The unraveling of Europe’s nuclear dream

And, no doubt, new technologies will be proposed that promise to solve all the problems of the past, while utilities will fight tooth and nail to keep existing plants online long after their expected life-span is complete.

Nuclear Europe: a dream unwinding, China Dialogue, Steve Thomas June 06, 2012“ Francois Hollande’s election victory is the latest blow to an industry struggling to revive the optimism of pre-Fukushima days. But the seeds of crisis were there well before Japan’s disaster, writes Steve Thomas. Prospects for nuclear power in post-Fukushima Europe are looking grim. Since the reactor meltdown in Japan last year, Germany, Switzerland and Italy have imposed phase-outs or abandoned attempts to start ordering new nuclear plants; the British programme has been delayed and one of the two remaining potential investors has dropped out; foreign investors are walking away from projects in eastern Europe, for example in Bulgaria and Romania; and France has elected a new president on an apparently anti-nuclear ticket.

With the leaders of Germany and France – two of Europe’s most powerful economies – now firmly in the “anti” camp, the outlook for nuclear power on the continent more widely is distinctly ropy. The Fukushima nuclear disaster of 2011, it seems on first glance, has been a devastating pill.

But while there is little doubt that the crisis in Japan significantly worsened the chances of a nuclear-powered Europe, it did so mainly by exacerbating problems that were already there – around cost, finance and public acceptance. It’s worth taking a moment to look at how these dynamics are playing out across the continent, and how they might impact Europe’s long-term energy agenda.

For Germany, the nuclear phase-out announced in the immediate aftermath of the Fukushima crisis, which will see all nuclear plants closed by 2022, was simply a return to the position that had applied for all but six months of the last decade. It is far from clear that German chancellor Angela Merkel, had she chosen to go a different route, would have been able to do more than extend the life of existing plants by a few years. New power plants, meanwhile, were a long way off. Similarly for Italy, where citizens rejected an ambitious nuclear construction programme in a referendum last June, there were always many hurdles to jump before the nuclear industry could get stuck in.

What Fukushima has done for Germany and Italy is to close off the nuclear option forever. All sides now know they must commit fully to energy efficiency and renewables to meet the climate-change challenge. And the environmentalists’ claim that nuclear isn’t necessary will be properly tested.

Meanwhile in France, the heart of Europe’s nuclear industry, it remains to be seen how firm Francois Hollande’s position will remain in office. Those with long memories will remember Francois Mitterand coming to power in 1981 on an apparent promise to stop new nuclear, only for a further 10 or so orders to be placed over the following six years. …..

Then there’s the United Kingdom, always the real test ground for the “nuclear renaissance” in Europe. A potentially large, prestigious market, which pioneered electricity market liberalisation, and where the government promised nuclear would receive no subsidies – if nuclear could survive in those conditions, it could survive anywhere.

Since a British nuclear revival was announced in 2005, the challenge has always been squaring commitments not to subsidise and to maintain a competitive electricity market with the need to give plant owners the certainty of income necessary to convince banks to back their schemes. Horizon, the joint venture set up by the two German companies RWE and E.ON has effectively been abandoned, and reports that it will be bought by Chinese or Russian interests look unrealistic.

EDF, the remaining serious developer in the United Kingdom, has more than enough to deal with back home in France, and financing anything other than a very secure investment across the channel looks more trouble than it’s worth. As the window when orders can be placed draws closer, negotiations between government and EDF are getting more pointed. And it’s looking less and less likely they will manage to sign contracts that are acceptable to the UK Treasury – the contracts will have to be guaranteed by public funds – and avoid falling foul of EU competition law.

In eastern Europe too, there have long been ambitions to build new nuclear plants. But plans have mostly been based on very unrealistic cost estimates and an assumption that the large amount of excess power produced could be sold profitably in western Europe. This has never been a convincing model and finance for projects like Belene in Bulgaria andCernavodă in Romania has always been a barrier to these projects going ahead…..

So, yes, the outlook for nuclear power in Europe is bleak. That has long been the case. But it does not mean this power source is going to disappear from the agenda. Four of the most aggressively pro-nuclear governments – the United Kingdom, France, Poland and the Czech Republic – are reportedly lobbying the European Union for nuclear power to be given the same status as renewables. Crucially, this would allow subsidies to be dished out without breaking EU laws barring direct state aid to industry.

June 7, 2012 - Posted by Christina Macpherson | business and costs, EUROPE

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