Brussels hosted the inaugural Nuclear Energy Summit on March 21, chaired by Prime Minister Alexander De Croo and IAEA Director General Rafael Mariano Grossi. World leaders convened to emphasize nuclear energy’s role in combating climate change.
Background and Significance
- The UN Climate Change Conference (COP28) in Dubai (UAE) in December 2023 underscored nuclear energy’s essentiality in achieving climate objectives.
- A declaration endorsed by 22 global leaders outlined the imperative to triple nuclear energy capacity by 2050.
- The summit, aligned with the IAEA’s ‘Atoms4Netzero’ initiative, forms part of the collaborative effort towards decarbonization.
Nuclear Energy Advantages
- Nuclear power emits significantly less carbon compared to solar, wind, hydropower, and geothermal sources.
- Its capability to provide uninterrupted energy regardless of geographical limitations positions it as a vital element in the renewable energy mix.
- Nuclear power plants boast low operational costs, a smaller land footprint, and a longer lifecycle compared to other renewable energy sources.
Financing Nuclear Energy: Challenges and Solutions
Technological Advancements
- Recent advancements in nuclear technology, including Small Modular Reactors (SMRs), enhanced radiation proofing, and extended fuel cycles, mitigate nuclear-related risks.
- The entry of technology startups into the nuclear industry signals a destigmatization of nuclear energy and introduces innovation.
Role of Multilateral Development Banks (MDBs) and Private Investors
- Despite technical progress, MDBs and private investors have not significantly contributed to the nuclear industry’s financing.
- The World Bank’s last nuclear project financing was in 1959, highlighting the need to reassess MDBs’ nuclear financing policies to incorporate private capital or blended finance models.
Cooperative Funding Models: Success Stories
Examples of Cooperative Funding Models
- France, South Korea, Russia, and the U.K. utilize cooperative funding models where investors raise credit from the market and take full responsibility for project delivery.
- Finland’s ‘Mankala’ model, in practice since the 1970s, involves multiple private companies jointly owning energy producers, sharing construction and operating costs, and buying energy at cost based on ownership share.
Financial Creativity and Market Support
- Financial innovation and market support, coupled with low interest rates, can unlock the potential of nuclear energy at scale, replicating successful funding models.
Nuclear Energy Landscape: Current Status and Future Prospects
Global Nuclear Reactor Statistics
- There are currently 440 nuclear reactors worldwide, contributing a quarter of the world’s low-carbon energy.
- With 60 reactors under construction and 110 in the planning stage, nuclear energy expansion is most pronounced in Asia, particularly in China.
Challenges in Infrastructure Development and Financing
- Despite ambitious expansion plans, nuclear infrastructure development and finance mobilization face challenges, evidenced by project terminations and bankruptcies.
- Companies like NuScale Power, Westinghouse, and Areva have encountered financial difficulties and project overruns, indicating the complexities of nuclear energy financing.
Nuclear Power in India: Current Status and Future Prospects
Current Nuclear Energy Landscape
- India’s first commercial nuclear power plant (NPP) in Pahalgarh, Tarapur, provides reliable energy at a cost of 2/kWh lower than solar power tariffs.
- The Kudankulam power plant in Tamil Nadu offers electricity priced between 4-6/kWh, comparable to coal-fired thermal power plants.
- Despite its versatility, nuclear power constitutes only 1.6% of India’s total renewable energy mix, attributed to various factors including stigma, weaponization risk, regulation, and high upfront costs.
Recent Developments and Liberalisation
- India’s nuclear industry is undergoing a novel phase of liberalization, marked by ambitious growth plans domestically and internationally.
- The invitation of $26 billion in private investments signals a significant shift, aiming for a phased tripling of nuclear capacity from 7,480 MW to 22,480 MW by 2031-2032.
- Prime Minister Modi’s attandance at at the core loading of the Prototype Fast Breeder Reactor (PFBR) signified a positive trajectory for the industry.
Advancements and Self-Reliance
- The PFBR’s capability to generate fuel and power simultaneously represents a notable advancement in India’s largely self-reliant nuclear industry.
- These developments highlight a promising future for nuclear energy in India, despite past challenges and low adoption rates.
Source: Nuclear energy: fixing the finance (The Hindu, March 22, 2024)