The image of a nuclear power plant dispersing steam into the atmosphere through its cooling towers evokes many of the same reactions now as it did in the 1970’s, when global energy crises prompted a surge in interest in nuclear. Its inclusion in the European Commission’s taxonomy proposal, which is aimed at encouraging investment into green technologies, provoked familiar arguments. The reasoning behind energy policy is complex and sometimes opaque – in this case, France is lobbying hard for nuclear, much to the chagrin of its neighbors – but we can say one thing with relative certainty; the economics of nuclear power does not add up.
In DNV’s Energy Transition Outlook, we forecast that nuclear will meet 5% of primary energy demand in 2050, which is approximately the same as today. This is compared to solar and wind, that will grow 10-fold and 20-fold, respectively, and be much bigger than nuclear. Half of the world’s installed nuclear capacity is over 30 years old and is coming to the end of its life. Countries like Spain and Germany are decommissioning but this will be counterbalanced by new projects in Asia, and possibly also in France, where President Macron seems very keen to push nuclear power. The challenge with nuclear is that costs remain high, and even if the industry talks optimistically about small scale nuclear reactors (SMRs), the costs will not see any strong reduction.
Whilst nuclear power continues to be hindered by persistently high costs, the opposite is true for renewables. Solar PV + storage, for example, offers a compelling alternative to nuclear. The cost of solar + storage is currently more than double that of solar without storage. However, with a continued drop in the battery prices, the gap between the two will narrow to below 65% by 2045. Despite its higher costs, solar + storage has an advantage over solar on capture price. These plants can charge their batteries when sunlight is plentiful during the day and sell the stored electricity when the price is high. By 2030, the capture price advantage of solar + storage over regular solar plants will surpass the cost disadvantage on a globally averaged basis.
By taking a holistic approach to solar, it is possible to overcome the intermittent nature of solar, and make it compete even better with steady production from gas, coal or nuclear. As well as the introduction of energy storage, flexibility can be achieved by upgrading the grid and the creation of demand response solutions that use excess power to make, for example, hydrogen.
The long-term future of nuclear power could possibly be the successful scaling of fusion technology. The Joint European Torus project in Oxfordshire recently produced 59 megajoules of heat over five seconds after two decades of tests and refinements since its last test. But even the optimist must realize that nuclear fusion will not be the silver bullet for the climate crisis. The first large scale reactor run by Iter will not start producing energy until 2035 and even if private capital is driving innovation, it is misguided to think that fusion will play a big role in the energy mix before the second half of the century.
It would be naïve to say that cost is the only driver of energy policy. The building of the $31 billion Hinckley Point C nuclear power-plant in the UK makes little sense from a modeller’s perspective. It will produce electricity more than double the cost of current wind projects and it is horrendously behind schedule. It does, perhaps, reveal something behind the mindset of policymakers. With one stroke of the pen, the government signed into existence a project that will meet 7% of the UK’s energy demand using a zero-carbon technology which is tried and tested and increases energy independence. The latter is particularly important given current geopolitical worries.
If we are to reach the goal of net zero emissions before 2050, we need Europe and the US to be carbon neutral well before this date. It might be that they chose to use well-proven but expensive nuclear to contribute to this neutrality. But the far bigger role – and at a much lower cost – will come from solar PV and wind, and not even a pro-nuclear EU taxonomy can change this.
