Nuclear Power and the Clean Energy Transition
Investing in the clean energy transition Financing and economic support for nuclear power By Shant Krikorian “The energy market is changing and has become more unpredictable in many countries because they are diversifying their energy sources in order to decarbonize, which has led to more fluctuations in energy prices and supplies,” said Wei Huang, Director of the IAEA’s Division of Planning, Information and Knowledge Management. “This more volatile market is contributing to the uncertainty of committing to long-lived, capital-intensive technologies with large upfront costs, like nuclear power.” Innovative approaches to financing and market policies in the nuclear industry can help mitigate uncertainty and counteract market fluctuations, said Maria G. Korsnick, President and CEO of the Nuclear Energy Institute. Advances in technology are also helping to make nuclear power a more costeffective option (see page 14).
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nnovative financing and market policies are one way that investment in new build nuclear power plants is becoming more attractive, which may help to pave the way for a clean energy future. Nuclear power — which produces no greenhouse gas (GHG) emissions during operation — has been widely recognized by many countries for its important role in reducing GHG emissions and mitigating climate change. Its flexible and continuous stream of energy can also supplement supplies when other energy sources, such as variable renewables like wind or solar are not available. Despite these benefits, one of the biggest challenges with adopting nuclear power is economics. While the economics of nuclear power from today’s fleet remains competitive in many markets, financing a new plant has high up-front capital expenses and requires long-term investment.
24 | IAEA Bulletin, September 2020
“For nuclear to achieve its full potential in a low carbon energy future, nuclear power plants must receive appropriate compensation for the clean energy attributes and other benefits that are inconsistently valued across electricity markets,” Korsnick said. “Policymakers should pursue approaches that build upon the growing consensus that including nuclear energy is the most costeffective way to quickly transition to a clean electricity system. This means prioritizing the preservation of existing nuclear energy assets and creating a pathway for the construction of advanced nuclear energy facilities.” According to the International Renewable Energy Agency, the world’s total, direct energy sector subsidies are estimated to have been at least US $634 billion in 2017. These were largely dominated by subsidies to fossil fuels and renewable power generation technologies.
Encouraging nuclear investments Power purchase agreements (PPAs) have been used for a range of technologies for decades, but they are now gaining ground in nuclear power as the most widely used approach for decreasing uncertainty
