Above: The nuclear energy comeback is clearly underway after a difficult period following the 2011 accident at the Fukushima Daiichi NPP
China, which is set to overtake both the European Union and the United States in nuclear capacity by 2030. The picture may change again, though, as new technologies such as SMRs come to market.” The report notes that of the 52 reactors that have
started construction since 2017, 25 are of Chinese design and another 23 are of Russian design and warns: “Highly concentrated markets for nuclear technologies, as well as for uranium production and enrichment, represent a risk factor for the future and underscore the need for greater diversity in supply chains.”
SMRs: A positive factor The report notes: “In advanced economies, the rise in SMRs and new construction of large-scale reactors only just offset the effects of an ageing fleet, meaning that capacity is slightly higher in 2050 than today. In the European Union, the share of nuclear power in the electricity mix peaked at 34% in the 1990s but has already fallen to 23% today and continues to fall steadily in this scenario. By contrast, in China, installed capacity more than triples to mid-century”. It also doubles in other emerging economies. The report is optimistic about SMRs. “Cost-competitive
SMRs, boosted by government support and new business models, can help clear the path to a new era for nuclear energy. Demand for firm, dispatchable and clean power from the private sector is a major driver of interest in these emerging technologies, and there are plans of varying maturity for up to 25 GW of SMR capacity, in large part to meet growing electricity demand for data centres.” It adds: “Under today’s policy settings, total SMR capacity
reaches 40 GW by 2050, but the potential is far greater. In a scenario in which tailored policy support for nuclear and streamlined regulations for SMRs align with robust industry delivery on new projects and designs, SMR capacity is three times higher by mid-century, reaching 120 GW, with more than one thousand SMRs in operation by then.” This rapid growth scenario would raise required investment in SMRs from less than $5bn today to $25bn by the end of this
decade, with cumulative investment of $670bn by 2050 IEA believes the rise of SMRs, alongside a new wave of
large-scale reactors built on time and on budget, can open the possibility for Europe, the United States and Japan to reclaim technology leadership. “In a rapid growth scenario, nuclear capacity in advanced economies grows by over 40% to 2050, helping to meet energy security and emissions goals. The share of large-scale nuclear construction starts using designs from advanced economies rises from less than 10% in recent years to 40% by 2030 and over 50% thereafter, spurred by new projects in Europe, the United States, Japan and Korea. The widespread deployment of SMRs reinforces this trend, with over half of new construction starts to 2050 using designs from the United States or Europe. A more competitive and diverse market brings broad benefits for countries seeking to step up deployment of nuclear technologies.”
The investment challenge However, a rapid growth scenario requires a major expansion in annual investment, which doubles to $120bn already by 2030. “Nuclear projects have traditionally been hard to finance due to their scale, capital intensity, long construction lead times, technical complexity and risk liability in some countries. This has meant heavy involvement of governments, and typically a major role for state-owned enterprises (SOEs) as owners and operators of nuclear plants. SOEs can often obtain large amounts of financing at relatively competitive rates, close to those of sovereign entities.” IEA says public funding alone will not be sufficient to build a new era for nuclear: private financing will be needed to scale up investments. “However, the long timelines for permitting and construction make nuclear a tough proposition for commercial lenders, as they can push the breakeven point for a new large reactor to 20-30 years after the project start. These factors also limit the use of project finance structures, which are often used to support other large infrastructure projects.”
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