtedly over if it has ever existed and for the next years there are no signs of a reversal of the current upward cost trend.

The energy policy debate in Europe has set (industrial) competitiveness high on the agenda. Support for renewable energies (RE) was in debate and partly suspended. The recent discussion on supporting nuclear power in the UK has, however, demonstrated that renewables are not the only low-carbon option that requires financial incentives under the current framework conditions. The aim of this paper is to compare the costs of state aids necessary for constructing new nuclear power plants for the example of the planned plant at Hinkley Point C in the UK with support incentives for RE.

For doing so, a static and a dynamic approach are followed: The static approach compares today’s support incentives for renewable energy with the state aid for Hinkley Point C, whereas for the dynamic approach a model-based assessment of future RE deployment up to 2050 in the EU is undertaken. This is done by use of the Green-X-model (www.​green-x.​at) and incorporates the impact of technological learning (future cost reductions) as well as aspects of market integration of variable renewables like solar and wind.

While more and more nuclear installations facing the end of their lifetime, decommissioning financing issues gain importance in political discussions. The financing needs are huge along the Uranium value chain. Following the polluter pays principle the operator of a nuclear installation is expected to accumulate all the necessary decommissioning funds during the operating life of its facility. However, since decommissioning experience is still limited, since the decommissioning process can take several decades and since the time period between the shutdown of a nuclear installation and the final disposal of radioactive waste can be very long, there are substantial risks that costs will be underestimated and that the liable party and the funds accumulated might not be available anymore when decommissioning activities have to be paid. Nevertheless, these financing risks can be reduced by the implementation of transparent, restricted, well-governed decommissioning financing schemes, with a system of checks and balances that aims at avoiding negative effects stemming from conflicts of interests.

The regulation of nuclear issues dates back as far as the foundation of the European Community. The Treaty establishing the European Atomic Energy Community (EURATOM) was one of the founding treaties of the European Communities next to the Treaty establishing the European Coal and Steel Community (ECSC) and entered into force on January 1, 1958. Since then and unlike the other founding treaties, the EURATOM Treaty has never been significantly amended or reformed. Why?

To be able to answer this question, one must look at the legal conditions and political key messages for the setting up of the EURATOM Community. The latter not only from within Europe but also from abroad. Due to the Members States’ original compromise and the limits between what is controlled and regulated under the treaty and what remains in the discretion of the Member States, the EURATOM Treaty is clearly limited in its scope.

The EU has no competences in regulatory fields such as operational safety of nuclear power plants, management and safe disposal of radioactive waste, storage or disposal facilities and decommissioning of installations. All these crucial objectives remain the sole responsibility of national authorities and are co-guided by standards adopted at the international level, especially under the framework of the International Atomic Energy Agency (IAEA). The EURATOM Treaty then remains as the only sectoral energy policy impeding the integration of policy towards a democratic energy Union. This is reflected by the European Parliament’s role being rather that of an opinion-giving onlooker than a co-decision maker in matters related to nuclear regulation.

Nuclear core melts with large emissions of radioactive substances are not paid for by nuclear power companies but by the victims and by taxpayers. This subsidy is often the result of legislation with that purpose.

Experience shows that the relative frequency of such accidents is several orders of magnitude larger that the risk estimates publicised by the nuclear industry and nuclear proponents.

This chapter describes the how the problem was created in order to make the nuclear development economically possible. In the end, it is described how a market may be created based on compulsory paying capacity, possibly provided via catastrophe bonds that would internalise many costs of accidents. At the same time, such regulations would provide a market evaluation, by responsible actors, of the nuclear risk costs.

The nuclear reactor supply industry, once seen as an essential component of diversified companies with an electrical engineering capability, is now seen in Europe, USA and Japan as a risky niche business for specialist companies. Vendors from Russia and China now appear likely to win the vast majority of new reactor orders although in both cases, their technologies have not been reviewed by experienced Western regulators. Russia may not have the financial strength to back up its large order book while China has yet to win orders in open export markets.

This chapter documents the technical development of different generations of nuclear power plants and provides an outlook for possible future concepts and their market prospects. The objective is to assess whether there is really significant technological progress on the horizon and whether these “new” concepts have prospects to become cost-effective. A major conclusion is that most of the so-called Generation IV concepts have already been discussed in the 1950s. At that time, they have not been pursued further due to problems such as costs, limiting factors in material properties and problems in appropriately controlling the fission processes. Yet, since about 2000 a modest revival of the discussion on these concepts is observed, obviously mainly motivated by securing the flow of public money for nuclear research and the broad recognition that with present reactor concepts the nuclear industry will not succeed.

The decommissioning of nuclear power plants and the storage of nuclear waste are major challenges for all nuclear countries. Both processes are technologically and financially challenging. We provide an analysis of the status quo of both processes in three major nuclear countries: Germany, France, and the U.K. Germany was able to gain some decommissioning experiences but not one large-scale reactor has been released from regulatory control. EDF was forced to cancel its target to immediately dismantle all GCRs by 2036 due to underestimated technological challenges, while in the U.K., decommissioning of the legacy fleet lasts well into the 22nd century. Until now, no scale effects could be observed, if EDF can reap scale effects due to the standardization of its fleet remains to be seen. The search for a deep geological disposal facility is the most advanced in France, where the start date is fixed by law to 2025. There are many uncertainties related to estimated future costs. In the three countries, three different funding schemes are implemented: Germany switched from internal non-segregated funds to an external segregated fund for waste management. In the U.K. the decommissioning of the legacy fleet will be paid by the taxpayer for the next 100 years while an external segregated fund was established for the current operational fleet. In France, an internal segregated fund finances the future liabilities of EDF.

Finding safe and publicly acceptable routes for the management of long-lived nuclear wastes has been problematic in all countries that have used nuclear power. The dominant expectation on the part of Governments and the nuclear industry has been that the best option will be deep underground disposal. However even in Sweden, where political consensus has emerged over a site for a repository, disputes continue about long-term safety. Ethical issues, especially inter-generational equity, are relevant given continuing delays in implementing long-term management and where countries, like the UK, continue to build new reactors, achieving political acceptability is more problematic than where new-build is not an option. Failure to resolve nuclear waste issues is a major obstacle to public acceptance of nuclear technology.

China has the most ambitious targets for nuclear power and some expect that it would shore up the flagging prospects for a large expansion of nuclear power around the world. But in recent years, China’s nuclear program has not grown as fast as projected. This chapter explains why there are good reasons to expect nuclear power growth to slow down further. Promises that new reactor designs will be constructed in large numbers in China or exported from China to other countries seem unlikely to materialize. As a result, nuclear power’s salience to future global electricity generation will continue to diminish.

The accident of unit 4 at the NPP Chernobyl from 1986 was arguably the worst disaster of a nuclear power plant that happened so far. It became apparent to the broader public that the vast amount of radioactive fission products that accumulate during operation of a nuclear reactor have the potential to render large areas inhabitable. The root cause of the accident was therefore of major interest for all countries who operated nuclear power plants, or who had nuclear power plants in its vicinity. Considering all information available today it is safe to draw the conclusion that the reactor design was too complex at that time, and therefore errors have been made. It is not so easy to exclude that this could happen with other designs in other countries as well.

This study analyses the government’s efforts and the actual situation of the victims of Fukushima Daiichi nuclear power plant accident five years after the accident. As of September 5, 2015, about 99 thousand Fukushima prefecture residents had been forced to evacuate from their homes. Currently, the government is seeking to lift evacuation orders aggressively. However, evacuees have mixed feelings. The amount of legally required compensation for damages continues to increase; it reached 7.65 trillion yen (US$76.5 billion) in the latest review as of the end of March 2016. TEPCO is practically bankrupt and has been collecting funds from all Japanese citizens. As of the end of December 2015, 51 people were diagnosed with malignant or suspected malignant thyroid cancer in the second examination conducted by Fukushima Prefecture. Government measures, i.e., disaster recovery plans, compensation for damages, and scientific approaches, have been used as means to avoid taking responsibility through the use of power, the use of money to keep victims silent, and the use of science as an excuse; these measures are driving the victims into a corner instead of supporting them. Ultimately, two common causes of these problems are related to the nuclear energy policy of the past and the nuclear energy policy for the future.

The costs of managing the consequences of the Fukushima-Daiichi nuclear have been significant already, and the estimated total future costs have increased over time. The immediate payments have been possible by direct payments from the Japanese government. However, most these payments are not acknowledged as government spending. Instead, a complicated system of envisioned re-payments have been created.

Based on the three Special Business Plans published by TEPCO since the nuclear disaster, this evolving perception of the economic consequences and the increasingly complicated repayment schemes are described.

The conclusion of the authors are that the repayment schemes are not compatible with a future efficient, competitive electricity market.

It is suggested that other governments who implicitly or explicitly accepting economic liabilities for nuclear accidents prepare themselves in order to avoid un-necessary indirect cost after future reactors accidents.

In recent years increasing shares of variable renewable energy sources (RES) have changed the structure of electricity markets in several countries. The core objective of this paper is to provide insights into the conditions necessary to bring about a more democratic and sustainable electricity system by integrating even larger quantities of variable RES. Our major finding is that a market-based approach would ensure that competitive forces rather than governmental interferences – such as capacity mechanisms – shape the future of the electricity markets. This transition towards a competitive and sustainable future electricity system will be based on an approach of “new thinking” which requires a paradigm shift in the whole electricity system. This includes switching to a more flexible and smarter concept allowing a greater scope for demand participation, storage options and other flexibility measures.