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Nuclear power’s rapidly accelerating crisis

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A fire-sale is underway as the punch-drunk nuclear power industry tries to stop the rot.

The French government is selling assets so it can prop up its heavily indebted nuclear utilities.  Électricité de France (EDF) announced in 2015 that it would sell A$13.8 billion of assets by 2020 to rein in its debt, which now stands at A$51.8 billion.

EDF is purchasing parts of its bankrupt sibling Areva, which has accumulated losses of over A$14 billion over the past five years. French EPR reactors under construction in France and Finland are three times over budget ‒ the combined cost overruns amount to about A$17.5 billion. Bloomberg noted in April 2015 that Areva’s EPR export ambitions are “in tatters“, and now Areva itself is in tatters.

Meanwhile, Japanese industrial giant Toshiba would like to sell indebted, US-based nuclear subsidiary Westinghouse, but there are no buyers so Toshiba must instead sell profitable assets to cover its nuclear debts and avoid bankruptcy.

One site where these problems come together is Moorside in the UK. A Toshiba / Engie consortium was planning to build three AP1000 reactors, but Toshiba wants to sell its stake in the consortium in the wake of its massive losses from AP1000 construction projects in the US.

Engie reportedly wants to sell its stake in the consortium, and the French government has already sold part of its stake in Engie … to help prop up EDF and Areva! Deck-chairs are being shuffled.

The latest dramas occur against a backdrop of deep industry malaise, with the receding hope of even the slightest growth resting squarely on the shoulders of China. A February 15 piece in the Financial Times said: “Hopes of a nuclear renaissance have largely disappeared. For many suppliers, not least Toshiba, simply avoiding a nuclear dark ages would be achievement enough.”

Toshiba and Westinghouse are in deep trouble because of massive cost overruns building four AP1000 reactors in the US ‒ the combined overruns are about A$14 billion and counting. The saga is detailed in Bloomberg pieces titled ‘Toshiba’s Nuclear Reactor Mess Winds Back to a Louisiana Swamp‘ and ‘Toshiba’s Record Fall Highlights U.S. Nuclear Cost Nightmare‘.

Toshiba said on February 14 that it expects to book a A$8.2 billion writedown on Westinghouse,(on top of a A$3 billion writedown in April 2016. These losses exceed the A$7.1 billion Toshiba paid when it bought a majority stake in Westinghouse in 2006.

The four AP1000 reactors are the only ones under construction in the US. “There’s billions and billions of dollars at stake here,” said Gregory Jaczko, former head of the US Nuclear Regulatory Commission. “This could take down Toshiba and it certainly means the end of new nuclear construction in the US.”

Bankruptcy looms for Toshiba, with the banks circling and the risk heightened by the likelihood of further delays and cost overruns with the AP1000 reactors in the US, and unresolved litigation over those projects.

Toshiba says it would likely sell Westinghouse if that was an option ‒ but there is no prospect of a buyer. The nuclear unit is, as Bloomberg noted, “too much of a mess” to sell. And since that isn’t an option, Toshiba must sell profitable businesses instead to stave off bankruptcy.

Toshiba planned to make nuclear operations and microchips its two growth areas. But now the company plans to sell most ‒ perhaps all ‒ of its profitable microchip business to prop up the nuclear carcass and avoid bankruptcy. The company might get A$17‒22 billion by selling its entire stake in its microchip business, said Joel Hruska from ExtremeTech. “That would pay off the company’s immediate debts,” Hruska said, “but would leave it holding the bag on an incredibly expensive, underwhelming nuclear business with no prospects for near-term improvement.”

Toshiba plans to exit the high-risk reactor construction business and focus its nuclear business on design, equipment supply and engineering services.

Plans for three AP1000 reactors at Moorside in the UK are in doubt. Toshiba hopes to sell its 60% stake in the project consortium NuGen. Cumbrians will be glad to see the back of corruption-plagued Toshiba ‒ but corruption-plagued South Korean utility KEPCO might take its place. Cumbrians Opposed to a Radioactive Environment (CORE) commented: “KEPCO is itself still emerging from a major scandal that surfaced in 2012 involving bribery, corruption and faked safety tests for critical nuclear plant equipment which resulted in a prolonged shut-down of a number of nuclear power stations and the jailing of power engineers and parts suppliers.”

Plans for six AP1000 reactors in India may not survive the Toshiba / Westinghouse meltdown. The project is now almost impossible according to Reuters’ sources. India is said to be one of the countries leading the ‘nuclear renaissance’ but hasn’t seen a single reactor construction start since 2011.

Toshiba’s demise would not greatly concern the nuclear industry if it was an isolated case, but it is symptomatic of industry-wide problems. Nick Butler from Kings College London wrote in a Financial Times online post: “Toshiba is just one company in the global nuclear industry, but its current problems are symptomatic of the difficulties facing all the private enterprises in the sector.

Civil nuclear power involves huge up-front capital costs, very long pay-back periods and high risks that are compounded by a lack of experience, especially in managing nuclear construction projects after a long period with few new plants. For all those reasons, private investors avoid the sector and prefer to put their money where they see faster and safer returns.”

‘The EU, the US and Japan are busy committing nuclear suicide’

The nuclear industry and its supporters have responded in varying ways to the crises facing nuclear utilities and the industry’s broader malaise. Some opt for head-in-the-sand delusion and denial. Others are extremely pessimistic about the industry’s future. Others paint a picture of serious but surmountable problems.

There is agreement that the nuclear industries in the US, Japan and the EU ‒ in particular their nuclear export industries ‒ are in deep trouble. A February 2017 EnergyPostWeekly article says “the EU, the US and Japan are busy committing nuclear suicide.” Michael Shellenberger from the pro-nuclear Breakthrough Institute notes that: “Nations are unlikely to buy nuclear from nations like the US, France and Japan that are closing (or not opening) their nuclear power plants.”

Shellenberger said: “From now on, there are only three major players in the global nuclear power plant market: Korea, China and Russia. The US, the EU and Japan are just out of the game. France could get back in, but they are not competitive today.”

That’s good news for the nuclear industries in South Korea, China and Russia. But they might end up squabbling over scraps ‒ there were just three reactor construction starts last year around the world. South Korean companies have failed to win a single contract since the contract to build four reactors in the UAE. Likewise, China has made no inroads into export markets other than projects in Pakistan and Argentina.

Russia’s Rosatom has countless non-binding agreements to supply reactors, mostly in developing countries. But Russia can’t afford the loan funding promised in these agreements, and most of the potential customer countries can’t afford to pay the capital costs for reactors. Former World Nuclear Association executive Steve Kidd says it is “highly unlikely that Russia will succeed in carrying out even half of the projects in which it claims to be closely involved”.

The pro-nuclear Breakthrough Institute’s Michael Shellenberger presents cataclysmic assessments of nuclear power’s “rapidly accelerating crisis” and a “crisis that threatens the death of nuclear energy in the West“.

Likewise, pro-nuclear commentator Dan Yurman says that a “sense of panic is emerging globally” as Toshiba exits the reactor construction industry. He adds: “After nine years of writing about the global nuclear industry, these developments make for an unusually grim outlook. It’s a very big rock hitting the pond. Toshiba’s self-inflicted wounds will result in long lasting challenges to the future of the global nuclear energy industry. Worse, it comes on top of the French government having to restructure and recapitalize Areva …”

Yurman notes that Westinghouse may struggle to keep its nuclear workforce intact: “Layoffs and cost cutting could reduce the core competencies of the firm and its ability to meet the service needs of existing customers much less be a vendor of nuclear technologies for new projects.” Likewise, Will Davis, a consultant and writer for the American Nuclear Society, explains the failure of the Japanese/US AP1000 projects and the French EPR projects with reference to the “loss of institutional knowledge, industrial capability and construction capability” over the past generation.

As recent history has repeatedly shown, this loss of capability leads to reactor project delays and cost overruns, and that in turn leads one after another country to abandon plans for new reactors. Vast numbers of staff, skilled across a range of disciplines, need to be trained and employed if the nuclear power industry is to move ahead (or even survive). But utilities and companies are firing, not hiring, vast numbers of staff and making a perilous situation much worse … possibly irretrievable. EDF, for example, plans to cut 5,200 to 7,000 staff by 2019 (including 2,000 sacked last year) ‒ about 10% of its total workforce.

Ironically, Westinghouse, the villain in Toshiba’s demise, may have made the best strategic decision of all the nuclear utilities. In 2014, Westinghouse announced plans to expand and hopefully triple its nuclear decommissioning business. The global reactor fleet is ageing and the International Energy Agency anticipates an “unprecedented rate of decommissioning” ‒ almost 200 reactor shut-downs between 2014 and 2040.


Dr Jim Green is the national nuclear campaigner with Friends of the Earth, Australia.  

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  • Michael Murray

    Well they should have invested in research into thorium reactors.

  • Ken Dyer

    Ah, all music to my eyes………

  • Alastair Leith

    Sub-editors win of week to Giles for fitting punch-drunk (3 votes), stop-the-rot (2 votes) and fire-sale (1 vote) into the opening sentence of a nukes story. 🙂

    • Ian

      And slipping in a meltdown further into the article.

  • John McKeon

    What was that (in)famous boast that was made a long time ago? Something like ‘nuclear power will provide electricity too cheap to meter’?
    ………………….. (sound of crickets in the empty auditorium)

    • Michael Murray
    • Alastair Leith

      irony is solarPV is on track with two decadal trend to do just that. And Tesla owner ELon Musk is already claiming his tilePV roof is cheaper than a conventional roof including install costs. Probably he must be including a reduction in energy bills over a period to be saying that but he hasn’t actually come out and made that qualification yet. Either way is the opening shot in applied PV on all external cladding materials which will make PV effectively zero cost. Ray Kurzweil has asserted PV modules themselves will be virtually zero cost by ~2036, and he has an impressive forecasting strike rate (second to none in the world I suggest).

  • John McKeon

    I absolutely will NOT feel sorry for anyone who has invested in nuclear. All they have done is saddled civilisation with a clean up of the radioactive mess – in storage that has to last longer then civilisation has thus far been around. And who will have to pay for this? Us, citizens at large. It wasn’t asked for but instead it was imposed upon us. I feel only disgust at the greed and stupidity of the whole bloody mess.

    • Alastair Leith

      Great case of how centralised electrical generation makes for centralised power of others. Suffered most, the traditional owners in outback Australia where this deadly resource is mined (and leaked into declared world heritage areas which T.O.s kept pristine for 50,000+ years).

      • illiad88

        I completely agree with the majority of your comment. However traditional owners did not keep anything pristine. They were responsible for the extinction of the mega fauna species, as well as destroying much of the natural rainforests through firestick farming, leaving the desert and bush we know today as Australia. Another legacy left for us is the continued need for back burning(yet another boon for the environment). You should read or watch “The future eaters”. Aboriginals and Torres straight islanders continue to this day to legally hunt endangered species, which is made possible by section 211 of the Native Title Act 1993. I have seen first hand how Torres straight islanders hunt and kill a Dugong. First they scare it (usually a baby) into the shallow waters of the beach by hitting it and poking it with sticks. Then when it is effectively beached, they beat it to death with large sticks and clubs, hitting it all over its body for a good 5 minutes or more. There is much to be admired about the Aboriginal and Torres straight islander cultures, but environmental conservation is not one of those things, despite the feel good revisionist narrative increasingly employed nowadays. I do not harbour any animosity toward todays Aboriginals for the stupidity of their ancestors, nor do I feel Aboriginals should harbour animosity toward todays Australians of European decent for the stupidity of their ancestors. But let us not gloss over ugly elements of history and give undue credit, all the while blaming the terrible white man for everything. Instead lets look at this information in the cold light of day, and leave the rose coloured glasses in your pocket.

        • Alastair Leith

          The megafauna extinction argument hypothesised by Flanery doesn’t hold much water these days. Researchers at Museum of Victoria said they’ve effectively shown it to be a false hypothesis a decade or so ago.

          “despite the feel good revisionist narrative increasingly employed nowadays. I do not harbour any animosity toward todays Aboriginals for the stupidity of their ancestors, nor do I feel Aboriginals should harbour animosity toward todays Australians of European decent for the stupidity of their ancestors.”

          Wow, that comment is so dripping in condescension and ignorance I just don’t know where to start my critique. I think I’d rather invest my time in climate action that picking up on you errors.

    • Mallu

      You can burn the waste in a fast breeder reactor and get rid of it.

      • illiad88

        I didn’t know this. Thanks for the info.

      • Ken Fabian

        The success record for building and operating fast breeder reactors is worse than for “conventional” nuclear.

        • Mallu

          That is true in the west but political reasons were the major cause. German fast breeder was never started, Supephenix was shot by an RPG during contruction. It took three years to get permission to start Monu. The US killed off the IFR in 94 with the combined help of anti nuclear acitvist and the coal lobby who worked closely together. The Russians have operated a fast breeder in comercial use since 1980 (BN-600). It has far better than any western breeder and its CF is comparable to LWR reactors. It’s big brother the BN-800 entered comercial operation last august. Later this year Russia will commece construction on the BREST 300 lead cooled reakctor that has a fully closed fuel cycle, like the american IFR.

          • Ken Fabian

            If we want to play the blame game, I blame climate science denial for depriving the nuclear-for-climate push of the backing of the largest existing bloc of pro-nuclear political support – that of the Conservative Right. No anti-nuclear activists could have upset nuclear’s great historic moment of opportunity – climate change – deader than climate science denial by it’s “friends”. No climate problem, no need to support nuclear over coal and gas and oil. As a blunt instrument for attacking renewables it serves a small minded political purpose, but that purpose is served without any commitment to nuclear.

            I also suspect the involvement of Germany’s Right – what remains of it’s ‘oppressed’ denier minority – in being willing to sacrifice nuclear in order to get a few decades more profit from it’s coal. If the German people wanted governance by people who took climate change seriously there were no real pro-nuclear choices on offer.

            Climate being a “green” issue looks so obvious it was never a choice for Environmentalists, but it was a laissez fair free choice for the Conservative Right to go along with that framing rather than grasp the issue and make it a mainstream one and theirs, about enduring economic prosperity. End the climate science denial and opposition to strong climate action and nuclear will gain the actual support of many of the influential politicians and captains of commerce who people think, wrongly, support it now. But I suspect renewables will gain much more from the end of climate science obstructionism than nuclear.

  • Alastair Leith

    “Hopes of a nuclear renaissance have largely disappeared. For many suppliers, not least Toshiba, simply avoiding a nuclear dark ages would be achievement enough.”

    Ouch.

  • Bristolboy

    Despite this the UK government seem committed to new nuclear and against onshore wind and solar.

    • Ned Childs

      Britain and France are both socio-pathetically (sic) committed to nuclear power in order to provide a “viable career path” to potential nuclear navy submariners … for when they get out of the boat … and this commitment to remain viable world powers is a “Matter of Empire” for both dying powers … even if this “imperial nuclear imperative” ensures a contaminated, unlivable, bankrupt planet … sad … and also unnecessary …. worst political-industrial miscalculation since Munich 1938. Stop the worldwide uranium FRAUD!!!

  • nakedChimp

    Dang, I’m sure the logic semiconductors for higher voltage levels were Toshiba is one of the last options will go down the drain because of that.
    Just dandy.

  • illiad88

    In the made for tv movies about Nikola Tesla, it was implied that Tesla was strongly opposed to the use of Nuclear power. It was also suggested that Tesla saved Westinghouse from financial ruin by returning his stock in the company. Decades later Westinghouse goes on to build Nuclear reactors. No sympathy here. Although it is a shame Toshiba had to go and get its hands dirty in all that filthy Nuclear business.

  • onesecond

    The sooner we get rid of this sorry nuclear business and put its capital into renewables the better it is.

  • Tim Buckley

    Interesting to see the 80% collapse in TEPCO’s share price over the last decade (once one of the world’s largest nuclear powered utilities), against the backdrop of an overall Japanese equity market that has doubled. Destruction of US$20bn of shareholder wealth in a decade, as well as outsourcing to Japanese electricity consumers the US$140-200bn Fukushima nuclear clean up bill.

    Maybe the ~50% collapse in Toshiba’s share price in the last year is another guide, particularly as Toshiba shareholders stomach a US$8bn write-off of their brilliant US nuclear technology acquisition of 2012.

    India has long dreamed of a nuclear industry boom, but India’s Dec 2016 draft ten year National Energy Plan assumes renewable energy capacity additions 50 times that of nuclear. And with Indian solar now costing less than US$45/MWh and taking less than a year to build, nuclear looks ridiculously expense (not to mention takes 15 years to commission a new plant on average) in comparison.

  • heinbloed

    The EdF-desaster is described by the utility report 2016 from the grid provider RTE (which is sold by EdF to the State):

    http://www.rte-france.com/sites/default/files/2016_bilan_electrique_synthese.pdf

    7.9 % less atom power generated,
    30% less power exported,
    80% more fossil fuel burned …..

    That 11% more PV power was generated doesn’t mean the drunks see the light, EdF wants to sell its money printers in Spain:

    http://bfmbusiness.bfmtv.com/entreprise/edf-veut-vendre-fotosolar-sa-filiale-solaire-espagnole-1109693.html

    The company is bankrupt but there is no chapter 11 in Europe as for Westinghouse in the USA:

    http://www.japantimes.co.jp/news/2017/02/24/business/corporate-business/toshibas-u-s-unit-westinghouse-explore-chapter-11-bankruptcy-sources/#.WLFMOThBrcs

  • heinbloed