IEEJ：August 2019 © IEEJ2019

Towards Sustainable Transport
Laszlo Varro, Chief Economist, International Energy Agency
Kyoto, 25 August 2019

IEA 2019. All rights reserved.

IEEJ：August 2019 © IEEJ2019

Nuclear is a leading source of clean electricity today

TWhLow-carbon electricity generation in advanced economies by source, 2018
5 000
4 000
3 000
2 000
1 000

NuclearHydro

WindBioenergy

Solar PV

Nuclear power provided 10% of electricity supply worldwide in 2018,
while in advanced economies, it has been the largest clean source of electricity for over 30 years.
IEA 2019. All rights reserved.

IEEJ：August 2019 © IEEJ2019

Nuclear power has avoided CO2 emissions for 50 years

Gt CO2Cumulative CO2 emissions avoided by nuclear power worldwide, 1971-2018
70

Developing economies

60

Other advanced economies
Canada

50

Korea

40

Japan
United States

30

European Union

20
1001971

1980

1990

2000

2010

2018

Without nuclear power, CO2 emissions from electricity generation would have been almost 20%
higher over the period.
IEA 2019. All rights reserved.

IEEJ：August 2019 © IEEJ2019

The nuclear fleet is ageing

Average age (years)

Age profile of nuclear power capacity in selected regions
50403020100050
United States

100Canada150200

European Union

250300350
Nuclear power capacity (GW)
JapanIndiaKorea

China

Many nuclear power plants in advanced economies are facing retirement
as they approach the end of their original 40-year design lifetime.
IEA 2019. All rights reserved.

IEEJ：August 2019 © IEEJ2019

Unfavorable new construction experience both in the US and Europe
Nuclear investment costs from the 2005 - 2015 editions of Projected Cost of Power Generation and recent US/EU experience
with III gen + projects

USD/kw

9 000
8 000
7 000
6 000
5 000
4 000
3 000
2 000
1 000

2005

20102015

Recent experience

Project management problems, cost inflation and competition from gas and renewables hit theinvestment appetite for nuclear
IEA 2019. All rights reserved.

IEEJ：August 2019 © IEEJ2019

An emerging China – Russia dominance in nuclear development
New nuclear construction starts by technology provider, 2012 – 2018
16000
14000
12000
10000
8000

export6000

domestic

4000
2000
0

China

RussiaKorea

rest of the world

The last Korean export project started in 2015, recent policy decisions by the Korean
government are less favorable to nuclear
IEA 2019. All rights reserved.

IEEJ：August 2019 © IEEJ2019

Nuclear could face a steep decline in advanced economies

GWNuclear power capacity (operational) in advanced economies in the Nuclear Fade Case, 2018-2040
300

European Union
United States

250

Canada

200

Japan

150

Other advanced economies

10050
2018

2025

2030

2035

2040

Without additional lifetime extensions or new projects,
nuclear capacity in advanced economies would decline by two-thirds by 2040.
IEA 2019. All rights reserved.

IEEJ：August 2019 © IEEJ2019

Lower nuclear raises CO2 emissions and supply costs

3 000

1 200

2 000

800

1 000

400

Fuel use
CoalGas400

300

200100CO2 emissions

T&DPowerplants

Investment

Billion USD per year (2017)

4 000

Billion USD (2017)

1 600

Mt

Mtoe

Change in key indicator in advanced economies in the Nuclear Fade Case under current policies, 2019-2040
50403020
10Total electricity
supply costs

Lower nuclear raises fossil fuel use and power sector CO2 emissions by 5% to 2040,
raising investment needs by close to $600 billion to 2040 and supply costs toconsumers.
IEA 2019. All rights reserved.

IEEJ：August 2019 © IEEJ2019

Nuclear power is part of a cost-effective clean energy transition
Power sector investment needs in advanced economies on a sustainable energy pathway, 2019-2040
Fossil fuels
Sustainable
Development
Scenario

NuclearRenewables
Batteries
02468

1012Trillion USD (2017)0246810

Nuclear FadeCaseNetworks

12Trillion USD (2018)

Investment needs to achieve the energy transition are $1.6 trillion
without nuclear complementing renewables in the fight against climate change.
IEA 2019. All rights reserved.

higherIEEJ：August 2019 © IEEJ2019

Increasing network investment is not only a financial issue

IEA 2019. All rights reserved.

IEEJ：August 2019 © IEEJ2019

Bypassing social acceptance barriers increases capital costs

Undersea DC interconnection with amerchant business model, North Sea

IEA 2019. All rights reserved.

Tunneling under the Alps for the France– Italy interconnector

IEEJ：August 2019 © IEEJ2019

Further emphasis on solar and wind raises integration challenges

Solar PV share

Wind and solar PV shares of generation by region in the Nuclear Fade Case on a sustainable energy pathway

30%

India
China

20%

10%
China
India
0%0%

2017
United States
European Union= 2 000 TWh

Greece Germany
US10%

UK

Denmark

Portugal
Ireland
Spain
20%

2040,
Nuclear Fade Case

30%

40%

50%

Wind power share

Rising shares of wind and solar PV require more flexibility in power systems, callingon power plants, grids, storage technologies and demand-side management.
IEA 2019. All rights reserved.

IEEJ：August 2019 © IEEJ2019

A low carbon system in Japan without nuclear: possible, but

4000 km2 of solar panels

Twice the current German wind production fromfloating offshore and onshore Hokkaido

In the absence of nuclear wind and solar would have to do the heavy lifting, providing almost
half of electricity by 2040
IEA 2019. All rights reserved.

IEEJ：August 2019 © IEEJ2019+ New dispatchable low carbon capacity for system adequacy
25 million tons/year CO2 captured from gas + CCS
plants60 million tons/year of biomass burned for power

36 GW new hydro and battery storage
Maintaining electricity security in a low carbon – low nuclear Japanese system would requiremassive and socially contentious investments in dispatchable low carbon capacities
IEA 2019. All rights reserved.

IEEJ：August 2019 © IEEJ2019+ 20 years of network investment at 4 times the current level
Internal interconnection
reinforcement

Cableconnections forfloating
offshore windDC cables for Hokkaido
wind and Kyushu solar toHonshu

IEA 2019. All rights reserved.

Together with distribution reinforcement to support small
scale solar network investment needs reach 0.6% of GDP

IEEJ：August 2019 © IEEJ2019

Nuclear lifetime extensions provide cheap clean electricity

USD per MWh

Levelised cost of electricity (LCOE) in the United States by technology in 2018
200150100500New

Lifetimeextension
Nuclear

Solar PV

Windonshore
Renewables

WindOffshore

CoalGassupercritical combinedcycle
Fossil fuels

Nuclear lifetime extensions are cost-competitive with new solar and wind,
and provide a dispatchable source of clean electricity.
IEA 2019. All rights reserved.

IEEJ：August 2019 © IEEJ2019

Financing is a key issue to enable new nuclear construction

USD per MWh

LCOE of a 4 billion USD/GW nuclear project depending on the cost of capital

140
Typical WACC
applied on aregulated assetSovereign bonds of baseadvancedeconomies

12010080

Merchant projects selling in
Rate of returnwholesale markets
expectations withlong-term contracts

Cost of capital
Depreciation
Operational
expenditureand fuel

60
40
200

123456789101112
131415Weighted-average cost of capital (%)

Given long lead times and long lifetimes, the cost of capital is a dominant driver of thecompetitiveness of nuclear investment
IEA 2019. All rights reserved.

IEEJ：August 2019 © IEEJ2019

Small modular reactors, this time for real?

Nuclear innovation and early deployment of advanced technologies needs to accelerate fornuclear to play meaningful role in the low carbon system
IEA 2019. All rights reserved.

IEEJ：August 2019 © IEEJ2019

Policy recommendations for countries pursuing nuclear power
Ensure a sound framework for lifetime extensions:• Value the clean nature of nuclear power and contributions to electricity security• Clarify safety requirements for longer life and more flexible operations
Support new construction:• Establish appropriate frameworks to reduce financial risks• Maintain technical competencies related to nuclear power• Pursue research & development of new technologies (e.g. small modular reactors)

IEA 2019. All rights reserved.

IEEJ：August 2019 © IEEJ2019

Contact :report@tky.ieej.or.jp
IEA 2019. All rights reserved.