The Banking Executive Magazine - June 2022 Issue

Nuclear Energy Since the Fukushima accident in Japan more than ten years ago, nu- clear power has been on the decline, but it could be about to make a comeback. Some have claimed that nuclear energy can assist in address- ing the dual problems of energy security and climate change consid- ering Russia's invasion of Ukraine and the recent spike in natural gas prices. Is the industry doing well again, or is this just another false dawn? Until recently, nuclear power’s prospects seemed poor. Plants built in the 1970s and 1980s are nearing the end of their working lives, while Germany and Japan decided to shut down theirs for political reasons. Of the relatively few new nuclear plants currently being built, many have been blighted by management fail- ures and technical faults. The flag- ship EPR pressurized water reactors at Flamanville in northern France and Olkiluoto in Finland are, respec- tively, 13 and 12 years behind sched- ule. Hinkley Point in southwest England, which was supposed to have provided the power to cook Britain’s Christmas turkeys in 2023, may now be operational in 2027. In- evitably, all these projects are mas- sively over budget. In the United States, no new com- mercial nuclear facility has opened since 1996. The combination of cheap domestic shale gas and subsi- dies for wind power has undermined the economics of existing plants and discouraged investment in new ven- tures. With the cost of alternative en- ergy supplies falling, nuclear began to look excessively costly and risky. In many countries, staff with nuclear engineering skills are aging, and re- cruitment has been minimal over the past decade. The industry’s argument that nuclear should be regarded as a boon to the clean-energy transition has not halted the decline. But over the past year, surging energy prices and the energy insecurity triggered by Rus- sia’s invasion of Ukraine have re- minded governments and consumers that depending on imports of key strategic resources is risky. Maximiz- ing domestically produced electricity supplies should be the starting point for any energy-security strategy. At the same time, the sharp increases in natural-gas prices in the past 12 months have begun to make new nu- clear facilities look much more com- petitive. The result is a wave of new projects and plans. UK Prime Minister Boris Johnson wants nuclear power to pro- vide 25% of the country’s electricity by 2050. In April, China approved ISSUE 162 JUNE 2022 the BANKING EXECUTIVE 33