CONSULTING

Nuclear Finances: Corporate Meltdown?
Nuclear power has a significantly different finance profile to the other conventional power plant
technologies, with, under normal circumstances, large upfront construction costs, relatively small
fuel costs and at the end of operational life, increasing operational costs as well as significant
decommissioning and waste management costs. Furthermore, as other sections of the report have
shown, nuclear construction projects have recently demonstrated an almost inherent inability to
be built to time and cost. Under these circumstances, the views and actions of the markets, creditrating
companies and analysists can be decisive for the competitiveness of nuclear power.
Some years ago, many saw the call for decarbonization as an opportunity for nuclear power to
expand, given that no greenhouse gases are emitted during operation—although significant CO2
emissions are generated during other parts of the fuel and operational chain. However, as
illustrated in the nuclear vs renewables chapter, this has not occurred and it is renewables,
particularly solar and wind power, that have over the last decades been deployed at scale.
Steve Kidd, long-term nuclear industry strategist, has gone as far as suggesting “to abandon climate
change as a prime argument for supporting a much higher use of nuclear power to satisfy rapidlyrising
world power needs”. 175 The reason:
The nuclear industry giving credence to climate change from fossil fuels has simply led to a stronger
renewables industry. Nuclear seems to be “too difficult” and gets sidelined - as it has within the entire
process since the original Kyoto accords. And now renewables, often thought of as useful complements
to nuclear, begin to threaten it in power markets when there is abundant power from renewables
when the wind blows and the sun shines.
Indeed, there is growing conflict between the power produced by variable renewables, such as
wind and solar power, and the large centralized capacity operating around the clock (traditionally
known as base-load capacity), such as nuclear power and coal. In particular, many renewable
energy sources have priority access to the grid system and/or have lower operating costs than
conventional sources and therefore, when they are able to generate, it is their electricity that enters
the grid system. As more and more solar and wind is deployed, they are taking a greater and greater
share of the market at particular times, therefore, restricting the production sales of other power
sources 176 , especially in North America and Western Europe, regions where there is also flat or
falling power demand. On 15 May 2016, in Germany, the world’s 4th largest economy, for a few
hours over 80 percent of the country’s power was provided for by renewables 177 ; a country with
10.8 GW of installed nuclear and 48 GW of coal and lignite capacity.
Therefore, it is clear that as renewables make an ever increasing contribution to the power mix,
then any conventional power capacity will need to be smaller, more flexible units that compliment
175 Steve Kidd, “Is climate change the worst argument for nuclear?”, NEI, 21 January 2015, see
http://www.neimagazine.com/opinion/opinionis-climate-change-the-worst-argument-for-nuclear-4493537/,
accessed 1 July 2016.
176 Ela E., Milligan M., et al.,“Evolution of Wholesale Electricity Market Design with Increasing Levels of
Renewable Generation”, National Renewable Energy Laboratory, U.S.DOE, Office of Energy Efficiency &
Renewable Energy, September 2014, see http://www.nrel.gov/docs/fy14osti/61765.pdf, accessed 12 June 2016.
177 Renewables international, “Reports of 100% renewable power in Germany vastly overstated”,
17 May 2016, see http://www.renewablesinternational.net/reports-of-100-renewable-power-in-germanyvastly-overstated/150/537/95397/,
accessed 1 July 2016.
Mycle Schneider, Antony Froggatt et al. 60 World Nuclear Industry Status Report 2016