Nuclear

Electric Utilities & Power Generators

The Electric Utilities & Power Generators industry is made up of companies that generate electricity; build, own, and operate transmission and distribution (T&D) lines; and sell electricity. Utilities generate electricity from a number of different sources, commonly including coal, natural gas, nuclear energy, hydropower, solar, wind, and other renewable and fossil fuel energy sources. The industry comprises companies operating in both regulated and unregulated business structures. Regulated utilities maintain a business model in which they accept comprehensive oversight from regulators on their pricing mechanisms and their allowed return on equity, among other types of regulation, in exchange for their license to operate as a monopoly. Unregulated companies, or merchant power companies, are often independent power producers (IPPs) that generate electricity to sell to the wholesale market, which includes regulated utility buyers and other end-users. Furthermore, the industry is divided across regulated and deregulated power markets—referring to how far up the value chain regulated utility operations span. Regulated markets typically contain vertically integrated utilities that own and operate everything from the generation of power to its retail distribution. Deregulated markets commonly split generation from distribution, designed to encourage competition at the wholesale power level. Overall, companies in the industry are challenged with the complex mission of providing reliable, accessible, low-cost power while balancing the protection of human life and the environment.

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Source: SASB

The nuclear sector provides virtually carbon-free baseload power, accounting for 10% of global electricity supply. Existing power plants are economically competitive, but new ones face challenges due to high capital costs and concerns about risk and technological progress. Nuclear power emits few GHG emissions, but radioactive waste storage remains a major concern. The sector plays a significant role in the green and sustainable transition, particularly in emerging and developing economies. Investment opportunities mainly focus on restructuring existing power plants rather than building new ones.

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Industry Characteristics

• Nuclear energy provides large amounts of virtually carbon-free baseload power at stable variable cost, contributing significantly to both the economic and the environmental dimension of sustainable development. While existing nuclear power plants are economically competitive in most cases and perform well in deregulated electricity markets, the economic competitiveness of new nuclear power plants will remain an issue due to their high capital cost. Up to 70% of new plant lifetime costs can be due before the date of first operation, making nuclear power sensitive to interest rates and financing costs. Source: OEC - NEA (Nuclear Energy Agency)
• The social dimension of nuclear energy's contribution to sustainable development is ambivalent. While nuclear energy contributes to the security of energy supply, local employment and technological development, it can also be politically divisive in some OECD member countries. Some of these reactions can be traced to associations with military uses of nuclear energy and more generalised concerns about technological progress and risk. The nuclear energy debate must equally address the issues of public perception along with economic, environmental and technical issues. To meet sustainable development goals, nuclear energy will have to achieve a higher level of social acceptance than it enjoys in many countries today. Source: OEC - NEA (Nuclear Energy Agency)
• Nuclear power is the second-largest source of low-carbon electricity today, with 452 operating reactors providing 2700 TWh of electricity in 2018, or 10% of global electricity supply. Source: IEA

Sustainability Impact

• Radioactive waste is probably the most important issue when considering the use of nuclear energy. Progress has been made in reducing the volume of final waste and next-generation reactors will burn fuel even more efficiently. Nevertheless, remaining waste has to be addressed and long-term storage is currently the safest and most viable solution. While such waste needs to be handled with care, above-ground storage in specially designed casks over the past 50 years has been handled with great success and minimal environmental impact. Source: OEC - NEA (Nuclear Energy Agency)
• On a life cycle basis, nuclear power emits only a few grams of GHGs: a median value of 14.9 g CO2-eq/kW·h with an interquartile range of 5.6–19.7 g CO2-eq/kW·h was estimated based on more than 200 individual estimates (for light water reactors) published in the literature. The bulk of nuclear related GHG emissions stems from cement production, material production and  component manufacturing in the construction phase, but emissions are also affected by the carbon intensity of the electricity supply and enrichment technology in the uranium enrichment phase. Source: OEC - NEA (Nuclear Energy Agency)
• Life cycle emissions from the nuclear power chain are comparable with the best renewable energy chains and several orders of magnitude lower than fossil fuel chains. Source: OEC - NEA (Nuclear Energy Agency)
• Nuclear power has avoided about 55 Gt of CO2 emissions over the past 50 years, nearly equal to 2 years of global energy-related CO2 emissions. However, despite the contribution from nuclear and the rapid growth in renewables, energy-related CO2 emissions hit a record high in 2018 as electricity demand growth outpaced increases in low-carbon power. Source: IEA

Sustainability Investments to watch

• In the absense of further lifetime extensions and new projects could result in an additional 4 billion tonnes of CO2 emissions, underlining the importance of the nuclear fleet to low-carbon energy transitions around the globe. In emerging and developing economies, particularly China, the nuclear fleet will provide low-carbon electricity for decades to come. Source: IEA
• It is considerably cheaper to extend the life of a reactor than build a new plant, and costs of extensions are competitive with other clean energy options, including new solar PV and wind projects. Nevertheless they still represent a substantial capital investment. The estimated cost of extending the operational life of 1 GW of nuclear capacity for at least 10 years ranges from $500 million to just over $1 billion depending on the condition of the site. Source: IEA
• A number of challenges specific to the nature of nuclear power technology may prevent investment from going ahead. The main obstacles relate to the sheer scale of investment and long lead times; the risk of construction problems, delays and cost overruns; and the possibility of future changes in policy or the electricity system itself. Source: IEA

• Construction and safe operation of new nuclear power plants, for the generation of electricity and/or heat, including for hydrogen production, using best-available technologies
• Pre-commercial stages of advanced technologies to produce energy from nuclear processes with minimal waste from the fuel cycle