PEST(EL) in the Nuclear Industry – The Economic (part 5)

And now back to our regularly scheduled programming.

Last time we looked at the US economics of nuclear. The international view is more variable and worth a look at the same issues.

It is interesting to note that most countries (with a few notable exceptions) have not changed their stance on building (or not building) new nuclear plants since the events in Japan. Economics seem to be a key driver in those decisions.

Western Europe is much like the US in regards to economics at this time. Some countries are in more financial trouble than others, but stagnant economic growth and low interest rates dominate. However, there are some key differences that are driving different behaviors in different countries.

United Kingdom

The UK’s economy is much like the US, but with some key differences in the electricity and energy demand market. The UK was more strongly building wind turbines both onshore and off. With such efforts, the inefficiency of wind to meet energy needs has become more obvious. Solar was never really much of an option in the British Isles, and the decline in the North Sea oil and gas reserves as well as rising natural gas prices has given the country notice that other alternatives are needed.

The UK also had to shut down much of its aging nuclear fleet. The technology used in many of the reactors has not been as robust as was initially believed. In shutting these reactors down, the need to develop significant suitable replace power became much more obvious to policy makers and thus made nuclear as more acceptable option.


The French have maintained a nuclear program and have not indicated any rejection of nuclear. However with 75% of electricity already generated by nuclear, France has not indicated a plan to embark on any major building programs. As the current fleet ages, it is not yet clear how France intends to manage the impact. Some plant life extension, which is less expensive is clearly possible, but currently, there is little economic incentive for new build.


Germany has been quite divided about nuclear power with the industrialized south generally more supportive of nuclear due to its low cost and generally high reliability. However, politics seem to have driven the country to drop the nuclear option. There is an economic factor that should not be ignored. Germany has considerable in country coal deposits as well as significant economic interests in Russian natural gas. Together with low growth rates, and some that are willing to try to make wind and solar work, these unlikely interests come together to eliminate nuclear from their current strategy.


The Swiss had an initial knee-jerk reaction to follow in Germany’s footsteps, but at a much more measured pace. The Swiss have little outside resources beyond the hydro-electric system that they operate so well. Swizterland is a mature economy with limited growth and so has some time to make these decisions.

Eastern Europe

Several eastern European nations have looked at Germany’s announced exit from nuclear power as a potential opportunity to provide energy in the shortfall. Poland and the Czech Republic both continue to be strongly supportive on nuclear programs. With the drop in production in Germany, the economic potential of new nuclear in both countries seems to tile more in favor of building new nuclear plants.

Of course, there is a political aspect to any programs in these generally smaller countries within the EU. There is significant pressure from both Germany and Austria for these countries to give up their nuclear ambitions. In order for them to be able to fully leverage such opportunities, some support from pro-nuclear governments is needed.

Emerging markets

I include here China, India, the Middle-East, and other countries rapidly moving up the economic ladder. In all of these countries economic growth is enormous and in many there is significant shortage of energy. The choices to get large amounts of reliable power and still hold GHG emissions and cost within some reasonable limit are few. Thus, most of these countries have looked at what happened in Japan, concluded that modern designs are less prone to similar failures and are proceeding with new nuclear as quickly as they can safely do so. In many of these countries, alternative energy supply are also being pursued aggressively, but in the middle east, for example, the goal is to stop using oil for energy production so that it can be sold to other nations to continue economic growth at home.


This is a quick summary analysis of extremely complex economic drivers in the international arena. However, it is clear that in general the drive to build new nuclear around the world is more clear in economies with considerable growth. Unfortunately, many of these countries do not have as clear a track record in safe operations of such complex facilities. Countries with well developed programs need to remain engaged in the construction and operation of nuclear power plants in order to remain in a position to influence developing countries despite the unclear economic drivers for nuclear power.

4 thoughts on “PEST(EL) in the Nuclear Industry – The Economic (part 5)”

  1. Margaret,

    I think you miss one other influence, in the context of the UK – that we’ve deregulated our energy sector far more aggressively than is the case in pretty much all of the US (with the possible exception of Texas).

    That gives us particular advantages, as well as challenges. It reduces the opportunity for political grandstanding in terms of technology selection, but it increases the risk for investors in nuclear plant.

    The early aggressive attempts to develop wind have left us acutely aware of what’s implicit in that. The deregulation structures make the costs and technical challenges of wind integration acutely apparent;

    • Andy,

      Interesting that deregulation is working better for nuclear in the UK than in the US. In the US, the only places where new nuclear is being aggressively pursued is where electricity is still quite regulated. In our case it increases the risk of political grandstanding, but lowers the economic risk, if one gets a PUC that understands the long term benefit of nuclear.

      I had assumed that the US was going to have to go back to a regulated energy sector to move the ball forward. Thanks for the insight.

      • TBH, Margaret, most places that have gone down the deregulation route have made it work rather better than the US! It’s honestly hard to see quite why.

        Generation is competitive across most of the EU – and pretty much everywhere has competition in retail. The EU Commission is enforcing the “third package” on deregulation, which enforces separation of T&D from retail and generation activities (we did it in 2001-2.

        The nordics, all but one Aussie state and the New Zealanders are pretty much where we are.

        You seem to have been sidetracked by the California debacle – which I’d argue was at least as much a function of half-hearted deregulation, in the form of restrictions on generation and transmission development, and regulating retail prices while allowing wholesale prices to float.

        Having said all that, it’s fair to say that Government is intervening in the market here, to advantage nuclear and renewables (and probably CCS, but I suspect that’ll crash and burn pretty quickly). But, I think they’ve found ways to do that which keep the market strongly competitive – mostly by imposing what amounts to a guaranteed level of carbon tax, and reserving part of the market for low carbon generation.

        I’ve been muttering for years about going back to school, and PhD on the various national experiences. One day…….

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