Even before the 2011 Fukushima disaster, the word "nuclear" had a tainted reputation, following events like Chernobyl and amid ongoing environmental concerns. However, despite its controversial history, nuclear power is regaining attention as a viable solution to urgently reduce CO2 emissions. It remains the sole technology capable of providing uninterrupted (base-load), large-scale power with minimal climate impact.
As of May 2023, there were 436 nuclear reactors in operation in 32 countries around the world. The USA has the most at 93 but has added only two over the last decade. China is coming on strong and has added 37 reactors in the same period to reach 55. More generally, Asia is the main region in the world where the capacity for electricity generation, specifically nuclear power, is growing significantly.
Compared to fossil fuel-based and renewable power production, nuclear power has several benefits regarding environmental impacts: the close to zero climate footprint (see Figure 1), almost pollution-free operation, and the smallest land-use footprint of all power production technologies, thus minimising biodiversity impacts. On the other hand, there are considerable risks associated with nuclear technologies that need to be addressed, such as the potential for nuclear weapon proliferation and radiation with devastating regional consequences. Additionally, there are further considerations regarding human rights and environmental issues throughout the value chain and lifetime, as well as end-of-life waste management.
Navigating nuclear power costs and supply chains
Some consider the cost of nuclear power to be the main obstacle to increasing the scale globally, especially following projects that went massively over budget (e.g., Olkiluoto in Finland and Hinkley Point C in the UK). The stringent safety regulations and the massive use of steel and concrete make construction costs among the highest of power production technologies. Construction costs have increased over time, opposite to the cost of construction for most other technologies.
However, once completed, the operating cost of a nuclear power plant is far lower than other power generation facilities. This makes the levelised cost of electricity (the price at which the generated electricity should be sold for the system to break even at the end of its lifetime) of a nuclear power plant (including decommissioning costs) more or less the same as power from a fossil fuel power plant and onshore wind power. Hydropower has the potential to be even cheaper.
Adhering to rigorous regulations, such as those found in the EU, USA, Canada, and similar regions, significantly reduces the risk of weapons proliferation and accidents associated with nuclear power. To date, nuclear power is associated with far fewer deaths than almost any other power production technology. Only solar PV and wind power are close (see Figure 1). Still, while the risk of death from a nuclear incident is remote, the worst conceivable accident at any nuclear power plant could have devastating consequences. Further concerns are associated with the supply chain of nuclear power, both upstream and downstream, particularly regarding uranium sourcing and final waste disposal.
A Deep Geological Repository (DGR) is the established method for long-term nuclear waste storage, yet social resistance and a ‘not-in-my-backyard’ mentality often complicate selecting host sites. Uranium mining poses immediate challenges in the supply chain. In 2022, Kazakhstan led global production with over 20,000 metric tons, followed by Canada with over 7,000 metric tons, then Namibia, Australia, Uzbekistan, and Russia (source: Statist). These countries face human rights, workers’ rights, and corruption concerns. Uranium extraction poses health risks to workers and local communities. Regular on-site mining audits by power producers are essential to address these risks.
Financing nuclear power generation—is it green?
The pros and cons of nuclear power: a small direct environmental footprint versus supply chain issues and possibly waste management issues, combined with a financial cost level close to those of fossil fuels or onshore wind farms. It seems to us that there is a strong case for higher utilisation of nuclear power as a base-load provider in well-regulated and reasonably corruption-free nations.
Furthermore, as exemplified by the several green financing projects we have worked on recently, those companies took supply chain issues and other risk elements seriously. They could finance a large part of their nuclear operation with green financing, meaning nuclear is qualified as a sustainable investment. This opinion is supported by the ultimate inclusion of and unlocking nuclear power (under strict conditions) in the EU taxonomy, albeit in and out during the drafting process.
Takeaway questions
Can sustainable financing encourage responsible practices in the nuclear industry?
Given the seemingly obvious low environmental impact compared to other energy sources, how can high costs and safety concerns be better managed?
What steps can be taken to store and dispose of nuclear waste amidst public resistance safely?
How do we balance nuclear power's environmental benefits with its social risks?
At Accrona, we offer actionable insights from a wealth of experience. We are your trusted advisory partner for all sustainable finance needs, from strategy, issuances, equity raising, intelligence, and capacity building. We have experience working on several nuclear power financing cases, exploring their risks and opportunities and seeing their ultimate green financing. We turn insights and challenges into success stories. Contact us today to explore how our tailored services can drive tangible and positive change for your organisation and contribute to building a sustainable future.