Nuclear generation expands in Asia; slows in US and Europe
China and South Korea have the most supportive policies on nuclear energy, with significant new nuclear construction programs under way in both countries, according to a Moody’s survey.
In addition, Japan has been supportive of restarting some of the country’s nuclear reactors, despite public opposition since the 2011 Fukushima nuclear accident.
“Despite government support for nuclear generation in most major economies, low prices for natural gas have put nuclear power in a less competitive position,” said Patrick Mispagel from Moody’s Investor Service.
“As a result, nuclear generation is growing only in a few major markets, most notably China and South Korea,” added Mispagel.
The rating agency’s latest report examines the prospects for nuclear generation in China, South Korea, Japan, the US, the UK, France and Germany, and the effect nuclear generation has on the credit quality of the utilities operating within them.
The Moody’s report notes that while most of these countries support nuclear energy, Germany is taking an aggressive stance against nuclear power with the gradual phase-out of its reactors.
In addition, low natural gas prices in the US and the push toward renewable energy in Europe are slowing down nuclear expansion in these regions.
Only in some of the major Asian countries, such as China and South Korea, where natural-gas prices are relatively high, is new nuclear generation being pursued to a significant degree against a backdrop of strong demand for electricity.
China General Nuclear Power Corporation and China National Nuclear Corporation are building a number of new nuclear units that will dramatically increase the country’s nuclear generation output, which today stands at about 2% of China’s total energy mix. Meanwhile, South Korea has targeted a more modest increase in nuclear generation. The government’s continued support of nuclear power is notable given the discovery of substandard parts at several of Korea Hydro and Nuclear Power Company’s nuclear reactors in 2013.
However, the Korean government responded to the discovery by instituting increased oversight of the reactors, rather than by lowering its overall support for nuclear power.
In Japan, the shutdown of all nuclear reactors following the Fukushima accident in 2011 has led to the most dramatic drop in nuclear generation output. Output fell from 29% of total power generation in 2010 to just under 2% in 2013 and to zero now, with all nuclear reactors currently out of service.
As a result, the country’s utilities have higher fuel costs, given their increased reliance on natural gas, oil and coal to generate electricity, leading to substantial operating losses.