In April of 2015, Fairewinds’ Chief Engineer, Arnie Gundersen and the Fairewinds crew headed to Quebec City for the World Uranium Symposium. Attended by more than 300 delegates from 20 countries that produce uranium for nuclear power and weapons, the symposium brought together experts who are calling on governments throughout the world to end all uranium mining.
In this presentation Part 2: Economics of Nuclear Power, Mycle Schneider, an independent international energy and nuclear policy consultant and lead author and lead author of the annual World Nuclear Industry Status Report, provides an economic analysis of the cost of nuclear power including data using charts and graphs.
The World Nuclear Status Report, Presentation to The World Uranium Symposium, April 14-16 2015, Mycle Schneider
MS: Ladies and gentlemen, thanks a lot for this introduction. Let me make a few comments in French before I do my presentation in English. After all, we’re in Quebec, where people speak French, it seems. (Continues in French from 19:19 to 20:38) Thanks very much. I will now talk about nuclear issues, which is a lot less – well, how shall I say? – light than theater or self-managed youth hostels.
What we try to do with the World Nuclear Industry Status Report, which is an annual publication now, is to give a broad overview of the industry in the world, to provide sort of a carpet for discussion. The nuclear issue is an issue which a lot of people discuss without knowing much about it. And I think there are a lot of controversial points, but one should get into controversy once one had agreed on the basis. That’s absolutely crucial. So what we try to do is exactly that; provide a carpet for debate. It’s always important if you talk any kind of energy issues to look at the entire movie over a long period of time. If you look at a photograph, it doesn’t tell you anything because it can change so dramatically from one to other year that you have to assess developments over long periods of time.
What we have here is reactor startups in the world in green and in red, reactor shutdowns. So you can see if you only look at the last part of the story, you miss actually the most significant parts of the history, when there were large waves of reactor startups in the 1970’s and in the 1980’s. But from the end of the 1980’s onwards, it’s pretty flat. So the red and the green startup/shutdown is basically very similar. So in cumulated terms, what does that provide us with? It’s a situation where we have this uninterrupted rise until the end of the 1980’s, with the first stop of that rise in 1989. And from then on, really a flat situation, until this event in 2011 in Japan, which of course had a dramatic impact on the numbers of operating nuclear power plants in the world. Now we thought that – when you look at international statistics of the International Atomic Energy Agency or any governmental statistics, they don’t show that because the reactors in Japan are officially still in operation, which is quite amazing because there’s no reactor generating electricity since September, 2013. So that’s a year and a half without any kind of generation of nuclear electricity. And in 2013, only two reactors generated electricity. But the official statistics say 48 reactors in operation. We think that’s quite misleading.
So what we did is we created a new category that we call long-term outage. So the reactors that are not officially being abandoned or shut down, but that have not generated electricity for the entire year before we released our report, and for the time within – for the first half of the current year, we call them in long-term outage. So we take them out of the statistics of operating reactors. We think that is much closer to reality than the international official statistics.
So if we look at the situation – the same image for the 28 countries of the European Union, you get a very similar development pattern until the end of the 1980’s. When I say development pattern, you look at these graphs in terms of shapes – it’s important to understand what goes up, what goes down, what is big, what is small, much more than a figure. Figures you can debate. Is it 177 or was it 178? It doesn’t make a difference to understand trends. This is trend analysis so we’re trying to look at the big picture. And it’s very clear, here, the message. It’s had the same development pattern until the end of the 1980’s, but from then on, it’s pretty different. Right? From then on, we have a decline – very clear decline. And today we have 47 nuclear reactors less in operation than at the peak time at the end of the 1980’s.
Just keep that in mind when you read that there is one reactor under construction in France, one reactor under construction in Finland and two reactors under construction, more or less, in Slovakia in Europe. It’s irrelevant to this trend. Entirely irrelevant. It doesn’t change anything. You won’t even see those reactors when they come on line because more reactors get actually closed than start up.
So that’s the idea – look at the trends. Now we’ve seen the numbers of reactors operating. So when they operate, they generate electricity. There’s 31 countries in the world that generate nuclear electricity.
But this picture shows very clearly that we don’t have a pattern where it’s spread out over the 31 countries. On the contrary, it’s very much concentrated to a small number of countries. So roughly, for many years, it’s been the top five that have been generating approximately two-thirds of the nuclear electricity in the world.
In fact, two countries – the U.S. and France – generate approximately half of the nuclear electricity in the world. Or said differently, one country, France, generates about half of the nuclear electricity in the European Union. So those are the orders of magnitude to understand what the significance is.
Now the other thing we did is we tried to understand how does the maximum generation of electricity develop over time. So we looked at the peak generation of electricity historically per country. So this is the lighter color here. And it’s not really surprising that we find Japan that was actually a big player a few years ago, move back practically to de facto – to zero nuclear generation. This is still for 2013, so there was a little bit of nuclear generation yet.
The other country that is particularly remarkable is Germany, who was also a big player until 3/11 when it decided to phase out nuclear power entirely by 2022. And had shut down immediately 8 of 17 reactors. But you can also see that a number of other countries have actually – the lighter part is higher than the red or blue parts. So the historical generation was actually higher than what they have done in 2013 or 2012. That was number of reactors, generation of nuclear electricity. And so we look here at the absolute generation of electricity, which you can see actually continue to rise until 2006. And then it declined. And obviously we see the Fukushima effect from 2011 onwards. But the most remarkable part here is actually the relative share of nuclear power in the world’s commercial electricity generation. And when you look at that, you realize that the peak was actually achieved already 20 years ago in the middle of the 1990’s.
And from then on, we see a steady slope, but steady decline. That decline had only been accelerated at the end of this graph after the events in Japan. So that is a first important lesson here. Fukushima did not trigger any crisis in the nuclear industry. It accelerated a pre-existing decline, very much to the contrary to what you can usually read in the papers or see on television.
Now if you try to understand where this travel is going, one of the criteria to look at is obviously the number of reactors under construction. So this is the historical – over the entire history of nuclear construction, the number of units that were at some point listed as under construction. And you know, the industry loves to show a graph from 2005 to 2015. That’s very neat, because indeed, Jesus, we have like doubling the number of reactors under construction. So that’s a very significant increase, which is true. It’s not negligible. But what that does not tell is that in 2005, the number of reactors under construction was so low that you have to go back to the beginning of the nuclear age to find an equivalent low number of units under construction – far from sufficient to actually provide the turnover to bring on line as many reactors that are being closed down. And we see that even over the past years, again, we see a decline in numbers. So that trend doesn’t seem to be prolonged much.
Who are the players? Well, it’s quite simple. There’s actually only one. It’s China. China has 38 percent of the – 23 of the total of 61 reactors under construction. So this is the only big player. The other countries like Russia with 8, India with 6, U.S. with 5, South Korea with 4 – all the other countries only have one site – either one or two reactors under construction.
The other thing which is really interesting is if you look at this column here which gives you the construction start. Because you find some interesting dates here: 1983. That’s quite awhile ago to have started. But the absolute record holder is in the United States. Watts Bar 2 started construction in 1972. They had planned to finish it in 2012, which would have been nice – like 40-year project – round figure. But it didn’t exactly work out. I don’t know. Now they say maybe this year, maybe not. So speculations are open.
But there’s also other countries like I was mentioning Slovakia earlier. It’s 30 years in the statistics as under construction. Ukraine, 1986/87. So we see that many of these projects – in fact, there’s eight that have been listed there for over 20 years. And we did a very detailed assessment and we realized that there are now at least – those are substantiated – at least 49 of these are delayed. And when I’m saying delayed, it can be anything from several months to many years. So it’s a global phenomenon.
Now the other thing I wanted to attract your attention to on this slide is you see the lighter colors here are actually units that had been in the statistics at some point, but were abandoned. In nuclear history, it’s over 250 reactor orders that have been canceled. So a unit that is listed as under construction, there’s no guarantee whatsoever that this will actually be finished and generate electricity at some point. Keep that in mind. Now in the absence of large new-built programs, it is clear that the average age of the current fleet increases constantly. We can basically always add a year. We don’t even have to calculate. When we calculate it a year later, the fleet is a year older. I mean it’s pretty amazing.
So currently it stands at about 29 years. That’s the average age of the reactors operating. I don’t know if there’s people here that weren’t even born then, but if you remember the car that you’ve been driving 30 years ago, that was another technological age. I mean it’s a very different technology today. So these are old machines. Very old machines.
So almost half of the reactor fleet is now operating for 30 years and more. This is particularly problematic because the market situation of nuclear power is getting increasingly complicated (time check at 34:48). So – and this is really something – I don’t have time to go into this in detail, but it’s something I’m very much concerned about. Because what we see today is that the economic situation of the operating utilities is in terrible state.
So one of the few blips I wanted to give you here – few case studies – where the market prices, the bulk rate for electricity barely is not covering any more the cost. In Belgium, GDF Suez filed a court case against the government and lost the case. They were fighting a fuel tax which they said could drive them over the edge of profitability if they had to pay it. They lost it. So they made a statement where they said now we are keeping all options open, which means shutting down reactors much earlier than anticipated because they’re not profitable any more.
In Sweden, we have seen data that illustrates that at least three reactors were not making any money – were losing money two out of four years. And with the new government announcing a 17 percent tax increase can have a similar effect as in Belgium. In Germany, - as I mentioned before, Germany has a nuclear phase-out program, so by and by shutting down of the remaining nine reactors. The utility Eon decided to shut down one reactor seven months earlier than required by law. Why? Because it’s not making any money. It’s impossible to actually make a profit with that machine.
And finally, in the U.S., as you probably know, there were five shutdown decisions. After a situation where I think for 15 years, there was no movement, no reactor startups, no shutdowns, the utilities announced in one year 5 shutdowns for very similar reasons, including two reactors that were actually licensed to operate beyond 2030.
So that means the traditional utilities, not only nuclear ones, but in particular nuclear ones, are under increasing pressure. And the situation is so bad that to illustrate that, the 20 largest energy utilities in the European Union lost about half of their stock value since 2008. Now that’s half a trillion Euros – 500 billion Euros. It’s a huge amount of money that is lost in capital value. So there is a real situation of crisis.
One example, because it’s the largest nuclear country in terms of percentage generated from nuclear power in the electricity mix, but also because EDF – Electricity de France – is the largest nuclear operator in the world with 58 nuclear reactors. And Arriva is the largest, or one of the largest nuclear builders in the world, and integrated nuclear companies doing basically everything from uranium mining, and I’m sure many of you are aware that Arriva is very active in this country – to waste management. So they do the entire chain – fuel chain. So both companies are 85 percent or 87 percent for Arriva – owned by the government. So people always thought, well, what can happen to a government-owned company. Right? Not much.
Well, not exactly. The problem is that the operating costs in France increased in dramatic ways over the past few years. The energy regulator in France has calculated that the loss in one year, in 2012, was about 1.5 billion, because the income from tariff sales, from kilowatt hour sales did not cover the cost any more, which incidentally is illegal in France. So there is no other choice but to increase rates or to reduce costs. Reduce costs is not to do because, on the contrary, old reactors, lack of investment over the past few years, so costs are increasing. So there’s no other choice but to increase tariffs. The stock value – we’ll come back to that – plunged significantly over the past few years. And the debt load of this company is now 34 billion Euros. I mean 34 billion Euros is really a very large number. To give you an idea, this is about – there were months long discussions with the European union and the French government to authorize a deficit, a state budget deficit beyond three percent. Three percent is the European legal limit. And France didn’t make it. And they requested the authorization to go to four percent. That difference, between three and four percent, I calculated is about 11 billion Euros. 11 billion Euros for the state deficit. So we’re talking here for the debt of this utility three times that amount. So people that think well, the government is just going to bail out EDF or bail out Arriva, it’s not going to work like that. There is no money to bail out.
Arriva’s situation is even worse. Arriva is technically bankrupt. There’s absolutely no doubt. This company lost 8 billion in four years with a capital of something like 3-1/2 billion and a debt load of over 5.8 billion Euros. So this company is de facto bankrupt. And it was downgraded to junk by Standard & Poors in November last year, and downgraded again since.
So here we see the stock price development of EDF, largest nuclear operator in the world. While this is a national indicator - you always have to put it against an indicator because an economic crisis leads to all companies going downhill and it doesn’t tell you anything. So a good indicator is like the NASDAQ or other national indicators. If you do that for France, this is what gives the difference between the state-owned company and the 40 largest companies in France. You look at the Arriva case, this is what it gives. So it’s dramatic – absolutely dramatic in terms of loss of value. Now just a few words on – we always have sort of a 10-page section, 15-page section in the report on the comparison between nuclear and renewable energy developments. So what we did here is we have in blue, wind energy capacity – generating capacity development. In green, it’s solar photovoltaic and in red, it’s nuclear. And this is since the year 2000. So the changes – the capacity changed since 2000. So we have less than in the year 2000 for nuclear and we have a huge increase in wind and solar. Obviously, the capacity doesn’t tell you the whole story. You have to look at the generation of electricity. But even in electricity terms – and here we looked at starting in 1997 – you remember ’97 was the signing of the Kyoto Protocol. So we wanted to know, what since the Kyoto protocol actually was generated in additional by nuclear, wind or solar. And the result is really staggering, because you see that the electricity generated added since ’97 by wind is about five times as much as nuclear. And even photovoltaic just caught up with nuclear, which is quite an impressive result.
China is the most amazing country in terms of renewables development because the thing is, China doesn’t only do nuclear. They do a lot more renewables than they do nuclear. They invested already five times more in 2010 in renewables than in nuclear. So the result is here. In the capacity addition by photovoltaic paced out in 2013 nuclear additions. And here is production. So wind alone generates more power in China now since 2012, than nuclear, in spite of that large building program, because of the time factor. It’s just much faster to implement.
So to conclude this – I mean you can read this – you can read faster than I can tell you this, but the basic message is we have a situation where the global nuclear industry has been in crisis and in decline trend for many years. This has nothing to do with Fukushima. It’s merely an acceleration of a pre-existing trend. The second thing is that it’s important to understand, and I’m very concerned that the economic and financial situation of the operating companies is so bad and so problematic that this will have an effect on safety.
Can you imagine a company that is technically bankrupt like Arriva is operating the planet’s most dangerous place, which is the La Hague Reprocessing Facility in Normandy in France, which has the largest radioactive inventory. The spent fuel that is stored there is equivalent to over 100 reactor cores without any kind of protection. It’s like basically steel roofs; no major protection. That company has 50 tons of plutonium on the site. So a company that has announced that they want to get rid of 500 people on that site because of economic pressure – 500 people? What did they do until now? Fishing? You know? How is it possible that you can get rid of 500 jobs on a site like that of maybe 3,000? So I’m very concerned. The same is true, of course, for the Utility EDF but it’s also true in other countries. The utilities are under enormous pressure and that will have consequences on safety.
On the other hand – and that’s my final point – it’s very clear that we are in the middle of an energy revolution. Not at the beginning. We’re right in the middle. We just didn’t get it yet. Because the economic feasibility today of renewables is such that they’re fully competitive with other sources in many regions and countries in the world already, but it will be a game changer within the next five years in most of the countries on the planet. So what I think is that we have to be very careful. We’re very aware of the pressures that exist on one hand and on the hand of the opportunities that come up, on the other hand. Thank you very much. (applause)