Update on Europe's nuclear renaissance
Developments occur in Germany, Turkey, Italy, the U.K.
There is plenty of news from Europe on the nuclear energy front. Some it is in the “pro” column, but all of it is influencing the shape of energy policy there. In Germany Chancellor Angela Merkel is facing new challenges to her plan to keep the nation's 17 reactors operating after 2022. In Italy, a key government officials spearheading the country's investment in nuclear energy resigned over corruption charges. However, one of Italy's largest utilities is going ahead with a site selection process for two new reactors. In Turkey the government finally inked a deal with Russia to build four new reactors. The U.K. election created a new government with an anti-nuclear minister in charge of energy policy, but his party won't vote against pro-nuclear policy in parliament. Here’s a series of updates.
Germany
Chancellor Angela Merkel (right) may have a tougher time keeping her pledge to maintain the nation’s 17 nuclear reactors running past their scheduled shutdown date in 2022. A defeat in a regional election in North-Rhine Westphalia May 11 eliminated Merkel’s majority in the upper house of the German parliament.
Social Democrats and Green Party members say the election results will force the Merkel to reappraise her plans to overturn the legislation enacted by a center-left coalition under Gerhard Schroeder that would shut down the reactors which provide nearly a quarter of the nation’s electricity.
Significantly, after Schroeder left office in 2005, he went to work for Russia’s natural gas monopoly – Gazprom – which inked a pipeline deal that would increase Germany’s dependence on Russia for energy if its nuclear reactors are taken out of service.
The election outcomes show German voters reacted after parliament approved a 22.4 billion (euro) emergency bailout for Greece. The move proved to be deeply unpopular with voters who gave the minority Green Party a big boost to 12% of the vote positioning it to have more significant influence on national affairs.
Green Party leaders took the victory to mean it now has leverage to stop Merkel from saving the reactors. However, it is only a regional election and not a national mandate. German Foreign Minister Guido Westerwelle told the German press the vote was a “warning shot” focused mostly on economic issues.
Experts in the intricacies of German legislative tactics debated whether Merkel has been forced into a political corner. While Merkel doesn’t appear to have the votes in the upper house to keep the reactors, some experts argued she can change the policy without asking for a vote on it. Her opponents aren’t expected to roll over on that point.
The whole issue has been reopened and may push Germany into a fossil fueled future exactly at a time when the rest of Europe is going the other way. German utilities have warned that a shift back to fossil fuel would result in rate increases making the country’s export driven economy less competitive relative to its neighbors like France.
Italy
The future of nuclear energy took one step backward and two steps forward the first week of May. The loss occurred in political column with the resignation of Italian economic minister Claudio Scajola (right) who left the government to defend himself in a real estate scandal. He was one of Prime Minister Silvio Berlusconi’s closest allies and the key driver of the nation’s reclamation of nuclear energy as a strategic resource after banning it in the 1980s.
Scajola came under investigation after press reports indicated he got an expensive apartment in a prime location in Rome at a dsicount price in return for political favors involving public works contracts. He defended himself saying he was leaving the government to clear up suspicions of corrupt practices. Scajola, 62, held a portfolio that included energy policy. No successor has been named and industry analysts worry that political momentum to build four new nuclear reactors will be lost.
While Scajola was stepping down. Enel, one of Italy’s largest utilities, announced it will build two new reactors in a northern province about 60 miles from of Rome. Enel said that it was looking at sites in Montalto di Castro and Caorso but had not decided which ones. The utility was reported to be leaning toward a site in Montalto di Castro for both reactors to have economies of scale and access to transmission facilities already there.
Any site selection process will have to overcome deep seated hostility from local officials. However, Scajola said, while in office, that the government pledged to engage local officials in the site selection process. It may have been a signal that enough government money being pumped into their respective economies would soothe these fears.
A total of four new reactors were planned by Scajola. Italian utilities said another four would be needed for the country to meet an objective of generating 25% of its electricity by 2025 with nuclear energy.
Turkey
The Russians are coming and they plan to build four nuclear power plants at the Akkuyu site near Mersin on the Mediterranean coast. Turkey's Energy Minister Taner Yildiz (right) said the four 1,200 MW VVER units will be financed, built, and operated by Rosatom, the Russian nuclear export company. Once in revenue service, the Russian firm has the option to sell up to a 49% interest of the $20 billion project to Turkish investors.
The Turkish government pledged to purchase 70% of the electricity generated by the first two reactors and 30% of the electricity generated by the next two for periods of 15 years from the time they enter revenue service. The reported price was $0.124 per kWh. The rest of the electricity will be sold at market rates in Turkey and to other countries in the region. The first two reactors are expected to begin operation by 2019. At one time the Russians had proposed a price of $0.21/KWh but backed off after an uproar by ratepayers who currently are charged $0.08 kWh for electricity generated by natural gas. The price is still lower than the last best offer by the Russians under the prior tender process which came in about $0.15/kWh.
A previous effort to award a contract for the reactors ended in 2009 the courts. This agreement did not involve competitive bids, but was negotiated directly between the Turkish and Russian governments. A separate agreement was reported to be in negotiation with South Korea’s KEPCO for a nuclear power station at Sinop on the Black Sea coast. It would involve KEPCO's 1,400 MW reactor design which the utility also proposed in its winning bid for the $20 billion UAE contract last December.
The reactor deal with Russia included a long sought after oil pipeline agreement that would allow Russia to expand its exports without shipping them by tanker through the Bosporus. The pipeline will run from the Black Sea port of Samsun to the Mediterranean port of Ceyhan which is already a major oil terminal for a major oil line that comes from Baku and services Azerbaijan’s Caspian Sea oil fields. The nuclear deal and the pipeline agreement moved Turkey into a much closer relationship with Russia on energy supplies.
United Kingdom
The election results have produced some strange comments from the new government. Chris Huhne, (right) the the coalition government’s new secretary of state for energy and climate change, is deeply in the anti-nuclear camp with a desire to promote wind and wave energy projects. However, he also told the BBC it will be “entirely up to the nuclear industry in the first instance” whether or not new nuclear power plants are built in the UK.
He said: “If the industry comes up with a plan which genuinely involves no public subsidy, then it will go through the normal national planning process… and the proposal will go forward in the normal way and we are committed in the Liberal Democrat side of the coalition not to vote against it.
Huhne said if there is a majority in parliament in favor of a particular proposal then new nuclear will go ahead. Liberal Democrats will not support the plans for as many as 11 new nuclear power stations, and as many as 18 new reactors. However, Conservative and Labour members of parliament do which gives the proposals enough votes.
Mr Huhne said: “The main point is that there is absolutely no disagreement in the coalition on the key principal that there will be no public subsidy. If a consortium is prepared to build a nuclear power station without public subsidy then in all probability new nuclear will go ahead.”
The Conservatives and Liberal Democrats, the two parties in the coalition, said they had agreed a process that will allow Liberal Democrats to maintain their opposition to nuclear power while making new nuclear construction possible.
The whole arrangement smacks of a particularly goofy form of political window dressing because it is silent on carbon taxes. It's like a non-denial denial. The U.K. will need to have a steep tax on carbon to effectively shift utility investment from coal-fired plants to nuclear energy. Also, the U.K. nuclear fleet is aging and half a dozen plants must be replaced within the next 10-15 years. All parties involved in the government know that there is an important role for financial support for the new reactors because of their tremendous capital requirements. The best that can be said for the situation is that Huhne knows his position is ineffectual at best, and has cloaked it with the fiscal figleaf of no new subsidies. There is more work to do in the U.K. on figuring out how to pay for the new reactors or at least provide confidence to investors.
Electricité de France (EDF) is leading the nuclear revival in the UK and has said it plans to have the first of four new nuclear power plants in the UK commercially operational in 2017. German utilities E.ON and RWE have teamed up, and a consortium comprising of Iberdrola, GDF Suez and Scottish and Southern Energy has also been established to build new nuclear power plants on land acquired by the companies. Billions in new investment are riding on the ability of the new government to sustain the nuclear effort in the U.K.
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