LONDON (ICIS)--A renewed nuclear arms race and climate activism may lend a new lease of life to nuclear power generation for now, but cheap gas and hefty state subsidies are sapping its long-term business case, Bulgaria’s former ambassador to Russia told ICIS.
Ilian Vassilev, an energy market specialist, described cheap nuclear energy as a contradiction in terms, not only due to state aid forked out in the form of grants, benefits or exemptions, but also production costs, waste fuel and storage management or substantial risk insurance.
“Long-term PPAs [power purchase agreements] are quickly becoming a relic, which undermines the sustainability of the revenue base needed to substantiate ultra-capital intensive nuclear power plants (NPPs). NPPs are impossible without state support in one form or another.”
Countries such as Belarus, Bulgaria, Hungary, Romania or Turkey are either preparing to commission nuclear generation, as in Belarus’ case, or are at various stages of project development.
With the exception of Romania, all other regional NPPs have or will be fitted with Russian reactors.
But Vassilev noted that even Russia, through state-run Rosatom, has been looking to delay construction works on several reactors because of high costs.
“To understand the context of the nuclear energy cost debate, it is worth noting that the Russian ministry of energy asked Rosatom to delay construction works at reactors such as Kursk NPP or Leningrad-2 NPP, for fear of hiking electricity prices.
“Note that the cost per reactor unit in Russia is 40% below the price tag in Belene [proposed Russian-developed Bulgarian NPP] and more than 50% below the price tag of Akkuyu [the Turkish Russian-developed NPP]. Yet, the Russian ministry fears [NPPs] are too expensive and that launching them on time would lead to a surge in electricity prices.”
As gas prices on European hubs plummeted to a 10-year low this week, Vassilev said it was becoming increasingly difficult to raise credit for the construction of nuclear plants.
He said even Russian banks were struggling to secure required “credit mass,” leaving Rosatom to scramble for Chinese funding.
Vassilev explained the development of nuclear energy benefited from advances in the development of nuclear weapons, which had helped to inject billions of dollars into fundamental nuclear research.
These budget funds dried at the beginning of the 90s and, allowing for some time lag, the technology and engineering progress in the 2000s stalled.
The technology, therefore, needed innovation breakthroughs in the field of thermonuclear reactors or small-scale reactors, he argued, noting that in the past one of the greatest drivers of nuclear power generation had been the nuclear arms race.
But, he pointed out that the nuclear accident at the Severodvinsk military shipyards in last month calls into question the Russia’s progress in the development of nuclear weapons.
“Russia needs to underwrite new nuclear missile programs and tests should be seen against an impressive backlog of nuclear reactors [it builds] abroad and whose funding requires over $100bn.”
An argument that has often been made in support of nuclear electricity was that the technology would provide clean generation at a time when carbon emissions need to be drastically reduced globally.
However, Vassilev said: “To claim that life-sustaining CO2 is a polluter and nuclear waste is “clean” speaks volumes about the inherent perverse ideology in the debate.”
Speaking about the Belene project, a 2GW NPP which Bulgaria first announced in the 1970s and is yet to commission, Vassilev said it was unnecessary. The country’s installed capacity is already 10GW and peak level demand even during the harshest winters does not exceed 7GW.
“A long-term capacity shortfall is expected in 2037-2039 at the earliest when operating licences for reactors 5 and 6 at the Kozloduy nuclear power plant [Bulgaria’s existing NPP] expire and only provided no further extensions are provided.”
The Belene project has been stalled and then relaunched on three occasions, the most recent one being in June last year.
“The common denominator in all three previous attempts [to resuscitate Belene] has been the Soviet blend of ideology, planned economy and [Bulgarian] pride.
“Keeping the project alive provides a legitimate excuse to continue with small spending accounting for the Belene NPP. There is a group of political and commercial interests that understands that the Belene NPP generates a chain of long-term client capture that is hard to break - a virtual Hotel California - easy to enter, tough to exit.”