Frost: Environmental Concerns, Electricity Demands Boost Nuclear Energy Market

June 10, 2008 // Published as a news service by IHS

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Supplying more than 31% of electricity demand, nuclear energy plays a key role in the European Union's (EU's) generation structure, and emerges as a comprehensive and cost-effective generating option.

According to Frost & Sullivan, nuclear energy has the potential to reduce carbon dioxide (CO2) emission, meet the ever-increasing demand for electricity and make a crucial contribution to the community's energy independence and security of supplies.

The prospect of nuclear energy is still uncertain, analysts said. However, the market shows a renaissance of nuclear generation.

According to Frost & Sullivan, the market is expected to witness solid growth over the medium and long term, with the worldwide installed nuclear capacity growing to 600 gigawatt (GW) in 2030.

Analysts said globally, there are 439 nuclear power reactors in 31 countries with an installed electricity net capacity of about 372 GW in operation, generating approximately 16% of the world's electricity.

In Europe, the situation is very diverse. "Overall, in the enlarged EU, there are 146 nuclear reactors in operation and four under construction," said Frost & Sullivan research analyst Maciej Jeziorski. "In the 15 countries which have nuclear reactors, the share of nuclear power out of the total electricity production ranges from only 3.5% in the Netherlands to 78.1% in France."

The Central and Eastern European (CEE) region is witnessing a high increase of electricity consumption due to the robust economic growth and the rising standards of living, analysts said.

CEE countries have been growing rapidly, outpacing the first 15 member states of the EU (EU-15) by a wide margin. As a result, analysts said the electricity demand has been increasing radically - 5% gross domestic product (GDP) growth results in more than 3% upsurge in electricity consumption.

As members of the EU, CEE states are obliged to considerably decrease CO2 emissions. Analysts said the time is ripe to expand nuclear energy. By 2030, the capacity in the CEE states will double. It appears that the region has no better option than investing in nuclear power generation, thus a big increase in this sector is expected to happen in the coming years.

Most countries in the region have nuclear power units in operation. Analysts said the Czech Republic has six nuclear reactors, generating over one-third of its electricity. Slovakia has five reactors supplying over half of its demand.

Slovenia has one reactor (jointly owned with Croatia), which supplies 40% of the country's demand. Hungary has four nuclear units generating more than one-third of its electricity. Bulgaria has two reactors supplying more than 40% of the state's demand. And Romania has two reactors, which account for about 10% of the country's production.

The only EU exception in this region is Poland, analysts said. "The country had four 440 MW [megawatt] Russian units under construction in the 1980s at Zarnowiec, but the work was halted in 1990 and the components were put up for sale," said Jeziorski.

"Nevertheless, the domestic electricity consumption in Poland, according to the official document Energy Policy of Poland Until 2025, is forecast to grow by 80%-93% (depending on assumed scenario) until 2025, which requires substantial additional investments in power generation."

Jeziorski said due to European regulations to radically reduce the community's CO2 emissions, the country has no better option than launching a nuclear power plant at once, so that the first plant should be operating around 2021-2022 (a time frame that has been stated in the most recent governmental documents).

There are 35 nuclear power units under construction worldwide, analysts said. In the CEE region, where 20 reactors are in operation, there are plans to set up new or upgrade existing power plants. Today, the CEE region has a net electricity capacity of more than 11,000 MW and this is forecast to increase considerably.

Source: Frost & Sullivan.