Nuclear Renaissance

In a recent Financial Times interview, Hans-Holger Rogner, Head of Planning and Economic Studies for the International Atomic Energy Agency, stated, ”If we want to curb greenhouse gas emissions by 50 per cent to 80 per cent by 2050, and we don’t use nuclear power for base load electricity generation, what can we use instead? It is not a quick fix: it depends on public acceptance and government support. It is not the whole solution to the problem. But it can make a contribution.” Many nations around the world are starting to agree; witness the more than 50 countries developing ambitious plans for nuclear fleet build-out. Here again China, as in solar and wind technology, is leading the way. Of the 50 nuclear plants are under construction around the world at this time, 16 are in China, as are 126 of the 430 plants that in the proposal stage. But, China is not alone in its ambition. The U.K. has made a dramatic policy turnaround and begun a construction program, while Italy has at least 4 new plants on the drawing board. Countries such as Spain and Germany who once had plans to decommission their fleets, have puts those plans on hold although have not moved ahead with new plant designs as yet. The U.A.E. wants to get into the game with support from the United States bringing the highly politicized nature of nuclear issue in Iran into sharp focus. To this point, emerging countries can by and large can sidestep issues with the nuclear non-proliferation treaty by staying out of the fuel production cycle, namely the uranium enrichment and waste reprocessing stages.

Meanwhile, support for nuclear is just beginning to build in the U.S. vis-à-vis the Kerry-Boxer energy bill in the Senate but up until now federal support has been minimal with only 4 new plants, serving to take over as older first generation plants are decommissioned.

While passive safety and waste reprocessing technologies will continue to improve over time, two major issues loom over the industry: cost and fuel sourcing. On the cost side, perhaps the industry could take a lesson in strategy from one of our favorite examples, Southwest Airlines. Standardizing the fleet would go a long way to lower costs and reduce risk in future plant build outs. Given there are only a handful of firms qualified build such plants and no need to pursue competitive advantages at the plant level through proprietary designs, I’m not the first to suggest that there would great economic benefits in developing a standardized platform or sets of platforms.

Strategic sourcing is perhaps the trickier issue, particularly for the U.S. where about 30% of operating plants have are fueled in recent years by materials sourced from a one-time windfall, decommissioned Soviet warheads. Looking at the figure below we see Australia becoming the “Saudi Arabia of Uranium” and a potentially interesting realignment of geopolitical interest in the future.

We certainly do live in interesting times.



SOURCE: Source: Energy Statistics Database | United Nations Statistics Division via NationMaster