12 April 2024
New Nuclear: How is the energy transition changing the nuclear narrative?
Nuclear power currently provides roughly 30% of the world’s low-carbon electricity and is the second-largest source of low-carbon power after hydropower. Yet, it is one of the most challenging and divisive energy sources.
Nuclear has been marred by a longstanding perception that it is fraught with danger. Critics argue that the potential for catastrophic disaster outweighs its benefits, but advocates maintain that nuclear energy is not only incredibly safe but also pivotal in the journey to net zero.
While there have only been three major nuclear accidents – the Three Mile Island partial meltdown in 1979, Chernobyl in 1986 and Fukushima in 2011 – the tragic and long-term fallout has left an indelible stain on nuclear energy that has been difficult to shift. Globally, around 48 GW in nuclear capacity has been lost since 2011 due to plants shutting down or not extending their operational lifetimes.
Yet the energy crisis prompted by Russia’s invasion of Ukraine and recent favourable policy changes have led a shift in narrative, putting nuclear back on the map and offering a reprieve to nuclear power plants that had been destined for closure.
A changing landscape for nuclear
At COP28, Australia’s Shadow Climate Minister Ted O’Brien said, “COP 28 will be known as the nuclear COP.” His comment came after 22 countries, including the US, the UK, France and Japan, issued a ministerial declaration to triple nuclear capacity by 2050.
In 2022, Japan announced plans to restart many of its reactors that had been dormant since the nuclear accident at Fukushima in 2011. Following the tragedy, Japan took all of its reactors offline; it had been the world’s third-largest producer of nuclear energy. Nuclear supplied more than a quarter of the nation’s electricity. Out of Japan’s 33 operable nuclear reactors, 11 reactors had been brought back online by October 2023, with a further 16 in the process of restart approval.
The EU included nuclear in its 2022 REPOWEREU plan, while the US introduced tax credits for existing nuclear power plants, and the Inflation Reduction Act offers support for advanced reactors.
France currently has 56 operational nuclear reactors, which generated 62.5% of the country's electricity in 2022. In 2014, the government set a target to decrease nuclear's share of electricity generation to 50% by 2025, but this goal was postponed to 2035 in 2019 and ultimately dropped in 2023. Meanwhile, Germany, known for its anti-nuclear stance, has extended the life of its three remaining nuclear plants.
The UK has nine operational nuclear reactors at six plants. While five are due to retire by the end of the decade, these will be offset by the Hinkley Plant C (HPC) project in Somerset, which is due to start generating electricity in 2027. The first to be built in the UK since 1987, HPC is expected to meet 7% of the UK’s electricity demand. Another project, EDF’s Sizewell C in Suffolk, was due to start construction in 2024 but has been delayed due to local opposition. Together Against Sizewell C's case was heard in the Court of Appeal in November 2023.
“COP 28 will be known as the nuclear COP.”
- Ted O’Brien, Australia’s Shadow Climate Minister
What is nuclear energy?
Nuclear fission is a reaction where neutrons hit an atom’s nucleus, causing it to split into two or more nuclei and release a large amount of energy. All electricity generated by nuclear power is via nuclear fission.
Increased demand to curb fossil fuels
The world is still too dependent on fossil fuels, but there is a growing awareness that coal can only be phased out when there is another energy source reliable and cost effective enough to replace it. Progress to reduce reliance has been limited to renewable energy in the power sector, which is set to account for 35% of energy use globally by 2025. Intermittent energy sources such as solar and wind will not be sufficient to break the hydrocarbon stranglehold.
The US Energy Information Administration Service has predicted that global electricity needs to increase by 30% to 76% by 2050 compared to current consumption, and zero-carbon technologies must meet this increase in demand.
To reach net zero by 2050, global nuclear power will need to double to almost 812 GW. Yet, it is not a solution that can be implemented in isolation. It is well-positioned to provide baseload power but does not cope well with power fluctuations in the grid. Nuclear energy is also unsuitable for providing backup power for intermittent resources as reactors cannot ramp up and down on demand.
To reach net zero by 2050, global nuclear power will need to double.
There is a sense that, had the world woken up to the potential of nuclear energy earlier, then this issue could have been avoided. However, as Executive Director of the Breakthrough Institute, Ted Nordhaus, points out, even at COP 21 in 2015, when climate scientists, including James Hansen, tried to argue for an enlarged focus on nuclear power, they were dismissed and even labelled climate deniers.
Ageing, waste and proliferation limit Nuclear’s potential
Construction and operational issues
Most nuclear plants operating were designed to last 25-40 years, and with an average age of 35 years, an ageing fleet is a growing problem for several countries, including France; globally, at least a quarter of all plants will need to be upgraded or shutdown in the next few years.
There is a sense that, had the world woken up to the potential of nuclear energy earlier, then this issue could have been avoided. However, as Executive Director of the Breakthrough Institute, Ted Nordhaus, points out, even at COP 21 in 2015, when climate scientists, including James Hansen, tried to argue for an enlarged focus on nuclear power, they were dismissed and even labelled climate deniers.
The World Nuclear Association has stated that nuclear plants are expensive to build but relatively inexpensive to run. Recent construction has run years behind schedule and been millions of dollars over budget. Consequently, financing has been difficult to secure. The wider labour shortage in the construction sector is acutely felt due to the specialist skills required for a nuclear development. There are also issues with intermittency and running costs, as nuclear plants have high fixed costs even when turned down.
The waste debate
Nulear fission produces radioactive waste, which takes thousands of years to degrade to radiation-safe levels. There is still no viable way to safely dispose of the radioactive material produced at every stage of a nuclear plant’s lifecycle.
Roughly 3% of the waste is labelled high risk; it is hazardous, radioactive for 10,000 years and needs to be cooled and stored forever. A further 7% is considered immediate waste, dangerous and must be stored in containers. The rest is low-level risk but still needs to be stored.
Currently, much of the world’s nuclear waste is kept in temporary storage across the world. While countries widely agree that deep geological disposal is the best solution for the final disposal of the most radioactive waste produced, many are collecting and storing waste in inactive nuclear power plants.
In the USA, about 88,000 metric tonnes of spent nuclear fuel from commercial reactors remain stored in these sites, and the number is set to increase by at least 2,000 metric tonnes each year.
In fact, the largest quantity of untreated nuclear waste is currently stored in Sellafield, UK. The site shut down in 2003, yet more than 100,000 of its employees are still involved in clean-up and decommissioning activities, which are planned to continue for more than a century at a cost of approximately USD118 billion.
The first deep geological disposal site is expected to start operating in Finland in 2024. At 450 metres below ground, the Onkalo facility has been designed to store waste for 100,000 years. Preferred sites have also been selected in France, Sweden, the UK and the USA.
The first deep geological disposal site is expected to start operating in Finland in 2024 and has been designed to store waste for 100,000 years.
Nuclear proliferation
Nuclear proliferation makes countries very nervous. In nature, uranium type U28 is widely found with a minimal amount of type U35. The enrichment process focuses on concentrating and increasing type 35. While it can be used as a means of reprocessing spent fuel to recover uranium and plutonium to recycle them for fresh fuel, it can also be used to build nuclear weapons. Most countries have signed international agreements to limit nuclear weapons, and the International Atomic Energy Agency regularly inspects facilities. Yet if nuclear energy becomes more prevalent as an energy source, the potential for its misuse will undoubtedly increase, too.
Micro reactors are less than 1% of the size of traditional nuclear reactors and can provide clean, carbon-free energy to remote communities.
Check out our case study on small modular reactors (SMRs) in Romania >
A new nuclear strategy to overcome obstacles and increase trading
While still in their relative infancy, small modular reactors (SMRs) – small-scale nuclear fission reactors – are one of the latest trends; they are more adaptable and produce less energy than existing nuclear reactors. Micro reactors are less than 1% of the size of traditional nuclear reactors and can provide clean, carbon-free energy to remote communities. Both these reactors and advanced modular reactors can be constructed modularly – parts created in a factory and assembled onsite – reducing the need for bespoke construction and reducing costs.
The costs associated with these new nuclear technologies are still prohibitively high but will reduce with economies of scale. International funding is supporting SMR development in certain emerging economies, like Romania.
The US Energy Department has suggested hundreds of coal power plant sites could be repurposed for nuclear. One advantage is that they already have the necessary permits and equipment. The Federal Regulatory Commission certified the first SMR design for Portland-based company NuScale Power in 2023. NuScale sees a wide range of applications for its SMR power plant design, including plans for it to replace the many US coal power plants that may retire by 2035. However, in November 2023, Nuscale announced it had cancelled its first reactors due to rising costs and weak customer demand.
By the end of 2024, the Idaho National Library (INL) also hopes to have built the world’s first modern “microreactor”. The Microreactor Applications Research Validation and Evaluation (Marvel) project aims to provide a 100 kW fission reactor for researchers and developers to gain operational experience and advance technological maturity for reactors at this scale. The goal is also to enable other new commercial microreactor applications. Next year, Marvel could be the zero-emissions engine of the first nuclear microgrid in Idaho National Library (INL) and overcome some of nuclear’s most significant obstacles: safety, efficiency, scale, cost and competition.
Interconnection is another area which could prove beneficial for nuclear energy. As we have established, building nuclear plants is hugely capital-intensive, but operating them is relatively cheap. Therefore, there is growing potential for nuclear trading power, and there are several examples where this is already happening.
France supplies roughly 90% of the Channel Islands’ power via subsea cables. The Jersey Electricity Company states that it has three multi-million pound supply cables to France, which supply 95% of its electricity – approximately one-third from hydro sources and two-thirds from nuclear.
France and the UK also signed an agreement in March last year, which has the potential to support an increase in electricity interconnection with France by up to two-thirds. There is huge potential to connect nuclear energy plants to further sources via subsea cables. If it is competing with other energy sources, nuclear is likely to win on stability and price.
How can traditional energy resources like nuclear, coal, and gas plants be combined with newer, cleaner technology to allow renewable energy sources to thrive?
Will insurance need to adapt?
It is not surprising that insurers have considered nuclear plants high-risk since the industry's inception. As a result, nuclear pools were established in the 1950s involving governments, the insurance market and the newly-formed industry.
The pooling of capacity by insurers facilitates the joint underwriting of risks. It tends to occur when risk is deemed high severity/frequency and insufficient capacity is attracted to the class of business. Other examples where pooling is used include terrorism and natural catastrophes.
There are still a relatively low number of nuclear plants worldwide compared to the number of conventional power plants, and the existing insurance infrastructure has been tailored to that profile. While this arrangement has worked well up until now, is it sufficient to accommodate the planned nuclear growth?
The answer may align with the broader energy transition, the changes to the profile of existing fuel sources and the challenges the world is facing. The grid distribution model was designed to handle comparatively few large base load power plants.
As the generation profile has shifted towards a greater number of small (renewable) plants, the grid is struggling to accommodate this globally. This has increased the risks associated with grid stability and again raises the question, how can traditional energy resources like nuclear, coal, and gas plants be combined with newer, cleaner technology to allow renewable energy sources to thrive?
The nuclear reciprocal pools and specialist carriers such as Nuclear Risk Insurance (NRI) and Nuclear Industry Reinsurance Association (NIRA) are adequate for the current requirements. However, if there is a reasonably substantial expansion of the number of SMRs, the way that the insurance market caters for nuclear energy will inevitably need to change. Our market will need to focus on adapting to meet future opportunities as they arise. Nuclear power and the inherent risks are distinct from those of conventional power (particularly from a liability perspective), which will pose different challenges to the insurance market in the future.
Navigating the new nuclear narrative
It has been clear for some time that there is no single solution to net-zero emissions. The energy transition is a complex journey of discovery, innovation and tenacity as the world grapples to understand what alternative sources of power it has at its disposal.
Part of the process is recognising the consequences of implementing or expanding the use of alternative energy. Nuclear energy development has been impaired due to safety and environmental anxieties. However, as the journey to net zero has become more pressing, countries have been urged to consider its potential, and this has prompted a revision of its reputation. A decade is a long time in nuclear technology, and the narrative has certainly evolved.
There are still important and valid concerns around nuclear energy, most notably the long-term disposal of waste, but there are also effective solutions that require more buy-in and investment. Most importantly, the newfound scalability of nuclear energy is an exciting concept that has the potential to supply low-carbon energy to communities that need it most.
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