Nick Butler and Shahin Vallee – an economist specialising in European affairs and a former economic advisor to Emmanuel Macron The energy market in Europe is being radically transformed by formidable forces, but governments and companies alike are so far failing to adapt to a changing world. Some of the greatest risks lie in the nuclear sector. The scale of the challenge suggests that only a pan-European approach can produce viable solutions but can the continent, in the wake of Brexit, deliver the necessary co-operation? Three principal factors are at work: The rapidly declining marginal cost of renewable energy (solar and wind), is threatening the economics of nuclear and fossil-fuel powered generation and, starting in Germany, breaking down the business models of the established utilities. Secondly the increasing openness of the European energy market is such that policy decisions taken in one country immediately weigh on others. This is accelerating the pressure on the business models of utilities. Thirdly An entire generation of nuclear power plants built in the 1960s and 1970s is reaching the end of its working life. Plants will need to be retired, decommissioned securely and in some cases replaced at very high cost. Decommissioning know-how, however, is minimal and there is no standardised and affordable model for the development of new nuclear capacity or its integration into a system in which renewables will be a growing force. Over the next decade, France must begin to decommission and replace its low-cost but ageing fleet of nuclear reactors. The cost of decommissioning is being downplayed but is estimated at about €54bn for 58 plants, of which only €23bn has been set aside by Paris-based utility EDF. This figure takes no account of the recent announcement by the French nuclear waste management authority that Cigeo, the used-fuel disposal plant, will on its own cost €25bn. Dealing with these problems requires a level of co-operation across Europe that goes well beyond current plans for an “energy union” designed by the European Commission. Reliance on technology that is proving expensive and difficult to bring on stream, in particular the EPR, will soon lead governments and energy users to choose alternative technologies. In the absence of clear decisions on smaller reactors, the next generation of plants will be developed by non-European companies and the global nuclear industry will become ever more dominated by Russia, Korea and China. New enterprises should be established that have both state and private shareholders, but are run commercially without day-to-day political interference. Their remit would be to develop the technology and skills to deliver a safe, cost-effective process of decommissioning and design the next generation of nuclear reactors fit for energy markets in which renewables will become the dominant source of supply.
FT 1st May 2017 read more »