IIn his 2014 book “Clean Disruption”, Stanford lecturer Tony Seba, who talks about entrepreneurship, disruption and clean energy, compared nuclear power to a zombie: “not quite alive but not neither dead.” Seba points out that nuclear power has consistently failed, with the industry characterized by cost overruns, massive construction delays and fatal accidents. A clean energy researcher, he points out that nuclear is one of the few industries with a negative learning curve, with the cost to build a reactor now more than ten times higher than in the 1970s.
Serhii Plokhy, Harvard history professor and authority on the nuclear age, points out in his recently published book “Atom and Ashes” that hundreds of accidents have occurred in the history of the nuclear industry and explains in detail category 7, the highest level, the Chernobyl (Ukraine, 1986) and Fukushima (Japan, 2011) accidents which released large quantities of radioactive materials with serious environmental and health consequences.
And on top of that, Vladimir Putin is currently demonstrating the geopolitical dangers posed by large nuclear sites. Plokhy sums up nuclear power as not only risky to exploit, but also unreliable as a long-term solution to climate change.
The energy crisis seems to be giving new space for nuclear enthusiasts to champion the technology as a non-fossil solution to the energy transition, but is it as effective or safe as they claim?
Nuclear energy density can be high but its modularity is very low
The US Office of Nuclear Power points out that US nuclear power plants have an average capacity factor of approx. 92%, which is well known to be higher than the capacity factor of intermittent renewable sources (about 35% for wind and 25% for solar). Additionally, nuclear proponents like to point out that the high energy density of fission reactors means that a nuclear power plant has a power density of approx. 1000 watts per m2while the power density of solar is about 20 watts per m2. This, for example, drives Japan’s interest in technology.
China also has a policy of promoting technology, and analyzing the record of 30 years of federal support in a country with little public or political opposition is a very relevant exercise. Energy specialist Michael Barnard has conducted a study of China’s efforts to develop wind, solar and nuclear power. The country has had a nuclear development program since the 1990s (the first commercial nuclear power plant started operations in 1994) and a wind and solar program since the mid-2000s.
It has tracked the annual deployment of these technologies over the past 11 years as well as their production. The graphs drawn by Barnard show unequivocally that wind and solar have been able to develop successfully while nuclear has not. The energy density may be attractive in theory, but even the support of the Chinese government has not been able to accelerate the development of nuclear reactor construction. Complexities in engineering megaprojects abound, and nuclear scalability has never been achieved (falling into the slow-speed, bespoke category in Bent Flyvbjerg’s “Four Ways to Scale” matrix).
This is the main reason why Barnard predicts that solar and wind in China will produce four times more electricity than nuclear by 2030 (there will be 100 GW of nuclear in China by 2030, the half of the previous target, while in 2023 approximately 55 GW of nuclear will be online).
Heat and drought have affected hydropower generation in many areas; natural gas and coal are at historically high levels; and there are lingering concerns about our ability to increase both renewable energy sources and long-term energy storage. This situation revives the arguments in favor of the high energy density of nuclear energy. This is why a country that has pledged to dismantle all its nuclear power like Germany is considering postponing the dismantling of its three remaining nuclear power plants, despite the fact that it has phased out the technology since the Fukushima disaster.
Likewise, the governor of California is currently planning to keep its last nuclear power plant, Diablo Canyon, in operation longer. Plokhy warns that the risk of accidents linked to the maintenance in operation of old nuclear power plants is significant, but also the risk of precipitating the development of a new generation of reactors.
Bill Gates is backing new clean technologies through his venture capital fund Breakthrough Energy, but has also been backing modular nuclear hopefuls since 2006 when he co-founded TerraPower to develop modular nuclear fission reactors that should be safer and more efficient. A few weeks ago, Gates led a round that raised $750 million for the Seattle-based company. A first 500 MW demonstration reactor is due to enter service in 2028.
According to investment bank Lazard, which frequently calculates the levelized cost of energy (LCOE) for different power sources, nuclear is at $204/MWh (assuming no utility costs). dismantling) while large-scale solar is at $41/MWh in version 15 of their model. It’s unclear what the cost of developing the TerraPower modular solutions would be, but what is clear is that the commercialization phase is unlikely to occur until 2030.
Shortly after COP26, I wrote an open letter to Mark Carney suggesting that we use three key metrics when looking at climate change mitigation solutions. The first is the Avoided Emissions Potential (EAP), which involves estimating the volume of emissions that are prevented from entering the atmosphere by using a low-carbon alternative to a high-emitting technology or process – for example, electric vehicles versus internal combustion engine cars.
Second, the time value of carbon, which is similar to the time value of money; i.e. CO2 avoided in the short term is worth more than that avoided in the long term. Finally, the carbon return on investment calculates the dollar per megaton of EAP. Although nuclear power theoretically has a high PAE, it performs extremely poorly in terms of time value of carbon and return on carbon investment, with plants costing large sums and taking a long time to come online, meaning that any material impact would be realistic beyond 2030.
Thus, the investment case is not strong.
Not cheaper, faster or safer
Nuclear energy takes many years to develop. The median construction time for nuclear reactors in operation in 2020 was seven years, and the industry has a terrible record of cost overruns. A team from MIT estimated that over five decades of nuclear power plant development at 107 plants in the United States, the average final cost of each plant was three times the original budget. The next nuclear plant to become operational in the United States says it all: the Vogtle plant, being built in Georgia, now costs more than $34 billion. When approved in 2012, the two additional reactors (1,113 MW each) were valued at $14 billion. The new reactors are expected to come on stream in 2023 at a cost of $15.3 million per MW.
In stark contrast, BloombergNEF predicts solar modules will reach $250,000 per MW by the end of the year.
China, the United States, the United Kingdom, Japan and France are the main countries which continue their efforts in the development of nuclear energy. France is a particularly relevant case because it is the country where the share of electricity of nuclear origin is the highest, more than 70%. A look at the current issues with its major utility provider EDF is also concerning. The company recently released its 2Q22 financial results which were marked by a 75% decline in EBITDA levels which “reflects the company’s struggles in nuclear generation”. The company is facing corrosion problems at several plants, with only 30 of its 56 reactors operating in April.
Nuclear as an investment strategy, why bet on an overwhelming source of problems?
Nuclear will not solve the current energy crisis, will not accelerate the energy transition and will not provide abundant and cheap electricity to many countries on the planet. This last point is essential.
By contrast, distributed renewables can provide power to more than 700 million people in Africa, Latin America and Southeast Asia who still lack access to electricity. Distributed renewable energy and scalable and flexible wind and solar are much more relevant for the vast majority of countries (among UN member countries, only 30 out of 193 have nuclear power plants). The risky decision to extend the operation of old nuclear power plants as a knee-jerk reaction to the energy crisis is being misinterpreted by some analysts as a nuclear renaissance.
To be clear, there have been no breakthroughs in modular nuclear fission, and nuclear fusion continues to be in the experimental phase, decades away from any material commercial breakthrough.
There are several nuclear energy ETFs, marked by uranium miners as the main constituents as well as large US utility companies with significant nuclear assets (such as Duke Energy, Dominion Energy and Exelon Corp) as well as conglomerates Japanese (like Mitsubishi Heavy Industries). Betting on a nuclear revival sounds like a strategy for investors who don’t believe renewables and LDES will grow quickly and successfully.
However, we firmly believe that nuclear energy simply will not compete with solar, wind and batteries, at least on any scale. The key to the renewable energy system is long-term energy storage (LDES), and many forms are rapidly emerging, from hydrogen stored in salt caverns to hydroelectricity pumped with compressed air and, of course, to the batteries. Countries like Germany, Italy and Ireland that have Net Zero targets and a ban on new nuclear are investing a lot of resources in these technologies.
We do not have time to lose. While the nuclear zombie may still be standing in some places, the overwhelming majority of countries will decarbonize their grids with the sustainable, deflationary, digital and modular solutions that solar, wind and battery power have become. Nuclear may play a small role in some geographies and jurisdictions, but it just doesn’t make sense to rely heavily on such centralized, risky and expensive technology when there are so many win-win alternatives available. .
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.