Nuclear energy policy; European prospects and the case of the UK

March 6, 2019

By Alex Taylor

Nuclear power remains a controversial issue in Brussels and across Europe despite the EU itself maintaining its impartiality through regulation: the Clean Energy Package for all Europeans (2018) includes the most recent binding target for renewable energies of 32% by 2030, but each Member State’s energy supply outside of these binding targets remains a decision determined at the national level as per the Lisbon Treaty. The lack of Member State consensus is evident when considering existing nuclear policy: Italy and Austria have reaffirmed their stance against it; Germany and Switzerland have committed to a phase-out; the UK and Netherlands have seen a re-emergence of political support; and France and Finland have actively invested in new projects.

Scenarios in the EU’s 2050 Roadmap (2012) showed that the energy mix of 2050 may see a  nuclear share somewhere between 2.6 – 17.5%, more recent analysis of decarbonisation pathways in COM(2018) 773 narrows that estimate to 12 – 15%. Notably, this work concludes that inclusion of a modest nuclear baseload will deliver the lowest cost decarbonisation pathway for the power sector in respect to the 2050 targets – largely because nuclear is a low-carbon, market ready technology (commercial-scale CCS remains elusive) that mitigates the costly infrastructure upgrades required to integrate distributed and variable renewable assets.

The newly developed EPR reactor is the most powerful and cost-effective commercial nuclear technology that will be delivered in the next phase of international nuclear deployment – the world’s first active EPR reactor is now delivering energy to the grid at Taishan 1 in China. European EPR projects are also underway in Finland (Olkiluoto) and France (Flamanville), although both projects have been beset by overruns on budget and timelines leading to some high-profile criticisms.

More recently, the UK’s readjusted stance towards nuclear saw the beginning of EPR developments at Hinckley Point C – a project seen by many as a timely catalyst to re-stimulate Europe’s flagging nuclear power sector. Of course, getting the project over the line wasn’t straightforward, with finance from the state-owned China General Nuclear Power Group (CGN) ultimately needed. Over the past few months doubts have become to emerge over the UK’s nuclear pipeline with both Hitachi and Toshiba cancelling plans and forfeiting millions to avoid taking on the significant project risks that have had implications on the existing British, French and Finnish projects.

How the next years play out will surely have long-term impacts on European nuclear. The emerging supply gap offers opportunity as coal-powered fire plants close and the existing nuclear powerhouses of the 20th Century such as Japan and the US wind down their programmes. However, with public financial backing for new projects becoming less attainable and large-scale unsubsidised renewables becoming more feasible, European nuclear risks being displaced by both alternative energy sources and the Chinese nuclear industry.

In the nearer term, the UK is the space to watch as its own supply gap (~15%) created by the cancelled nuclear projects must be filled – leading to some interesting questions around whether replacement nuclear deals be secured and if so, who will finance the risk? Will new gas-fired power stations need to be commissioned? And is the level of investment into grid infrastructure, battery storage and CCS for a more distributed approach to decarbonisation really attainable?

With the coal phase-out set for 2025 and all 10 of the UK’s existing nuclear plants expected to close within the next 10 to 15 years, the Government’s position on how it plans to deliver secure, affordable and clean baseload power over the next decades must become clear. Ecuity continue to track domestic and European energy policy at all levels of debate, for more info contact:

Alex.taylor@ecuity.com