Changing the Economics of Nuclear Power: Impact of Shale Gas E&P

Date: February 22, 2011
Pages: 30
US$ 580.00 US$ 490.00
Report type: Strategic Report
Delivery: E-mail Delivery (PDF), Download

Download PDF Leaflet

Changing the Economics of Nuclear Power: Impact of Shale Gas E&P
Shale Gas E&P Impact on Economics of Nuclear Power

BMI View: The proliferation of shale gas E&P activity in the US has turned the energy market on its head and is having a profound impact on investment calculations for new power generation assets. We believe that the ensuing glut in US natural gas supply has effectively killed off the momentum for a nuclear renaissance in the US. We anticipate US gas price dynamics will cascade through the European gas market, and in tandem with ongoing exploration for shale gas in Europe, we believe the European nuclear new-build plans can also be in line for a re-assessment by sponsors and financiers.

The financial crisis of 2008/2009 brought financing ventures for nuclear power to an abrupt halt. With sponsors and financiers taking a more circumspect approach to long-term risk, these extremely capital intensive projects went on the backburner and several were subsequently abandoned, at least for the time being (see Calvert Cliffs 3 in the US, Belene in Bulgaria and Cernadova 3 & 4 in Romania).

In tandem, the proliferation of exploration and production (E&P) activities for unconventional gas in the US proved so successful that most recent estimates show that (depending on depletion rates) the US can be self sufficient in natural gas for a century and possibly longer. [1]

This has proved to be a crucial factor that is altering the economics behind nuclear power projects. BMI believes that the dramatic increase in US domestic natural gas production and subsequent reduction in natural gas prices was the deciding factor that has tipped the balance of economic viability against nuclear power. According to the latest long-term price forecasts from the US Energy Information Administration (EIA), it could be 15 years before nuclear power becomes cost competitive in relation to natural gas again.

In this special report we highlight trends and patterns that have arisen out of the US regarding the correlation between rising shale gas production and feasibility of nuclear power projects. We ask what this could mean for Europe's nuclear power sector as shale gas exploration proliferates across the region at a time when several governments are still trying to get plans for nuclear new builds off the ground.

We conclude that the dynamics of unconventional gas developments are different in the US and Europe; indeed, it is too soon to tell what the prospects are for unconventional gas production in Europe, and therefore have only attempted a theoretical scenario in this case. Based on this, we do believe that sponsors in Europe will hold off from commitments to major nuclear projects until they are able to gauge what, if any, impact on European gas prices the current exploration will have.
Shale gas E&p
Impact on Economics of Nuclear Power
the Story so Far
Nuclear Investments and Shale gas in the us
  Chart: Short Break or Break Up?
Brent Crude and Henry hub Spot Prices, Us$
  Chart: off its hi Ghs
Price of Natural gas Used in Electricity Production
  Chart: Risi ng Domestic Produ Ction Redu ces Need for Imports
us Natural gas Historical Data
  Chart: too Bullis h on us nu Clear?
United States - Installed Electricity Capacity Forecast, GW
  Chart: the Point When nu Clear Becomes Cost Competitive With Gas/ tw o gas Price Forecasts
Henry hub Spot Price, (2009 Dollars/mn Btu)/ eia Forecasts
  Table: list of us Nuclear Power Projects
Project Name: Construction of Nuclear Power Projects, South Carolina/ two Nuclear
Reactors, Levy County, Florida/ Nuclear Power Plant, Texas/ South Texas Project, Units
3&4, 2700mw/ Bellefonte Unit 1 Nuclear Power Plant/ Calvert Cliffs iii Nuclear Reactor
Project/ two Nuclear Reactors, North Carolina/ lee Nuclear Power Plant, South Carolina/
Vogtle 3 & 4 Reactors, Georgia/ two new Reactors, Turkey Point Npp, Florida/ Watts Bar,
Unit 2, Tennessee
Federal Loan Guarantees: Still not Enough to get Nuclear Going
Across the Atlantic
Following in America's Footsteps?
  Chart: Digging Deep
Unconventional gas Plays in Europe
  Chart: EU Ropean nu Clear Power Plans - Still on the Drawi ng Board
Number of Nuclear Reactors Planned, Proposed and in Construction
on co2 Reduction
  Table: mu ch Uncertainty Amongst EU Ropean nu Clear Power Projects
Countries: Bulgaria, Czech Republic, Poland, Ukraine, France, Kazakhstan, United Kingdom,
Finland, Netherlands, Lithuania, Estonia, Slovakia, Slovenia, Switzerland, Romania
  Chart: More gas fi red Power Plants for the eu
European Union - Installed Electricity Capacity Forecast, gw
on Energy Security
Changing the Economics of Nuclear Power: Impact of Shale gas E&p
Wait-and-see Before Committing to Nuclear Power
United States
new Nuclear Power Plant in the Works for Dominion
United Kingdom
Revolutionise the Energy Market: Greener (and Nuclear)?
  Chart: Catching up With Other EU Countries
Gross Electricity Generation From Renewables (gwh), 2007
Stimulating Low-carbon Forms of Generation
not Clear on Nuclear
  Chart: mu ch Room for Improvement for uk Renewables
Electricity Production Capacity (mw), 2007
who Will pay the Price?
A new Referendum: a Sword of Damocles on Italian Nuclear Renaissance
  Chart: nu Clear Power, ris ky for EU Ropeans
Q: When you Think About Nuclear Power, What First Comes to Mind?
  Chart: Italians, not Sure They Want nu Clear
Q: Should the Current Level of Nuclear Energy as a Proportion of all Energy Sources be
Multiple Problems Imperil Italian Nuclear Sector
Hurdles Remain as pge Enters Pre-feasibility Phase on Npp
  Table: mu ch Uncertainty Amongst EU Ropean nu Clear Power Projects
Countries: Bulgaria, Czech Republic, Poland, Ukraine, France, Kazakhstan, United Kingdom,
Turkey, Finland, Netherlands, Lithuania, Estonia, Slovakia, Slovenia, Switzerland, Romania,
EU ets Iii: Implications for European Energy Investments . 24#
  Chart: the Importance of Coal-fi red Plants for EU Member States
Contribution of Coal and Lignite to Electricity mix 2010, % of Total
Those Most at Risk
Poland: Investment Already Affected
Czech Republic: CEZ Mixes it up
  Table: Planned Constructions o r Expansi ons of Coal-fi red Power Plants
Countries: Poland, Czech Republic, Greece
Greece: Liberalisation a Precondition for Diversification
Germany: Large Opportunities for Renewable Energy Sources
Business Monitor International Ltd
Special Report
  Table: Electricity Generation in EU Countries With Coal-fi red Plants, 2010e
Countries: Estonia, Poland, Greece, Czech Republic, Germany, Bulgaria, Denmark, Romania,
uk, Slovenia, Ireland, Portugal, Netherlands, Slovakia, Spain, Hungary, Finland, Italy, Austria,
Belgium, France, Sweden
Eur1trn in Infrastructure to Realise Europe’s Energy Strategy
  Chart: EU Priority Corrid Ors for Electricity, Gas & Oil
Map of Europe
How to Finance Over Eur1trillion of Energy Infrastructure?
  Chart: Facing hi gh Debt pi Les
European Utilities net Debt (eur, mn) in 2008 and 2009
Skip to top

Ask Your Question

Changing the Economics of Nuclear Power: Impact of Shale Gas E&P
Company name*:
Contact person*:
Request invoice
Your enquiry:
Please click on a Check Box below to confirm you are not a robot: