A combination of factors like the move towards decarbonisation, fuel diversification, geopolitical situations resulting in fossil fuel price hikes and climate change affecting solar and wind power provide the base for expansion of nuclear power in the Asia Pacific region, Moody’s Investors Service said earlier this month.
According to the rating agency, nuclear power will maintain its 10 percent share of the global energy mix through 2050, supported by an expanding Asia Pacific (APAC) fleet. Around 60 percent of new nuclear units under construction globally were in APAC as at the end of April 2023.
“Decarbonisation and fuel diversification will drive the nuclear power sector’s share of the energy mix in Asia Pacific,” Moody’s Vice President, and Senior Credit Officer, Ada Li, said in a statement.
“Recent disruptions, such as a spike in fuel fossil prices and less stable solar and wind performance due to climate conditions, also underpin a greater role for nuclear power in the region’s long-term carbon transition plans,” Li added.
Nuclear power share of APAC’s energy mix will rise from current levels of 5 percent to 8 percent by 2050, the Moody’s report said.
It said that China, Japan, and Korea will lead APAC’s nuclear power expansion with plans to increase the sector’s share in their power mix to more than double-digit percentages.
The stability of nuclear power output – compared to solar and wind power — increases its cost competitiveness among low-carbon energy options. Recent disruptions, including those caused by climate change conditions, have further increased the appeal of nuclear power.
China is the largest builder of nuclear units globally, and the country aims to double the share of nuclear power in its energy mix by 2035. Surging fuel costs and tight supply have driven Japan’s policy shift to nuclear, with more restarts planned. South Korea relies heavily on nuclear power, with nuclear to contribute 35 percent of the total power in the country by 2036.
In the number of nuclear power units currently under construction in the APAC region, China leads with 19 units totaling 19,805 MW and is followed by India’s 8 units totalling 6,028 MW; Korea 3 units, 4,200 MW; Japan 3 units, 4,038 MW; and Bangladesh 2 units, 2,160 MW.
According to Moody’s, technological advances for safer, structurally reinforced and climate resilient reactors, the gradual commissioning of new generation reactors without material cost overruns and delays, and the provision of safe waste disposal and decommissioning plans should help alleviate policy hurdles and public concerns about nuclear power.
Moody’s said the new nuclear power capacity additions, primarily spearheaded by Asia, together with a more open attitude to nuclear power to meet net-zero targets in markets like the UK, will offset retirements and exits of nuclear power in markets such as Germany.
In addition, there have been announcements of lifetime extensions of existing reactors in developed markets that originally had plans to exit nuclear power, such as Belgium.
The report also said that construction delays and cost overruns are common in first-of-a-kind projects, especially under tightened safety requirements for new generation reactors.
For instance, the European Pressurized Reactor (EPR), a third-generation nuclear power technology, experienced multiple delays and cost overruns in the case of its debut unit in Finland, Olkiluoto 3. The plant, whose construction began in 2005, started commercial operations only at the beginning of 2023, some 14 years after its original commissioning date.
The EPR at Flamanville in France, which is planning for commercial operations, is estimated to cost over 12 billion euros, compared with its original budget of around 3 billion euros. Although China’s EPRs at Taishan took shorter time to commission, it still took nearly nine years to complete construction and connect to the grid.
In India, the 500 MW Prototype Fast Breeder Reactor (PFBR) is getting delayed for various reasons. The reactor is the first of its kind for India and designed by the Indira Gandhi Centre for Atomic Research ((IGCAR).
“Continuous policy support in the research and development of new civilian nuclear power technologies (for example, small modular reactors (SMRs)) will enhance the long-term competitiveness of nuclear power and cultivate the technical expertise of staff,” Moody’s said.
SMRs are nuclear reactors that have a power capacity of up to 300 MW per unit, which is about one-third of the generating capacity of traditional nuclear reactors. They are intended to have lower initial investment and a shorter construction time compared to traditional reactors because of their smaller scale, components that can be factory assembled and transported, and lower site requirements.
On the other hand, wider application of SMRs is constrained by their overall economics after incorporating infrastructure costs, for example grid connection. Currently there are 50 SMRs globally, most being pilot reactors or reactors constructed for academic research purposes, the report said.
Wider application of commercially viable SMR technologies will be beneficial to long-term nuclear development because, given the smaller scale investment required, they will more likely attract private investors and therefore make it easier to obtain financing, it added.
Besides, countries like China, India, Japan, and others are developing or exploring thorium-based nuclear reactors as an alternative to uranium, with thorium being over three times more abundant than uranium.
