As the initial shock of Japan's nuclear crisis abates, IHS Energy analyst Kash Burchett saysEuropean governments are taking stock of the role of nuclear power in their respective energy strategies and considering means by which they may defend existing policy.
Following a tumultuous week in Europe's energy markets, governments and industry representatives are seeking to quell the rising tide of anti-nuclear sentiment across the continent and reaffirm the importance of nuclear power in Europe's energy strategy.
On Monday (14 March), German chancellor Angela Merkel stunned policymakers and markets alike with the announcement that seven of the Germany's oldest nuclear power plants (NPPs) would be shut down for the duration of a three-month moratorium on the fleet's life extension. The plants only account for around 5 per cent of total German generation capacity but this was enough to push baseload power prices for delivery next quarter up 16% to EUR62.75/MWh (USD87.23/MWh), their highest level since 2008. Carbon prices alsper cento surged 3.7 per cent to close at EUR17.21 (USD24.06) per metric ton on Wednesday (16 March), on the expectation that any capacity shortfall arising from German (or other European states) shutdown of nuclear reactors would be replaced with gas- or coal-fired supply. Stocks in renewable energy companies soared while shares in European firms involved in the nuclear industry plummeted; RWE saw its value slump 7.95 per cent and E.ON was down 8.52 per cent within hours of the German government's announcement, while AREVA dropped around 5 per cent before rallying slightly.
Yet despite the deepening crisis at Japan's Fukushima Daiichi complex and China's surprising decision to freeze construction of its 26 NPPs currently being built, European governments have for the most part refrained from rushing to abandon or suspend their nuclear programmes:
Arguably the most likely to freeze its nuclear programme given the relative regularity of seismic disturbances, Italy's government has instead announced it plans to press ahead with its plans to build a new NPP in 2013. Anti-nuclear sentiment in Italy was already quite strong before the recent earthquake struck Japan. Following the Chernobyl disaster, a referendum in 1987 saw the country vote against nuclear power and all plants were shut by 1990. Under pressure from high and rising electricity demand, reliance on imports from countries generating electricity from nuclear plants and greenhouse gas (GHG) emission reduction commitments, the Berlusconi administration formally announced plans to reintroduce nuclear power to the Italian energy mix in 2009. Since then, however, progress has been slow, plagued by political crises and difficulties in establishing a national nuclear regulatory authority. In early 2011, Italy's Constitutional Court ruled that the country's plans for new nuclear capacity should be put to a public vote. This decision may turn out to be crucial. At the time the government was considered likely to see its plans accepted but following events in Japan, the vote will be very close: a snap poll conducted this week showed 60% of the populace opposed to new nuclear build. This is partly attributable to the memories of the earthquake which struck the city of L'Aquila in April 2009, killing more than 300 people and flattening whole towns.
According to Spanish finance minister Elena Salgado, Spain has not made any new decisions regarding nuclear energy after the accidents in Japan. Spain does not have plans to build any new nuclear capacity but the government and regulatory agencies had been taking an increasingly soft approach to the sector: license renewal for Almaraz 1 and 2 came up for review in 2010, and in April the Spanish authorities recommended that a 10-year extension be granted to 2020. The government concurred and in January 2011 approved 70-MWe uprates for both reactors, with 68MWe for Unit 1 being imminent, the engineering work having been already done. Furthermore, in February 2011 parliament removed a legal provision limiting NPP operating lives to 40 years. At the time, a government minister proclaimed that although still opposed to new build, "almost all nuclear power units will be open, operating and even repowering" until 2021. Prime Minister Jose Luis Rodriguez Zapatero on Wednesday (16 March) ordered a review of his country's NPPs in light of the crisis unfolding in Japan but has urged calm, describing the policy as an "extra precaution". Protests against NPPs this week have so far been relatively small, amounting to only a few hundred.
Nuclear power in the United Kingdom is not considered as controversial as in other parts of Europe. The hiatus in nuclear development came more as a result of cheap gas and advances in combined-cycle gas turbine generating technology in the 1990s than public opposition to reliance on nuclear power. Since the Labour government’s white paper in 2005, however, the country has been planning a revival of the sector. Thus far the government’s response to the crisis in Japan has been relatively muted: the energy secretary Chris Huhne has asked the chief nuclear inspector Mike Weightman to report on Britain's nuclear safety by mid-May. Indeed, the energy minister Charles Hendry has sought to downplay the review stating, "I think a delay is the wrong word, and certainly not a moratorium". The UK's situation is unique in that it is the only country in the world which plans to see new NPPs constructed and operated entirely by the private sector. This lack of state involvement meant that the economics of new plants were already tight, hence any new regulatory costs could very easily make some new projects unviable. Plans to reorganise the electricity market as a whole could create a more stable environment for investors in nuclear (and indeed renewable) energy.
Sweden's prime minister said this week that the country had no plans to review its nuclear policy. Sweden currently relies on 10 nuclear reactors for around 50 per cent of its electricity supply. In a 1980 referendum, Swedes voted to phase out nuclear power, but in 2009 the centre-right alliance government reversed course and agreed to allow existing reactors to be replaced when they are no longer serviceable. Indeed, the debate in Sweden often centres upon whether or not to build new plants or to simply squeeze more power out of existing units. The latter option essentially implies allowing the rods to get hotter and generate more power, thereby potentially increasing the risk of meltdown. Some have suggested that the meltdown in Japan might thus cast new reactors in a more favourable light.
Finland will review the safety of its nuclear reactors. The country operates four nuclear reactors that provide a quarter of its electricity. Finland was one of the first to revoke its decision to phase out nuclear power and is arguably at the vanguard of the European nuclear renaissance in its construction of a third generation European Pressurised Reactor (EPR), at Olkiluoto. The EPR has suffered several delays, however, and attracted a good deal of criticism already, prior to events in Japan (see Finland: 31 August 2010: Demonstrators Block Roads to Protest Against Nuclear Power Plant Construction in Finland).
Switzerland is one of the few European states to follow Germany's lead and act immediately to revise its policy. The country suspended the approvals process for three new nuclear power stations on Monday (14 March), so safety standards can be revisited. Switzerland's five existing nuclear reactors generate about 40 per cent of the country's electricity but some will have to be retired in coming years. Decisions on sites for new plants were due to be made in mid-2012. In 1990, a referendum saw a 10-year moratorium imposed on nuclear facilities but this was dropped following another vote in 2003. Only last month, Swiss voters narrowly approved the building of a new plant in Muehleberg to replace the old one there, which is 20 per cent owned by E.ON.
Poland has reaffirmed its intentions to press ahead with the construction of two new NPPs, located near the south of the country. Plans to begin construction of a 3,000-MW NPP around 2016 are still in the relatively early stages. The Polish government is seeking technology transfers and commercial agreements with firms from the United States, France, South Korea and Japan. The country depends on coal for its electricity, partly because of the country's natural resource endowments but also because of a reluctance to allow dependence on Russian gas imports to increase. Nuclear power is seen as a means to maintain energy independence while reducing per-unit emissions.
The Czech Republic's prime minister says his country will go ahead with plans to develop its nuclear energy programme despite Japan's nuclear crisis. Petr Necas says the government will complete a multi-billion-dollar tender to build two more nuclear reactors at the Temelin nuclear power station, adding that "there's no reason to change it". State energy policy in the Czech Republic and in Eastern Europe in general is broadly less sensitive to public opinion than in the West. Indeed, the potential for Germany to halt its nuclear programme will be seen by CEZ as an opportunity to increase power exports.
Outlook and Implications
European governments are well aware of the trade-off between embracing greenhouse gas emissions reduction targets and the risks that come with operating a nuclear power plant. Despite the deepening crisis in Japan and Germany's knee-jerk reaction, most European countries do not appear keen to significantly change course yet. Even in Germany, Angela Merkel has made clear that she is not considering shutting down all of Germany's reactors only to import nuclear power from elsewhere to be a viable option (indeed, there is strong evidence that the shut-down of the seven oldest reactors during the three-month moratorium has more to do with appeasing anti-nuclear voters in the upcoming local elections than with rationally considered long-term energy strategy). Other bodies have joined the defence for nuclear power, notably officials at the OECD, who describe nuclear power as "essential to Europe's energy supply".
Even if governments and international agencies are committed to delivering nuclear power, however, they must first convince their electorate that such technology is safe. In this area, the EU is taking a strong lead: all 27 states have agreed to subject the bloc's 143 reactors to a series of stress tests, which will determine their ability to withstand earthquakes, floods and other disasters. Much like the financial stress tests imposed upon European and America banks, the key criterion for the tests having a meaningful impact is that they must be sufficiently rigorous that not all plants pass. Any other outcome will simply be labelled a whitewash.
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