CERA: Nuclear Power 'Renaissance' Real
April 23, 2007 // Published as a news service by IHS
"Over the past few years, high fossil fuel prices, energy security and climate change concerns, and increasing urgency about reducing greenhouse gas emissions have all converged to improve the position of nuclear power relative to other options," CERA Senior Director Jone-Lin Wang and Associate Director Christopher J. Hansen wrote in a report, Is the "Nuclear Renaissance" Real?
In the U.S., where no new reactor has been ordered in 28 years, these trends, plus excellent performance of the existing nuclear fleet and financial incentives in the Energy Policy Act of 2005, have led to a race to develop new nuclear power reactors.
In Asia, where the building of new nuclear plants never stopped, several countries have upped their target for new nuclear capacity. In Western Europe, a new reactor is under construction for the first time in more than a decade; a second one is not far behind.
The CERA assessment found that limits on nuclear component manufacturing capacity and skilled personnel could constrain nuclear capacity growth over the next several years, but found that these are short-term growing pains similar to those faced by other industries and other segments of the energy industry.
According to the CERA report, longer-term issues involving spent fuel storage and the risk of proliferation need to be addressed and will require implementation of international conventions. Development of convincing long-term solutions must make continuing progress or public support for the upcoming expansion may decline, the analysis found.
Nuclear Expansion Plans
The CERA analysis determined that the global political, environmental, economic and business situation is favorable for expansion beyond the current base of 435 nuclear power reactors, which together provide 369 gigawatts (GW) of electricity generating capacity and 16% of total worldwide electricity generation.
Twenty-eight additional units with 23GW of capacity are under construction worldwide; 20 countries now have new plants either under construction or under development, with well over half of new nuclear plants likely to be built over the next two decades in five countries: China, India, Japan, South Korea and the U.S.
In the U.S., several dozen reactors are in various stages of proposal development; international nuclear vendors and service providers are forming new alliances; and rising uranium prices have led to development of new mines.
Critical milestones in the first wave of new nuclear development in the U.S. will provide insights into whether, and how well, new nuclear development is proceeding. The CERA report identified the following key near-term milestones in the U.S.:
- 2007-2008 - Ordering long lead-time items such as large forgings.
- Late 2007-2008 - Submission of Construction and Operation License (COL) applications.
- Around 2010 - COL approval, final board decisions, site preparation, and ordering major components.
- After 2010 - Pouring first concrete.
CERA Major Conclusions
Wang and Hansen found that policy debates in North America, Europe and Asia all reflect the common recognition that nuclear plants contribute carbon-free power and reliable base-load supply while simultaneously diversifying the fuel mix. "Governments and businesses are taking action. The 'nuclear renaissance' is real," they wrote.
Major conclusions of the CERA evaluation include:
- Climate change policies support nuclear expansion.
- Supportive government policy is essential for nuclear development.
- License renewals and extensions will be used to more fully utilize existing plants.
- Nuclear plant costs will be higher for initial units.
- Successful demonstration of cost and performance in new designs is important for fast nuclear expansion.
- High uranium prices reflect short-term market tightness.
- Nuclear fleet expansion may be held back by limits on component manufacturing capacity.
- High-level waste storage solutions need to move toward resolution.
- Resolving concerns about links between the expansion of nuclear power and the proliferation of nuclear materials will be crucial as nuclear power expands its role in developing economies.
- A major nuclear accident or incident of nuclear terrorism anywhere in the world would put the brakes on new plant development.
Cost Comparison: Nuclear Vs. CCGT and Coal-based Power
In the competition with combined-cycle gas turbines (CCGT) and coal-based power plants for base-load power generation, the relative cost of nuclear generation varies substantially around the globe.
Coal-fired generation is typically more economic in areas such as northern China, the U.S. Midwest and Australia where coal is abundant and there is no penalty for carbon emissions. In areas distant from fossil fuels, such as Japan, coastal China and France, high fossil fuel transportation costs make nuclear power attractive.
Recent worldwide trends toward higher fossil fuel prices, combined with low interest rates, low inflation, and the increasing importance of carbon emissions as a direct power generation cost, have improved the relative economics of nuclear power.
The CERA report identified several key factors that will determine nuclear power's competitive position:
- Capital costs have a significant bearing because they represent two-thirds to three-quarters of the per-kilowatt-hour cost of nuclear generation.
- High-capacity factor - 90% for the best-run fleet - is more important to nuclear than other types of plants due to nuclear's high initial capital costs and high fixed costs.
- Cost of capital affects nuclear more than other types of plants; government funding or loan guarantees can cut unit cost of nuclear generation by 10 to 15%.
- Carbon emissions charges favor nuclear power; a $10-per-ton charge on CO2 raises cost of coal- and gas-fired generation by amount equivalent to 7 to 15% of nuclear's unit costs.
- Secure access to inexpensive fossil fuels reduces nuclear power's advantage.
In North America, the cost of new nuclear power is uncertain due to the lack of recent experience in building plants, new licensing processes and the use of new designs. If new plants can be built at $2,200 to $2,550 per kilowatt, nuclear is competitive with natural gas when natural gas price is at least $6-per-million British thermal units.
To be competitive with supercritical coal, nuclear needs to come in at the low end of the capital cost range, or a modest CO2 cost needs to be added.
CERA is an IHS Inc. company.