Can The Nuclear Industry Survive COVID-19?

In the United States, nuclear energy just can’t catch a break. Despite the fact that generating carbon-free energy has never been more important, the nuclear energy industry has been waning for years in the U.S. and now struggles to turn any profit, even while nuclear energy industries are going gangbusters in other countries, most notably Russia and China. Currently, the United States is the largest nuclear energy producer on Earth and is responsible for the production of a whopping one-third of all nuclear energy in the world. But that won’t last for long. Nuclear energy is on the rise globally as it falters in the U.S., and China is set to soar to first place in nuclear production before 2030. “GlobalData Plc predicts that China will pass France as the world’s No. 2 nuclear generator in 2022 and claim the top spot from the U.S. four years after that,” Bloomberg Green reported earlier this week.

Now, as many industry experts and energy sector pundits are lobbying for the centralization of renewable energy investment in post-COVID economic recovery plans, nuclear energy--a highly efficient form of energy production with zero greenhouse gas emissions--the faltering U.S. nuclear sector is trying to figure out how to get in on the next phase of the green energy revolution. But it won’t be easy.

“Record output from wind and solar is more frequently creating an oversupply that can push prices below where reactors are no longer profitable, or even to rates where utilities have to hand out power for free,” wrote Bloomberg Green in a separate article. And not even the nuclear sector outside the U.S. has been spared. “The rout has been exacerbated by the global pandemic gutting demand. Generators from France to Sweden, Germany and China have been forced to turn stations off or curb output.”

As energy demand has plummeted around the world thanks to the spread of the novel coronavirus and its subsequent economic downturn, the nuclear energy sector has gotten hit even harder than many other sectors. During the lockdown, “renewables have taken a bigger slice of the market because many nations had decided to give new green technologies priority into the grid” says Bloomberg Green. This is particularly true in Europe, where many previously successful nuclear plants are now losing out to renewables due to new policy measures.

In the United States, however, the picture looks very different. While the U.S. government has not taken any similar measures to prioritize renewable energy flow to the grid during the pandemic, the domestic nuclear industry was already in dire straits, in large part thanks to the explosion of cheap natural gas with the country’s recent shale revolution. “With prices in a rut, eight stations have gone dark since 2013. At least four more are scheduled to close permanently by 2025, including after one unit north of New York City shut at the end of April.” What’s more, many of the U.S. nuclear plants that are still hanging on are doing so in large part thanks to hefty government subsidies (and then saddling taxpayers with the huge cost of storing spent nuclear fuel as well.)

The nuclear sector will have to work hard to avoid being left behind. “We need to work on being more flexible in nuclear,” Magnus Hall, the chief executive officer of Swedish utility Vattenfall AB, was quoted by Bloomberg Green. “It’s a new way of learning how to run the plants and this is the mode we are in.”

While nuclear has taken quite a beating from the compounded impact of COVID-19 and the recent renewables push, it’s still a powerful power sector worldwide, and it’s global energy share remains larger than that of renewables. And while nuclear is taking a back seat in the U.S. and Europe, it’s surging in China, meaning it probably won’t lose its global status in the energy mix in the immediate future.

By Haley Zaremba for Oilprice.com