Nuclear Reactors 363 - The Difficulties of Financing Nuclear Power Projects
The Nuclear Energy Agency is an intergovernmental agency that was created in 1958 as part of the Organization for Economic Cooperation and Development. Thirty one countries participate in the NEA. They represent about eight five percent of the installed nuclear power generating capacity of the world. The mission of the NEA is to" assist its member countries in maintaining and further developing, through international co-operation, the scientific, technological and legal bases required for the safe, environmentally friendly and economical use of nuclear energy for peaceful purposes."
The International Framework for Nuclear Energy Cooperation was first proposed by the U.S. in 2006. The idea was to " form an international partnership to promote the use of nuclear power and close the nuclear fuel cycle in a way that reduces nuclear waste and the risk of nuclear proliferation." Critics of the IFNEC say that their advocacy of reprocessing spent nuclear fuel will be expensive and increase the risk of nuclear weapons proliferation. Critics also say that the Framework discriminated between countries that have a nuclear fuel cycle and countries that do not. The U.S. Congress provided far less funding than requested by the White House and, in 2009, the U.S. Department of Energy cancelled the U.S. "domestic components" of the plan. Currently, there are twenty five countries participating in the IFNEC.
The announcement of the IFNEC said that it had four main goals. " First, reduce America’s dependence on foreign sources of fossil fuels and encourage economic growth. Second, recycle nuclear fuel using new proliferation-resistant technologies to recover more energy and reduce waste. Third, encourage prosperity growth and clean development around the world. And fourth, utilize the latest technologies to reduce the risk of nuclear proliferation worldwide."
The NEA and the IFNEC just cosponsored a conference called Nuclear Energy's Role in the 21st Century: Addressing the Challenge of Financing in Paris France. The conference convened "leading stakeholders from energy planning authorities, regulators and export credit agencies, as well as vendors, utilities, bankers, rating agencies and insurers, to identify key barriers and develop approaches to address the financing of nuclear projects."
The head of the NEA told the attendees that the energy market was broken. He said that when subsidies are necessary to build power plants there is a serious problem. Prior to proposing subsidies for power plants, it is necessary to ask whether the energy marketplace in member countries was functioning as it was intended to.
He raised the question of pricing carbon emissions as a solution to climate change. If climate change mitigation is important, there will have to be a tax on carbon. Without a significant price on carbon, nuclear power will be much less competitive against natural gas.
He said that it was really impossible to give a specific price for a nuclear power plant because there are so many different variables in different places and with different designs. He pointed out that the price given for building a new plant might also include the cost of new infrastructure and transmission systems. He claims that the price of a new nuclear power plant has to be seen as an investment in a sixty year asset that will produce a lot of electricity for a long time. Although some nuclear power projects are behind schedule and over budget, he said that there were also projects that were on time and on budget. He was skeptical about the viability of small modular reactors, especially if they need to be relicensed in every country where they are installed.
He mentioned that the cost of addressing safety issues post-Fukushima was not as expensive as had often been claimed. He does not think that nuclear safety needs to be a major impact on the economics of nuclear power.
He pointed out that things have change significantly in project implementation, the nuclear supply change and the financing of nuclear projects since most of the existing nuclear power reactors were built. Deregulation in many countries has changed the financing models for major power projects. In many markets, it may be impossible to justify the construction of any power generating system without some sort of subsidy or other type of government support.
With respect to nuclear technology, new companies are supply reactors and components. New vendors are pushing advanced reactors aggressively around the world. New types of reactors will be entering the marketplace in the future. With all these changes including the pressure of climate change, financing new nuclear projects will be difficult.
