On 11th March of 2011, an earthquake with a magnitude of 9.1 on the Richter scale struck Japan unleashing 30-feet-high Tsunami waves which killed more than 15,500 people. It led to one of the world’s worst Nuclear accident at the Fukushima Daiichi Nuclear Power Plant. A meltdown occurred in the reactors of the Fukushima power plant which displaced more than 140,000 people and contaminated the Fukushima prefecture. Total economic damage has been estimated to be north of the $100 Billion mark and there were 32 deaths directly attributable to the accident. The accident also started the decline of the world’s Nuclear power industry.
THE AFTERMATH
The nuclear power industry, in the aftermath of the accident, remains gripped in popular paranoia and doubt over the safety of this energy source due to its potential to kill millions if not handled properly. It also generates waste which is extremely toxic, radioactive and carcinogenic which has the ability to turn productive farmlands into wastelands for centuries. Fossil fuel and environmental lobbies have pushed towards stricter Nuclear energy policies. This has coincided with erosion of favourable public perception towards Nuclear power and eroding economic viability of nuclear energy.
Japan
Japan was one of the biggest proponents of nuclear energy and aimed to increase the share of nuclear power in total power production mix to about 40%. Self-sufficiency and reducing dependency on external sources of fossil fuels were the key motivators behind Japan’s pre-Fukushima nuclear industry.
Source: U.S. Energy Information Agency (available on Wikimedia Commons)
Japan gradually increased its production from Nuclear sources as per its nuclear energy policy in years prior to the disaster. However, in the disaster’s aftermath, Japan shut down all its nuclear reactors with only 9 of the 39 operable reactors being currently operational. Japan hopes to only meet about 20% of its electricity needs through Nuclear power by 2030, which is half the original target of meeting 40% of electricity demand through nuclear energy. All existing nuclear power expansion plans were shelved by the Japanese government in the aftermath of Fukushima Nuclear Power accident with the swing in public perception away from Nuclear Power.
Europe
Switzerland, which meets a third of its energy needs through nuclear power, also plans to phase out after a referendum in which 58% of voters voted against nuclear power. France, which earns about 3 Billion euros from energy exports, plans to reduce nuclear energy share from 75% to about 50% by 2030. Germany has planned a complete phaseout of nuclear power by 2030 and has already reduced the share of nuclear power in its power mix from about 22% a decade ago to about 11.5% currently. This comes in the backdrop of Paris agreement which places a significant onus on the countries to limit their carbon emissions and keep temperatures within 2 degree Celsius of pre-industrial revolution levels. This requires a significant reduction in carbon emissions and consequently investment in low carbon emission sources.
China
In a gloomy atmosphere for nuclear power across the world, China remains one of the few remaining places for expansion of nuclear power. China, with its gargantuan population and rapidly increasing living standards, is already the world’s largest consumer of electricity and might triple its energy consumption if the per capita consumption of energy matches American levels. Almost two-thirds of all reactors under construction are situated in China. However, the share of nuclear power in the total power market of China remains minuscule and stands at 3.9% of all power produced in 2017.
A typical Nuclear Power Station
Columbia Power Station is a commercial nuclear energy facility with a capacity to produce 1107 MWh of electricity. It is located in the state of Washington, USA, and has been continuously producing power since 1984. It is slated to continue producing power till 2043. Columbia Power Station supplied power at a capacity factor of 95% in 2014 and was the cheapest source of electricity in the region until 2014. The construction cost of Columbia was $6.39 billion dollars which translates to about $7.32 billion dollars when adjusted for inflation. The cost installation per watt was $5.32 per watt, which is higher when compared to contemporary rooftop photovoltaic systems that have lower lifespans. Columbia Power Station has been a model of efficiency and stabilizes the constantly fluctuating power production of the region which varies to a great degree with natural elements(Hydropower, Solar Power, Wind Power). The above-mentioned values are typical for a nuclear power plant. Nuclear power plants require huge sunk costs when compared to other means of production of electricity but are far more reliable and offer a degree of stability to the power production mix. They also have extremely long lifespans and extremely low operating costs which makes them competitive compared to other sources of power, but only in the long run with a near-full load at all times. Levelized cost of electricity (LCOE) which measures the price at which electricity must be sold to recoup operational and capital costs stands at $95/MWh for nuclear power. LCOE for solar power, onshore wind power, and conventional coal power are $125, $95 and $74 respectively in the United States. However, cheaper photovoltaic solar power systems have emerged in various parts of the world.
Greener and more dependable
Nuclear power in its current form has one of the lowest carbon emissions per unit of electricity generated while also being dependable with a capacity factor being consistently more than 90%. The capacity factor of renewable sources barely manages to cross the 50% mark. Photovoltaic systems, currently the most popular method of generating solar power, rarely cross the 30% mark for the capacity factor.
Tonnes of CO2 generated per GWh of energy produced
Source: world-nuclear.org
Monthly Capacity Factors for Select Fuels and Technologies (January 2011-October 2013)
Source: U.S. Energy Information Agency (available on Wikipedia)
Nuclear Waste and vulnerability to Terrorist attacks
Most of the hysteria surrounding nuclear energy stems from the massive contamination potential of nuclear waste and lack of permanent disposal facilities for it. Safe permanent disposal of spent nuclear fuel continues to be a thorn in the nuclear policy. There is no permanent storage/disposal facility for high-level nuclear waste and much of the nuclear waste remains stored on-site with small leaks and accidents being regularly reported. However, the fear of a dirty bomb detonation remains real with ISIS managing to get hold of radioactive material when it captured Mosul in 2014. A dirty bomb has the potential to contaminate huge areas of land for decades and make them practically worthless and inaccessible.
Reprocessing through fast breeder reactor which reduces the volume of nuclear waste drastically is possessed by only a few countries - Russia, China, India, France & UK. Nuclear Plants around the world are vulnerable to military-style attacks. Any attack that manages to disengage the cooling system has the potential to cause a full meltdown and contamination on a scale which dwarfs Chernobyl and Fukushima. According to reports by the United States 9/11 commission, nuclear power plants were potential targets considered originally for the September 11 attacks.
The financial health of firms in the Nuclear sector
Since the Fukushima disaster, the financial health of nuclear engineering companies has taken a noticeable southward dip. Areva, the French state-controlled reactor manufacturer, lost 770 million euros in 2017 and has lost money to the tune of billions of dollars every year since the Fukushima crisis. German engineering giant Siemens quit the nuclear industry in 2011 while American nuclear reactor maker Westinghouse and supplier of beleaguered Jaitapur Nuclear Power Plant reactors filed for bankruptcy protection. GE, Hitachi contributes less than 1% of all the revenues of the GE group and has been termed as a “drag” on GE’s power business by analysts.
Renewable blow to Nuclear Industry
While the nuclear industry is still seen with skepticism in the public eye, another industry is rapidly replacing the nuclear industry. Prices of solar power have crashed to 4 cents per unit while the production prices for the brand new Kudankulam nuclear power plant are 6 cents per unit. Narendra Modi led Indian government recently cut its targeted nuclear power generation for 2030 from about 63,000 MWh to about 22,000 MWh. It plans to do this using 19 reactors with the original ambitious plan of building 57 reactors being scrapped. In addition to solar power, wind power’s prices have also dropped considerably, now being even cheaper than thermal and nuclear power. This comes in the backdrop of ambitious plans of the Indian government to expand wind power to 60,000 MWh and expansion of solar power to 100,000 MWh. Solar power enjoys one of the most favourable public perception with various tax credits and government support for projects (both commercial and small scale) across the world. Nuclear power across the globe costs about $5 per watt of installed capacity as initial investment while Solar Power has recently been touching $3 levels, although with a significantly shorter lifespan. Nuclear power is economically disadvantaged since nearly all costs are sunk costs and it needs to operate at full capacity for a long period of time to be economically viable.
Coal on the other hand has low sunk costs ($0.5 per watt of installed capacity). Nuclear Power is suitable in low interest rate environments while power sources with low upfront and higher marginal costs are suitable for high interest rate environments found in the upcoming economies. This is due to higher opportunity cost in a high interest rate environment for a power source with high initial investment. This fundamental disadvantage historically prevented rapid expansion of Nuclear power when compared to Coal or other fossil fuel fired power plants.
A Slow Death
Source: World Nuclear Association
A worldwide trend of phasing out of Nuclear power was accentuated after the Fukushima disaster. Solar and other renewable sources of power threaten nuclear energy towards obsoletion in terms of producing energy commercially. The share of nuclear power generation in the total global mix has already fallen from 17.5 percent in 1996 to 10.3 percent last year, and is slated to fall further, challenged by renewables. The biggest problem is that nuclear power is becoming uneconomical as the costs of alternative energy sources fall, at least in some parts of the world such as in Europe and the United States. China has grand nuclear plans, but some of the nuclear projects there are falling behind schedule. It looks like the Nuclear industry is heading towards a slow meltdown.
