Opinion of the European Economic and Social Committee on the Role of nuclear energy in the stability of EU energy prices (exploratory opinion requested by the Czech Presidency of the Council of the EU)
Date: 2022-09-21
Institutions: European Economic and Social Committee
Subjects: EU energy policy, electrical energy, energy crisis, energy production, nuclear energy, nuclear power station, price of energy, price stability, reduction of gas emissions, security of supply








C_2022486EN.01010201.xml










21.12.2022   


EN


Official Journal of the European Union


C 486/102






Opinion of the European Economic and Social Committee on the Role of nuclear energy in the stability of EU energy prices
(exploratory opinion requested by the Czech Presidency of the Council of the EU)
(2022/C 486/15)






Rapporteur:



Alena MASTANTUONO











Referral


The Czech Presidency of the Council of the EU, letter of 26.1.2022




Legal basis


Article 304 of the Treaty on the Functioning of the European Union
Exploratory opinion




Plenary Assembly decision


21.9.2022




Section responsible


Transport, Energy, Infrastructure and Information Society




Adopted in section


7.9.2022




Adopted at plenary


21.9.2022




Plenary session No


572




Outcome of vote
(for/against/abstentions)


143/73/42 (recorded vote — see Annex II)




1.   Conclusions and recommendations









1.1


The stability and affordability of energy prices is essential to preserve both the purchasing power of households and the competitiveness and resilience of the European industrial fabric. After a decade of relative price stability for energy import prices and the relatively low annual increase of domestic producer prices for energy of 0,9 % between 2010 and 2019, Europe has been witnessing a sharp increase in energy prices since second half of 2021. Volatility in energy prices and uncertainty of energy supplies escalated with the war in Ukraine.












1.2


The challenge that Europe is facing today is twofold: the need to combat climate change and the need to ensure a stable energy supply at an affordable price. As the Commission writes in its REPowerEU plan, the challenge is to rapidly reduce our dependence on Russian fossil fuels by fast forwarding the clean transition and joining forces to achieve a more resilient energy system and a true Energy union. The solution has three time dimensions. The essence of the short-term perspective is primarily to resolve the situation with the supply of energy, as a possible shortage may exacerbate price increases. The current market situation is influenced by current and expected supply-side factors. It is therefore necessary to use all available energy sources in the EU as outlined in the REPowerEU plan. This is a crisis scenario, the purpose of which is primarily to secure the supply of energy. The medium-term perspective allows for greater respect for the sustainability and balance of energy sources, and the long-term perspective, provided that geopolitical security risks are reduced, will entail focusing on green goals.












1.3


The additional costs of safety and security caused by the war threaten to contribute substantially to the increase in energy prices. In the short term, existing nuclear power plants in EU Member States which opted to include nuclear power in their energy mix and where it is technically feasible will contribute to the stability of energy supply, which to a great extent influences price stability. Without the existing nuclear capacity, the shock to the energy system caused by Russia’s invasion of Ukraine would certainly be even bigger.












1.4


Nuclear power as a source of low-emission electricity is available on demand to complement the leading role of renewables such as wind and solar in the transition to electricity systems with net zero emissions. The EESC points out that nuclear as a stable baseload can at this time contribute to stable supply. The marginal costs of nuclear energy are stable and much lower than those of gas and coal plants. Nuclear power plants do not emit a significant amount of CO2 when in operation and so their marginal costs, like those of renewables, do not include any CO2 costs and are not affected by volatile carbon pricing as we could see in 2021 when the carbon price rose more than 200 %. The volatility in the EU ETS scheme significantly affects the price of gas and coal on the EU market.












1.5


From a regulatory point of view, the electricity prices on the EU wholesale market are determined by merit order in which the last power plant sets the price. In most cases of standard market behaviour, the price on a spot market is determined by gas or coal. This means that nuclear power does not influence energy prices on the spot market, except for when the energy mix includes a high share of low-emission sources. However, the spot market is only part of market sales. Energy companies often sell physical supplies of electricity on the basis of bilateral contracts. In this case, different financing models and bilateral contracts used in EU Member States with nuclear in their energy mix help to stabilise the energy price for the customer.












1.6


The current energy crisis affected the functioning of the EU electricity market by distorting its basic rules due to the number of interventions to mitigate high energy prices or significantly decrease demand. This situation points to the important correlation between decreased supply and increased demand pushing up energy prices. With a more robust supply from stable low-carbon energy sources, energy prices will be less volatile and thanks to the interconnection of national energy markets the benefit can be shared across the EU.












1.7


The EESC considers that extending the life of the existing fleet of nuclear power plants makes sense in this particular situation and will, at the same time, contribute to the transition to a carbon-neutral economy. It has the potential to meet current expectations regarding energy supply and to reduce gas consumption in the electricity sector, thereby reducing the risk of gas shortages. It can also help to alleviate the unprecedented price volatility caused by non-economic factors, and meet current expectations regarding energy supply. The EESC recommends that the Member States work on solutions for storage capacity and reinforce transmission interconnections in order to respond effectively to outages in renewables in the longer term and in gas in the short term.












1.8


The EESC proposes that the Czech Presidency, within the European Nuclear Energy Forum (ENEF), discuss price stability in the nuclear sector and the role of nuclear power in stabilising supply as a response to reduced EU dependence on Russian gas. The EESC would like to be closely involved in this discussion.












1.9


The EESC suggests reinforcing bilateral cooperation with international partners in the nuclear sector in order to share the findings in terms of innovation and advances in new technologies. The EESC recommends that the Czech Presidency of the Council of the EU organise a conference on small modular reactors which could take the form of the EU-US high-level forum on small modular reactors and explore this promising research.




2.   Background and explanatory notes









2.1


Article 194 of the Treaty on the Functioning of the European Union lays down the legal basis for energy policy in the EU. Specific provisions are laid down in other articles such Article 122 of the TFEU (security of supply), Articles 170-172 of the TFEU (energy networks), Article 114 of the TFEU (Internal energy market) and Articles 216-218 of the TFEU (external energy policy). The Treaty establishing the European Atomic Energy Community (Euratom Treaty) serves as the legal basis for most EU actions in the field of nuclear energy.












2.2


The Treaty on the Functioning of the European Union also guarantees to Member States their right to determine the conditions for exploiting their energy resources, their choice between different energy sources and the general structure of their energy supply (1).












2.3


The EU’s plan to become the first climate-neutral continent in 2050 requires an energy transition towards zero and low-emission energy sources. The increasing part of renewables in the energy mix cannot happen without a backup made up of currently stable energy sources at our disposal such as fossil and nuclear energy; in addition, we need to invest in non-fossil gas-fired plants to cope with fluctuations in renewable energy. There is also a great need for storage capacity in order to avoid blackouts and satisfy growing energy consumption driven by electrification. Among the current stable energy sources, nuclear energy is the only source with low emissions which could reduce dependence on Russian gas.












2.4


Nuclear energy, with its 413 gigawatts (GW) of capacity operating in 32 countries, contributes to decarbonisation and reduces reliance on imported fossil fuels by avoiding 1,5 gigatonnes (Gt) of global emissions and 180 billion cubic metres (bcm) of global gas demand a year (2). Nuclear power, as a source of low-emission electricity, is available on demand to complement the leading role of volatile renewables such as wind and solar in the transition to electricity systems with net zero emissions. According to the International Energy Agency, less nuclear power would make net zero ambitions harder and more expensive and global nuclear generating capacity is expected to double by 2050.












2.5


The Commission Delegated Regulation (EU) 2022/1214 (3) recognises the potential of nuclear energy to contribute to the decarbonisation of the Union’s economy and considers nuclear energy a low-carbon activity. The Final Report of the Technical Expert Group on Sustainable Finance from March 2020 (4) stated that ‘nuclear energy generation has near to zero green-house gas emissions in the energy generation phase’ and ‘evidence on the potential substantial contribution of nuclear energy to climate change mitigation objectives was extensive and clear’. The taxonomy provides for additional and stricter requirements on waste disposal, funding and decommission planning.












2.6


The stability and affordability of energy prices is essential to preserve both the purchasing power of households and the competitiveness and resilience of the European industrial fabric. After relative price stability for energy import prices in the last decade (except the drop in 2020 by 31 %), and the relatively low annual increase of domestic producer prices for energy of 0,9 % between 2010 and 2019 (in 2020, energy producer prices fell by almost 10 %), Europe has been witnessing a sharp increase in energy prices since autumn 2021 (5).












2.7


For the first time in its history, the European Union is confronted by several serious risks linked to energy supply, energy security and skyrocketing energy prices. One of the reasons is that some Member States were not careful, or have succumbed to external pressure, and reduced all backup resources too quickly, while foreign interference certainly played a role in this regard.












2.8


Hectic and volatile energy price developments were already evident before the war, from autumn 2021, caused by several disruptions in supplies as well as the global increase in the demand for gas. The reason for the unusually high energy prices since last autumn is the sharp global increase in the demand for gas, due to a number of key factors: upward economic recovery, tightened supplies to the EU, a lack of investment, and bad weather conditions which have resulted in reduced production of energy from renewables. In some cases, speculation has led to the emptying of gas storage facilities (6). The current volatility in energy prices is mainly determined by the impacts of the Russian aggression against Ukraine, the uncertainty about a possible escalation in other countries and the effort to cut the EU’s energy dependence on Russia as quickly as possible.












2.9


The additional costs for safety and security caused by the war threaten to substantially contribute to the increase in energy prices. The next period of diversification of EU energy input, connected with massive investments into new infrastructure (e.g. LNG terminals, hydrogen pipelines) and realignments of the existing energy delivery network, could be accompanied by an additional jump in prices. The situation is also exacerbated by a significant decline in nuclear generation, expected to decrease by 12 % (more than 100 TWh) in 2022. According to the IEA electricity market report of July 2022, this decline is due to temporary decreased plant availability in France, the retirement of 4 GW of nuclear power in Germany and the impact of the Russian invasion on Ukraine’s nuclear plants.












2.10


Under the current circumstances, at least until the fundamental EU energy shift makes progress, the use of already existing energy sources available in the entire territory of the EU and utilisable immediately without impediments and within the already installed infrastructure is the highest priority. At the same time, cutting supplies of energy commodities from Russia is well underway, including the risk of limiting the supply of fuel rods for nuclear power plants, and ensuring a stable energy supply to all Europeans is leading to a challenge in terms of complying with climate targets.












2.11


To a certain extent, nuclear power enables the adaptation of electricity generation, depending on how much power is produced from renewables. Nuclear power stations are less flexible than gas, but they bring an element of stability into the system as they contribute significantly to the energy base load, and current regulation in some EU Member States allows flexible regimes for nuclear power plant operations.












2.12


The already installed nuclear sources are able to immediately satisfy the higher demand for electricity and are characterised by low operating costs. It is true that the comprehensive levelised energy costs in the case of nuclear sources are rather high, especially due to the huge investment costs which reflect high security measures; however, in the case of gas, the levelised energy costs are even higher (7). At the same time, given the war in Ukraine, we have no certainty that we will continue to be supplied with Russian gas or fuel rods until alternative supplies are found.












2.13


Nuclear is the dispatchable low-carbon technology with the lowest expected costs for 2025. Only large hydro reservoirs can provide a similar contribution at comparable costs but remain highly dependent on the natural features of individual countries. Compared to fossil fuel-based generation, nuclear plants are expected to be more affordable than coal-fired plants. While gas-based combined-cycle gas turbines (CCGTs) are competitive in some regions, their levelised cost of energy (LCOE) depend strongly on the prices for natural gas and carbon emissions in individual regions. Electricity produced from nuclear long-term operation (LTO) by lifetime extension is highly competitive and remains not only the lowest cost option for low-carbon generation — when compared to building new power plants — but for all power generation across the board (8).












2.14


Similarly to renewable sources, the operating costs of nuclear energy are low. The variable costs are virtually independent of the global energy commodity market. For this reason, nuclear power plants bid on the electricity market at a stable price. Price of fuels and carbon pricing generally have the greatest impact on costs of electricity production. These variable costs or marginal costs vary greatly from one technology to another. The marginal cost of nuclear power plants depends on the price of nuclear fuel, which is much lower than that of gas or coal. Nuclear production being substantial, the price of fuel can be spread over a large production volume, a large quantity of MWh. Since nuclear power plants do not emit CO2, their marginal costs do not include any costs related to CO2 allowance prices, like renewables.












2.15


From a regulatory point of view, the electricity prices on the EU wholesale market are determined by order of merit, in which the last power plant sets the price. In most cases of the standard behaviour scenario, the price on a spot market is determined by gas or coal. This means that nuclear power does not influence energy prices on the spot market, except for when the energy mix includes a high share of low-emission sources, set to be the future European model. At present, the standard market model has been destroyed by the supply-side shock, especially as regards gas, which has to be accompanied by the other disposable sources to contribute to market equilibrium and price stability, along with regulatory interventions such as demand reduction across the Union (9).












2.16


The spot market is only part of market sales. Energy companies often sell physical supplies of electricity on the basis of bilateral contracts. In this case, different financing models and bilateral contracts used in the EU Member States with nuclear power in their energy mix help to stabilise the energy price for the customer, but not necessarily to lower it. We also have to distinguish between different layers of the electricity market (wholesale versus retail). The retail markets in the EU depend on many factors such as the level of competition, but also on factors that determine the final price. The electricity prices paid by household consumers in the EU include taxes and levies. According to Eurostat figures, the average share of levies and taxes paid by household consumers for electricity in the EU is 36 %.




3.   General comments









3.1


The EESC is well aware of and respects the seriousness of the situation. Under the current circumstances, as a part of crisis and emergency management, reliable deliveries of energy at an acceptable price are the way to survive. For that reason, any disposable source which can be reliable should be used not only to accommodate demand, but also to contribute to price stability in this very uncertain period of time.












3.2


The EESC fully supports the European Green Deal and the shift of the European economy to climate neutrality by 2050. At the same time, the climate transition needs to go hand in hand with the five pillars of the Energy Union, namely with the pillars on security of supply and affordability of energy prices. Future policies should aim to decrease the high import dependency, as highlighted by the EESC in several opinions.












3.3


In the light of the main targets of the European Commission’s REPowerEU Communication, there are two phases of the effort for energy price stability in the EU; the first until some first steps of decreased the EU’s dependence on Russia with visible results are made, and the second when the EU energy dependence on Russia is zero. The EESC admits that for the first phase, where stability and safety will play a fundamental role, nuclear energy from existing EU sources also plays a role as highlighted in the REPowerEU plan (10), bearing in mind that preparing the EU energy system for the next winter will not be easy (to create sufficient stocks and reserves of gas, to start the diversification of deliveries, to utilise more hydrogen and methane, to make massive additional investments into renewable and energy efficiency projects) as the International Energy Agency indicates in its recommendations of March 2022 (11). For the second, a return back to the Green Deal mainstream could be possible when any risks linked to the security of supply are eliminated.












3.4


The EESC points out that the supply of fuel rods to nuclear power plants in the EU with VVER reactors operated on their territory (Bulgaria, Czech Republic, Hungary, Finland and Slovakia) might be at risk due to the war in Ukraine. At the same time, it is pleased to see that alternative supplies are possible (12) and encourages the relevant Member States to find alternative suppliers as soon as possible. Nuclear plants do not require large storage capacity and can easily stock fuel for 3 to 5 years, so it is possible to switch to another supplier or buy fuel at a favourable price.












3.5


The EESC highlights that the stability of the EU energy market is an absolute priority for today as it can eliminate volatility in energy prices. The nuclear energy as a very stable base load energy source (a backup to volatile renewables) can substantially contribute to stability of supply in periods of extraordinary risks.












3.6


The EESC points out that nuclear energy does not bare the risk of volatility in EU ETS prices, which reached an all-time high of EUR 100 per tonne of CO2 in early February 2022. Since nuclear power plants do not emit CO2, their marginal costs do not include any CO2 costs, like renewables. The volatility in the EU ETS scheme significantly affects the price of gas on the EU market.












3.7


Comprehensively, nuclear energy has high investment costs but relatively cheap operating costs. However, we are not starting from scratch, and existing (upgraded) nuclear capacities can be used to stabilise the market. The policies should allow Member States to prolong the operation of the existing fleet, as the long-term operation of nuclear power plants is by far the most affordable solution for 2030 and beyond which will allow a smooth transition to climate neutrality. It is necessary to avoid any measures that might negatively impact existing low-carbon capacity, or which would discourage investors from investing in the necessary technologies.












3.8


The EESC suggests factoring the role of nuclear energy into the future design of electricity market rules. Nuclear plants can offer electricity to end consumers at a fixed price, as several European countries use different models of contracts which ensure stability for consumers. A fixed purchase price ensures a return on investment and lower capital costs, and partially fixes the electricity price for end consumers.












3.9


Nuclear power accounted for around 25 % of the electricity produced in the EU in 2020. More solidarity and better transmission interconnections on the energy market will help to respond effectively to the volatility of renewables in the longer term and outages in gas in the short term. The EESC also calls for Member States to work on storage capacity and replace gas plants with energy from low-carbon sources. Any provisions in the revision of the electricity market design should incentivise investments in the low-carbon technologies needed to decarbonise the power sector in a safe and affordable manner.












3.10


The EESC highlights the other element of price stability for nuclear energy ensured by the stability of supplies. Compared to gas, nuclear power plants do not require large storage capacities and can easily stock its fuel for 3 years (13). Longer refuelling and stocking capacity help with buying the fuel under more favourable conditions as well as switching to other suppliers. For this reason, it encourages the five Member States with VVER technologies to look for alternative suppliers.












3.11


When the EU’s energy dependence on Russia decreases, it will be a good starting point not only to think, but also to implement and materialise the innovation potential regarding nuclear energy, namely the utilisation of nuclear sources for the production of hydrogen and waste recycling as a part of a circular economy chain. Using electricity from nuclear power to produce hydrogen and heat presents new opportunities according to the International Energy Agency. Surplus nuclear electricity could be used to produce an estimated 20 million tonnes of hydrogen in 2050 and co-generated heat from nuclear plants could replace district heating and other high-temperature uses (14), though the construction costs would need to fall to make it competitive.












3.12


The EESC proposes that the Czech Presidency discuss, within the European Nuclear Energy Forum (ENEF), price stability in the nuclear sector and also the role of nuclear power in the stability of supplies as a response to the reduction of the EU’s dependence on Russian gas. The EESC wishes to be closely involved in this discussion.












3.13


The EESC suggests reinforcing bilateral cooperation with international partners in the nuclear sector, mainly with the U.S., in order to share results in innovation and advances in new technologies. The EESC recommends that the Czech presidency of the Council of the EU organise a conference on small modular reactors which could take form of the EU-US high-level forum on small modular reactors and explore this promising research.




4.   Specific comments









4.1


The EESC is well aware of some risks connected with the utilisation of nuclear energy and supports the need for further research in order to make it even safer. It would be foolish to think that the risks do not exist. Nuclear power has been used to produce energy since the 1950s, and since then the level of security and safety have been reinforced, i.e. to withstand extreme external events, both natural and man-made, such as an aircraft crash or explosions. The EESC invites Member States not to stop research and innovation in this area and to comply with strict requirements on safety and waste disposal.












4.2


The current situation on energy market also affects uranium prices, which can be stabilised by better diversification of suppliers, or in the longer term by building power plants requiring less frequent refuelling. Power plants based on Small modular reactors (SMRs) may require less frequent refuelling, every 3 to 7 years in comparison to between 1 and 2 years for conventional plants. Some SMRs are even designed to operate for up to 30 years without refuelling. In addition, the construction of GEN III power plants meets the needs of countries with large energy requirements and developed grids (as shown by the programmes underway or planned in different countries).












4.3


Small modular reactors designs are generally simpler, and the safety concept for SMRs often relies more on passive systems and the inherent safety characteristics of the reactor, such as low power and operating pressure. SMRs offer savings in cost and construction time, and they can be deployed incrementally to match increasing energy demand.












4.4


The fuel needed for nuclear plants is rather of small volume compared to the needs of power plants running on fossil fuels. One small pellet of uranium dioxide weighing five grams produces the same amount of energy as a ton of coal or about 480 cubic meters of natural gas. Nuclear plants do not require large storage capacities and can easily stock fuel for 3 to 5 years. Stocking capacity can be considered as stability for the plant, as it decreases the dependence on a particular supplier and gives the possibility to buy fuel when there are favourable prices.












4.5


The investments made in this sector also means that any upgrade can be used for the benefit of the green transition. Nuclear technologies and methods are used to contribute towards the transition to an increasingly hydrogen-based energy system in two main areas: (i) hydrogen production from nuclear assisted thermal/chemical dissociation of water and (ii) contribution of nuclear methods and techniques to improve understanding and allow subsequent tailoring of materials to better meet the requirements for hydrogen storage and conversion (15).





Brussels, 21 September 2022.


The President of the European Economic and Social Committee

Christa SCHWENG




(1)  TFEU Article 194(2).

(2)  https://iea.blob.core.windows.net/assets/0498c8b8-e17f-4346-9bde-dad2ad4458c4/NuclearPowerandSecureEnergyTransitions.pdf

(3)  Commission Delegated Regulation (EU) 2022/1214 of 9 March 2022 amending Delegated Regulation (EU) 2021/2139 as regards economic activities in certain energy sectors and Delegated Regulation (EU) 2021/2178 as regards specific public disclosures for those economic activities (OJ L 188, 15.7.2022, p. 1).

(4)  The TEG report available at: TEG final report on the EU taxonomy | European Commission (europa.eu).

(5)  Eurostat data from February 2022 https://ec.europa.eu/eurostat/web/products-eurostat-news/-/edn-20220210-2

(6)  For more details, please see the opinion TEN/761 (OJ C 275, 18.7.2022, p. 80).

(7)  IEA/NEA, 2020.

(8)  https://iea.blob.core.windows.net/assets/ae17da3d-e8a5-4163-a3ec-2e6fb0b5677d/Projected-Costs-of-Generating-Electricity-2020.pdf

(9)  Council Regulation (EU) 2022/1369 of 5 August 2022 on coordinated demand-reduction measures for gas (OJ L 206, 8.8.2022, p. 1).

(10)  REPowerEU Plan COM(2022) 230 final.

(11)  IEA 10-Point Plan to European Union for reducing reliance on Russian supplies by over a third while supporting European Green Deal, with emergency options to go further, March 2022.

(12)  The Temelín nuclear power plant in the Czech Republic found alternative suppliers.

(13)  According to the Euratom Supply Agency’s 2020 annual report, ‘uranium inventories can fuel EU utilities’ nuclear power reactors for 2,75 years on average.

(14)  https://iea.blob.core.windows.net/assets/0498c8b8-e17f-4346-9bde-dad2ad4458c4/NuclearPowerandSecureEnergyTransitions.pdf

(15)  IAEA-TECDOC-1676.




ANNEX I
The following counter-opinion, which received at least a quarter of the votes cast, was rejected during the discussions (Rule 71(7) of the Rules of Procedure):







AMENDMENT 7


TEN/776


Role of nuclear energy in the stability of EU energy prices


Replace the whole opinion presented by the TEN section with the following text (explanation/reason at the end of the document):



Tabled by:

DIRX, Jan
HERNÁNDEZ BATALLER, Bernardo
IZVERNICEANU, Ileana
KATTNIG, Thomas
KUPŠYS, Kęstutis
LOHAN, Cillian
MOSTACCIO, Alessandro
NABAIS, João
NIKOLOPOULOU, Maria
RIBBE, Lutz
SCHMIDT, Peter
SCHWARTZ, Arnaud













Amendment





1.   Conclusion and recommendation







1.1


The answer to the question of the Czech presidency is, in summary, in the current market design of the electricity market, nuclear energy cannot play a role in price stability. This is because the merit order applies in the current market design (see point 2.8). Only when the market design is adapted with substantial financial state aid, in addition to private financing, a situation of price stabilization by nuclear energy is possible.










1.2


The EESC advises the Czech presidency to open a structured dialogue at EU level with the aim of agreeing on a new market design for the electricity market that guarantees price stability.




2.   Introductory notes







2.1


Prior to the Czech presidency of the Council of the EU (second half of 2022), this upcoming presidency asked the European Economic and Social Committee to prepare an exploratory opinion on the role of nuclear energy in the stability of EU energy prices.










2.2


The EESC is happy to comply with this request from the Czech presidency, as it offers the opportunity to provide a factual and unambiguous description of that role.










2.3


Achieving price stability is one of the preconditions for offering electricity customers, both businesses and consumers, certainty about their costs in the short and medium term. Stable power prices therefore play a crucial role for the performance of European businesses and the creation and maintenance of employment.










2.4


Price stability is also necessary for all companies, especially small and medium-sized companies, in order to be able to provide realistic quotations in a timely manner and to make realistic forecasts.










2.5


In order to be able to provide the answer to the Czech presidency as factual and unambiguous as possible, in this exploratory opinion we will not discuss other aspects that are also interesting, but which are not important within the phrasing of the question for this exploratory opinion. That means, first, that we do not interfere with the right of each Member State to make its own choices about how electricity is generated in its own country. And second, that we do NOT comment on the actual and possible advantages and disadvantages of nuclear energy.










2.6


The issue of security of supply also falls outside the scope of this exploratory opinion. This issue deserves its own opinion. But it is of course indisputable that in the current situation with a war in Europe in which gas and oil are used as geopolitical weapons, it is important to keep the existing power stations operational as much as possible and flexibility should be exercised with regard to the temporary use of fossil and low emission fuels. And as already mentioned, the Committee recognizes the right of each Member State to make its own choices about how electricity is generated in its own country. The Committee reiterates that it strongly supports what the European Commission writes in its REPowerEU plan: the challenge is rapidly reducing our dependence on Russian fossil fuels by fast forwarding the clean transition and joining forces to achieve a more resilient energy system and a true Energy union.










2.7


Although it is tempting to also discuss the level of energy prices, we do not do that, because the stability of the prices does not depend on the level of the price. Stability may or may not apply at any price level.










2.8


Some technical terms are explained here:

Market design: the way in which the electricity price is determined in the market.

Marginal costs: the amount by which total costs increase if a company produces one additional product.

Spot market: a spot market is the market for the exchange of commodities, like electricity, on which transactions are carried out for immediate payment and prompt delivery.

Merit order: the order of power plants based on the level of their marginal costs, starting with the lowest marginal costs and ending with the highest marginal costs. So, power plants with higher marginal costs are added until the demand is met. The order is: renewable energy, nuclear energy, coal, oil and gas. In today’s electricity market design, the last power plant from the merit order (mostly gas) sets the price with its marginal costs.




3.   Answer to the question







3.1


Of course, every power plant plays a role in the electricity market. For example, it is clear that the recent failure of many of France’s nuclear power stations and the consequent need to import more electricity is reflected in the development of the price. But in this exploratory opinion we do not look at these more or less temporary situations, but at the structural side of the way in which the electricity market works.










3.2


We focus on the spot market, because it mainly determines the price that consumers have to pay. And, as mentioned, on the spot market the merit order is the market design.










3.3


The role of nuclear energy in the stability of EU energy prices depends on two variables, namely whether it concerns old or new nuclear power plants and whether it concerns the current market design or is it a new market design? So if you combine these variables, you get four different situations.










3.4


In order to give the clearest possible answer, it is therefore necessary to distinguish four different scenarios for these four different situations, namely the following:






A


: existing nuclear power plants in the existing market design










B


: existing nuclear power plants and a new market design










C


: new nuclear power plants in the existing market design










D


: new nuclear power plants and a new market design.








3.5   A: Existing nuclear power plants in the existing market design







3.5.1


In almost all Member States, electricity generated in current nuclear power plants does not and cannot play a role in the price stability of electricity. The reason for this is the current market design of the merit order, with the plant with the highest marginal costs as price setter (almost always gas, even in France). There is one exception in the EU: Sweden, due to their electricity mix (almost 60 % renewables — mainly hydropower — and about 30 % nuclear) (1).




3.6   B: Existing nuclear power plants and a new market design







3.6.1


In principle, it is conceivable that nuclear power plants then have a price-stabilizing effect — for example in a market design in which pricing is based on average costs and/ or nuclear power is out of the merit order. However, it is questionable what such a market should look like and how it should function. But in the UK, for example, a new model is now being implemented, namely to split the market into two segments: dispatchable power and non-dispatchable power. The dispatchable segment (mainly gas with residual coal and a little biomass) would follow the marginal pricing model, and the non-dispatchable would be paid on a full cost basis (some kind of regulated return on capital in the form of a Contract for Differences — which is where the UK has already gone with their new nuclear power station Hinkley Point C (2). This does mean that the state will have to subsidize the nuclear power stations concerned if the electricity price in the market is lower than the agreed amount based on the regulated return on capital.




This means that such a new market design consists of two elements: a market segment in which the previous market design (= merit order based on marginal costs) applies and a second where there are de facto only contracts for differences. As a result, the electricity generated within the contracts for differences has a stable price and is thus reflected in a more stable price for the consumer. But the price for the consumer will still fluctuate, because a part of the electricity is still priced on the merit order.
3.7   C: New nuclear power plants in the existing market design







3.7.1


Nuclear power plants can have a stabilizing effect on prices if enough nuclear power plants are built so that nuclear power plants are regularly the last power plants in the merit order. This would mean that we would have to replace fossil power plants with nuclear power plants; so at least hundreds of new nuclear power plants in Europe! And: yes, then it would set the price, with a price level that — see Hinkley C — would be about twice as high as renewable electricity. However, due to marginal pricing, the inevitable consequence would be that the new nuclear power plants would not be able to finance themselves on the market, so they would need subsidies.




3.8   D: New nuclear power plants and a new market design







3.8.1


The nuclear power plants should be out of the merit order and under the cost (plus) system. The plus comes from the fact that next to government financial investments, the private sector needs to get on board to and have a fair RoI (Return on Investment), therefore the cost plus tariff (see also point 3.5.1).




4.   Summary







4.1


The answer to the question of the Czech presidency is, in summary, in the current market design of the electricity market, nuclear energy cannot play a role in price stability. Only when the market design is adapted with substantial state aid, in addition to private financing, a situation of price stabilization by nuclear energy is possible.










4.2


Therefore the EESC advises the Czech presidency to open a structured dialogue at EU level with the aim of agreeing on a new market design for the electricity market that guarantees price stability.

















Reason





In their statement of 8 September, EESC President Christa Schweng and TEN Section President Baiba Miltovica wrote: ‘The EESC calls for joint European action to ensure the stability of electricity prices and to urgently reform the energy market.’ And that is precisely the essence of this amendment, that we have drawn up in order to provide a clear and honest answer to the question from the Czech presidency.
The draft opinion TEN/776 that is on the table does not focus on the question of the Czech presidency, namely the question of the role of nuclear energy on the stability of the electricity price, but it is an opinion that is firstly mainly about security of supply and secondly an advertising message pro nuclear energy. Security of supply is of course also very important, but the presidency did not ask about that.
And unfortunately the rapporteur has also included many inaccuracies and questionable points in her opinion. We have described a selection of 20 of these points in a memorandum before the TEN section meeting earlier this month.
We want to underline that achieving price stability is one of the preconditions for offering electricity customers, both businesses and consumers, certainty about their costs in the short and medium term. Stable power prices therefore play a crucial role for the performance of European businesses and the creation and maintenance of employment.

Therefore we prepared this amendment and we ask the Bureau of the EESC to accept it as a counter opinion.

In this amendment we provide a clear and unambiguous answer to what this opinion should be about, namely what is the role of nuclear energy on the stability of energy prices in the EU. We will therefore NOT discuss the pros and cons of nuclear energy, nor the price level, because you may or may not have stability at any price level.
It is important to understand that if you want to do something about electricity prices, it is necessary to change the current energy price market system. A conclusion that is now expressed in many places in Europe, up to and including Ursula von der Leyen and the Energy Council of 9 September. A conclusion that we have repeatedly introduced in the process of this opinion.
Therefore we outlined in this amendment four scenarios to investigate in which situation of market design nuclear energy can and in which situation nuclear energy cannot have a stabilizing effect on energy prices. Our conclusion is that nuclear energy cannot have a stabilizing effect in two of the scenarios, but under certain conditions it may have a stabilizing effect in the other two scenarios.
Our view was supported by the three experts who were invited by the chair and the rapporteur of the study group to a meeting of the study group:
Prof Keppler: ‘Nuclear energy has no real impact on electricity prices, and neither does an increase of 10 or 20 %!’
Mr Cometto (International Atomic Energy Agency, IAEA): ‘On the short-term nuclear has a limited impact to lower electricity prices.’
Mr Goicea (FORATOM): ‘Nuclear can in theory provide stability to final power prices but it’s still a matter of market design.’













Outcome of the vote:











In favour:


98




Against:


135




Abstention:


27










(1)  https://sweden.se/climate/sustainability/energy-use-in-sweden

(2)  https://www.gov.uk/government/collections/hinkley-point-c





ANNEX II









 


MEMBER


GROUP


MEM


Delegated vote




1


ANDERSEN, Dorthe


II


A


SORGENFREY, Bente




2


ANDERSSON, Jan Torsten


III


N


 




3


ANDERSSON, Krister


I


Y


 




4


ANGELOVA, Milena


I


Y


 




5


ANTONIOU, Michalis


I


Y


 




6


ARDHE, Christian


I


Y


 




7


ATS, Kerli


III


Y


 




8


BABRAUSKIENE, Tatjana


II


A


 




9


BACK, Thord Stefan


I


Y


 




10


BALDZENS, Egils


II


Y


 




11


BARBUCCI, Giulia


II


A


 




12


BARCELÓ DELGADO, Andrés


I


Y


 




13


BARRERA CHAMORRO, Maria Del Carmen


II


N


 




14


BARTELS, Holger


II


N


 




15


BÄUMLER, Christian


II


N


 




16


BERNIS CASTELLS, Jaume


III


Y


 




17


BERTOLINI, Silvestre


II


Y


 




18


BIEGON, Dominika


II


N


 




19


BLANC, Patricia


III


Y


 




20


BLIJLEVENS, Réné


I


A


 




21


BOGUSZ, Malgorzata Anna


III


N


 




22


BOLAND, Séamus


III


N


 




23


BOLLON, Pierre


I


Y


 




24


BORSANI, Matteo Carlo


I


Y


 




25


BRISHOUAL, Rachel


III


A


 




26


BRONIARZ, Wincenty Slawomir


II


A


 




27


BRZOBOHATÁ, Zuzana


III


N


 




28


BYRNE, Peter


I


Y


 




29


CABRA DE LUNA, Miguel Ángel


III


Y


 




30


CALDERONE, Marina Elvira


III


N


 




31


CALISTRU, Elena-Alexandra


III


A


 




32


CAÑO AGUILAR, Isabel


II


N


 




33


CATSAMBIS, Constantine


I


Y


 




34


CHAMPAS, Panagiotis


III


Y


 




35


CHARRY, Philippe


II


Y


DESIANO, Carole




36


CHOIX, Bruno


I


Y


 




37


CLEVER, Peter


I


Y


HEMMERLING, Udo




38


COMER, John


III


Y


 




39


CORAZZA, Chiara


III


Y


 




40


COULON, Pierre Jean


II


Y


 




41


COUMONT, Raymond


II


Y


 




42


CSER, Ágnes


III


Y


 




43


DE FELIPE LEHTONEN, Helena


I


Y


 




44


DE LEEUW, Rudy


II


N


ULENS, Miranda




45


DE LOTTO, Pietro Francesco


I


Y


 




46


DE MELLO, Vasco


I


Y


 




47


DE MÛELENAERE, Robert


I


Y


 




48


DEGUARA, Jason


II


N


 




49


DEL RIO, Cinzia


II


N


 




50


DESTOM, Joël


III


Y


 




51


DIAMANTOUROS, Konstantinos


I


Y


 




52


DIMITRIADOU, Stavroula


II


N


 




53


DIRX, Jan


III


N


NEISINGH, Ody




54


DOZ ORRIT, Javier


II


Y


 




55


DROBINSKI-WEIß, Elvira


III


N


 




56


DUFEK, Bohumír


II


Y


 




57


DULEVSKI, Lalko


III


N


 




58


DUTTO, Diego


III


N


 




59


EDELÉNYI, András


I


Y


 




60


FELSZEGHI, Sára


II


Y


 




61


FORNEA, Dumitru


II


Y


 




62


GARAT PÉREZ, Francisco Javier


III


Y


 




63


GARCÍA DEL RIEGO, Antonio


I


Y


SABATINI, Giovanni




64


GARCÍA SALGADO, Manuel


II


Y


 




65


GARDIAS, Dorota


II


Y


 




66


GAVRILOVS, Vitalijs


I


Y


 




67


GEISEN, Norbert


III


Y


 




68


GKOFAS, Panagiotis


III


Y


 




69


GOBINŠ, Andris


III


N


 




70


GONDARD-ARGENTI, Marie-Françoise


I


Y


 




71


GRABO, Louise


III


Y


KILIM, Irma




72


HÄGGLUND, Sam


II


A


 




73


HÄGGMAN, Maria


II


A


 




74


HAJNOŠ, Miroslav


II


Y


 




75


HAUKANÕMM, Monika


III


N


 




76


HEALY, Joe


III


Y


 




77


HERNÁNDEZ BATALLER, Bernardo


III


N


 




78


HOFFMANN, Reiner Gerd


II


N


 




79


HOLST, Sif


III


A


 




80


IOANNIDIS, Athanasios


III


Y


 




81


IZVERNICEANU DE LA IGLESIA, Ileana


III


N


 




82


JAHIER, Luca


III


N


 




83


JOHANSSON, Benny


II


A


 




84


JONUŠKA, Alfredas


I


Y


 




85


JOÓ, Kinga


III


Y


 




86


JUODKAITE, Dovile


III


N


 




87


KÁLLAY, Piroska


II


A


 




88


KATTNIG, Thomas


II


N


BUZEK, Tanja




89


KIUKAS, Vertti


III


Y


 




90


KLIMEK, Jan


I


Y


 




91


KOKALOV, Ivan


II


Y


 




92


KOLBE, Rudolf


III


N


 




93


KOLYVAS, Ioannis


III


N


 




94


KOMORÓCZKI, István


I


Y


 




95


KONTKANEN, Mira-Maria


I


Y


 




96


KOUTSIOUMPELIS, Stavros


II


Y


 




97


KROPIL, Rudolf


III


Y


 




98


KROPP, Thomas


I


Y


GERSTEIN, Antje




99


KRUPAVICIENE, Kristina


II


Y


 




100


KÜKEDI, Zsolt


III


Y


 




101


KUNYSZ, Maciej Dawid


III


A


 




102


LADEFOGED, Anders


I


Y


 




103


LE BRETON, Marie-Pierre


I


Y


 




104


LEFÈVRE, Christophe


II


Y


 




105


LEITANE, Katrina


III


A


 




106


LOBO XAVIER, Gonçalo


I


A


 




107


LOHAN, Cillian


III


N


 




108


LUSTENHOUWER, Colin


I


N


 




109


MACHYNA, Emil


II


Y


 




110


MADSEN, Niels


I


Y


 




111


MALLIA, Stefano


I


Y


 




112


MANOLOV, Dimitar


II


Y


 




113


MARCHIORI, Alberto


I


Y


 




114


MARIN, Florian


II


N


 




115


MARTINOVIC DŽAMONJA, Dragica


I


Y


 




116


MASCIA, Sandro


I


Y


 




117


MASTANTUONO, Alena


I


Y


LEMCKE, Freya




118


MATSAS, Andreas


II


Y


 




119


MAVROMMATIS, Manthos


I


Y


 




120


MEDINA, Felipe


I


Y


 




121


MENSI, Maurizio


III


A


 




122


MERLO, Nicoletta


II


Y


 




123


MESKER, August Pierre


I


N


 




124


MEYNENT, Denis


II


N


 




125


MILTOVICA, Baiba


III


Y


 




126


MINCHEVA, Mariya


I


Y


PANGL, Andreas




127


MIRA, Luís


I


Y


 




128


MISSLBECK-WINBERG, Christiane


I


Y


 




129


MITOV, Veselin


II


Y


 




130


MONE, Andrea


II


A


 




131


MOOS, Christian


III


A


 




132


MORENO DÍAZ, José Antonio


II


A


 




133


MORKIS, Gintaras


I


Y


 




134


MOSTACCIO, Alessandro


III


N


 




135


MUREȘAN, Marinel Dănuț


I


Y


 




136


MURGUÍA ESTEVE, Aitor


II


N


 




137


NIKOLOPOULOU, Maria


II


N


 




138


NIKOLOV, Bogomil


III


N


 




139


NOWACKI, Marcin


I


Y


 




140


NYGREN, Ellen


II


A


 




141


OCHEDZAN, Justyna Kalina


III


A


 




142


O’CONNOR, Jack


II


A


 




143


ÖNGÖRUR, Berivan


II


A


 




144


OSTROWSKI, Krzysztof


I


A


 




145


PADURE, Decebal-Ștefăniță


I


Y


HAUNERT, Nora




146


PAIDAS, Ioannis


II


Y


 




147


PALMIERI, Stefano


II


A


 




148


PARTHIE, Sandra


I


A


 




149


PATER, Krzysztof


III


Y


 




150


PAVIĆ-ROGOŠIĆ, Lidija


III


A


 




151


PENTTINEN, Markus


II


Y


 




152


PETRAITIENE, Irena


II


Y


 




153


PIETKIEWICZ, Janusz


I


Y


 




154


PILAWSKI, Lech


I


Y


 




155


PLOSCEANU, Aurel Laurentiu


I


N


 




156


POCIVAVŠEK, Jakob Krištof


II


A


 




157


POPELKOVÁ, Hana


II


Y


VAN KELLE, Lottie




158


POTTIER, Jean-Michel


I


Y


 




159


POTYRALA, Dariusz Miroslaw


II


Y


 




160


PREDA, Bogdan


I


Y


VUORI, Timo




161


PROUZET, Emilie


I


Y


 




162


PUECH d’ALISSAC, Arnold


I


Y


 




163


PUXEU ROCAMORA, Josep


I


Y


 




164


QUAREZ, Christophe


II


Y


 




165


RAMMO, Alari


III


Y


 




166


RAVNIK, Branko


III


Y


 




167


REALE, Maurizio


I


Y


 




168


REDING, Jean-Claude


II


N


 




169


REISECKER, Sophia


II


A


RUSU, Sabin




170


RELIC, Danko


III


A


 




171


REPANŠEK, Neža


III


N


 




172


RIBBE, Lutz


III


N


 




173


RISTELÄ, Pekka


II


A


 




174


ROBYNS, Wautier


I


Y


 




175


ROCHE RAMO, José Manuel


III


N


 




176


RÖPKE, Oliver


II


N


KLUGE, Norbert




177


SAKAROVÁ, Dana


II


Y


 




178


SALIS-MADINIER, Franca


II


N


 




179


SAMMUT BONNICI, Dolores


I


A


 




180


SCHAFFENRATH, Martin Josef


III


N


 




181


SCHLÜTER, Bernd


III


A


 




182


SCHMIDT, Peter


II


N


 




183


SCHWARTZ, Arnaud


III


N


 




184


SCHWENG, Christa


I


A


 




185


SERRA ARIAS, Ricardo


III


Y


 




186


SIBIAN, Ionut


III


N


 




187


SILVA, Carlos


II


N


 




188


SILVA, Francisco


III


N


 




189


SILVA, João


II


N


 




190


SINKEVICIUTE, Elena


III


Y


 




191


SIPKO, Juraj


III


A


 




192


ŠIRHALOVÁ, Martina


I


Y


 




193


SMOLE, Jože


I


N


 




194


SÕBER, Kristi


I


Y


 




195


SOETE, Paul


I


Y


 




196


STOEV, Georgi


I


Y


 




197


STUDNICNÁ, Lucie


II


A


MILIĆEVIĆ-PEZELJ, Anica




198


SÜLE, Katalin Elza


I


Y


 




199


SVENTEK, David


I


Y


 




200


SZALAY, Anton


II


Y


 




201


SZYMANSKI, Mateusz


II


Y


 




202


TCHOUKANOV, Stoyan


III


N


 




203


TEDER, Reet


I


Y


MAJETIĆ, Davor




204


THURNER, Andreas


III


N


 




205


TIAINEN, Simo


III


Y


 




206


TOPOLÁNSZKY, Ákos


III


A


 




207


TRINDADE, Carlos Manuel


II


N


MAURICIO DE CARVALHO, Fernando




208


TUPILUȘI, Tudorel


III


Y


 




209


TZOTZE-LANARA, Zoe


II


N


 




210


ULGIATI, Luigi


Non-insc.


Y


 




211


UNGERMAN, Jaroslav


Non-insc.


Y


 




212


VADÁSZ, Borbála


I


Y


 




213


VARDAKASTANIS, Ioannis


III


N


 




214


VASK, Kaia


II


Y


 




215


VERNICOS, George


I


Y


 




216


VIIES, Mare


II


Y


 




217


VILARES DIOGO, Edgar


III


N


 




218


VON BROCKDORFF, Philip


II


N


 




219


VORBACH, Judith


II


N


 




220


VYYRYLÄINEN, Tiina


III


Y


 




221


WAGENER, Marco


II


N


WOLFF, Romain




222


WAGNSONNER, Thomas


II


N


 




223


WILLEMS, Heiko


I


Y


 




224


WILLEMS, Marie Josiane


III


A


 




225


WRÓBLEWSKI, Tomasz Andrzej


I


Y


 




226


WYCKMANS, Ferdinand


II


N


 




227


YIAPANIS, Anastasis


III


Y


 




228


YILDIRIM, Ozlem


II


Y


 




229


YLIKARJULA, Janica


I


Y


 




230


ZARINA, Katrina


I


Y


 




231


ZIELENIECKI, Marcin Antoni


II


Y


 




232


ZORKO, Andrej


II


N


 




233


ZVOLSKÁ, Marie


I


Y


HARTMAN RADOVÁ, Jana




234


ZYCH, Tymoteusz Adam


III


N