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Outlook: IEA Says Nuclear Is Set for a 'Comeback'

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Nuclear power is "set to make a comeback," International Energy Agency (IEA) Executive Director Fatih Birol said this week, as his agency released a long-awaited report on nuclear power's role in the global energy transition. If the transition proceeds with a precipitous decline in nuclear power generation, from 10% of global output to 3% by 2050, the energy transition will be more challenging, more risky and $500 billion more expensive, the report argues. But the IEA also warned that any true nuclear buildout needs industry to lower reactor construction costs by 40%, and governments to develop frameworks that "facilitate investment" in nuclear.

The new report repeats the IEA call — first made in its influential May 2021 report on achieving worldwide net-zero emissions by 2050 — for doubling nuclear power, which the Paris-based agency argues will provide a complementary role to renewables via its dispatchability and its provision of "system services." It also builds on a May 2019 report, the first by the IEA to focus entirely on nuclear power, which argued that nuclear life-extensions are "generally cost-competitive" with other power generation sources, including new wind and solar capacity.

This week's report, titled Nuclear Power and Secure Energy Transitions and released Jun. 30, expands its focus to argue that nuclear energy "can help make the energy sector's journey away from unabated fossil fuels faster and more secure," and notes that the global policy "landscape" is "opening up opportunities for a nuclear comeback."

Birol praised recent policy shifts in Belgium and South Korea that reversed official nuclear phaseout goals just as he had last week implicitly criticized Germany's decision not to extend its last three reactors beyond 2022. But he also refocused his pro-nuclear arguments on both energy security, cost and geopolitical grounds, noting in the last instance that China and Russia are taking the lead in nuclear power, and China is set to operate more nuclear plants than any other country by 2030.

A Growing Appetite

"We were already seeing before the current war context that there was a growing appetite for nuclear power," said Birol, but thanks to "high energy prices," a "growing attention to energy security" and the "national security of many governments," the IEA is "seeing that several countries around the world are reviewing their position vis-à-vis nuclear power." Birol pushed stridently for such a review, explaining that IEA staff examined what would happen if instead of more nuclear power, there were "less nuclear in the future." Their conclusion was that "it would be technically more challenging, more expensive and riskier. Therefore we thought we should bring this to the attention of the decisionmakers."

The IEA's official role is advising OECD member states on energy policies, and given recent policy signals it's safe to say that many OECD decisionmakers are already receptive to these arguments.

"Those countries that opt to use it reaffirm the role of nuclear energy in their energy mix," read this week's communiqué from the G7, comprising the world's leading democracies, issued on Jun. 28 two days before the IEA report. "Those countries recognize its potential to provide affordable low-carbon energy and contribute to the security of energy supply as a source of baseload energy and grid flexibility. They state their assessment that the development and deployment of advanced nuclear technologies including small modular reactors within the next decade will likely contribute to more countries around the world adopting nuclear power as part of their energy mix."

Another policy signal could come on Wednesday, Jul. 6, when the European Parliament votes on a European Commission "taxonomy" proposal that would classify some natural gas and nuclear power projects as "sustainable," and thus eligible for "green" funding.

Necessary or Extraneous?

Not surprisingly, advocates of 100% renewables pushed back on the report, with Stanford University's Amory Lovins saying "it is no more transparent, soundly structured, or plausible than the IEA's two similarly lopsided previous versions." He argued in a perspective that locally optimized clean-energy portfolios "obviate classical dispatchability and 'baseload' capacity." Separately, researchers at Stanford, led by Mark Jacobson, published a study last month arguing that grid stability analyses indicates that some 145 countries, grouped into 24 regions, can by 2050-52 "exactly match demand" with 100% supply from water, wind and solar power.

The IEA report, which was externally reviewed by multiple industries within the nuclear sector and by pro- and antinuclear governments, came to a dramatically different conclusion.

"Nuclear and other dispatchable power sources complement renewables by providing critical services to the electricity systems," Keisuke Sadamori, the IEA's director of energy markets, said in a Jun. 30 presentation. "The predominance of wind and solar in the power mix, and the end of unabated fossil fuel generation, must be complemented by a diverse mix of dispatchable generation to provide stability, short-term flexibility and adequate capacity during the peak demand periods."

Indeed, Sadamori and the IEA believe that this role is so important that governments must restructure energy markets to reward it. "The wholesale markets should price system services to reflect their value," said Sadamori. "The need for system services such as flexibility, adequacy and stability increases sharply as the share of variable renewables increase. Electricity markets should be designed to fully value these services, not just the electricity production."

This leads to the new report's most notable rhetorical gambit: a low-case nuclear variant of the agency's 2050 net-zero scenario that "considers the impact of failing to accelerate nuclear construction and extend lifetimes." In this case, nuclear's share of total global generation would decline from 10% in 2020 to 3% in 2050, and solar and wind would "need to fill the gap, pushing the frontiers of integrating high shares of variable renewables. More energy storage and fossil fuel plants fitted with carbon capture, utilization and storage would be needed." As a result, this scenario would require "$500 billion more investment" and raise annual consumer electricity bills by an average of $20 billion to 2050.

Topics:
Nuclear Policy, Low-Carbon Policy
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