Several countries reassessing stances on nuclear power; Nuclear renaissance in peril after Japan
quake; Several countries reassessing stances on nuclear power
A series of incidents at a nuclear plant in Japan after last week’s disastrous earthquake and tsunami is threatening to snuff out the global nuclear renaissance as popular opinion quickly turns on the technology.
LONDON (MarketWatch) — A series of incidents at a nuclear plant in Japan after last week’s disastrous earthquake is threatening to snuff out the global nuclear renaissance as popular opinion quickly turns on the technology.
The shift in sentiment, already visible in newspaper headlines and protests across the globe over the weekend, means plans to build dozens of new nuclear reactors could be derailed, to the benefit of alternative energy sources like solar and wind power.
Meanwhile, demand for uranium, which is used to fuel nuclear plants, could drop sharply, while gas prices have started to creep up on expectations that Japan will need to import more liquefied
natural gas to make up for the nuclear shortfall.
The end of the atomic era?
Evidence of an abrupt turnaround on nuclear power is gathering quickly, even as the situation in Japan continues to evolve and no one has a firm handle on the eventual outcome of the crisis engulfing several reactors.
“The end of the atomic age,” proclaimed the latest cover of Germany’s major news weekly, Der Spiegel, as some 40,000 protesters gathered in Stuttgart on Saturday to call for an end to nuclear power. Chancellor Angela Merkel was forced to appear on television Sunday night to address the turmoil and reaffirm the country’s commitment to phasing out nuclear.
On Monday, she went a step further and suspended for three months a plan to extend the life of the country’s nuclear plants. Read more on the German nuclear plan’s suspension.
In Germany, where important regional elections are taking place next month, the pressure of public opinion seems to have been too much.
“The sentiment in Germany has completely changed overnight,” said Gerard Reid, head of clean-technology research at Jefferies.
In the U.S., Sen. Joe Lieberman and Rep. Ed Markey, among others, called for a moratorium on any new nuclear-power projects. The U.S. has more than 100 nuclear reactors currently operating.
Renewed caution is to be expected. What the nuclear industry would like to avoid is a drastic U-turn.
“I think politicians have to be prudent,” said Luis Echavarri, director general of the Nuclear Energy Agency. “One thing is not to take any decision to invest more into nuclear today, and a different one is to say never again. We need to learn from the accident.”
In Japan, lessons had not yet started to emerge, as plant operators and scientists were working Monday to avert a meltdown at the stricken Fukushima Daiichi plant, which could result in a massive leak of radioactive material and contamination on a wide scale. All reactors at Fukushima were shut down after the earthquake Friday, but the loss of power at some units has meant that the cooling systems needed to stop the reactor cores from overheating are not functioning.
As an emergency measure, three reactors were flooded with seawater to help them cool — a costly sacrifice, as it means they can never be used again.
With more than 50 reactors, Japan is one of the world’s top nuclear-power countries, alongside the U.S. and France.
Cost of building a nuclear plant to surge
Over the past decades, safety fears about nuclear plants have focused on potential terrorist attacks. New reactors have been conceived to be able to resist the impact of a jet crash, for instance. The current crisis, however, is exposing the vulnerability of nuclear plants to natural
— and unpredictable — disasters.
“The events in Japan show that all you need to create a nuclear disaster is impair the cooling system,” said Reid.
New safety measures are likely, once more is understood about how Japanese plants could have better coped with the earthquake, but the price of building a nuclear plant will go up significantly.
“The damage has been done, and there’s only one very simple question: Who would insure a nuclear power station?” said Reid.
“While the ultimate impact to the penetration of nuclear is unknown at this early stage as the emergency unfolds, one thing for sure is that the timing of new plants, and the cost of capital, has surely increased,” he added.
Shares of reinsurers in Europe have dropped sharply since the accident, with the likes of Swiss Re (RUKN, CH) and Hannover Re AG(HNR1, DE) losing more than 7% over the past two sessions. Read more about nuclear and energy stocks in the wake of the earthquake.
“On the other side, virtually overnight, the economics of solar and renewables have significantly improved,” Reid said.
On Monday, shares of SolarWorld AG (SWV, DE) jumped 13% in Frankfurt and Vestas Wind Systems, a maker of wind turbines, advanced more than 7% in Copenhagen.
Meanwhile, utility firms, which often carry the burden of financing new nuclear plants, have come under pressure since Friday. Nuclear power represents 75% of installed capacities at France’s EDF (EDF, FR), 23% at Finland’s Fortum (FUM1V, FI), 16% at Germany’s E.On AG (EOAN, DE), 12% at RWE AG (RWE, DE), also in Germany, and 9% at Spain’s Endesa SA (ELE, ES), according to Cheuvreux.
In France, Areva SA (CEI, FR) sank nearly 10% in Monday trading. In December the firm signed a deal to build two new reactors in India for more than $9 billion.
Echoes of Chernobyl
As Germany’s hesitation on its plants’ extension shows, the scale and seriousness of the Japanese events are already leading countries to reassess their position on nuclear power, annihilating 25 years of efforts by the nuclear industry to improve its image after the Chernobyl disaster in Ukraine. See MarketWatch First Take analysis of the Japan earthquake’s impact on nuclear energy’s prospects.
While some nations are in the advanced stages of launching new nuclear programs, such as France, the U.K. and Finland, some are still just starting to consider a nuclear revival, including Spain and Italy.