The International Energy Agency’s (IEA’s) latest Clean Energy Progress Track report published on 11 June, assesses the full range of energy technologies and sectors.
Only six out of 46 technologies and sectors were "on track" with the IEA's Sustainable Development Scenario (SDS), which maps out pathway to reach the goals of the Paris Agreement on climate change, deliver universal energy access and significantly reduce air pollution.
IEA said the COVID-19 pandemic is having a "major impact" on energy systems around the world, curbing investments and threatening to slow the expansion of key clean energy technologies. Before the crisis, progress on clean energy technologies had been promising, but uneven. However, the latest report shows that only six of 46 technologies and sectors were “on track” to meet long-term sustainability goals in 2019. Another 24 showed progress, but not enough to meet long-term goals, while the remaining 16 were “not on track”.
IEA executive director Fatih Birol said: “Our latest findings make clear the urgent need for governments to do more to foster the growth of these technologies, which can create jobs, stimulate economic growth and also help us accelerate transitions to cleaner energy systems."
IEA has made clear that tackling the world’s climate challenge and accelerating clean energy transitions calls for a grand coalition encompassing everyone who is genuinely committed to reducing emissions.
“This coalition needs to span governments, industry, investors and civil society to share innovative ideas and best practices, and inspire one another with greater ambition,” IEA said.
The Tracking Power 2020 report looked at 13 sectors. Only two were rated as “on track” – solar photovoltaics and bioenergy power generation. Five needed more effort - renewable power, onshore wind, offshore wind, hydropower and natural gas-fired power. Six were “not on track” - concentrating solar power (CSP), geothermal, ocean power, nuclear power, coal-fired power and carbon capture, utilisation, and storage (CCUS).
With respect to nuclear power, IEA said that, in 2019, 5.5GW of new nuclear capacity was connected to the grid and 9.4GW was permanently shut down, bringing global capacity to 443GW.
New nuclear power projects were launched (about 5.2GW), with refurbishment being carried out in many countries to ensure the long-term operation of the existing reactor fleet.
"Nevertheless, more efforts in terms of policies, financing and cost reductions are needed to maintain existing capacity and bring new reactors online," IEA said. "According to current trends, nuclear capacity in 2040 will amount to 455GW – well below the SDS level of 601GW. Additional lifetime extensions and a doubling of the annual rate of capacity additions are therefore required," it added.
China and Russia lead in terms of new grid connections and construction launches, with China accounting for 20% of nuclear reactors under construction globally.
“Although 60.5GW of new nuclear capacity was under construction at the end of 2019, the rate at which new projects are completed remains half that required under the Sustainable Development Scenario (SDS). New nuclear capacity of 15GW on average annually between 2020 and 2040 is required to meet the SDS,” IEA said.
In 2019, 13 nuclear reactors were permanently shut down in Japan (five units), the USA (two units), Switzerland, Germany, Korea, Russia, Sweden and Taiwan (one unit, each) for a total of 9.4GW. Several were also retired as a result of adverse market conditions in the USA.
IEA recommended four actions:reduce nuclear policy uncertainty and recognise of the value of nuclear power in present and future low-carbon energy systemsreduce market risks through electricity market reformsuse government leadership to promote new nuclear constructionharmonise licensing and foster international collaboration.
IEA said nuclear policy uncertainty in a number of countries is preventing the nuclear industry from making investment decisions, partly because of inconsistencies between stated policy goals – such as climate change mitigation – and policy actions.
“Forthright recognition by governments and international organisations of the value of nuclear energy’s attributes and its contribution to decarbonising the world’s energy systems would encourage policy makers to explicitly include nuclear in their long-term energy plans and NDCs under the Paris Agreement.” Ongoing EU Sustainable Financing taxonomy discussions regarding the eligibility of nuclear power for sustainability funding highlight the difficulties, it added.
Electricity market uncertainty makes it difficult for investors to predict the amount of revenue a nuclear plant could generate over several decades.
IEA said regulators could reduce this uncertainty by improving electricity market designs to assign an appropriate value to the clean, dispatchable energy nuclear power plants provide. "It is particularly important to develop long-term contracts schemes to reduce the exposure of long-lived nuclear assets to short-term market risks," IEA noted.
Policy makers could support rapid reduction in construction costs by building on lessons learnt from recent Gen-III first-of-a-kind projects and "making timely decisions on new-build projects," IEA said. Taking these decisions as soon as possible would put nuclear back on track with the SDS and would provide "considerable economic stimulus in the short term through job creation".
IEA said that, considering the impact of the cost of capital on the levelised cost, and the positive externalities associated with nuclear power, “there is clear rationale for governments to support financing directly or indirectly – especially to address risk perception and build-up capabilities when nuclear programmes are initiated”.
Given the long-lasting and deep structural impacts of a nuclear programme on a country’s economy and its electricity system, governments must consider nuclear projects as national infrastructure projects of strategic importance. This type of strategic decision may be particularly critical in the post-COVID-19 period to galvanise national economic recovery efforts.
Finally, more efforts to harmonise regulatory requirements and promote design standardisation are needed. “This could be achieved through information- and experience-sharing among regulators, including for the more novel designs, and through more effective global industry initiatives to harmonise engineering standards."
In a follow-up article on 12 June, Laszlo Varro, IEA's chief economist and Peter Fraser, head of gas, coal and power markets division said the COVID-19 crisis is undermining nuclear power’s important role in clean energy transitions.
“Today, countries emerging from lockdowns face the task of reviving their economies without losing sight of long-term challenges such as climate change and energy security,” they said. “To achieve a sustainable recovery from today’s crisis that makes energy systems cleaner and more resilient, it is important to pay attention to an often underappreciated energy source: nuclear power.”
They added that the COVID-19 crisis "threatens to exacerbate the situation.”
Nuclear power plants performed well during lockdowns with no plant having to limit its operations because of health precautions. Overall, nuclear generation has declined slightly in response to lower demand, with output reduced during periods of high production from renewables. “In this way, nuclear power emerged as one of the key sources of flexibility for electricity systems, maintaining large and reliable supplies of low-carbon power.”
Losing the contribution of existing reactors that can operate safely for years to come “would have negative consequences for emissions and energy security”.
The authors cited an IEA report from 2019, which warned of the risk of nuclear power fading out of energy systems in advanced economies unless policy makers acted to extend the lifetimes of existing plants and spur the construction of new ones. Without such investment “as much as two-thirds of nuclear power capacity in advanced economies could be gone by 2040”. This would increase the global cost of transitioning to a sustainable energy system by $1600bn.
“Even before the start of the COVID-19 crisis, events over the past year had unfortunately been following the scenario of underinvestment in nuclear power.”
The authors advised that countries seeking to maintain nuclear power as part of their energy mix should make their immediate focus the need to avoid losing nuclear capacity that can continue to operate safely. “In the context of ultra-low electricity prices, this could mean allocating funding from stimulus packages to nuclear plant lifetime extensions and upgrades that otherwise might be cancelled,” the article said.
They also said "There is no doubt that any new nuclear project will require a proactive support from public finance in the form of long-term contracts, capital guarantees and other measures.”
One bright spot for the future is the interest from private venture capital funds in investing in new nuclear technologies. These “could potentially bypass some of the project management challenges of large conventional projects while offering safety and waste management advantages.”