Chinese Slowdown May End Nuclear's Last Hope for Growth
This year has been catastrophic for nuclear power, and just when it seemed the situation couldn’t get any worse for the industry, it did, writes Jim Green, editor of Nuclear Monitor: there are clear signs of a nuclear slow-down in China, the only country with a large nuclear new-build program. According to Green, if this program stalls, nuclear power looks headed for an irreversible decline. Courtesy Nuclear Monitor.
China’s nuclear slow-down is addressed in the latest World Nuclear Industry Status Report and also in an August 2017 article in trade publication Nuclear Engineering International by former World Nuclear Association executive Steve Kidd.
China’s nuclear program “has continued to slow sharply”, Kidd writes, with the most striking feature being the paucity of approvals for new reactors over the past 18 months. China Nuclear Engineering Corp., the country’s leading nuclear construction firm, noted earlier this year that the “Chinese nuclear industry has stepped into a declining cycle” because the “State Council approved very few new-build projects in the past years”.
Kidd continues: “Other signs of trouble are the uncertainties about the type of reactor to be utilised in the future, the position of the power market in China, the structure of the industry with its large state owned enterprises (SOEs), the degree of support from top state planners and public opposition to nuclear plans.”
Over-supply has worsened in some regions and there are questions about how many reactors are needed to satisfy power demand. Kidd writes: “[T]he slowing Chinese economy, the switch to less energy-intensive activities, and over-investment in power generation means that generation capacity outweighs grid capacity in some provinces and companies are fighting to export power from their plants.”
Nuclear power in China may become “a last resort, rather as it is throughout most of the world”
Kidd estimates that China’s nuclear capacity will be around 100 gigawatts (GW) by 2030, well below previous expectations. Forecasts of 200 GW by 2030 were “not unusual only a few years ago,” he writes, but now seem “very wide of the mark.” And even the 100 GW estimate is stretching credulity ‒ nuclear capacity will be around 50 GW in 2020 and a doubling of that capacity by 2030 won’t happen if the current slow-down sets in.
Kidd states that nuclear power in China may become “a last resort, rather as it is throughout most of the world.” The growth of wind and solar “dwarfs” new nuclear, he writes, and the hydro power program “is still enormous.”
Chinese government agencies note that in the first half of 2017, renewables accounted for 70% of new capacity added (a sharp increase from the figure of 52% in calendar 2016), thermal sources (mainly coal) 28% and nuclear just 2%. Earlier this month, Beijing announced plans to stop or delay work on 95 GW of planned and under-construction coal-fired power plants, so the 70% renewables figure is set for a healthy boost.
Crisis in the US
The Chinese nuclear expansion program was arguably the last hope of the nuclear industry to get back on a growth trajectory. Almost everywhere else, the nuclear sector finds itself in heavy weather.
In the United States, the plan to build two AP1000 power reactors in South Carolina ‒ abandoned in July after US$9‒10.4 billion was spent on the partially-built reactors ‒ is now the subject of multiple lawsuitsand investigations including criminal probes. Westinghouse, the lead contractor, filed for bankruptcy protection in March. Westinghouse’s parent company Toshiba is selling its most profitable business (memory chips) to cover the debts of its rogue nuclear subsidiary and to stave off bankruptcy.
The cost of the two reactors in South Carolina was estimated at US$9.8 billion in 2008 and the latest estimate ‒ provided after the decision to abandon the project ‒ was US$25 billion. Cost increases of that scale are the new norm for Generation III nuclear plants. Cost estimates for two French reactors under construction in France and Finland have tripled.
Pro-nuclear commentator Dan Yurman discussed the implications of the decision to abandon the VC Summer project in South Carolina in a September 11 post:
“It is the failure of one of the largest capital construction projects in the U.S. Every time another newspaper headline appears about what went wrong at the VC Summer project, the dark implications of what it all means for the future of the nuclear energy industry get all the more foreboding. … Now instead of looking forward to a triumph for completion of two massive nuclear reactors generating 2300 MW of CO2 emission free electricity, the nation will get endless political fallout, and lawsuits, which will dominate the complex contractual debris, left behind like storm damage from a hurricane, for years to come.
The only other nuclear new-build project in the US ‒ two partially-built AP1000 reactors in Georgia ‒ is hanging on by a thread. Georgia’s Public Service Commission is reviewing a proposal to proceed with the reactors despite the bankruptcy filing of the lead contractor (Westinghouse), lengthy delays (5.5 years behind schedule) and a doubling of the cost estimate (the original estimate was US$14 billion and the latest estimates range from US$25.4‒30 billion for the two reactors).
“Instead of looking forward to a triumph for completion of two massive nuclear reactors generating 2300 MW of CO2 emission free electricity, the nation will get endless political fallout, and lawsuits”
No other reactors are under construction in the US and there is no likelihood of any construction starts in the foreseeable future. The US reactor fleet is one of the oldest in the world ‒ 44 out of 99 reactors have been operating for 40 years or more ‒ so decline is certain.
- Exelon claims that “economic and policy challenges threaten to close about half of America’s reactors” in the next two decades.
- A January 2017 article, written by a nuclear industry PR consultant and published by World Nuclear News, states that “as many as two-thirds of America’s 99 reactors could shut down by 2030”.
- Nuclear Energy Insider claims that 38 reactors will be shut down upon reaching their end-of-licence terms by 2035.
- A pro-nuclear lobby group states that almost one-quarter of US reactors are at high risk of closure by 2030, and almost three-quarters are at medium to high risk.
- In May 2017, the US Energy Information Administration released an analysis projecting nuclear’s share of the nation’s electricity generating capacity will drop from 20% to 11% by 2050. The analysis makes heroic assumptions about the longevity of existing reactors so the true figure could be well below 11%.
- A September 2017 report by S&P Global Ratings estimates that half of the 99 reactors could be taken offline in the next 17 years.
There is some disagreement about how far and fast nuclear will fall in the US ‒ but fall it will. And there is no dispute that many plants are losing money. More than half of the country’s reactors are losing money, racking up losses totaling about US$2.9 billion a year according to a June 2017 analysis by Bloomberg New Energy Finance. A separate Bloomberg report found that expanding state aid to loss-making reactors across the eastern US may leave consumers on the hook for as much as US$3.9 billion a year in higher power bills.
France’s nuclear industry is in its “worst situation ever” according to former EDF director Gérard Magnin
Indicative of their desperation, some prominent nuclear advocates in the US (and to a lesser extent the UK) are openly acknowledging the contribution of nuclear power (and the civil nuclear fuel cycle) to the production of nuclear weapons and using that as an argument to sharply increase the massive subsidies the nuclear power industry already receives. That’s a sharp reversal from their usual furious denial of any connections between the ‘peaceful atom’ and the proliferation of Weapons of Mass Destruction.
Elsewhere, the nuclear industry is also in deep malaise and has suffered any number of set-backs this year. Pro-nuclear lobby groups are warning about nuclear power’s “rapidly accelerating crisis” and noting that “the industry is on life support in the United States and other developed economies“.
Lobbyists are warning about a “crisis that threatens the death of nuclear energy in the West” and soon they will be warning about a crisis that threatens the death of nuclear energy in the East. Public support for South Korea’s nuclear power program has been in free fallin recent years, in part due to a corruption scandal. Incoming President Moon Jae-in said on June 19 that his government will halt plans to build new nuclear power plants and will not extend the lifespan of existing plants beyond 40 years.
In June, Taiwan’s Cabinet reiterated the government’s resolve to phase out nuclear power by 2025.
In Japan, Fukushima clean-up and compensation cost estimates have doubled and doubled again and now stand at US$192 billion. Only five reactors are operating in Japan, compared to 54 before the March 2011 Fukushima disaster.
Rosatom’s deputy general director Vyacheslav Pershukov said in June that the world market for new nuclear power plants is shrinking, and the possibilities for building new large reactors abroad are almost exhausted
France’s nuclear industry is in its “worst situation ever” according to former EDF director Gérard Magnin. The only reactor under construction in France is six years behind schedule, the estimated cost has more than tripled from US$3.9 billion to US$12.4 billion, and the regulator recently announced that the pressure vessel head of the reactor will need to be replaced by 2024 following a long-running quality-control scandal. The two French nuclear utilities face crippling debts (US$44.2 billion in the case of EDF) and astronomical costs (up to US$118 billion to upgrade ageing reactors, for example), and survive only because of repeated government bailouts.
In the UK, nuclear industry lobbyist Tim Yeo says the compounding problems facing the industry “add up to something of a crisis for the UK’s nuclear new-build programme.” The only two reactors under construction ‒ EPR reactors at Hinkley Point in Somerset ‒ are eight years behind schedule.
The estimated combined cost of the two Hinkley Point reactors, including finance costs, is US$35.4 billion (the EU’s 2014 estimate of US$32.5 billion plus a US$2.9 billion increase announced in July 2017). Excluding finance costs, the estimated construction cost for one EPR reactor in the UK was US$2.66 billion in the mid- to late-2000s and that has risen five-fold to US$13.3 billion.
In Switzerland, voters supported a May 21 referendum on a package of energy policy measures including a ban on new nuclear power reactors. Thus Switzerland has opted for a gradual nuclear phase-out and all reactors will probably be closed by the early 2030s, while all of Germany’s reactors will be closed by the end of 2022 and all of Belgium’s will be closed by the end of 2025.
In South Africa, a High Court judgement on April 26 ruled that much of the country’s nuclear new-build program is without legal foundation. There is little likelihood that the program will be revived given that it is shrouded in corruption scandals and President Jacob Zuma will leave office in 2019 (if he isn’t ousted earlier).
Perhaps most worryingly of all for the nuclear industry is that even Rosatom, the ambitious Russian nuclear company that not long ago hoped to export its nuclear reactors all over the world, is not so optimistic anymore. Rosatom’s deputy general director Vyacheslav Pershukov said in June that the world market for new nuclear power plants is shrinking, and the possibilities for building new large reactors abroad are almost exhausted. He said Rosatom expects to be able to find customers for new reactors until 2020‒2025 but “it will be hard to continue.”
Another problem is the ageing of the nuclear workforce. The IAEA recently noted that maintaining and developing a competent nuclear workforce is “among the biggest challenges” the industry faces
Globally, the industry’s biggest problem is the ageing of the current fleet of reactors. The International Atomic Energy Agency (IAEA) estimates that just to maintain current capacity of 392 GW, about 320 new reactors (320 GW) would have to be built by 2050 to replace retired reactors. That’s 10 new reactors each year. A nuclear ‘renaissance’ has supposedly been underway over the past decade yet on average only five reactors have come online each year.
Another problem is the ageing of the nuclear workforce. The IAEA recently noted that maintaining and developing a competent nuclear workforce is “among the biggest challenges” the industry faces.
Comparison with renewables
The International Atomic Energy Agency (IAEA) has released the 2017 edition of its International Status and Prospects for Nuclear Power report series. It states that the share of nuclear power in total global electricity generation has decreased for 10 years in a row, to under 11% in 2015, yet “this still corresponds to nearly a third of the world’s low carbon electricity production.” In other words, renewables (24.5%) generate more than twice as much electricity as nuclear power (10.5%) and the gap is growing rapidly.
Five years from now, renewables will likely be generating three times as much electricity as nuclear reactors. The International Energy Agency (IEA ‒ not to be confused with the IAEA) recently released a five-year global forecast for renewables, predicting capacity growth of 43% (920 GW) by 2022. The latest forecast is a “significant upwards revision” from last year’s forecast, the IEA states, largely driven by expected solar power growth in China and India.
The IEA forecasts that the share of renewables in global power generation will reach 30% in 2022, up from 24% in 2016. By 2022, nuclear’s share will be around 10% and renewables will be out-generating nuclear by a factor of three. Non-hydro renewable electricity generation has grown eight-fold over the past decade and will probably surpass nuclear by 2022, or shortly thereafter, then leave nuclear power in its wake as renewables expand and the ageing nuclear fleet atrophies.
Dr Jim Green is the editor of the Nuclear Monitor newsletter, where a version of this article was originally published, and national nuclear campaigner with Friends of the Earth Australia.