Nuclear power is so expensive that it has become “hard to justify” in an age of cheap natural gas, the chief executive of GE – a major supplier of nuclear equipment – told the Financial Times this weekend:
“When I talk to the guys who run the oil companies they say look, they’re finding more gas all the time. It’s just hard to justify nuclear, really hard. Gas is so cheap and at some point, really, economics rule,” he said.
Gas prices are now at 10-year lows thanks to the shale-gas “revolution” going on in the United States, while the nuclear industry is languishing in post-Fukushima crisis and faces uncertainties of price, policy and public opinion.
A clear signal that the confidence of nuclear investors is at a low ebb came in March, when German firms RWE and E.On ditched plans to build two reactors in Britain, at a projected cost of £10 billion, blaming the harsh financial environment and surging decommissioning costs in their domestic market, where nuclear is being phased out.
Even the Chinese nuclear market – on which global firms appear to be pinning their hopes for resurgence – is far from a safe bet, as New Century Weekly recently noted in the article “Public fears check Chinese nuclear” (translated by chinadialogue),
All this has led some observers to conclude that gas is a more viable back up for renewables than nuclear. “So I think some combination of gas, and either wind or solar … that’s where we see most countries around the world going,” Immelt told the FT.
But is unconventional gas risk free?
Well, no. Moves to ban the controversial drilling technique used to extract gas from shale in jurisdictions from the US state of Vermont to France suggest there are policy risks here too. Meanwhile, vehement expressions of public opposition, including protesters chaining themselves to fences, show that society remains divided over the energy source. Environmentally, there are major concerns, from water pollution during the drilling process to the carbon footprint of gas – even if those arguments aren’t swaying current governments, who’s to say future governments won’t be greener-minded?
And in China, thought to have the world’s most plentiful shale-gas supplies, experts aren’t even convinced they can easily get at the reserves, as Xu Nan and Wang Haotong wrote on chinadialogue last week:
In China, where the shale gas lies much deeper underground and in tougher terrain than the US, no companies have yet mastered multi-stage hydraulic fracturing. Some say this means China will have to work with American firms. Others worry it will be hard to adapt imported technology and expertise to Chinese geology.
An Economist article from March, entitled “The dream that failed”, argued that nuclear power won’t go away but may never have more than a “marginal” role globally. It may be too early to tell how the shale-gas dream will end.