The overriding concern of most developing countries in their pursuit of nuclear energy is several-fold. The volatility of the hydrocarbon market has always been a perennial motivation for many energy-importing countries to seek nuclear energy development. When hydrocarbon prices rise precipitously, such as between 2001-2008, their government debt significantly increases. Many developing countries are also experiencing demographic increases whereby they are finding it more difficult to allocate fuel between their various economic sectors. Consequently, they view nuclear power generation as a panacea for power shortages, while some countries also look forward to potentially exporting electricity regionally. And, there is the fact that many developing countries, especially since the most recent global climate change negotiations, are interested in doing their part to promote low carbon power generation. Also, we must not forget that since the advent of the Atomic Age, nuclear power was the purview of a very exclusive club of developed countries. As a result, there is a fair amount of global prestige associated with having a capable domestic nuclear power sector.
In short, many developing countries consider nuclear power as prestigious, recognized, clean, and affordable technology that will improve their energy security posture and mitigate global warming.
Currently, there are 30 countries in the world with 449 operation nuclear reactors for power generation. There are 60 new nuclear power plants being constructed in 15 countries. Moreover, there are an additional 28 countries that are exploring nuclear power options for the future. In terms of mid-to-long term projections, it is predicated that in a business as usual scenario, whereby current rates of economic and power demand growth continue apace (especially in the Asia-Pacific region), then the global installed capacity will greatly expand.
At the moment, there is 390 GWe of installed capacity, and under this scenario, it is poised to increase by nearly 40 percent (to 554 GWe) by 2030. And, this will expand by approximately 80 percent (to 717 GWe) by 2040. If the global community adheres to its greenhouse gas reduction pledges undertaken during the climate negotiations in Paris during COP 21, then even these figures could rise.
One key feature for the mid to long term is that that established nuclear markets, such as the U.S. and the E.U are struggling to expand their nuclear power sectors, due to the post-Fukushima worries of the populace and financial concerns with their nuclear power companies. However, Asia, Latin America, and Africa have not been afflicted to the same degree with post-Fukushima trepidation and are moving ahead with nuclear power plans.
By 2035, if all the NPPs planned and under construction become realized, then the global energy balance could reach approximately 660 GWe, supplying nearly 5 percent of the world’s power requirements (up from four percent, currently). China is expected to surpass the U.S. in nuclear power output by 2026, on the back on its power demand and economic growth forecasts. However, in terms of Europe, its nuclear power production is projected to decline by nearly 30 percent by 2035. This would represent a relatively stark decline as Europe depends upon a quarter of its power generation from nuclear power, and almost half of its low carbon electricity generation.
The nuclear power sector is witnessing robust challenges within Europe, as each member state has differing nuclear policies. For instance, some member states are anti-nuclear with strong populist antagonism towards nuclear power generation, while others do not view nuclear energy as antagonistically. Therefore, to 2035, many European nuclear power plants will likely be shuttered as they reach the end of their operating lifecycles or due to governmental fiat. These nuclear power plant closures will likely not be compensated by new plant construction. We can surmise that the EU energy security goals would be unlikely to be met by the provision of nuclear energy, and would depend significantly upon either import/domestic production of natural gas, energy efficiency policy implementation or renewable energy deployment.
One of the major players on nuclear energy market is Russia. There are two aspects to the Russian nuclear power sector, one is domestic deployment, and the other is the export market. Russia is heavily represented in both.
For instance, Russia implemented a policy directive in 2003 to privilege nuclear power for domestic electricity generation to transition away from natural gas. In that vein, in 2013, Russia allocated nearly $2.4 billion dollars to expand its nuclear power sector, both domestic and export oriented. In the export market, Russia has almost 60 percent market share dominance, concluding contracts with a host of countries for power plant construction.
Russia has contracts to construct 34 reactors in 12 countries, deals worth approximately $300 billion. Additionally, when technical cooperation and nuclear fuel supply agreements are included, Rosatom is conducting business in about 20 countries.
A critical feature behind Russia’s export dominance is based on financial flexibility and generous state backing. Rosatom’s pricing framework can be between 20-50 percent below its nearest Western competitors. This is also strengthened by large pre-financing packages.
Similarly, the Russian government grants full state backing of the Russian government for Rosatom’s nuclear power projects overseas. And, these factors are further reinforced by technological advancements over the past two decades in Russian nuclear technology of which its Western rivals have not been able to match.
All of these aforementioned factors taken in total mutually reinforce each other and have placed the Russian nuclear industry on a strong upward trajectory.
Justin Dargin is a global energy expert at the University of Oxford