Author: Nityanand Jayaraman
June 15, 2012
The unpredictable financial implications of constructing, running, decommissioning plants and handling risks are causing a global rethink on nuclear energy
For a professed proponent of liberalisation and free trade, Prime Minister Manmohan Singh’s penchant for a technology that cannot float without subsidies is telling. Nuclear power’s unfavourable economics are not lost on Dr. Singh.
Recently, Westinghouse Electric and Nuclear Power Corporation of India Limited (NPCIL) signed a Memorandum of Understanding (MoU) to negotiate the setting up of AP1000 reactors in Gujarat, ending a slump in interest from the Toshiba subsidiary in India’s nuclear market. For Toshiba’s Westinghouse and other nuclear equipment suppliers, the Civil Nuclear Liability Act’s clause on supplier liability was the key hurdle to investing in India. The companies wanted the Indian government to insulate them from the financial fallouts of any potential disaster caused by their technology by spreading that liability among taxpayers. The recent MoU suggests some progress in moving towards this goal.
More obstacles remain, though. Nuclear projects are un-bankable. The government may deploy mental health specialists to deal with the fears of Kudankulam protestors. But those shrinks are unlikely to be able to allay the fears of financiers or nuclear equipment suppliers.
According to nuclear energy expert Peter Bradford, “The most implacable enemy of nuclear power in the past 30 years has been the risk not to public health but to investors’ wallets. No nuclear power project has ever bid successfully in a competitive energy market anywhere in the world.” Mr. Bradford was member of the U.S. Nuclear Regulatory Commission and chair of the New York and Maine electricity regulatory commissions. He teaches a course on nuclear power at the Vermont Law School.
Unpredictable financial implications associated with constructing, running, decommissioning plants and handling nuclear risks are causing a rethink on nuclear energy worldwide. But these developments seem to slip by India without so much as causing a ripple.
Germany and Switzerland have decided to phase out nuclear power, despite their substantial dependence on it. Israel abandoned its year-old civilian nuclear programme after Fukushima. Belgium revived a pre-Fukushima decision to phase out nuclear power, using the Japanese disaster as a reminder. Italy and Kuwait gave up their nuclear debut by abandoning plans for 10 and four plants respectively. Mexico dropped plans for constructing 10 plants. All of Japan’s 54 reactors are now closed, and plans for 14 new reactors killed.
The story of nuclear energy’s unviability is told not just by the actions of naysayers, but also by the experiences of those — like Egypt, Saudi Arabia, Jordan, Iran, Turkey, Vietnam and South Africa — pursuing nuclear programmes. All of them want the nuclear option, but have no idea how they will finance it.
If the U.S. is Dr. Singh’s inspiration, then the so-called nuclear renaissance’s trajectory in that country gives even more cause for despair. In 2009, the U.S. declared a nuclear revival with promises of more than 30 new reactors. Today, most of these projects are doomed. Even candidates for federal loan guarantees such as the South Texas project, and the Calvert Cliffs-3 project in Maryland, have been mothballed.
State governments in the U.S. do not seem to share the Federal Government‘s enthusiasm for nukes. Bills to reverse moratoria on nuclear plants in Minnesota, Kentucky and Wisconsin failed last year. In Missouri, North Carolina and Iowa, legislators defeated bills to charge electricity consumers in advance to finance reactors.
“At the time of Fukushima, only four countries — China, Russia, India and South Korea — were building more than two reactors. In these four nations, citizens pay for the new reactors the government chooses to build through direct subsidies or energy price hikes,” Bradford notes.
Finland was among the few that reiterated its commitment to nuclear power after the Fukushima disaster. The 1,600 MW Olkiluoto nuclear plant uses French company Areva‘s technology. Areva’s modular design was expected to make it faster and cheaper to build. But 11 years later, the project is behind schedule and its $4.2 billion budget is up now by 50 per cent. After Fukushima, Areva admits that the same plant would cost $8 billion. Even Areva’s home project, in Flamanville, France, has suffered a $4 billion cost overrun and a four year delay. Indeed, 31 out of 45 reactors that were being constructed globally around 2009 were either delayed or did not have official dates for commissioning, says a report for the German Government by consultant Mycle Schneider.
In Kalpakkam, meanwhile, the Prototype Fast Breeder Reactor was slotted to contribute to the grid in March 2012. In 2005, Baldev Raj, Director of the Indira Gandhi Centre for Atomic Research, Kalpakkam, boasted that the 500 MW unit will be completed in 2010, 18 months before schedule. Till date, there is no sign of this happening. The Kudankulam plant, which is now 23 years old since conception, lost only eight months due to protestors.
In Jaitapur too, the government has more to worry about than local protestors. Areva, the technology supplier, is in trouble. Last year, it announced losses of €1.6 billion, and the sacking of 1,200 workers in Germany. Last June, it decided to suspend production at a Virginia reactor component plant due to declining market prospects. Its expansion plans in France, the United Kingdom, and the U.S. may never materialise. Areva expected to sell 50 nuclear reactors this decade. It has not received a single order since 2007.
Now, with a socialist president at the helm in France, Areva’s future looks even more uncertain. French President François Hollande had promised voters a reduction in nuclear dependence from 75 to 50 per cent, and shutdown of an aging reactor in Fessenheim. Whether or not he carries through with these promises, it appears certain that no new plants will be built or planned during his term. Both conservative-led Germany and socialist France will make up the shortfall from the nuclear phase-out, by investing in renewables for electricity and new jobs. In replacing nuclear with renewables, these nations are declaring that despite its carbon dividend, nuclear is too risky — financially, politically and environmentally — to pursue.
(Nityanand Jayaraman is an independent writer and volunteer with the Chennai Solidarity Group for Kudankulam Struggle.)