Europe's Nuclear Energy Woes

Posted by: Mark Scott on June 30

Rising energy costs and concerns over carbon dioxide emissions have focused minds in Europe’s utility sector. The response? A push to build more nuclear power plants that would reduce the amount of fuel (such as natural gas and coal) that’s imported and cut CO2 just as governments start to take a hard-line stance towards greenhouse gases.

Yet there are problems with this plan. Global interest in nuclear energy (over 200 projects currently are pending) has tripled the construction costs for plants over the last five years, according to figures from Lehman Brothers. That’s come just as many workers in Europe’s nuclear industry are thinking about retiring (consultancy Capgemini reckons the average age of employees now is around 45 years old) and energy companies are finding it hard to fill this knowledge-gap with graduates.

All told, Europe (and the U.S, for that matter) could have trouble fulfilling the expectations of this so-called ‘nuclear renaissance.’

Speaking at a June 30 conference in London organized by BusinessWeek's sister company Platts, Vincent de Rivaz, chief executive officer of France's EDF, said the industry now faces "tough global competition," adding "some of the skills we need, such as nuclear engineers, are in short supply."

That sentiment is echoed by Colette Lewiner, Capgemini's energy, utilities, and chemicals global sector leader. "We have an energy crisis, but the public doesn’t understand the problems," she says. Her major concerns -- nuclear construction and labor costs have skyrocketed and emerging economies, such as China and India, are forging ahead of their Western counterparts. "Asia's the most dynamic region in the world [for nuclear]," Lewiner adds.

So where does this leave Europe's nuclear aspirations? Well, organizations such as Britain's National Skills Academy for Nuclear (NSAN) are trying to fill the workforce gap by enticing students into the sector. Currently, over 80% of industry knowledge is found in only 20% of all employees, estimates NSAN Chief Executive Officer Jean Llewellyn, who adds firms are investing millions of dollars in new programs to attract graduates.

Getting more engineers into the sector, though, might not be the major problem. Long construction times -- nuclear power plants can take up to 10 years to build -- mean companies must lay out investment decisions decades in advance. Yet European governments have taken different stances on nuclear energy, which has limited the options available to firms. After years of dismissing nuclear, Britain now has embraced the technology, while countries like Germany and Spain have plans to end electricity production from nuclear in the near future. Such political seesawing doesn't make it easy for companies to finalize investment decisions.

And while Europe debates the pros and cons of nuclear, emerging countries keep pushing ahead. China, for example, has 8 reactors under construction. India and Russia also have seven in the works respectively and both countries expect to ramp up construction over the coming decades.

All this means nuclear energy will take center stage in the coming decades. Yet rising construction costs, a lack of qualified personnel, and political dilly-dallying might cause Europe to miss out on this pending nuclear renaissance.