The importance of nuclear power, which produces no greenhouse gas (GHG) emissions during operation, is widely recognized in many countries due to its important role in reducing GHG emissions and mitigating climate change. Due to the flexibility and continuity of its energy flow, it can serve as a supplementary source of energy when other sources of energy, such as renewable energy sources with variable generation, such as wind or solar power, are not available.
Despite these advantages, financial considerations represent one of the biggest challenges in terms of introducing nuclear power. In terms of economic parameters, electricity generated by existing nuclear power plants remains competitive in many markets, but financing the construction of a new plant is associated with high initial capital costs and is a long-term investment.
“The energy market is changing and becoming less predictable in many countries as they diversify their energy sources for decarbonization, leading to more volatility in energy and commodity prices,” explains Huang Wei, Director of the IAEA's Planning, Information and Knowledge Management Division. “This heightened market volatility is fueling heightened uncertainty about commitments to long-term, capital-intensive technology projects that require high upfront costs, such as nuclear power.”
According to Maria Korsnik, President and CEO of the Nuclear Energy Institute, the nuclear industry's innovative approaches to financing and market regulation policies can help mitigate uncertainties and counteract market fluctuations. Technological advances are also helping to increase the cost-effectiveness of nuclear power.
“For nuclear power to realize its full potential in a low-carbon future world, nuclear power plants must be appropriately compensated for their inherent clean energy performance and other benefits that do not yet have agreed-upon criteria in electricity markets.” Korsnik says. “Policy makers should apply approaches based on the growing consensus that the most cost-effective way to move quickly to a green electricity system is to add nuclear power to the process. This means prioritizing the preservation of existing nuclear power assets and building the capacity to build advanced nuclear power facilities.”
The International Renewable Energy Agency estimates that total direct subsidies to the energy sector worldwide in 2017 were at least $634 billion. The predominant share of subsidies was for fossil fuel and renewable energy technologies.
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