During the pandemic, a new perception is materializing across the globe that Nuclear Energy can play a significant role in decarbonizing energy systems, assuring electricity security, and resilience. While the world is facing major disruptions due to the COVID-19 outbreak, the operations have been transformed at power systems, to unveil the future electricity needs using low carbon sources. Governments are considering a broad range of options to sustain these future electricity demands, while some of the countries have specifically involved Nuclear Energy in their future energy policies.
Numerous positive environmental and socio-economic externalities produced with Nuclear Energy create a rationale for direct and indirect Government funding support to incentivize private funding. Nuclear Energy plays a magnificent role in being a reliable baseload energy source and also in the decarbonization of power supply. Looking at the current situation, since the start of this pandemic, the overall competitiveness and resilience of low carbon technologies have seen higher market shares for nuclear power in many countries.
It’s been reported by a newsletter by the IAEA Department of Nuclear Energy that the shares in South Korea grew by nine percentage points during the pandemic, while in the UK, Nuclear Energy eliminated the way of coal generation for almost two months. As examined by the US Energy Information Administration’s Short-Term Energy Outlook, throughout 2020, the shares by nuclear power generation are increasing by more than one percentage point as compared to the last year.
How Nuclear Energy Works as A Key to Global Decarbonization Goals?
During the lockdowns inflicted due to COVID-19, the strategic importance of electricity reliability has become apparent by an increase in demand for smooth operations for business continuity to ensure a stable economy. Nuclear Energy is a durable and reliable source of electricity, supplies low carbon power to uphold the accelerating use of renewables. Renewables now produces a third of power capacity across the world. The growing need for low carbon sources, especially renewables and declined use of fossil fuels, can achieve the decarbonization to sustain the electricity reliability demands.
Nuclear power generates about 10% of the world’s electricity, yet provides one-third of all low-carbon electricity. A newsletter from the world nuclear news, it’s been reported that currently, 30 countries are relying on nuclear power. The grid has been connected with 37 power reactors over the past five years, with further 55 units under development. Four countries are already developing their first nuclear power plants, with around 25 or such actively assuming Nuclear Energy to join their energy mix.
Nuclear Energy for Economic Advancement
An immense crisis is going on around the world that has set a challenge for global economic recovery. It has created a once in a lifetime opportunity for Governments around the world to establish a more resilient and prosperous economic recovery by keeping the redesign of energy systems at the center point. Countries around the world are already focusing on this opportunity to rebuild the economy. This situation has accelerated the transition to zero-carbon emissions, eventually delivering permanent jobs along with economic development.
In nuclear power plants, the heat-generated applications like district heating and hydrogen productions, reduce carbon emissions, and create an added revenue source. The heat produces from NPP can be redirected from electricity production to further industrial use, playing a significant role in global economic recovery.
Challenges Confronted by Nuclear Energy
Most of the Governments have adopted Nuclear Energy in their long-term energy plans as the resilient and continuous supply of electricity, yet some points need to be considered while investing in Nuclear Energy. Due to the economic shutdown over the world, some countries may lack the ability to independently finance nuclear plants. The new nuclear power plant’s construction can undergo significant financial risks in several dimensions being a complex industrial project. The nuclear projects possess the capital-intensive nature where the notable challenge lies. Also the cost recovery at the multi-decadal project requires more effort. The private funding sources consider the multi-decadal lifetimes as a long-drawn to be acceptable without robust construction and market risk allocation.
Nuclear Energy already confronts challenges in the deregulated electricity market for being a baseload power supply, that disregard system costs and preferentially dispatch variable renewables beneficiary from off-market subsidies. The deregulated electricity market undergoes an inadequate price signal for power generation capacity and infrastructure to stimulate long-term planning and funding and incentivize investments. This shows that funding nuclear plants may be tricky as it lacks assurance for secured and long-term revenue streams.
Hurdles in Constructing New Nuclear Plants
The construction of new nuclear plants can face difficulties securing funding, which eventually results in hurdles towards timely and cost-effective deployment of Nuclear Energy. The latest nuclear projects in China, Russia, Korea, and the United Arab Emirates feature the need for on-time nuclear power plants under the projected budget. These countries’ successful projects have demonstrated that on-time and on-budget project completion needs standard designs and committed timelines with multi-unit and serial construction. Whereas, the recent nuclear projects in Europe and the United States has demonstrated that embarking nuclear projects after being inactive for an extended period can result in hurdles due to eroded supply chains and inadequate skills. A vicious cycle created through delay in the completion of the nuclear project may lead investors to command risk premiums for their future nuclear projects. For a low-cost and exciting future investment in nuclear plants, this vicious cycle needs to break.
Essential Infrastructure for Nuclear Energy
The expansion of new nuclear plants across the countries need to have essential laws, regulations, guidance, and organizations to permit nuclear power plants and support the nuclear facilities, also to secure the compliance through inspection, and enforce nuclear regulations. The viability of new plants depends on extremely high safety and compliance with a number of international agreements. To construct new nuclear plants with reduced costs and expanded benefits, different risk dimensions need to be addressed promptly and allocated to the stakeholders who can handle them well. Governments play a significant role in this endeavor by providing Nuclear Energy with a long-term policy framework and also a resilient low-carbon electricity sector with the regulatory framework. To assure a resilient and stable electricity source in the future, Governments can build investment and policy frameworks, along with arrangements for the future electricity needs.
Despite the challenges faced by new nuclear plants, several light water reactor designs are moving ahead of the challenges encountered by first-of-a-kind (FOAK) projects, also the on-time decisions for future plants come up with a possibility for large-scale cost reduction. Some fourth-generation reactor systems and small modular reactors are also proceeding towards the steady growth of illustration projects.
Unlock Financing for Nuclear Energy Infrastructure in the COVID-19
To counter the consequences of the ongoing crisis, countries around the globe are looking to boost their economy; many of the Governments have already committed trillions of dollars in stimulus packages and even more to be announced shortly in the immediate aftermath of the pandemic. To meet the mid-century deadlines rapidly for the decarbonization approach, a resilient and sustainable low-carbon electricity infrastructure is more likely to be the key area of focus in these future commitments.
OECD reported from a recent analysis that its area alone holds assets of 63.7 trillion by institutional investors, whereas roughly USD 50 trillion are needed to transition to low-carbon electricity systems over the world. The pension funds and other long-term private investment funds that can well align the expected returns with infrastructure development can significantly increase the potentially available funds.
It’s of no secret that many of the countries are adopting Nuclear Energy for their resilient and sustainable future energy supply. With successful Governments supporting funding arrangements in the merchant country for the immediate new plans of nuclear plants is likely to encourage deployment of additional capacity nuclear power in 2020 and beyond.