The debate has raged across the world over the past few years (and not only in the expert community) as to the priorities for energy development at the national, regional and global levels. Moreover, the West has extended this discussion beyond engineers, economists, energy sector specialists and investors to form an entire expert movement that conveys a particular opinion to the society at large and then influences governmental policies. Developing countries present a somewhat different picture, where governments enjoy greater independence from public opinion in their decision-making, although the discussions are no less heated, nevertheless. These discussions have already created stable stereotypes associated with supporters of a particular mode of energy sector development: support for renewable energy sources (RES) and distributed energy is the province of liberals, while (centrally managed) traditional energy is the pet project of the conservatives[1].
Recently, the debates between supporters and opponents of renewable energy sources in the media and on the internet have reached an unprecedented level against the backdrop of major power supply problems caused by the abnormal cold spells in Europe and the United States. For instance, the Russian media actively criticizes the RES-based energy policies of the European Union and the United States for bringing about dire consequences in terms of energy supply (which is in fact not the case).
Nuclear energy is another butt of long-standing criticism. Public opinion in Western Europe demands that politicians abandon nuclear power in favour of renewable energy sources. This pressure has resulted in government and inter-governmental programmes geared primarily towards developing solar and wind power and the use of hydrogen.
Most surprisingly, supporters of both sides frequently miss the essence of the debate: they fail to ask why the authorities sometimes plump for renewable energy sources, while in other cases they choose oil, gas, or nuclear power plants. As a result, we often witness experts complaining about the low share of renewable energy sources in Russia’s energy balance compared to the high rates seen in European countries. Russia is thus seen to be lagging behind, having missed opportunities to develop the renewable energy sector. The problem, however, lies elsewhere: renewable energy sources do indeed make it possible to radically reduce the environmental footprint. However, if the idea behind developing the national energy sector is to solve environmental and climate problems, for example, by achieving carbon-free energy supply by a certain date, as many developed countries, as well as China, have done, then it is necessary to develop renewable energy sources (now, pay attention!) in combination with other low-carbon types of energy: nuclear energy and natural gas. Let us stress once again that this combination does not at all contradict the ideology and essence of “Energy 4.0” or the “energy transition.”
The Energy Sector and Economic Development
Renewable energy sources have proved stable and reliable during the COVID-19 crisis and, as expected, every “respectable” forecast predicts stable growth of varying intensity[2].
Renewable energy sources will cover 80 per cent of the increase in global demand for power in the next decade, and are expected to surpass coal as the principal source of energy by 2025. The highest growth will take place in China, where renewable power generation is predicted to increase by nearly 1500 TWh by 2030, which equals the total power generation of France, Germany and Italy combined.
In the next decade, solar and wind power plants will replace coal as the investment priority in building new power generation facilities. Solar power plants (SPP) will be constructed with greater intensity compared to other generation facilities due to the short construction times, low capital costs and the opportunities they offer to reduce environmental pollution. As the solar energy sector develops, secure supply chains and land for building SPPs will become critical factors. At the same time, direct support from the state will no longer be needed in most cases, although auxiliary support measures for stabilizing financial balances will still play a significant role in accelerating the construction of new capacities and reducing the costs of implementing new solar power projects.
In 2010–2019, the average costs of building solar power plants fell by 80 per cent. Additionally, solar power plants enjoy some form of governmental support in over 130 countries. This support has made cheap financing for solar power possible, which has played an important part in achieving record low prices.
The use of wind power is also expected to grow significantly. The average global cost of generating this kind of power has fallen by approximately 40 per cent over the past decade. Wind power enjoys governmental support in about 130 states, over 70 of which intend to develop shelf projects. Improved technologies and preferential financing terms will make it possible to reduce the costs of offshore wind energy to around USD 50 per megawatt/hour (MWh) in the next five years, which is roughly half the cost of recently constructed wind farms.
The use of nuclear power has continued to grow around the world, thanks to the completion of the first units of the EPR and AP1000 in China in 2018. The first unit of the Hualong-1 reactor is slated to be put into operation by the end of 2020.
Nuclear energy accounted for approximately 10 per cent of power generation in 2019 and was the second largest source of low-emission energy around the world (after hydropower). Nuclear energy has also contributed to the reliability of energy supplies: most reactors continued to operate throughout the first wave of the pandemic, despite demand being lower than usual. NPPs made it possible to ensure a certain flexibility of power grids and reduce the dependence of some states on imported fossil fuels.
Nuclear power generation is expected to return to pre-crisis levels by 2023 as demand recovers. Depending on the development scenarios, it is forecast to grow by 15–30 per cent before the end of 2030, although its share in the energy balance will decrease somewhat against the backdrop of various trends manifesting in two groups of states. In 2019–2030, developing states will increase NPP power generation by two thirds, which will bring its share in the total power production to 6 per cent. In early 2020, NPPs with total capacity of 42 GW (out of 62 GW) were being constructed. In 2030, nuclear power capacity will increase from 110 GW to 180 GW. China is on track to becoming the leader in nuclear power by 2030, ahead of the United States and the European Union. As of early 2020, China operated 48 nuclear reactors and was building 11 more. China is one of the few states that, under the Paris Climate Accords, included both nuclear power generation and renewable energy sources in its national programme for reducing emissions. The NPP development programmes that are being implemented in Russia, India and the Middle East could also contribute to increasing the global significance of nuclear energy.
Nuclear energy was the largest source of power in developed economies in 2019, but its generation is expected to drop by 10 per cent in 2019–2030 due to reactors aging and the restrictions imposed on new construction projects. Within the next decade, over 70 GW will be decommissioned at the NPPs currently in operation. Extending their service life may provide about 120 GW that otherwise would be shut down by 2030. By early 2020, about 20 GW of new NPP capacities had been built in Finland, France, Japan, South Korea, Slovakia, Turkey, the United Kingdom and the United States. Otherwise, the projected additional capacities in developed economies is limited.
By 2030, total NPP capacity in the European Union will have dropped by 20 per cent. The biggest drops will be seen in Germany (which plans to fully decommission its NPPs by 2022), Belgium, Spain and France. By 2030, the installed nuclear capacity in the United States will have declined by 10 per cent, despite the fact that construction has been completed on two AP 1000 reactors and that five states now offer livelihood loans to companies with zero emissions. In Japan, the total installed capacity of its NPPS will drop from GW 33 in 2019 to GW in 2030. Even those countries that are interested in developing nuclear energy are running the risk of soon abandoning it due to extremely complicated market conditions and the risks connected with new capital investment. This development is highly probable, despite the possibility of nuclear energy being declared “clean” and despite NPPs being the most economically efficient low-emission power source.
Overall, global investment in renewable energy sources and nuclear power will rebound to pre-crisis levels in 2021, and is expected to grow steadily to USD 420 bn by 2030. In the next decade, renewable energy sources and nuclear energy will account for up to 80 per cent of all investments in energy generation.
Features of Nuclear Energy Development in Russia and Around the World
Nuclear energy is a technologically proven source of electric power that has significant potential to reduce carbon emissions. It has a large number of unique features that make it a viable option for many governments throughout the world. For example, one of the advantages of nuclear energy, besides it having zero carbon emissions, is that it is manageable: it does not depend on weather conditions, which makes it compatible with renewable energy sources. Additionally, nuclear energy generates more power than other zero-carbon energy sources per unit of area (facilities require less space).
However, nuclear energy technologies are capital intensive. Capital costs may account for up to 80 per cent of the energy costs of a new nuclear power plant. Therefore, reducing the cost of power plant construction (including equipment, building materials and labour) are of fundamental importance for making nuclear energy competitive.
In addition to the high capital costs, nuclear energy has other problems—possible construction time and budget overruns and the uncertainty of energy prices throughout the life cycle of nuclear power plants in an era of increasingly cheap renewable energy sources and advances in energy storage technologies. This has prompted consumers and other interested actors (from taxpayers to national governments) to reassess their standing on NPPs. Additionally, the Fukushima Daiichi disaster in 2011 sparked political and social debates on nuclear power in some markets.
At the same time, according to the Energy Research Institute of the Russian Academy of Sciences, even though some countries abandoned the development of nuclear energy in favour of using renewable energy sources, global power generation at NPPs will increase by 2040.
Some experts believe it is desirable, reasonable and even necessary to combine nuclear energy with renewable energy sources to achieve the global carbon-free development goal. The goals set by international treaties to reduce environmental impact may prove unattainable if NPPs are abolished, despite the growing economy, population and emerging technological development trends. Additionally, some experts consider the projects to combine the use of NPPs (base-load demand) and renewable energy sources (variable duty) of particular interest.
The new developments in nuclear energy, such as building and operating mini nuclear reactors, appear highly promising in terms of long-term development. Several countries are working on such reactors. Russia, the United States and France have been particularly successful in this area. These technologies are particularly interesting for small states and isolated and remote regions (Russia is already building such a mini NPP in Yakutia).
Given Russia’s leadership in nuclear technologies, nuclear energy could play a leading role in the low-carbon technological restructuring of Russia’s energy sector. The transition to the new generation of VVER-TOI light-water reactors has already begun, and the use of fast nuclear reactors will develop at an increasingly rapid pace, which will in turn speed up the nuclear sector’s changeover, first to the combined fuel cycle, and then to the closed cycle. Additionally, new types of NPPs will boast improved safety and efficiency and lower capital intensity. Therefore, the share of capital investment in VVER-TOI power units will be reduced by 15 per cent compared to their current costs, and the target specifications for fast reactors will be 15 per cent lower still compared to VVER-TOI. Transitioning to the closed nuclear fuel cycle will also make it possible to halve the costs of generating power at NPPs.
The introduction of fees for greenhouse gas emissions, even at RUB 600 (approximately USD 8) per tonne of СО2, significantly improves the competitive edge of carbon-free energy technologies and will lead to a 10-per cent increase in NPP capacity by 2050 compared to the base case, which does not include emissions payments. This is about 31% of the installed capacities of Russia’s UES.
With two thirds of its territory made up of isolated or remote regions with power supply problems, Russia has a huge area for applying new nuclear energy technologies. It is perfectly clear that a large country with a low population density cannot resolve the problem in developing its energy sector through large-scale network construction. Small-capacity nuclear power plants constitute one of the most realistic ways out of this situation.
Conclusions
Our analysis demonstrates that renewable energy sources are the most attractive energy generation technologies for ensuring sustainable carbon-free development around the world. At the same time, there are a number of technological and economic problems that can only be overcome by adopting a systemic approach using additional technologies, radically new approaches to managing and regulating energy markets, and complex energy systems (including in the course of transitioning from primarily centralized to primarily distributed systems). This, in turn, requires additional expenditures on developing the energy infrastructure. Under the currently emerging conditions, nuclear energy has rather good development prospects in both developed and developing states. It can serve as a supplement to renewable energy. As one of the leaders in nuclear energy, Russia has several competitive advantages in the face of the tougher requirements and commitments in environmental protection and countering climate change.
