Nuclear Energy Development: Assessing Aspirant Countries

Abstract

Of the more than 40-plus countries that have expressed an interest in obtaining nuclear energy, only a few have the odds in their favor.

While 31 states have an installed nuclear energy capacity, another 40 or so have expressed an interest in having the same. 1 The “have-nots” run the gamut in terms of standards of living, types of governance, geographic locations, populations, physical sizes, resource allocations, and levels of technological and industrial development. 2 So how does one dig through the rhetoric (sometimes decades of proclamations and blueprints) to assess the viability of these aspiring nuclear power states? The first step is to identify the characteristics that correlate with nuclear energy success.

Most of the early entrants into the nuclear energy domain were either high-income democratic countries with market economies or Soviet republics and Warsaw Pact members. To this day, states that once fit the above criteria still make up a majority of the 31 countries with nuclear power. But beyond this significant commonality, there are other shared characteristics that allowed these countries to build successful nuclear energy programs that can be instructive to understand what aspirants need to be successful in their pursuit. Beyond the obvious necessities, such as adequate water for cooling, other criteria for successfully building nuclear power plants include: (1) adequate financial resources; (2) the will and ability to assume the burden of risk; (3) an electrical grid of sufficient capacity to absorb the addition of a big plant; (4) the ability to develop or absorb technological innovation; and (5) a highly specialized workforce or the resources to attract such a workforce from abroad.

Financial resources. The most notable commonality among the nuclear energy states is their large economies. A number of exceptions–such as Armenia and Slovakia–were members of a larger political entity at the time they acquired nuclear power plants. Other anomalies were either Soviet satellites that benefited from Moscow's subsidies and technology transfers or small Western European countries with high standards of living. Overall, however, nuclear energy states are among the biggest economies in the world, though not necessarily rich in terms of per-capita income.

Of course, there are a number of reasons why countries with larger economies would be more capable of building nuclear power infrastructures. First and foremost, building new nuclear power plants involves significant capital costs. They can easily end up costing $15 billion depending on plant size, type, and delays. Nor is it simple to construct and manage the massive “system-of-systems” that constitutes a nuclear power plant. Further adding to the cost is the perception that there are significant benefits from economies of scale; this has led to nuclear power plants with massive capacity reactors and multiple units per plant. 3

Burden of risk. The magnitude of potential adverse consequences associated with building and operating nuclear power plants is huge and can be classified in several ways. First, there is the possibility of a failure to earn a return on investment. The feasibility of nuclear power generation is dependent upon the ability to take advantage of the relatively low operational and fuel costs to pay back the high front-loaded capital costs. The risk that a plant may not become operational, and the fact that the value of loans required is usually beyond a utility's capacity to collateralize, makes investors hesitant to put money into nuclear power plants. A second, less devastating (but still significant) set of risks relates to delays either due to regulatory challenges, supply chain backlogs, or failure to accurately estimate the completion time of a project. With such large price tags, stretching out a loan interest payment period without earning a return can translate into substantially increased costs. A third risk is that there is an event resulting in the release of radioactivity or inadvertent diffusion of sensitive material or technologies. While the global nuclear energy industry has maintained an admirable safety record, the consequences of a significant accident would be catastrophic. Even a minor accident could affect willingness to shoulder the burden of risk. The nature and magnitude of risk mean that governments must be willing to take on some or all of the risk even when private firms operate the plants.

Grid capacity. The technical constraints with respect to the size of a single nuclear power plant unit compared to overall electrical grid capacity must be taken into account. An industry rule of thumb is that an additional unit should not make up more than 10 percent of the total installed capacity of the grid in question. When a given unit produces too large a portion of the load, maintaining stable electrical service becomes impossible. Because the smallest of the nuclear power reactor designs commercially available are 600-megawatts-electric, the addition of even the smallest commercial reactor requires at least 5.4 gigawatts of installed electric capacity. For most aspirants this is not a problem because they have large grids or are connected to an international network. However, there are some aspirants that simply could not handle the addition of a nuclear plant under current conditions.

A cursory assessment shows that some states that have expressed an interest in nuclear energy can be immediately ruled out. Ghana, Namibia, Mongolia, and Bangladesh, for example, face seemingly insurmountable challenges to obtain the proper infrastructure.

Technological development. Only a few of the nuclear energy states developed their nuclear power plants entirely, or even largely, indigenously. Most purchased facilities from firms such as Areva, Westinghouse, or General Electric, which are based in countries with long histories of nuclear power development. Thus, being a technology innovator may not prove to be essential. Indeed, some countries may purchase plants that both will be built and operated by foreign firms as a means of expediting power generation and modernization. 4

A specialized workforce. Even where innovation is not a primary ingredient in obtaining nuclear power, maintaining it requires highly educated technical experts and highly skilled tradespeople to support the construction and operation of a plant. This can be accomplished by importing labor or cultivating a domestic workforce. Neither route is inexpensive. Importing labor can be difficult and costly when there is a high demand globally for such workers. At the same time, if the labor force is internally cultivated, there is the issue of whether the home market can support the skilled construction labor after the plant has been constructed.

Applying the criteria. Now that the criteria have been outlined, it becomes easier to assess an aspirant country's chances of building and integrating one or more nuclear power plants into its energy systems. A cursory assessment shows that some states can be immediately ruled out. Ghana, Namibia, Mongolia, and Bangladesh, for example, face seemingly insurmountable challenges to obtain the proper infrastructure. Other countries, however, do have the potential to be nuclear energy states. Here are some of the most- and least-likely states to be successful in acquiring nuclear energy, by region. Also included are “intriguing” cases to watch, as their progress will shed light on the potential balance between material and nonmaterial drivers for a prospective global nuclear resurgence.

Africa. Africa is a continent of approximately 50 countries; only one of which, South Africa, has a nuclear power infrastructure. Approximately 10 other African countries would like to follow suit for various reasons–such as needing to reduce a plague of under-electrification (both households without electricity and frequent outages for those that do have it) and transitioning away from exporting raw uranium and toward finished fuel manufacturing. While the African aspirants display a range of interest in nuclear power, as a whole, it is not a promising region for growth.

Egypt would seem to be the most auspicious African candidate to participate in a “renaissance” of nuclear power. It has a long history as a nuclear aspirant but neglected these plans in the wake of the Chernobyl disaster. Cairo's nuclear energy intentions have recently resurfaced, however. With a $162 billion nominal gross domestic product (GDP), only Nigeria and Algeria have economies on the same scale among African aspirants. But Egypt has more installed capacity than Nigeria and Algeria combined, is connected to neighboring countries' grids, and will be part of the Mediterranean ring grid that is planned to link the European system to those in North Africa. In addition, Egypt has a couple of research reactors and a long history of research and education in nuclear engineering relative to most other African countries. It also has demonstrated a willingness to channel resources into a nuclear program (i.e., to take on some risk) by putting more than $150 million into site and design selection.

Another promising African aspirant, and one that has captured a great deal of attention in recent years, is Libya. After being caught red-handed in pursuit of a covert nuclear weapons program, Libya turned over a new leaf by verifiably dismantling its illicit program. Since then, Western governments have been eager to promote Libya when touting the benefits of openly giving up a nuclear weapons program. Such benefits include agreements on peaceful nuclear technology. With a national income of more than $100 billion, experience with research reactors, and access to an international grid network, Libya has a better chance of success than many African aspirants. Moreover, since it has an authoritarian government, differences of opinion on risk need not be reconciled.

Namibia is one of the least likely African nuclear aspirants to achieve its goal. Its GDP, at $8.5 billion, is significantly less than the poorest nuclear power states. It should be noted that $8 billion is not an uncommon price for a nuclear power plant, though this cost is incurred over several years. Namibia is plugged into the Southern African Power Pool, a regional series of grid interconnections that link the generating capacity of 12 national utilities. This interconnection, however, has not eliminated the grid weaknesses that plague the nation. It also is uncertain whether Namibia has the scientific and technical capacity necessary to run nuclear power plants. The country, for example, does not operate research reactors. With only about 34 percent of households having access to electricity, Namibia has good reason to want to add capacity. But its ability to build nuclear plants is doubtful. Namibia also has not made much progress beyond signing agreements in principle, which nuclear power states certainly are willing to offer given the country's abundant uranium resources.

Iran would have been operating a light water reactor years ago if it were not for the international resistance resulting from Tehran's covert attempts to build facilities to enrich uranium and breed plutonium.

The Middle East. Because of longstanding regional conflicts and former and current nuclear weapons programs (or suspected weapons programs) in Israel, Syria, Iraq, and Iran, the Middle East is a region of particular concern with respect to proliferation of dual-use nuclear technologies. There are several countries that would like to build nuclear energy infrastructures in the region, and they face varying levels of international opposition to, and feasibility of, achieving their goals. The United Arab Emirates, by announcing its intention to forgo dual-use facilities, has largely eliminated any opposition to its intentions to build a nuclear capacity. 5 Iran, on the other hand, would have been operating a light water reactor years ago if it were not for the international resistance resulting from its covert attempts to build facilities to enrich uranium and breed plutonium.

Tehran, with a nuclear power plant under construction at Bushehr since 1975, has exhibited by far the highest level of commitment to developing nuclear technology to date among regional aspirants, demonstrating that it has both the financial resources and the will to build a nuclear infrastructure. By continuing to try to complete the plant despite so many delays and other costs–and by displaying a willingness to continue developing fuel-cycle facilities that will be unlikely to produce fuel at costs competitive with the world market price–Iran has shown that it is willing to assume high costs and risks in the pursuit of nuclear infrastructure. In other words, Tehran has made building a nuclear infrastructure its national priority. With 43 gigawatts-electric of installed capacity, the Iranian grid is the largest in the region. (Similarly, it is the largest economy in the region.)

Yemen stands out as one of the least likely nuclear aspirants in the Middle East, though it is not by any means the least committed. Take, for instance, the allegedly fraudulent $15-billion deal that it signed for five nuclear power plants with a U.S.-based corporation. How a state with a $27 billion annual national economy could afford such an expensive contract is unclear. In its current configuration, the Yemeni grid would be taxed severely by adding large plants, absent large-scale upgrades and international interconnections. Yemen also lacks experience with nuclear science and technology.

Jordan presents an intriguing case. By the numbers, it would seem to be one of the less promising Middle Eastern candidates for developing nuclear power. It has a $20-billion economy and less than 2 gigawatts-electric of installed capacity (though it is connected to an international grid). However, Jordan holds several advantages. For one, Amman has displayed a willingness to put money on the line by investing millions of dollars in pursuit of site and design selection studies. Similarly, Jordan's outspoken opposition to the proliferation of nuclear weapons has made it a prime candidate to receive technical support as an exemplar of what can be accomplished in the absence of international opposition. Yet another consideration is Jordan's lack of hydrocarbon resources that, unlike its neighbors, has made reliance on fossil fuels an expensive proposition. This fact, together with the country's estimated 70,000 metric tons of uranium reserves, provides a powerful motive to pursue nuclear power.

Asia and Oceania. In the Asia-Pacific region, countries such as the Philippines, Indonesia, and Thailand are attractive candidates for a nuclear energy program. There are others (e.g., Bangladesh, Mongolia, and North Korea) that face major economic and technical challenges.

A promising aspirant in the region is Indonesia. This archipelago nation is among the 20 largest economies in the world and has the fourth largest population. It also suffers from under-electrification with only about 54 percent of households having access to the grid and electricity consumption per capita of less than 500 kilowatt-hours (slightly higher than Pakistan and India, but lower than any other nuclear energy state). It does, however, have the economic and installed capacity scale commonly seen among nuclear energy states. Indonesia has been working on developing nuclear capacity for years, investigating site selection, plant design, and regulatory institution building. It also has had decades to develop the human capital necessary to run a nuclear plant. However, investment in nuclear infrastructure does not guarantee a country will be willing, or able, to follow through.

Among the least likely candidates to participate in a global nuclear expansion is Mongolia. With a nominal GDP of a little more than $5 billion, this country of three million people would be hard pressed to finance a nuclear energy infrastructure. While doing so may have some appeal since the country has substantial uranium deposits, it has not invested substantially to achieve this objective. There has been quite a bit of research on nuclear science relative to mining (e.g., dosimetry for individuals working in mines), but the lack of a research reactor or other preparations for developing the capacity to start a commercial-scale nuclear infrastructure is telling.

The most likely nuclear aspirant to succeed in Europe is Italy, mainly because it has operated nuclear power plants in the past–from 1963 until 1990 when, in response to the Chernobyl accident, it closed down its remaining operational units.

In Australia, substantial uranium deposits give the state a potential economic incentive to take its abundant raw material resources further toward finished fuel. While Australia does not face any insurmountable barriers in terms of economic or technical limitations, the country's varying policy stances are a prime example of the impact politics can have on nuclear power plans, even for economically advanced states. In 2006, under Prime Minister John Howard, the Liberal Party-led government sponsored a study that found a need to cultivate domestic nuclear energy. But a subsequent victory for the Labor Party stifled momentum in that direction. Today, Australia continues to refrain from developing commercial nuclear power.

Vietnam also is an important regional case study, as its economy has demonstrated real GDP growth, averaging more than 7 percent per year over the past two decades. The idea of adding capacity in large chunks to service the growing percentage of households that use electricity and the rising needs of a population with higher incomes appeals to this emerging market state. While Vietnam, with a nominal GDP of about $90 billion and only a little more than 11 gigawatts-electric of installed capacity, is not at the top in terms of scale among the Asian aspirants, there are intervening factors that may make it a more promising candidate than it seems. One is the high growth and industrial development mentioned above. The second is the fact that the relative stability of preferences seen under the communist government may be more conducive to advancing a long-term project than has been seen, for example, in Australia–a country that by almost all other measures is a more feasible candidate to add nuclear capacity.

Europe. More than one-half of the countries that have commercial nuclear power facilities are European, and, in that sense, it (along with North America) is one of the most developed regions with respect to nuclear power. It also is a region with the broadest possible set of views on nuclear power–from exceedingly pro-nuclear France to Austria, a country that has prohibited the development of nuclear power plants. Of course, these preferences are not necessarily stable. Germany, for example, adopted a policy of phasing out nuclear power, but more recently, the government has been reconsidering this decision (although not without domestic opposition).

The most likely nuclear aspirant to succeed in Europe is Italy. This is not based solely on the fact that it has the highest income and one of the most developed energy infrastructures in the region. Instead, Italy has the ability to operate nuclear power plants because it has done so in the past–from 1963 until 1990 when, in response to the Chernobyl accident, it closed down its remaining operational units. Italy has been preparing the legal and technical groundwork for resuming nuclear power capacity, and, if it does not succeed, it may reveal just how much more challenging and expensive it is to develop nuclear power than it once was.

Perhaps the least likely of the European aspirants to succeed is Albania. Granted, Albania, with an economy of a mere $13 billion, recognizes the need to partner with other countries–an Albanian plant would be partly owned by Croatia and, perhaps, other Balkan nations. Preliminary discussions have suggested the Italian company Enel would take the lead in overseeing the building and operation of an Albanian plant, and it is uncertain whether the lack of indigenous technical capacity will be problematic. It also is unclear whether the consensus-building and reconciling of risk attitudes between several governments will be successful. It is interesting to note that Albania, as the lead on the project, would likely be the smallest economy and, in some ways, the least developed partner.

Increasingly, there is a question as to whether a number of European states (and elsewhere, for that matter) that currently have old plants will be able to replace them when they become too old to re-license. A prime example is Armenia, which is, in several respects, an outlier among countries with operational nuclear power plants. It would be difficult for Armenia, a country with a $12-billion national income, to spend several billions of dollars over a few years on the construction of a new nuclear power plant. That said, the Armenians do intend to build a new nuclear plant to replace their aging Soviet-era plant. Construction is set to start in 2011, and the cost is estimated to be $5 billion. 6 If Armenia succeeds, it will shed more light on the nature of barriers to nuclear power, and how much easier it is for a state that already has nuclear capacity to add more plants. There are, after all, much larger and wealthier countries that have been struggling to build nuclear capacity for years without success.

The Americas. The three NAFTA countries are all nuclear energy states, as are Brazil and Argentina. Of the remaining countries in Latin America, only Chile and Venezuela have expressed an interest in nuclear power.

Chile and Venezuela are similar in a number of the nuclear power development criteria, although Venezuela has more advantages than Chile. Venezuela's nominal GDP is about $150 billion more than Chile's, but neither country has an income that would be anomalous for a nuclear energy country. More important is Venezuela's steadfast commitment to nuclear power and the lack of a unified opposition to challenge President Hugo Chavez's policy directives. Both states have grids that are presumably adequate to handle the addition of nuclear capacity with minimal modifications and both have had research reactors, although Venezuela's is shut down while Chile continues to operate one unit. Although Chile has delayed making a decision on nuclear power, Venezuela has been negotiating with Russia about provisions involving nuclear technology transfer as part of a larger cooperative agreement.

Final thoughts. The distinctive economic traits of global nuclear energy development are not cut-and-dry. Even an ideal candidate is not necessarily going to be able to realize its ambitions in the foreseeable future. Changing political environments, rising construction costs, and risk-management issues have created a higher barrier to entry today than existed in earlier decades. However, considering the debate over whether a nuclear renaissance is upon us, it is important to be able to assess the potential for success of aspirant countries in order to make clear judgments on related issues such as technology transfers, security policies, and aid and assistance. Thus, before assessing the “uncertainties” of a global nuclear renaissance, we are best served by taking stock systematically of what we do know about what it takes to construct and sustain a viable nuclear power sector.