The case of nuclear energy
By Andrew Poreda, Vice President and Senior ESG Research Analyst
Europeans are at an energy deadlock, as calmer winds and the shortage of natural gas (whose prices rose by more than 400% last year) portend a difficult winter ahead. The European dream Net Zero relied on renewables to save the day, but sometimes the weather just doesn’t cooperate. Does it make sense to simply blame their struggles on the dying wind, or should they re-evaluate their energy futures? It’s an interesting crossroads, and maybe the United States can learn from the Europeans’ missteps and seriously consider nuclear power as part of our clean energy solution.
When determining an energy mix, we must always take into account the “3 C” of efficient power: cost, cleanliness and consistency. At the margins, wind and solar (the perceived favorite by many developed countries) can look cheap and clean. Unfortunately, this “cheap” energy is not that great when one is a victim of rising commodity prices or progressive blackouts. Countries that depend on natural gas and (gasp!) Coal to provide backup power are paying for this redundancy, which essentially reverses progress towards net zero while adding negative externalities like air pollution. .
The European countries leading per capita coal consumption are six of the top ten places. Germany, the world’s fourth-largest economy, makes this dubious list, but it also has the distinction of having the most expensive electricity in the world. So, are the Germans and their economy really benefiting from their “impressive” 46% renewable energy grid? Probably not. Part of Germany’s power struggles relate to its response to the Fukushima disaster when it made the knee-jerk reaction to shut down all nuclear power plants by 2022.
But it’s not just Germany. The nuclear industry has clearly suffered over the past decade as a result of what happened in Japan, which was largely a case of poor governance in the management of security before and after the magnitude 9 earthquake. , 0 which wreaked havoc in the country. Having prohibitively expensive projects like the Vogtle Power Plant in Georgia also doesn’t inspire much confidence that nuclear power can be competitive in the future.
It is still the beginning, but new technologies could spawn a kind of nuclear energy renaissance. Concepts such as Small Modular Reactors (SMR) appear to be affordable and safe solutions if net zero power is desired. The UK is serious about nuclear power becoming a more influential part of energy talks and recently announced a deal with Rolls-Royce to build 16 SMRs. Investors also appear to have picked up the nuclear bandwagon, with uranium prices jumping over 60% in September (the highest since 2014). This initiative was largely motivated by the enthusiasm generated by the launch of the Sprott Physical Uranium Trust Fund.
Sage strongly believes that stakeholders around the world must seriously consider nuclear power in our clean energy future. We need to effectively balance the amount we want to pay for electricity with other factors, such as emissions and system reliability and resilience; renewable energy has its limits in finding a good balance, and nuclear energy will probably be a better option to assess all options.
For a more in-depth discussion of nuclear energy, see Sage’s 2019 article “Is there a future for nuclear power in America?»And accompanying him Podcast. Two years later, the discussion is largely similar.
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