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An IEA report says the sector now stands on the cusp of a new era driven by innovation, policy and renewed interest Nuclear energy in 2025 is expected to produce more electricity than ever before, with interest in the sector at its highest levels since the oil crises of the 1970s. Support is also now in place to expand the use of nuclear power in more than 40 countries. But the International Energy Agency’s The Path to a New Era for Nuclear Energy report released today (16 January) cautions that despite the rising momentum behind nuclear energy, various challenges need to be overcome for nuclear to play an important role in the future energy landscape. The report says that nuclear energy now stands on the cusp of a new era, owing to a combination of government policies, technological innovation and private sector interest. “Globally, nuclear energy is a leading source of clean and secure electricity generation – second only to hydropower among low-emissions sources.” Nuclear energy in the ‘Age of Electricity’ Innovation is changing the nuclear technology landscape through the development of small modular reactors (SMR), the first of which are expected to start commercial operations around 2030. “These positive developments for nuclear are well timed, as the world is moving towards the Age of Electricity, with global electricity demand for electricity set to grow six times as fast as overall energy demand in the coming decade, driven by the need to power everything from industrial machinery and air conditioning to electric vehicles and data centres,” says the report. “Alongside renewable technologies such as solar and wind, whose electricity output is expanding rapidly, nuclear can play an important role in meeting growing power demand securely and sustainably.” The IEA report says the market, technology and policy foundations are in place for a new era of growth in nuclear energy over the coming decades. “Nuclear is a clean and dispatchable source of electricity and heat that can be deployed at scale with round-the-clock availability. It brings proven energy security benefits to electricity markets as well as reductions in emissions, complementing renewable energy.” The report notes that generation from the world’s fleet of nearly 420 reactors is on track to reach new heights in 2025. Nuclear second only to hydropower Even as a few countries phase out nuclear power or retire plants early, global generation from nuclear plants is rising as Japan restarts production, maintenance works are completed in France, and new reactors begin commercial operations in various markets, including China, India, Korea and Europe. Nuclear power, the report says, produces just under 10% of global generation and is the second-largest source of low-emissions electricity today after hydropower. Some 63 nuclear reactors are currently under construction, representing more than 70 gigawatts (GW) of capacity, one of the highest levels seen since 1990. In addition, over the last five years, decisions have been taken to extend the operating lifetimes of more than 60 reactors worldwide, covering almost 15% of the total nuclear fleet. A new multi-country initiative was launched that aims to triple global nuclear capacity by 2050, recognising the role of nuclear energy in reaching energy security and climate goals, complementing the leading role played by renewables. Annual investment in nuclear – encompassing both new plants and lifetime extensions of existing ones – has increased by almost 50% in the three years since 2020, exceeding $60 billion. Nuclear energy sector challenges However, the momentum behind nuclear is unbalanced, the report cautions. “For the moment, the renewed momentum behind nuclear power is heavily reliant on Chinese and Russian technologies. “Of the 52 reactors that have started construction worldwide since 2017, 25 of them are of Chinese design and 23 of them of Russian design. “Highly concentrated markets for nuclear technologies, as well as for uranium production and enrichment, represent a risk factor for the future and underscore the need for greater diversity in supply chains.” A shift in market leadership is underway: half of the projects that are under construction today are in China, which is on course to overtake both the US and EU in installed nuclear power capacity by 2030. Ageing infrastructure Advanced economies are still home to most of the world’s nuclear fleet, but these reactors are relatively old; their average age is more than 36 years, twice the average elsewhere. Rejuvenating this fleet has not been easy: the nuclear industry in long-time market leaders, such as the US and France, has struggled in recent years with project delays and cost overruns for all new large-scale reactors. “A brighter outlook for nuclear power can be unlocked, as regional outcomes vary widely in a scenario based on today’s policy settings and market dynamics. “In advanced economies, the rise in SMRs and new construction of large-scale reactors only just offset the effects of an ageing fleet, meaning that capacity is slightly higher in 2050 than today.” SMR project development key to nuclear energy growth The IEA report says cost-competitive SMRs, boosted by government support and new business models, can help clear the path to a new era for nuclear energy. Demand for firm, dispatchable and clean power from the private sector is a major driver of interest in these emerging technologies and there are plans of varying maturity for up to 25GW of SMR capacity, in large part to meet growing electricity demand for data centres. “Under today’s policy settings, total SMR capacity reaches 40GW by 2050, but the potential is far greater. “In a scenario in which tailored policy support for nuclear and streamlined regulations for SMRs align with robust industry delivery on new projects and designs, SMR capacity is three times higher by mid-century, reaching 120GW, with more than one thousand SMRs in operation by then. “This rapid growth scenario would raise required investment in SMRs from less than $5 billion today to $25 billion by the end of this decade, with cumulative investment of $670 billion by 2050.” If construction costs for SMRs are brought down over the next 15 years to parity with large-scale reactors built on budget, this could see the cost effective uptake of SMRs increase by a further 60%, with deployment reaching 190 GW by 2050, the report says. Private sector funding crucial Public funding alone will not be sufficient to build a new era for nuclear: private financing will be needed to scale up investments. However, the long timelines for permitting and construction make nuclear a tough proposition for commercial lenders, as they can push the breakeven point for a new large reactor to 20-30 years after the project start. These factors also limit the use of project finance structures, which are often used to support other large infrastructure projects. The report says the outlook for nuclear energy and investment differs markedly across regions and countries. “In advanced economies, nuclear capacity rises thanks to new plants and lifetime extensions at existing ones; in the APS [Announced Pledges Scenario], capacity jumps by 40% to 2050. China accounts for over half of all capacity added to 2050, and the size of China’s nuclear fleet overtakes that of the US by 2030 to become the largest in the world. “In other markets, nuclear grows more rapidly after 2035, reaching 25% of global nuclear capacity by 2050 in the APS.” |
