In l987 – following the Chernobyl nuclear disaster – Italy voted to abandon nuclear, and a similar gesture was made by the good people of Sweden about the same time. According to the (UK) Financial Times (February 24, 2009), Italy’s “relatively advanced nuclear capacity was (immediately) mothballed or dismantled.” Fortunately though, Sweden specified 2010 as the date for dismantlement, because over the last decade Swedish nuclear energy – together with hydro – has provided this country (Sweden) with perhaps the lowest cost electricity in the world, and until the curse of electric deregulation appeared, the price was also among the lowest in the world.
The new Italian facilities are scheduled to be constructed by ENEL (EN), with the cooperation of Electricité de France [EDF] (OTC:ECIFF), who played a key role in the design of the reactors to be installed. This equipment will not make its appearance in Italy in the very near future though, and in fact if there is a serious nuclear accident near that country, it may never come into existence. But given the nuclear renaissance that is gaining momentum in Europe and elsewhere, a change in Italy’s nuclear plans will hardly be noticed. According to the German firm Siemens, at least 400 new reactors will be deployed globally by 2030. Moreover, several years ago Mr Vladimir Spidla, the Czech prime minister at the time, visited Finland, and among things he said that while Finland was the only country in Europe that displayed intentions to build an advanced nuclear facility, “soon almost all will join it.”
They will join it if they prefer a higher standard of living to a lower standard! Italy’s energy situation is a great deal better than many because of its access to the natural gas of north Africa (and particularly the expanding reserves of Algeria), but as I never tire of pointing out, the first time I taught in Australia, the Maui gas field of New Zealand was thought by many to be virtually inexhaustible. In another decade however it may only be a memory. I can also mention that it was via the premature exhaustion of Maui resources that a misleading interpretation of New Zealand’s attempt to restructure its electric market was put into circulation – an interpretation that seduced several academic stars and ‘wannabes’ into supporting deregulation exercises that I correctly identified as economically absurd.
Because of the ostensible “need” to rebuild its nuclear safety authority, and to identify sites for the new installations, the first new Italian reactor may not be in operation until 2020 – or even later. My reaction to this news is complete indifference! The important thing in Italy and elsewhere is that preparations are made to construct this equipment before the price of oil and gas goes into orbit, which many observers now believe could happen sooner rather than later.
The nuclear reactors that are to be constructed in Italy are ‘European pressurized reactors (EPR)’, or as they are often designated ‘third generation’ (Gen 3) equipment, where the emphasis is on safety. (Safety with this equipment means that if control systems stop working, the reactor shuts down automatically, dissipates the heat produced by the reactions in its core, and stops both fuel and radioactive waste from escaping.) Unless I am mistaken, it makes sense for Italy not to hurry their new project, because while things might go smoothly if these reactors were being constructed in France, or even China, there could be problems of a cultural nature in Italy, where ENEL and EDF must coordinate their efforts in order to meet deadlines and keep costs under control.k
There have been some serious ‘issues’ of a cultural nature in Finland, where EDF and the Finnish power group TVO are constructing a 1600 MW(e) installation, that is the largest reactor in the world. Anne Lauvergeon – the CEO of Areva (OTCPK:ARVCF) (France) – has blamed her Finnish collaborators for the delays and excessive costs experienced with this project, and without being especially familiar with the details of this accusation, I suspect that Madame Lauvergeon’s displeasure is justified. As compared to nuclear-friendly France, there are a large number of persons in Finland who believe that renewables are economically superior to nuclear, and even if this bizarre delusion has not infected the air in the vicinity of the construction site, it has almost certainly resulted in the kind of frictions that are unavoidable in multicultural projects – as I unfortunately discovered when teaching mathematical economics at a United Nations post-graduate institute in Senegal.
With regard to the above comment of Prime Minister Spidla about the future of nuclear, I would like to emphasize that the basic issue is the growing but not well understood value of electricity in the life of people in every country, in every walk of life, and especially individuals who are vulnerable to the economic discomforts that are likely to appear in a world characterized by a growing competition for resources and various other necessities. I choose to believe that a nuclear facility taking 4 years to construct, with a ‘life’ of at least 70 years, is an optimal piece of equipment for delivering reliable and comparatively inexpensive electricity. Some algebra associated with this belief can be found in my energy economics textbook (2007).
On at least one occasion the former Swedish prime minister called nuclear energy “obsolete”, but unless I am mistaken he did so in hopes of obtaining the additional votes from members of the anti-nuclear booster club that would have enabled him to continue his presence at the head of the Swedish government. With all due respect, I am sure that in the overworked mind of that gentleman his gratuitous evaluation of nuclear’s future was to some extent justified, but in point of truth he was simply unable to comprehend the complex architecture of energy economics, and he is not alone where this shortcoming is concerned. As I suggested in a number of lectures, one of the recent prime ministers of Italy was deceived by the promise of plentiful and inexpensive natural gas due to trans-Mediterranean pipelines, but apparently the present prime minister does not agree, nor was it necessary for him to agree, because the price of gas will not have its present appeal to consumers for many more decades, or perhaps even years. (Although not certain, the price of natural gas is and has been for a long time below its equilibrium price, measured with respect to e.g. the BTU price of oil.)
Though unfortunately ignored by many energy economists, the optimal course of action for a country like Italy may be maintaining or increasing its consumption of natural gas during the period in which entry – or re-entry – onto the nuclear scene is being prepared. Despite the opinion of deeply concerned though amateur economists like the former Swedish prime minister, if Italian and Swedish voters do not have a guaranteed access to nuclear energy later in this century, they could find themselves without access to the kind of goods and services that they have no desire or intention to be without – although as yet most of them do not appear to be inclined to recognize this fact.