The political climate for nuclear energy is not very positive in Europe, admits William D. Magwood, IV, and the industry is currently shifting towards Russia and Asia as a result.
William D. Magwood, IV has been the Director-General of the Nuclear Energy Agency (NEA) since 2014. NEA facilitates cooperation among countries with advanced nuclear technology infrastructures under the framework of the Organisation of Economic Co-operation and Development (OECD), but includes also non-OECD countries. Its 33 members account for 84 percent of the world’s installed capacity. Magwood comments on
- shift from Western to Eastern technologies on the nuclear markets;
- small modular reactors as a potential game-changer;
- long-term role for nuclear in the world’s energy mix;
- industry’s complicated relationship with the public;
- obstacles to progress on the spent fuel management;
- guarantees in the UK after its exit from Euratom.
Only a handful of reactors are being built in Europe and even in the OECD countries. Is the future bright for nuclear energy?
I personally think so. Around the world, there is a great deal of activity of constructing new plants. Just recently, I have been to Argentina. They are planning two new reactors. Next door, in Brazil, they are talking about building new plants.
Argentina and Brazil are not OECD countries, but the former is a NEA country and the latter has applied to join the OECD. But also Romania, which is a NEA country, is planning new reactors. Slovakia is building reactors.
Within Europe, there is not a lot of activity, but quite a bit is going on world-wide. Russia, another NEA country, is building several reactors. Obviously, China (a non-NEA, non-OECD country) is doing the most and has many reactors under construction.
Would you then say that the future is bright for nuclear energy outside Europe?
Right now, Western Europe is a tough place for building new plants. The political climate is not very positive. There is a much bigger focus on renewables.
We see a much different situation in Eastern Europe. Further to the east, in Russia and Belarus, there is a lot of activity. In Asia, there are the very active China and India. On the long term, nuclear is going to play a very large role world-wide, but it is very possible we might see a de-emphasis in some parts of the world like Western Europe.
Do you see the Russian technology – which will be used in Slovakia, Hungary and Finland, but also in Turkey and China – rising on the expense of Western technologies?
Today we do clearly see a dramatic shift in the nature of the nuclear supply framework. In the past we saw U.S. and French suppliers as the leaders. That is not really the case today. We see much more energy from Russian suppliers, China is now a very aggressive marketer, South Korea (NEA member) has been very successful and has plans to export to United Arab Emirates (UAE). But the shift from traditional to new suppliers is not a bad thing. Because the new suppliers are bringing something to the market, which the traditional suppliers can’t.
What is it?
Financing. Access to large amounts of capital to finance projects is more important than technology to customers today. Russia and China in particular are able to provide it.
Is funding reactor construction on the long term sustainable for Russia?
You have to ask the Russians. Clearly it has helped them get a lot of projects started that would not have started otherwise – for example in Turkey or Bangladesh. These countries would never have gotten financing through normal channels because of the size of the projects and their economies.
It is not just financing, it is also a lot of infrastructure support. The Korean project in UAE was characterized by a lot of technical support. There are hundreds of Korean engineers and experts living in UEA to make the project move forward. If you can’t have hundreds of Frenchmen or Americans willing to relocate for long periods of time, you are not going to be seen as competitive as Korea, China or Russia.
But the advantage of the local workforce is keeping the competence in the country for operation and other phases of the lifetime.
Which is an important issue. My preference would be to see countries follow more the Korean model. Korea took decades to build the expertise, which is now very deep. They have very strong infrastructure and very good supply chain. But it took a long time. Today, countries seem to be less patient. They want to get the benefits of nuclear power as quickly as possible.
But Russia, for example, has massive training programmes. There are hundreds of Turks in Russia right now trained on all aspects of nuclear operation. You can’t just rely on outside expertise, you have to build it internally.
Europe is not building a lot of reactors. Can you be a good exporter, if you don’t build the competence at home? Take France, for example.
If you are not building at home, it is hard to maintain a strong supply chain and be competitive overseas. You would have to be very fortunate and have a large portfolio of export opportunities.
In the U.S. for example, we weren’t building plants for a long time, even though we had suppliers marketing overseas. And even if we were building, we ran into significant trouble with project management, expertise, supply chain. It really was a big problem. In South Carolina, the cost eventually escalated, the schedule was extended because of those issues. And the project collapsed, at least so far. (In South Carolina, two utilities halted a construction of two AP1000 reactors by Westinghouse.) If you don’t have a strong domestic programme, it really is difficult to have a strong export capability.
Considering that mainly Asian countries build reactors and have the competence, the future market with nuclear technologies will be dominated by Asian players.
There is a shift towards Russia and Asia right now. But there is a potential for that shift to be slowed down considerably.
By whom?
In the U.S. and Canada, there is still a great deal of acceptance of nuclear energy as a principal option. If the economic conditions are right, nuclear power plants will be built. Westinghouse’s AP1000 is seen around the world as an excellent technology. Once we go through all the grief of building the first projects, we will have established the stable supply chain, built expertise, made it much more competitive. In addition, small modular reactors (SMR) might be a game-changer.
Is there a SMR technology that has been commercialized?
Several technologies are either available today or close to available. The Korean technology Smart is being marketed today. It is a small reactor that will be principally used in remote areas or for specific applications like water desalinization. An agreement has already been signed with Saudi Arabia to build two Smart reactors.
Do you see the future of nuclear energy with the SMRs or big nuclear power plants?
There is a potential for both. The SMRs really haven’t been fully proven yet. I have been recently briefed on two technologies. One is the Carem small reactor, which Argentina has been developing for the last several years. In the U.S. there is the NuScale technology. It is very interesting and has very high safety characteristics, good cost performance, but it hasn’t been built yet. Until these things are built, you don’t know what they can provide. In Europe, the U.S. and Canada, which do not have large growth prospects for electricity and there is less need to build large facilities, SMRs might make more sense.
Will the SMRs not run over budget and time like the bigger projects?
We have to wait and see.
How fast and for how much can a SMR be built?
It depends on the design. They are very different. The NuScale technology, for example, is based on building 12 small modules that go into one facility. The supplier tells me they can build one for 3 billion USD. That’s 600 MWe (each module at 50 MWe). That’s pretty good.
The initial price of an EPR, the 1600 MWe reactor by Areva, was around 5 billion USD.
That is why I am cautious about the SMRs. Their big advantage could be that instead of building a large complex facility in the field – rife with all sorts of complexities and uncertainties – you can build them in factories. We build aircrafts in factories. In an assembly-line type of approach, the quality control is maintained, cost is much clearer, schedule is very certain.
You again mentioned American and Asian technologies, not the European ones.
There is also the Argentine Carem. The UK has started some activities, but in continental Europe, small reactors haven’t been thought about very much.
So, this market will probably also be dominated by non-Europeans.
It is too early to tell. If small reactors are successful, maybe European countries will take another look.
But the Europeans are already running late on this market.
There is no late and no early. The energy markets are evolving. We are not even in 2020 and people are already starting to talk about the world in 2050. We have no idea what the energy supply will look like in 2050. People are projecting, but they have no clue.
The energy sector, especially nuclear companies, project themselves in a very long term.
They all have projections, including the International Energy Agency, NEA’s sister agency. They have no idea what they are talking about. I have seen through my career projections from every responsible agency you can name, they have all been universally wrong. Because you can’t predict things like the fracking phenomenon in North America. Who could have seen the oversupply in oil we have today? Who saw Fukushima-Daichi?
But you are certain that nuclear will be an important part of the energy mix.
Globally it will. There isn’t any question about that. Once built, nuclear plants are around for quite a long time. A plant built today is going to be in operation for 60, maybe 80 years.
The question is which trajectory we will take. Will we see a huge percentage of energy coming from renewables? Or will that prove to be not as easy as people think? Maybe there is a natural ceiling to how much you can get out of renewables, in which case – if you want to be serious about climate change – nuclear becomes important. Or does carbon sequestration finally work? Does fusion happen? We don’t know. Because the future is so uncertain, we have to keep all our options open. We need to explore renewables, do research on fusion, develop carbon sequestration.
The investors can’t keep all options open.
They have no choice, because they don’t know either. Smart investors recognize that the future is uncertain.. Many are choosing the renewables today, because that is where the governments are pushing them, where the subsidies and tax credits are. We will see if it is a good bet.
Public acceptance is a big issue for nuclear energy in Europe, but also in Japan where the biggest catastrophe since Chernobyl happened. Why is it still difficult for populations to accept nuclear energy despite improvements in nuclear safety?
It is not surprising. In the U.S. after Three Mile Island (nuclear accident) in the 1970s, there was a very strong reaction against nuclear energy. No one could even have a conversation about building a nuclear power plant in the U.S. for almost 30 years. It took a long time before the public view changed. And then it changed quite dramatically.
This was just before Fukushima.
Yes, just before. In some countries, Fukushima had a major impact, it is almost like 1979 all over again. It will take many, many years before the public mood shifts. But it will, eventually.
How will the public be convinced?
In the U.S. it was convinced by good operations over a long period of time. After Three Mile Island, the public saw nuclear plants operate reliably, cost effectively, without any problems for many, many years. When the question of new plants came up, the public said why not. We had many communities actively campaigning to have nuclear plants built. Will that happen in Germany or Sweden? I don’t know. But it is important to recognize public opinion can evolve over time.
Has the nuclear industry took a lesson in public communication?
Nuclear energy is very technical matter to explain to the general public. The industry has been very bad at it, almost universally. They’ve never quite figured out how to communicate. At the same time, the nuclear never seems to go away from the public consciousness. The advantages are still there. Once the plant is built, it provides large-scale, reliable supply at predictable levels of cost for many years without impact on environment.
Even if the operation of a power plant goes well, there is still the Achilles heel of nuclear energy: the spent fuel. For now, we don’t have a viable project of long-term storage of nuclear waste. How do you assess this problem?
As time goes on, it will become evident that disposing nuclear waste from a technical and scientific standpoint is well in our capabilities. There is really no question about it.
We still don’t have a proof.
That is going to change. Finland will be the first country. Sometime within the next 5 or 7 years, they will begin operating a deep geological repository for spent fuel. The real challenge is the public policy aspect.
So, you consider it a political question, not a technical one.
Absolutely. We cannot underestimate that finding the site, getting the process going is very difficult politically. Not far behind Finland, France will follow. Policymakers will ask: If Finland can do it, why can’t we?
Even Finland has problems. The company that wants to operate a Rosatom reactor doesn’t have an agreement for the future waste disposal with another nuclear operator participating in the construction of the repository.
It is a commercial issue. They will work it out.
It seems that Europe is a frontrunner in the spent fuel management.
Yes, and that’s a surprise to people. Ten years ago, everyone bet at the U.S. to be the leader and then the U.S. programme got side-tracked. Now the world’s eyes are looking at Finland.
It is important for people to understand that nuclear waste is being safely stored, certainly in all NEA countries. We are confident it can be stored for a long period of time until these issues are worked out.
Apart from the EU, the UK government wants to exit also the Euratom treaty. According to the NEA, would it be best that the UK stays in the EU and Euratom?
That is a domestic issue, on which I will not comment. But I have been interacting with people in UK since the Brexit decision and I think they are taking the steps necessary to adjust to the post-Brexit world. They are negotiating bilateral and multilateral agreements to deal with nuclear issues. Their office of nuclear regulation is putting in place the safeguards and capabilities needed after leaving Euratom. They have time to sort this out and there is no question they will be able to do it.
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