Europe’s beleaguered nuclear industry eyes comeback –


With ambitious decarbonisation targets and a lingering energy price crisis, Europe is reconsidering the place of nuclear in its energy mix. But any nuclear renaissance will depend on state support and an evolving political landscape, says Pierre Georges.

Pierre Georges is Senior Director, EMEA Utilities at S&P Global Ratings.

The European nuclear industry is in urgent need of renewal. Indeed, according to S&P Global Platts Analytics, nuclear production in Europe could decline by up to 7% by 2030 – and by up to 17% by 2040. Yet the decision whether or not to invest in new projects nuclear weapons has been undermined by strong political pressure. , social and regulatory. This has been further complicated by government and public concerns; accidents such as the Fukushima disaster in 2011 have remained etched in public memory.

Other problems with radioactive waste treatment and disposal solutions compromise both the social acceptance of nuclear technology and its reputation in the eyes of stakeholders. As a result, with many years passing and no major new reactors coming online, Europe lacks the local supply chain and specialized technical skills that its nuclear industry desperately needs.

However, as the energy transition accelerates, Europe could change its mind. Alongside the unprecedented scale of decarbonization currently needed to achieve zero emissions ambitions, current intermittency issues and price volatility have intensified calls for a technology-neutral approach that considers all forms low carbon energy.

In what would be a key step for nuclear, recently announced updates to the European Union’s taxonomy for sustainable activities – an instrument designed to provide a comprehensive and uniform classification of green projects – are expected to include nuclear energy. under certain conditions. Taxonomy-compliant projects, such as renewable energy, benefit from significant EU subsidies and easy access to private investment.

Nuclear could provide the answer

Unlike other low-carbon alternatives, nuclear provides a stable, non-intermittent power supply that could help reduce the cost of the energy transition while giving renewables crucial time to mature. Nuclear power is also independent of volatile raw material imports, providing a stable energy supply that mitigates related geopolitical issues. This could provide resilience in the face of soaring gas and electricity prices in Europe and complement the renewed political emphasis on energy independence.

In response to the growing need for such solutions, French President Emmanuel Macron recently announced the resumption of new nuclear construction for the first time in 40 years. In addition, the UK government – which has included nuclear energy in its decarbonisation strategy – recently introduced legislation establishing a Regulated Asset Base (RAB) based funding scheme for new nuclear projects and announced its decision to invest up to £1.7 billion to enable a large-scale nuclear project. Meanwhile, in Eastern Europe, Poland – which currently has no operating nuclear power plants – aims to build 6 to 9 gigawatts (GW) of new nuclear capacity to replace coal-fired generation, and Romania plans to build small nuclear reactors (SMR) to reduce import dependency.

Continued state support will be crucial

While nuclear power in Europe is associated with relatively high initial investment costs and long construction times compared to other fuels, this can be mitigated mainly if government policies are supportive enough or if nuclear is treated the same as other low-carbon technologies in terms of network access, price stability and stable technical requirements. Indeed, analysis by S&P Global Ratings shows that across the world, major nuclear projects typically involve government-related entities (GREs) – and often benefit from direct state support, government loans or support from import-export banks.

The European nuclear industry could proceed by qualifying new projects as social goods within the framework of the EU. The projects would be excluded from the current design of the energy market and, more importantly, from state aid rules, allowing for more direct state involvement in new projects. Designation as corporate asset may imply a specific framework for nuclear assets, with a determined remuneration scheme and some form of separation from the rest of the operator’s unregulated or market activities. In practice, such separation could mean operating the nuclear asset on an arm’s length basis with a separate and independent governance structure.

That said, S&P Global Ratings believes that a return to nuclear power in Europe will be neither quick nor easy. Any nuclear renaissance would be based on difficult political decisions and would require significant financial outlays, public investments and the management of complex technological advances.

While some European countries support nuclear power, others that have already decided to phase out nuclear energy – notably Germany – are unlikely to change their position. Yet, in a changing social and political landscape, and as decarbonization and energy independence become increasingly urgent priorities, a return to nuclear power could be considered.


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