NEA study sets scene for reducing nuclear costs

03 July 2020

Building new nuclear capacity does not need to be risky or expensive, a new report from the OECD Nuclear Energy Agency (NEA) has found. The organisation has called for government action to support a rapid reduction in the costs of new nuclear capacity by creating policy frameworks that capture and apply the lessons learned and capabilities developed over recent years.

(Image: NEA)

Nuclear energy can play a very important role in the near term - as part of the recovery from the COVID crisis - and in the longer term to meet environmental and energy security targets, but the cost of building large new plants has presented a major barrier, NEA Director General William Magwood said yesterday at the webinar launch of Unlocking Reductions in the Construction Costs of Nuclear: A Practical Guide for Stakeholders. In some cases, costs and overruns have even led to project failures, he said.

The NEA's analysis has shown that high costs and project schedules are not an inherent characteristic of nuclear technology but a reflection of weak supply chains and a lack of recent construction in western OECD countries, he said. The new report provides "compelling evidence for highly achievable pathways to dramatic cost reduction in nuclear new build," said Magwood at the report's online launch. "Cost reductions are already taking place in some parts of the world, and higher levels of industrial and regulatory harmonisation could bring additional long‑term benefits. Industry still has much to do, but the leadership and timely action by governments is essential."

The primary focus of the report is on opportunities for potential cost and project risk reduction for contemporary Generation III reactors, as such opportunities could be unlocked over the short term, said Mike Middleton, chair of the NEA Ad hoc Expert Group on Reducing the Costs of Nuclear Power Generation (REDCOST) which took the lead in preparing the report. The study also looks at opportunities applicable to small modular reactors (SMRs) and advanced reactor concepts for deployment in the longer term, as well as longer‑term cost reduction opportunities associated with the harmonisation of codes and standards and licensing regimes.

"For those countries that wish to include the nuclear option in their electricity mix, there is a clear window of opportunity to support significant near‑term cost reductions and increase the predictability of large nuclear projects by leveraging on lessons learnt from past projects," Middleton said. "Every new project is an opportunity to improve the constructability of the design, refine the associated delivery processes and reduce perceived construction risks."

The report makes eight key policy recommendations: to capitalise on lessons learnt from recent Gen-III construction projects; prioritise maturity of design and regulatory stability through policy support mechanisms; for countries considering multiple new-build projects to consider committing to a standardised nuclear programme to capitalise on the "series" effect; to enable and sustain supply chain development and industrial performance; fostering innovation, talent development and collaboration at all levels, including by ensuring the timely development of demonstration projects and the licensing framework required to foster market deployment of technologies such as SMRs and advanced reactors; supporting robust and predictable market and financing frameworks, with targeted financial support, at least as a transitional measure; encouraging concerted stakeholder efforts, with governments creating an environment that fosters a "social contract" with industry and society; and tailoring government involvement to programme needs.

Paying the premium

A panel of key policy and industry experts echoed the NEA's calls for action, at the government level, to ensure nuclear plays its role in the future, decarbonised, energy mix.

Pál Kovács, Hungarian state secretary responsible for maintaining the capacity of the Paks Nuclear Power Plant; Liisa Heikinheimo, deputy director general for nuclear energy and fuels at Finland's Ministry of Economic Affairs and Employment; Kirsty Gogan, co-founder and global director of Energy For Humanity; Kirill Komarov, first deputy director general for corporate development and international business at ROSATOM, and Xavier Ursat, group senior executive vice president for new nuclear projects and engineering at EDF shared experiences of lessons learned from ongoing projects and their application to new programmes such as Hungary's Paks II, for which a construction licence application was submitted earlier this week.

The panellists agreed that government action has a part to play in driving costs down. State involvement is crucial, including a willingness to support long-term projects not just through regulation of market conditions but also through the permitting and licensing process, Ursat said. Market energy prices should be considered as a short-term signal and could not be a long-term signal for investment, he said.

There is a difference between cost drivers related to technology and those related to the market, Komarov said. Technical drivers - moving from first-of-a-kind to serial construction - will make a real difference to costs, but the market related problem of nuclear being expensive is mainly a problem in rich Western countries and not the rest of the world, he said. The high costs of nuclear in many OECD countries were the result of an "antinuclear prejudice premium" he said, describing this as "the price you have to pay for political risk, for regulatory risk, for troubled supply chains and for an unfair market environment where your competitors in other energy sectors are heavily subsidised".

"This report comes at a really important time," Middleton said. "The evidence in this report shows that nuclear does not need to be risky or expensive," he added. There is a strong role for government - but there is also a role for the nuclear sector to "step up to the plate" and work with governments to deliver meaningful long-term cost reduction programmes, he said.

"We welcome this new NEA report highlighting the clear opportunities for reducing costs, time and risks of nuclear projects from lessons learned on recent projects in western countries," Agneta Rising, Director General of World Nuclear Association, said today. "We also see great opportunities to follow the path of those countries that have been building plants continuously (such as China, Japan, Russia and South Korea) where nuclear energy is one of the most cost effective sources of electricity."

Researched and written by World Nuclear News