The Tale of Three Nuclear Fleets: Uncertain Future for Nuclear in France, the United States, and Japan

It was a busy summer for the top three nuclear energy countries in the world: the United States (with a 100-reactor fleet), France (with a 58-reactor fleet), and Japan (with a 43-operable-reactor fleet). In France, a law was passed in late July to severely limit the role of nuclear power in the country’s electricity supply mix for some decades to come. Several weeks later on the other side of the Atlantic Ocean, the much anticipated Clean Power Plan to regulate carbon dioxide emissions from the existing power generation fleet was officially rolled out in the United States, disincentivizing license renewal for nuclear power plants. The following week in Japan, on August 11, the restart of nuclear power generation at the Sendai Plant in Kagoshima Prefecture brought an end to the two-year-long absence of nuclear power generation in Japan. While the Japanese restart stands out as the best news for the global nuclear industry, the future remains largely uncertain for nuclear energy in these three longstanding nuclear power leaders.

France

In July, France’s National Assembly (the lower house) passed the Energy Transition for Green Growth bill into law. This law aims to realize President Francoise Hollande’s vision for a greater role for renewable energy and less dependence on fossil fuels and nuclear energy. The law caps installed capacity of nuclear power at 63.2 gigawatts (GW)—i.e., maintaining the installed capacity at the present level—and reducing the share of nuclear in the electricity supply mix from 75 percent today to 50 percent by 2025. To meet the cap, France would have to shut down 1,650 megawatts (MW) of nuclear capacity by the end of 2016 to offset a capacity increase from a new nuclear plant—Electricité de France’s (EdF) Flamanville 3 in Normandy, earlier scheduled to come online by 2016, but the start-up is now likely in 2017. As a result, two 900 MW reactors in Fessenheim (in northeastern France on the border with Germany), operating since 1977, are now slated for closure to make the room for Flamanville 3 and to maintain the cap. The estimated cost for closing the Fessenheim reactors is approximately 5 billion euros .

Moreover, the legislative development follows the Areva announcement in March of an annual loss of 4.8 billion euros in 2014, as well as the presidential announcement in June of an extensive reform of the country’s nuclear industry. The reforms will turn the 87 percent state-owned Areva back into a nuclear fuel company, and see the 85 percent state-owned EdF acquiring at least 75 percent of Areva NP (reactor design, engineering, and services) and eventually exporting, as well as building and operating, new nuclear reactors. Whether the reforms can successfully turn around the fortune and the reputation of the French nuclear industry remains to be seen.

The United States

The future of nuclear energy does not look any brighter in the United States, where President Barack Obama’s signature Clean Power Plan delivered further uncertainty for nuclear energy. While the finalized rule allows South Carolina, Georgia, and Tennessee to count their reactors under construction toward their carbon reduction goals, as well as states to count the increase of power generation level (also known as “uprates”) at their nuclear power plants, the final Clean Power Plan—unlike the proposed version—does not allow 6 percent of existing nuclear generation to be counted toward emission reduction goals under a license extension. The prospect for new nuclear build remains challenging therefore.

Consequently, the regulation may facilitate reducing the nation’s commercial nuclear fleet, as states can no longer use licensing extension to meet their carbon reduction goals, and nuclear power has faced particularly strong competition from natural gas and renewables in recent years. How exactly nuclear may fare under any carbon trading regimes that may arise from the eventual implementation of the Clean Power Plan is a major question going forward. Notwithstanding some such unknowns, the competition from renewables and natural gas—combined with the large capital requirement for constructing a nuclear plant—will likely further exacerbate the economics of nuclear power generation in the United States for some years ahead.

Japan

In comparison, the nuclear restart in Japan came as good news to those who wish to see Japan’s return to reliance on nuclear energy. The Sendai Power Plant reactor unit 1, located in Kagoshima Prefecture, was the first to clear all of the required regulatory steps instituted by the new nuclear regulatory body in July 2013, following the nuclear accident at the Fukushima Dai-ichi Power Station in March 2011. The successful restart of this reactor is an essential prerequisite for the restart of not only the second unit at Sendai (as early as mid-October), but also the two dozen other units that are before the Nuclear Regulatory Authority of Japan for restart-oriented safety reviews.

As significant as it may be, the Japanese milestone does not signal the full restoration of nuclear power generation in Japan’s energy mix. For example, while necessary, these restarts will unlikely be sufficient for the Japanese government to achieve the 20 to 22 percent share it hopes to see for nuclear in the national power supply mix in 2030. Of the 43 units operable today, a healthy share would need to see their operational license renewed beyond 40 years, or nuclear energy would only account for about 15 percent in 2030 in the absence of new builds. Additionally, while the safety case for nuclear energy is on its way to resolution, the economic landscape is changing. Japan is undertaking power sector deregulation, and the economics of building new reactors and maintaining existing reactors will likely come under pressure as many utilities become uncertain about their market competitiveness in the liberalized landscape.

A mix of factors, such as a high construction cost, political climate, public sentiment, and policy preference for renewables, is generating significant headwinds to nuclear power generation in these leading nuclear energy economies. Also, the declining interest in nuclear power at home seems to be accelerating the export drive by these governments as a key means for preserving the competitiveness of their nuclear industries. But the diminishing opportunity for product demonstration at home, combined with the emergence of new reactor suppliers like South Korea and China, render reactor exports a less than certain means of revitalizing the nuclear industry in France, the United States, and Japan. Nuclear energy is at a crossroads, as both the challenges and the opportunity associated with nuclear power generation compete to define the future of this fuel in these three longstanding nuclear power leaders and ultimately the survival of their nuclear industries.

Jane Nakano is a senior fellow with the Energy and National Security Program at the Center for Strategic and International Studies (CSIS) in Washington, D.C.

Commentary is produced by the Center for Strategic and International Studies (CSIS), a private, tax-exempt institution focusing on international public policy issues. Its research is nonpartisan and nonproprietary. CSIS does not take specific policy positions. Accordingly, all views, positions, and conclusions expressed in this publication should be understood to be solely those of the author(s).

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