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Uranium Week: The Future Of Nuclear Energy

Weekly Reports | Aug 15 2017

The International Atomic Energy Agency has projected global nuclear power growth, or lack thereof, out to 2050.

By Greg Peel

The conclusion of the International Atomic Energy Agency is that the long term potential for global nuclear power remains strong. Global expansion is nevertheless expected to slow in coming years, mainly due to the early retirement of, or lack of interest in extending the life of, legacy plants in various countries, given the reduced competitiveness of nuclear power and changes in the policies of several countries post-Fukushima.

A shift in policy away from nuclear power in countries such as Germany has come about since the 2011 Fukushima disaster in Japan brought the safety of nuclear reactors back into question for the first time since Chernobyl. If today’s advanced reactor designs can further improve both safety and waste management, the use of nuclear power could grow significantly, the IAEA suggests.

Also required is greater recognition of nuclear generation as a low-carbon power source. Nuclear “greenness” has always been a matter of debate. Once up and running, nuclear plants require small amounts of uranium to keep going and emit no carbon. However, nuclear power plants take several years to construct (significant emissions) and require a large initial amount of uranium to fire up, which has to be mined (significant emissions). It is the long life of a nuclear reactor which tips the balance towards “green” in the long term.

But gas-fired power generation, while not green but a lot greener than coal-fired, is a lot cheaper by comparison and can be switched on and off at will, unlike nuclear. It is the rise of gas-fired power and the cheapness of gas thanks to ever developing fracking technology that has led to the US nuclear power industry both shutting down legacy reactors and abandoning new projects despite billions having already been spent.

Wide Range

In terms of global nuclear power projections, the IAEA has offered a high case assumption and a low case assumption. The high case sees nuclear capacity rising by 42% to 2030 from the 2016 level, by 83% to 2040 and by 123% to 2050. These seem like very encouraging numbers for uranium miners. Until we see the low case.

That has capacity declining by -12% to 2030 and by -15% to 2040 before rebounding back to the 2016 level by 2050. While the downside is more limited than the upside, this wide range of projection would be cold comfort for uranium miners currently burning cash on stubbornly low uranium prices.

Clearly the swing factor will be the developing world. China is leading the charge on new reactor builds thanks to its wold-leading determination to reduce carbon output through a mix of lower-emission and clean renewable energy. India also has ambitious plans, South Africa is pushing ahead, as are other Asian countries.

Meanwhile, the likes of Germany and France have nuclear footprint reduction policies while in the US, home to cheap shale gas, the future of nuclear power hangs in the balance.

As a side note, Australia is a globally leading uranium producer and the bulk of that production comes from the state of South Australia, which recently suffered a state-wide blackout when a severe storm rolled in. A rapid response from both the state and Australian federal governments to the state’s electricity security problems has seen a giant Tesla battery facility given the nod and more efficient solar/wind power touted as the solution.

Nuclear has not been mentioned.

Last week saw 400,000lbs of U3O8 equivalent change hands in the uranium spot market, industry consultant TradeTech reports. Having slipped back the week before, TradeTech’s weekly spot price indicator has risen US35c to US$20.75/lb.

TradeTech’s term price indicators remain at US$24.40/lb (mid) and $32.00/lb (long).

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