World Nuclear Association on the role of nuclear in the energy transition

This article is sponsored by World Nuclear Association

Sama Bilbao y León, director general of World Nuclear Association, discusses the role of nuclear in the energy transition, as well as regulatory updates and technological advancements in the sector.

Sama Bilbao y León

The current energy crisis and impacts of cost to consumers have raised energy security as a key issue in addition to addressing climate change. What are the key drivers of current energy policies and how are these impacting the role of nuclear energy?

In recent times a number of crises have highlighted the vulnerabilities of the current energy system. The pandemic contributed to a series of economic and energy shocks, and many governments started to introduce economic stimuli that linked the pandemic recovery with the clean energy transition. Since the end of last year, and even more so since the beginning of the war in Ukraine, there have been huge spikes in the price of natural gas and disruptions to global energy supplies, particularly in Europe. And everybody is impacted when the price of natural gas and other fossil fuels rise.

Vulnerabilities in security of supply have become apparent, not only for fuels themselves but also for the raw materials that are needed to generate energy. All energy sources are impacted by these shortages. Not just gas and oil, but also technologies such as solar and wind.

As a result of this, we are seeing renewed policy support for nuclear energy in many countries. This started before the Ukraine war, as there was interest in incorporating nuclear energy within the context of climate action. Support has been boosted due to concerns over energy security and also the need to achieve post-pandemic economic recovery.

To give some examples from around the world, the UK intends to triple nuclear capacity to 24 gigawatts by 2050, at which point it will make up 25 percent of the country’s electricity. In France, the government is moving forward with a programme of new reactors. Belgium was moving towards a complete nuclear phase out by 2025, but this has been delayed and will potentially be reversed. Germany is less certain due to a delicate political situation, but while policymakers remain committed in principle to closing their three remaining reactors by the end of the year, they have agreed to keep them available over winter. In China, nuclear is a major energy priority and capacity will soon eclipse that of France. All this shows how nuclear energy has become much more visible.


Organisations and financial institutions are making climate change commitments and starting to set transition plans. What do you think are credible pathways to guide the flow of capital?

In recent years, sustainable finance has become more mainstream. Unfortunately, there is as yet no internationally agreed set of criteria to determine whether an activity is or isn’t eligible. But after Glasgow, we have seen many organisations and financial institutions increase their commitments towards the decarbonisation of the economy, including through making more comprehensive and transparent climate disclosures.

Some new international standards are starting to arise. These will be instrumental in helping companies assess and report on climate-related risks and opportunities, and adjust their business models accordingly. They are also important for providing relevant information to investors and helping to channel investment towards decarbonisation of the global economy.

We are seeing organisations such as the Network for Greening the Financial System and the Glasgow Financial Alliance for Net Zero exploring ways to help companies assess climate risk and providing guidance on their energy transition plans so that they result in impactful investment.

Many risk assessments and transition plans rely on net-zero climate scenarios. These aim to provide insight into the optimum deployment of resources and energy technologies required to meet net zero. It is important that the quality of modelling improves, and that nuclear energy is fully considered and represented within these scenarios, free from artificial constraints.

For example, the net-zero scenario from the IEA estimates that global nuclear energy capacity doubles by 2050. We believe this is not ambitious enough. That scenario only considers the electricity from large reactors, and leaves out small modular reactors, nuclear hydrogen production and heating. The NGFS net-zero scenario estimates about 1,500 gigawatts of nuclear power by 2050, which is almost four times the current level. The 2018 “middle of the road” IPCC 1.5C report illustrative scenario – which assumes the minimum number of changes to the behaviour of humans, policies and markets – projects six times more nuclear energy in 2050 than 2010. The financial community needs to take account of the full potential of nuclear energy in order for their net-zero target setting to be ambitious, yet realistic.


Can you talk a little on the inclusion of nuclear energy within EU Taxonomy and nuclear within the sustainable finance framework?

We are pleased that the EU green taxonomy recognises nuclear energy as an eligible sustainable technology. It is important to emphasise that this is not ‘greenwashing’ the taxonomy. It is in fact the opposite. The United Nations Economic Commission for Europe recently commissioned a lifecycle assessment that compared all energy sources. It found that nuclear energy has the lowest greenhouse gas emissions, even compared against wind and solar. The report concludes, based on an analysis of 19 parameters, that the overall lifecycle health and environmental footprint of nuclear is among the lowest of all energy sources. Parameters include the use of raw materials and the land use of technologies, as well as the health impacts on the population.

As a capital-intensive energy source, inclusion in sustainable finance taxonomies is very important for nuclear energy, just as it is for all low-carbon energy technologies. It is essential for nuclear energy to have access to affordable financing as this reduces project costs and helps it become competitive with other energy sources. This in turn will ensure affordable electricity to the average consumer, which is what we all want.


What about the cost and financing of nuclear energy, how does it compare with renewables and other technologies?  

Nuclear is most definitely a cost-effective low carbon solution. There is an IEA report published every five years that compiles the projected costs of generating electricity. The most recent edition concludes that nuclear is the dispatchable low-carbon technology with the lowest expected cost in 2025. The only thing that compares is hydro, which is a very competitive energy source when deployed, but obviously depends on the natural endowments of individual countries.

Source: IEA

This applies to new nuclear, but the long-term operation of existing nuclear plants should also be considered. Extending the life of the current nuclear fleet for as long as feasible both economically and from the safety and regulatory point of view, is hands down the lowest cost form of low carbon generation.

We have seen nuclear projects in Western countries which have experienced delays and gone over budget. Our analysis is that in these particular cases, countries have gone decades without new projects, and this has caused a loss of skills and capabilities. Essentially, what we are looking at are the learning difficulties of first-of-a-kind projects which have started almost from scratch. The Western nuclear industry has had to rebuild supply chains and regain expertise and capabilities. This takes time and costs money. Continuing with additional construction projects is the best way to improve capabilities and competencies and realise on-time, on-budget projects.


Can you comment on the safety concerns surrounding nuclear energy?

On the whole, nuclear plants are among the safest industrial facilities, but there is a perception that they aren’t. With events such as the Fukushima accident, there is heightened global fear that these events are happening every other day, or that the consequences of these events are insurmountable. In reality, while serious, such accidents are rare. While the accident at Fukushima did have significant socioeconomic consequences, the loss of human lives or irreparable environmental damage was smaller than accidents that occur more frequently at certain other industrial facilities. Nuclear is responsible for the lowest number of fatalities of any major dispatchable electricity source, over 100 times fewer than coal and natural gas.

As for waste, when best practices are followed, we account for all hazardous materials generated, whether it’s waste or used nuclear fuel. The industry sets aside funds to manage this material from day zero. Essentially, every kilowatt hour of nuclear electricity that is sold should include an amount of money set aside for the management of used nuclear fuel and wastes from decommissioning.


We hear that new nuclear technologies are in development. What is the potential impact of these new technologies, and will they make nuclear more investable?

Currently, we have large reactors deployed in many countries. These are based on proven mature technologies and are capable of producing abundant, reliable 24/7 low-carbon electricity in an affordable manner. Many countries require large amounts of electricity, and these reactors are a good way to supply that. In 2021 the average capacity factor of the global nuclear fleet was 82.4 percent, up from 80.3 percent in 2020. This continues the trend of high global capacity factors we have seen since the year 2000.

However, the energy systems of the future are not going to be anything like the energy systems of today. We are going to see more distributed grids, smart grids and perhaps even microgrids in remote areas, as well as so-called hybrid energy systems with a greater reliance on energy storage and application shifting.

Small Modular Reactors and microreactors will be well suited to operate in remote locations or in a distributed grid. They will be more capable of load-following than large reactors that usually prefer to operate at a more or less constant rate. Many of these advanced reactor designs can make better use of their heat output. Some reach high temperatures and are being optimised for industrial applications such as hydrogen production, in addition to established low temperature applications like desalination and district heating.

When the demonstration projects are operating, we believe that we can hit the ground running and start deploying these reactors in large volumes, at a global level. The idea of smaller reactors is, instead of pursuing economies of scale, which is what we aim for in large reactor designs, we pursue economies of series production. Essentially, we are shifting the business case from projects to products.

Vendors plan to have factories which will manufacture these small modular reactors and then put them on the back of a train or a truck to transport them to the site of deployment. Minimal civil works will be carried out on-site. These designs should be much faster to deploy, and the construction times and the overall cost of the projects should be much lower. This should trigger interest in a greater range of potential customers.


What is WNA doing to overcome the barriers confronting nuclear energy today?

As an organisation that represents the global nuclear industry, we operate in three concentric circles. The first circle is working internally with the industry to implement best practices and create a robust global supply chain for the industry. We have more than 180 members in 44 countries in all continents, representing all sectors of the global nuclear fuel cycle. We connect them with each other and offer them forums where they can learn and work together to accelerate nuclear deployment globally.

In the next circle, we work with governments, national regulators and all the entities that have an impact on the way the nuclear industry operates. We bring the experience of the industry into those conversations. For example, we are working with many regulators and a few governments to try to put in place innovative frameworks to accelerate the way we license reactors.

The last concentric circle is international climate and energy bodies, where we represent the nuclear industry, and nuclear energy in the global energy debate. We take part in COP meetings, work together with UN bodies and the International Energy Agency as well as engaging with NGOs, business associations and the global finance community. Through this work, we are trying to put clear and authoritative information and analyses in front of global energy decision makers, so they have the right information about nuclear energy.