Nuclear reactors, but no fuel
The arguments against nuclear energy are well known: nuclear waste, nuclear weapons and nuclear accidents. All serious threats, but we don’t have to dig them up again this time. There is a more ordinary reason why the present-day revival of atomic energy is no solution to our energy woes. A nuclear plant does not run on solar energy, wind, air or water, but on (enriched) uranium. That radioactive element was dirt cheap for a long time, but that period has ended. At the beginning of 2000 a pound of uranium had a price tag of 10 dollars, in July 2007 the price was 136 dollar. This is a rise of 1300 percent.
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"Today, the mining of uranium only provides half of the nuclear fuel. The rest is originating from the dismantling of nuclear weapons since the end of the cold war - a source that will become depleted by 2015."
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The cost of nuclear electricity is not wholly dependent on the price of uranium. The fuel cost constitutes only 20 percent of the cost price – the running, the maintenance and the infrastructure costs of the plant have a much larger weight. According to the International Energy Agency (IEA) a doubling of the price of raw uranium leads to a rise of 6 percent in the cost price of nuclear electricity (The OECD talks of 10 percent). In the case of a coal plant, a doubling of the fuel price leads to a rise in the cost price of 40 percent, for a gas plant it becomes 75 percent.
Price explosion
But that does not make nuclear energy immune against rising fuel prices. The oil price (connected with the gas price) today is about 150 percent higher than the beginning of 2000. That means that the cost price of electricity generated in a gas plant has risen 115 percent. In that same period, the price of uranium rose with 1300 percent, which comes down at a rise of the cost price of nuclear energy with 78 percent (according to the standards of the IEA) to 130 (according to those of the OECD).
This price explosion has two reasons: a fast growing demand and a fast falling supply. Higher oil prices and concerns on global warming have made nuclear energy an attractive option again. According to the World Nuclear Association, right now there are 28 nuclear plants under construction, and 64 others are planned. Another 158 reactors are on the drawing board. China, Russia and India account for most of them.
Shrinking supply
All together we are talking about 250 new nuclear energy plants, compared to the 440 built at present. When all these nuclear plants will start running, in the second half of the next decade, demand for uranium will rise sharply – a part of the rise in prices of today is the consequence of speculation. According to the IEA, the annual demand for uranium will grow from 68,000 tons in 2005 up to 100,000 tons in 2030, a rise of nearly 50 percent.
Opposite this rising demand is a shrinking supply. Today, the mining of uranium only provides 55 to 65 percent of the nuclear fuel. The rest is originating from secondary sources, mainly the dismantling of Russian (and to a lesser extent American) nuclear weapons since the end of the cold war. By 2015, that source will become exhausted. That means that the higher demand starting from the second half of the next decade will have to be completely absorbed by ‘freshly’ mined uranium, which is now not even supplying two thirds of the fuel. Otherwise a considerable amount of the worldwide nuclear plants will have to shut down because of a shortage of fuel.
Massive investments
The IEA last year made a remarkable plea for more nuclear energy in the electricity mix. But the energy agency linked it to an important requirement, which received much less attention: massive investments in uranium mines and processing plants – following a huge underinvestment in the last 20 years. Every uranium producer is very busy expanding its capacity and they all have announced large investments for the coming decade – at least a doubling or more of their production. But the deficit is huge, and time is short.
According to the IEA, existing and planned facilities in 2030 can only deliver 65 percent of the fuel that is needed. According to the agency, it looks like there will be a shortage starting from 2020. Moreover, the expansion of the existing capacity is not plain sailing. Last October, a mine of Cameco, the biggest uranium producer in the world, was flooded by heavy rainfall. The opening of the mine, previewed to deliver 15 percent of the global uranium supply starting from 2008, was delayed with 2 years.
© Kris De Decker (edited by Vincent Grosjean) / Picture : flickr
An update on uranium prices (May, 2008)
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