NEA launches landmark report on cutting costs in nuclear construction


With the coronavirus (COVID-19) pandemic forcing a global lockdown and severe setback to economic activity worldwide, a landmark report on civilian nuclear energy was released earlier this month on how to reduce the costs of building large new plants, which has become the major hurdle in the development of this clean energy source. The report – Unlocking Reductions in the Construction Costs of Nuclear: A Practical Guide for Stakeholders – prepared by the Organisation for Economic Cooperation and Development (OECD) arm, the Nuclear Energy Agency (NEA), says nuclear power can play a significant role, both in the near-term as part of the recovery from the COVID crisis, as well as in the long-term to meet environmental and energy security targets.

Launching the report via a webinar organised with experts in the field, NEA Director General William Magwood said that the cost of building large nuclear plants has become a major barrier, with cost overruns and long delays leading even to project failures. The report said that high costs and project delays are not inherent deficiencies of nuclear technology but a reflection of weak supply chains and a lack of recent construction in western OECD countries.

“The report provides compelling evidence for highly achievable pathways to dramatic cost reduction in nuclear new build,” Magwood said in his introductory remarks. “Cost reductions are already taking place in some parts of the world, and higher levels of industrial and regulatory harmonisation could bring additional long‑term benefits,” he added.

The major recommendations made by the NEA report include capitalising on lessons learnt from recent Generation-3 reactor projects, prioritising maturity of design and regulatory stability through policy support mechanisms, for multiple new-build projects to consider committing to a standardised nuclear programme to capitalise on the “series” effect, enabling sustained supply chain development and industrial performance and supporting robust and predictable market and financing frameworks, with targeted financial support.

The other key recommendations are: Fostering innovation, talent development and collaboration at all levels, including by ensuring the timely setting up of a licensing framework required to foster market deployment of technologies such as small and modular reactors (SMRs) and advanced reactors, besides encouraging concerted stakeholder efforts, with governments creating an environment for nuclear technology development that helps foster a “social contract” with industry and society, and tailoring government involvement to programme needs.

“Nuclear energy can make substantial contributions to both the post‑COVID‑19 economic recovery and the world’s long‑term environmental goals if costs are in line with market needs. Our new report provides compelling evidence for highly achievable pathways to dramatic cost reduction in nuclear new build. Industry still has much to do, but the leadership and timely action by governments is essential”, Magwood said.

According to the lead author Mike Middleton, chair of the NEA ad hoc expert group on Reducing the Costs of Nuclear Power Generation (REDCOST), the primary focus of the report is on opportunities for potential cost and project risk reduction for contemporary Generation-3 reactors, whereby opportunities could be unlocked over the short term. He said it also examines the long‑term cost reduction opportunities associated with the harmonisation of codes and standards and licensing regimes.

“For those countries that wish to include the nuclear option in their electricity mix, there is a clear window of opportunity to support significant near‑term cost reductions and increase the predictability of large nuclear projects by leveraging on lessons learnt from past projects. Every new project is an opportunity to improve the constructability of the design, refine the associated delivery processes and reduce perceived construction risks,” Middleton said.

“The evidence in this report shows that nuclear does not need to be risky or expensive. There is a strong role for government – but there is also a role for the nuclear sector to step up to the plate and work with governments to deliver meaningful long-term cost reduction programmes”, he added.

The other participants at the webinar were: Hungarian state secretary responsible for maintaining the capacity of the Paks Nuclear Power Plant, Pal Kovacs; the deputy director general for nuclear energy and fuels at Finland’s Ministry of Economic Affairs and Employment, Liisa Heikinheimo; the co-founder and global director of the UK-based Energy For Humanity, Kirsty Gogan; group senior executive vice president for new nuclear projects and engineering at the French state-run firm EDF, Xavier Ursat, and the first deputy director general for corporate development and international business at Russia’s state atomic energy corporation ROSATOM, Kirill Komarov.

According to EDF’s Ursat, state involvement is crucial, as is its willingness to support long-term projects not just via regulation of the market, but also through the permissions and licensing process. “Market energy prices should be considered as a short-term signal and cannot be a long-term signal for investment,” he added.

Noting that there is substantial evidence to support the NEA findings, including recent studies from the Energy Technologies Institute, MIT Future of Nuclear Study, and the UK Energy Systems Catapult Nuclear for Net Zero study, Kirsty Gogan said the technical and organisational improvements stemming from these approaches will accelerate deployment of more advanced nuclear technologies like SMRs.

“This potential for nuclear energy to become a competitive climate solution matters because all the evidence shows that the fastest path to zero (emissions) is through a combination of renewables and nuclear energy. Evidence also tells us that this combination also delivers the most affordable and feasible path to zero,” she said.

“Achieving net zero across the whole economy by 2050 will be a Herculean effort by anyone’s standards. So we need to consider this effort in the context of the profound risk of failing to decarbonise in time, and the real challenges we face in achieving net zero. This is why we need to apply the same determination and commitment to cost reduction for nuclear energy as we have demonstrated successfully for other technologies like offshore wind, which has demonstrated how sustained access to finance and continuous build in exchange for a determined commitment to cost reduction and increased deployment is a successful formula that enables improved performance and competitiveness”, she added.

Finally, offering a comparative perspective based on Rosatom’s experience of constructing nuclear plants in both OECD and non-OECD countries (the company has 36 ongoing projects), Komarov pointed out that there is a difference between cost drivers related to technology and those related to the market. “Technical drivers, moving from first-of-a-kind to serial construction, will make a real difference to costs, but the market related problem of nuclear being expensive is mainly a problem in rich Western countries and not the rest of the world,” he said. According to the Russian official, the high costs of nuclear in many OECD countries were the result of an “anti-nuclear prejudice premium, or the price you have to pay for political risk, for regulatory risk, for troubled supply chains and for an unfair market environment where your competitors in other energy sectors are heavily subsidised”.