A new study ‘Nuclear for a decarbonized future’ by Barclays Research says investors have got it wrong- far from being a risky, costly, loss-making liability, nuclear is viable and bankable! ‘We believe that the current view of investors is that almost the entire gap of required carbon free generation output until 2050 will be met by building more renewables capacity. Nuclear energy, even though still a key part of the global generation mix, is not expected to see an increase in installed capacity. This is partially because of a view that while some countries could add net generation capacity to their power markets such as China and the US, others, such as Germany or Spain, want to exit nuclear altogether. We believe that this is an overly simplistic assessment. Given the scale of the challenge to transform the global generation mix, it is likely that nuclear will have to play a more important role in certain power markets, especially where there is clear and adequate government support’.
It says the potential for an increase in nuclear build could be driven by its higher load factors ‘implying lower capacity build requirement, particularly against renewables’. Load factors reflect the actual amount power delivered compared with the theoretically available amount if the plant could run full out all the time. Barclays quotes 90% for nuclear, only a 25% ‘blended average’ for renewables! In reality floating offshore wind is headed for 60% or more, while nuclear often gets under 80% or even less e.g. around 20% of French plants have recently been offline.
Less convincingly, given the current pretty consistently upward cost trends, it says that nuclear can win on affordability, ‘particularly so with new technology’. If it is alluding to Small Modular Reactors, that is very speculative- none yet exists and none may do for a decade or more. And what are we to make over the claim that nuclear is the safest option of all, safer than wind/solar? Well, yes, coal mining and burning is far more dangerous than anything else, but, while 220 or so deaths have been associated with wind turbine manufacture, installation, operation and maintenance globally, the occupational and public mortality figures for nuclear run into the several thousand, even on the basis of conservative estimates.
Barclays also claim that nuclear has the lowest waste footprint, arguing that while nuclear ‘is often perceived as inferior to pure renewables due to the need for uranium mining and waste disposal’, in fact, ‘the rare earth metals required for wind turbines and solar panels also require mining and, while the waste is not radioactive, the disposal requirements for these materials and for lithium ion batteries create a larger volume of waste than for nuclear fuel’.
It recycles the standard nuclear industry argument that nuclear waste is ‘much more dense than other waste- all the nuclear waste generated from commercial nuclear power plants since 1950 would fit on a football field stacked 30 feet tall’. And it updates it with this rather odd claim: ‘If recycling/reprocessing is considered, up to 97% of nuclear waste could be reused, compared with up to 96% for lithium ion batteries, c.80% for solar panels, and c.85% for wind turbine blades’. Some very odd numbers there. The 80, 85 and 96% lithium recovery rates might be improved, but for the moment they are surely pretty good. 97% for nuclear by products would be good too, but that’s very speculative and might be seen as very optimistic even by the most devoted fan of nuclear waste use and transmutation in fast neutron/molten salt reactors!
Barclays do seem to have gone a bit overboard on some of this. Wildly so in places. It notes that nuclear only accounts for 2% of China’s energy mix (in 2019), but sees that as ‘suggesting room to grow’! Well, as Barclays says, it is one of the few areas with nuclear growth, even if it’s slow. But are the Banks that short of new markets to invest in? What’s wrong with investing in renewables, everywhere?
Barclays concludes by asserting that ‘overall, nuclear power is far from perfect, but we believe it offers the best solution to network reliability from what is scalable at present and workable within the net zero by 2050 deadline’. This, I hope, is not offered as investment advice. If it was, it would arguably leave a lot be desired! But they do include this warning: ‘Barclays Capital Inc. and/or one of its affiliates does and seeks to do business with companies covered in its research reports. As a result, investors should be aware that the firm may have a conflict of interest that could affect the objectivity of this report. Investors should consider this report as only a single factor in making their investment decision’.
Well yes, it does seem that renewables are not seen by Barclays as being as good as new nuclear for making easy money, but maybe that’s because they are getting bad pro-nuclear, anti-renewables advice! Certainly, although it has more obvious sponsors, you won’t get anything better from the report from the Generation IV International Forum ‘Nuclear Energy: An ESG Investable Asset Class.’ It too sees nuclear as a bankable asset. However, the UK National Infrastructure Commissions recent report (see my earlier post) might offer a useful corrective. It noted that major completion delays and cost overruns were typical of the nuclear sector and, for more rapid short term deployment, it advised the government invest in renewables, hydrogen and bio-CCS instead.
The EU has been struggling with this issue for some while, with the European Commission (EC) trying to come up with an agreed taxonomy of energy sources to guide investment priorities. Five EU member states, led by Germany, have opposed nuclear inclusion in the support taxonomy. But ten EU countries, led by France, strongly backed nuclear inclusion. According to the FT, a draft EC taxonomy text says nuclear power should be considered a sustainable economic activity as long as EU countries that host power stations can safely dispose of toxic waste and meet a criteria to cause ‘no significant harm’ to the environment. If so, then the construction of new nuclear plants will be recognised as ‘green’ for permits granted until 2045. But it’s maybe not yet a fully done deal- with Germany still very strongly opposed, as is Austria, along with most greens. So are some key experts, who have challenged the advice given to the EC. And it may actually all get stalled, since the proposed ruling requires the use of ‘accident tolerant’ fuel, which the nuclear industry has pointed out is not yet widely available. All of which is of course is irrelevant, in practice, to Germany – it’s scheduled to close its last nuclear plants later this year, as it heads for 100% green power by 2035. Barclays may not agree with that!
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