With nuclear power facing an uncertain future in many countries, the world risks a steep decline in its use in advanced economies that could result in billions of tonnes of additional carbon emissions. Some countries have opted out of nuclear power in light of concerns about safety and other issues. Many others, however, still see a role for nuclear in their energy transitions but are not doing enough to meet their goals.
The publication of the IEA’s first report addressing nuclear power in nearly two decades brings this important topic back into the global energy debate.
Nuclear power is the second-largest source of low-carbon electricity today, with 452 operating reactors providing 2700 TWh of electricity in 2018, or 10% of global electricity supply.
In advanced economies, nuclear has long been the largest source of low-carbon electricity, providing 18% of supply in 2018. Yet nuclear is quickly losing ground. While 11.2 GW of new nuclear capacity was connected to power grids globally in 2018 – the highest total since 1990 – these additions were concentrated in China and Russia.
Nuclear power has avoided about 55 Gt of CO2 emissions over the past 50 years, nearly equal to 2 years of global energy-related CO2 emissions. However, despite the contribution from nuclear and the rapid growth in renewables, energy-related CO2 emissions hit a record high in 2018 as electricity demand growth outpaced increases in low-carbon power.
An aging nuclear fleet
In the absense of further lifetime extensions and new projects could result in an additional 4 billion tonnes of CO2 emissions, underlining the importance of the nuclear fleet to low-carbon energy transitions around the globe. In emerging and developing economies, particularly China, the nuclear fleet will provide low-carbon electricity for decades to come.
However the nuclear fleet in advanced economies is 35 years old on average and many plants are nearing the end of their designed lifetimes. Given their age, plants are beginning to close, with 25% of existing nuclear capacity in advanced economies expected to be shut down by 2025.
It is considerably cheaper to extend the life of a reactor than build a new plant, and costs of extensions are competitive with other clean energy options, including new solar PV and wind projects. Nevertheless, they still represent a substantial capital investment. The estimated cost of extending the operational life of 1 GW of nuclear capacity for at least 10 years ranges from $500 million to just over $1 billion depending on the condition of the site.
However difficult market conditions are a barrier to lifetime extension investments. An extended period of low wholesale electricity prices in most advanced economies has sharply reduced or eliminated margins for many technologies, putting nuclear at risk of shutting down early if additional investments are needed. As such, the feasibility of extensions depends largely on domestic market conditions.
In the United States, some 90 reactors have operational licenses through 60 years, yet several have already retired early, and many more are at risk due to relatively low wholesale electricity prices.
The nuclear fade case
Given these challenges, there is a possibility that the nuclear fleet in advanced economies could face a steep decline. The IEA’s Nuclear Fade Case explores what could happen over the coming decades in the absence of any additional investment in lifetime extensions or new projects.
Under this case, nuclear capacity operating in advanced economies would decline by two-thirds by 2040, from about 280 GW in 2018 down to just over 90 GW in 2040. The European Union would see the largest decline with the share of nuclear in the generation mix falling to just 4%. The share in the United states would drop from to 8%, and in Japan the share would fall to 2% – well below their 2030 target of 20-22%.
The implications of the Nuclear Fade Case are numerous, including possible electricity security concerns as gas-fired capacity plays an even more central role in meeting peak demand, and the need for significant additional investment.
Without additional nuclear, the clean energy transition becomes more difficult and more expensive – requiring $1.6 trillion of additional investment in advanced economies over the next two decades. Critically, a major clean energy shortfall would emerge by 2040, calling on wind and solar PV to accelerate deployment even further to fill the gap.
“Alongside renewables, energy efficiency and other innovative technologies, nuclear can make a significant contribution to achieving sustainable energy goals and enhancing energy security” Fatih Birol, Executive Director, IEA
In this context, countries that intend to retain the option of nuclear power should consider the following actions:
- Keep the option open: Authorise lifetime extensions of existing nuclear plants for as long as safely possible.
- Value dispatchability: Design the electricity market in a way that properly values the system services needed to maintain electricity security, including capacity availability and frequency control services. Make sure that the providers of these services, including nuclear power plants, are compensated in a competitive and non-discriminatory manner.
- Value non-market benefits: Establish a level playing field for nuclear power with other low-carbon energy sources in recognition of its environmental and energy security benefits and remunerate it accordingly.
- Update safety regulations: Where necessary, update safety regulations in order to ensure the continued safe operation of nuclear plants. Where technically possible, this should include allowing flexible operation of nuclear power plants to supply ancillary services.
- Create a favourable financing framework: Create risk management and financing frameworks that facilitate the mobilisation of capital for new and existing plants at an acceptable cost taking the risk profile and long time-horizons of nuclear projects into consideration.
- Support new construction: Ensure that licensing processes do not lead to project delays and cost increases that are not justified by safety requirements.
- Support innovative new reactor designs: Accelerate innovation in new reactor designs with lower capital costs and shorter lead times and technologies that improve the operating flexibility of nuclear power plants to facilitate the integration of growing wind and solar capacity into the electricity system.
- Maintain human capital: Protect and develop the human capital and project management capabilities in nuclear engineering.