It was five years ago that the Fukushima nuclear accident happened, the impacts of which are still being felt across the world. However, Fukushima is only partly responsible for the recent move away from nuclear across a large part of the world.

The biggest impact of the Fukushima accident was on Japan. Some 150,000 people were evacuated because of the threat of radioactivity and the ongoing cleanup is expected to cost over $100bn. The Japanese government nationalised the Fukushima owner Tepco and in the ensuing years Japanese nuclear production went from 47GW coming from some 52 nuclear reactors to next to zero. This gaping hole in Japan’s power mix was met by a mix of energy efficiency, LNG, oil and increasingly coal which was very expensive for the Japanese economy and was one of the reasons why the country went from having a trade surplus to a trade deficit in 2013. The move away was obviously not good for Japanese CO2 emissions which have risen significantly in recent years making the government’s 2020 CO2 targets unreachable.

Fukushima also had a dramatic impact on global sentiment towards nuclear power. Not alone did it push countries like Switzerland and Germany to make decisions to exit nuclear altogether but it also forced rethinks and new build cancellations across the world. In addition, we have seen regulators impose higher safety standards on nuclear plants. However, most of the problems in nuclear have nothing to do with Fukushima, it is to with the declining relative economics of nuclear.

One of the biggest issues is the spiraling costs of decommissioning across the world which is a risk that investors do not want to take. What is clear is that we have underestimated those costs significantly, the result of which is that many countries such as the UK are now forcing the tax payer to pay for those costs. It is similar situation in Germany where the government is in the process of setting up a fund to decommission the German nuclear fleet as it becomes increasingly clear that the utilities do not have enough reserves set aside to cover those costs.

Then we have the case of the French nuclear technology provider Areva, and the spiralling costs and increasing delays around its next generation nuclear technology, the so called European Pressurized Reactor (EPR), which has basically taken the company close to bankruptcy.

The real killer though to any nuclear renaissance was the decision by the UK government to offer the French utility EDF a guaranteed price for electricity produced by the new Hinkley nuclear power station of £92.50 per megawatt hour (plus inflation) for 35 years after it enters service. You would have thought this would have been a “no brainer” for any power producer given that the power price being offered to EDF is 3x the level of current UK wholesale prices. However, EDF is struggling to finance the deal and the more it struggles the greater the likelihood that no new nuclear power stations will be built in Europe or North America. Who will spent three times the power price on new nuclear when there are clean and safer technologies such as gas, wind and solar which are cheaper?

But the bigger issue with nuclear is that its costs (both build and operational) have gone up as the years have gone by. It has a positive experience curve. The more we build, the more problems we realize the technology has and the higher costs go. Meanwhile we have technologies such as solar and lithium-ion batteries which have negative experience curves meaning that costs continue to go down as production goes up.

And what the UK government has done with Hinkley Point is to make a technology bet on a nuclear industry that has not proved adept at reducing its costs. To make matters worse they have ordered it 10 years in advance of that station being built. Doesn’t sound very wise in the modern digital era we are living through where we have extremely fast technology change all around us…

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• Areva ,
• Co2 emissions ,
• EDF ,
• EPR ,
• European Pressurized Reactor ,
• fukushima ,
• German nuclear ,
• japan ,
• Japanese nuclear production ,
• nuclear decommissioning ,
• nuclear recession ,
• nuclear ren ,
• Nuclear Renaissance ,
• Switzerland nuclear ,
• Tepco ,
• UK nuclear policy ,