What role will nuclear power play in the energy transition?

Having had a torrid time over the last two decades, the nuclear power industry is at a crossroads. Some countries are pushing ahead with phase-out plans, while others – notably China – are rapidly expanding reactor fleets. In our view, investment in next generation nuclear capacity will be key to meeting the goals of the Paris Agreement.

In a recent report, compiled using our new Energy Transition Tool, we looked at both the current state of play in the global nuclear industry and the technology that could drive nuclear power forward. Fill in the form for a complimentary extract from the report and read on for an introduction.

Nuclear build has slowed down since the 1980s

At 366 GW, current operational reactor capacity is roughly the same as it was twenty years ago. The average rate of construction between 2000-2020 has been significantly lower than during the heyday of nuclear in the mid-1980s, when capacity was being built at a rate of 30 GW per year. At the same time, older capacity has been decommissioned.

Several factors have led to the slowdown in new nuclear build:

• The Fukushima disaster curtailed the nuclear programme in Japan, and in other countries, and has – understandably – created serious policy headwinds.
• Significant construction delays and cost overruns, caused partly by stricter safety measures, have afflicted large projects, particularly in Europe.
• Key suppliers have faced financial difficulties as a result of falling demand and rising construction costs.
• Operational issues are becoming increasingly commonplace in the world’s ageing nuclear fleet, impacting the sector's reputation.
• Competition from cheaper renewables has made the high cost and long timescales for nuclear harder to justify.

The current global policy picture for nuclear is mixed

While some countries (mainly in Europe) are aiming for a complete phase-out of nuclear, others – including China, Russia and India as well as Turkey, Bangladesh and the UAE – are enthusiastically pursuing a nuclear programme.

Over 125 GW of new large-scale nuclear capacity has been proposed, with the Russian state nuclear corporation ROSATOM the leading reactor provider both at home and abroad. China leads growth and is expected to account for 45% of global operational nuclear capacity by 2050.

However, as you can see from the chart below, in our base case overall growth is modest.

Wind and solar alone cannot meet global power demand

In this base case scenario, growth in wind and solar will dwarf the comparatively modest growth in nuclear power. But wind and solar alone won't provide the security of supply needed in a low-carbon world. If rapid renewables growth is matched by rapid growth in power demand, flexible and dispatchable sources will be essential too. Small modular reactors (SMRs) in particular are an option to take on this flexible role, alongside carbon capture, utilisation and storage (CCUS) and hydrogen. However, capex costs would need to fall by around 50% to compete with other flexible technologies.

Fill in the form at the top of the page to see charts on how nuclear capacity can complement wind and solar to provide security of supply in a low-carbon world.

Small modular reactors could play a key role in the future of nuclear

Like SMRs, the new breed of large-scale Generation IV reactors is being designed with enhanced safety and minimal waste in mind – two of the key issues with earlier designs. However, SMRs have additional benefits.

Put simply, size matters. The small, modular design of SMRs means capacity can be more closely matched to specific requirements. Key components can be manufactured centrally and assembled on site, reducing timescales. Their smaller footprint and emergency planning zones also mean they can be sited closer to industrial sites where waste heat could be used; old fossil fuel sites and their grid connections can be reused.

And while large-scale reactors have very high capital costs, the smaller scale of SMRs makes them more affordable to more utilities. (Though cost per kW remains relatively high compared to most renewable power technologies.)

SMRs also offer greater flexibility than large-scale reactors. Vendors have highlighted the potential to operate as low as 20% of nameplate capacity, for example, while the ability to refuel individual modules means less disruption to output.

Hurdles to SMR adoption

Despite the potential of SMRs, the sector is in its infancy. To date only a handful are either in operation or under construction. And there are plenty of other low-carbon dispatchable technology options to compete with, including hydrogen-to-power, geothermal or CCUS-equipped plants.

SMRs have several hurdles to overcome:

• Number of concepts. The present proliferation of concepts (around 70 globally) will need to be narrowed down so that benefits of scale can be realised.
• Cost. Both capex and cost of capital are initially likely to be high, impacting the levelised cost of electricity.
• Regulatory approval. Receiving approval for new reactor designs is time-consuming and expensive.
• Policy uncertainty. Nuclear faces ongoing and outsized risk in terms of potential policy change.
• NIMBYism: While smaller emergency planning zones mean SMRs can be built closer to residential areas, public opposition may still ensure they aren’t.
• Nuclear waste. Spent fuel is difficult and expensive to manage, although some SMR concepts are being designed to use reprocessed waste fuel from reactors.

The size of the addressable market for SMR will depend in part on the evolution of competing technologies. However, the global growth in power demand required to meet decarbonisation goals will create opportunities for many different technologies to make their mark.

In the full report you’ll find a more detailed analysis of next generation nuclear power, together with SMR case studies, a look at the potential role of nuclear power in low-carbon hydrogen production, and an exploration of the potential of nuclear fusion as the next cutting-edge technology.

Fill in the form at the top of the page for a complimentary extract. This includes:

• The evolution of new nuclear reactor capacity
• The global nuclear policy picture
• Large-scale nuclear project pipeline and in-development nuclear reactors by market share
• Operational nuclear capacity by region, and share by country
• Charts on electricity demand, global power capacity and nuclear capacity in different energy transition scenarios
• SMR developer/vendor landscape.