Nuclear Power Plant Miscellany

Are Nuclear Power Plants Safe?

The Assumption:
“The dangers and risks of nuclear power plants can be minimized and overcome with proper management and governance. Therefore, nuclear power plants should be prioritized as power plants.”

However:
Even if risk management is possible, nuclear power plants still carry significant risks and often experience delays during construction, making them not the most efficient or rapid option for reducing emissions.

Explanation:

  1. Even with standard management, the risks and dangers of nuclear power plants remain. According to Law No. 30/2007 concerning energy, nuclear power plants are used as a last resort among various other energy supply technologies.
  2. While fourth-generation reactors are claimed to be a safe technology, there are no examples of commercial projects. This indicates that claims of safety and mature technology have not been proven on a commercial scale.
  3. Global nuclear capacity (Statista, 2023) has tended to stagnate over the past 10 years.
  4. The average duration of nuclear power plant construction is 7-10 years (Statista, 2023). Nuclear power plants currently under development were decided upon at least 7 years ago, when renewable energy development was not as promising as it is now.
  5. In the past 10 years, the cost of generating renewable energy has been observed to continue to decline (Economist Impact, 2022). This makes renewable energy technology an increasingly economical choice.
  6. First-of-a-Kind (FOAK) nuclear technologies, including thorium-MSR reactors, by their very nature pose significant challenges in terms of construction costs and schedules, as illustrated in the figure below.
  7. A study of Gen-III/III+1 projects (OECD, 2020) revealed a worrying trend: the last five FOAK projects experienced construction delays, exceeding initial estimates by up to 2.3 times. Furthermore, these projects incurred costs that exceeded their previously announced budgets by 2.3 times. Even newer technologies, such as Small Medium Reactors (SMRs), exemplified by Vogtle 3 and 4, have faced similar challenges as Gen III FOAK projects. These recurring issues across technologies underscore the need to critically examine the risks associated with FOAK nuclear power plants.
  8. The chart below illustrates the magnitude of risk reductions at each phase. However, with FOAK nuclear power plants, we can envision substantial risks involved in construction/financing, and licensing risk premiums, given FOAK’s poor track record. Consequently, insurance costs (covering all construction risks, start-up delays, logistics, stakeholder liabilities, and environmental factors) for the FOAK NPP project’s capital expenditure (CapEx) are likely to be substantial, not to mention initial operational expenditure (OpEx) insurance. Furthermore, with interest rates during construction and the high risk of delays, stakeholders, particularly EPCs, may need to assume high initial risks and hold significant equity stakes to defer payments until closer to COD.

Explanation: Several news stories have raised the issue of nuclear power and highlighted its advantages, including its ability to generate energy at competitive costs (Media Indonesia, 2021):

  1. Although considered by some to be clean energy, nuclear power produces radioactive waste (IESR, 2021), which requires strict and detailed project governance. Even with the best project governance, there is no foolproof technology to prevent nuclear power plant accidents (the risk is always present).
  2. In terms of financing, there are two commonly used bases in the financing structure of power plants (OJK, 2014): limited-resource and resource-based. In the Indonesian context, because there are no existing assets for the first nuclear power plant, limited-resource financing, also known as project financing, is used. This means the capital raised is solely supported by the project itself, as is the case with most renewable energy projects. In this case, a separate corporate entity, acting as a Special Purpose Vehicle (SPV), is established to develop and operate the nuclear power plant. This entity is primarily funded by business-based revenues and several investors as sponsors.
  3. As with many operational nuclear power plants (World Nuclear Association, 2024), public (government) financing is leveraged to secure government involvement and ensure majority ownership in the project, thus facilitating access to cost-effective debt. Similarly, nuclear power plant Special Purpose Vehicle (SPV) companies (Indonesia Business Post, 2023) aim to collaborate with State-Owned Enterprises (SOEs) to form joint operational entities, further strengthening government involvement in the project through SOEs. Therefore, in this case, public (government) funds, through SOEs, will be involved in the project.
  4. Therefore, as Indonesians, we need to understand the risks faced by SOEs, shareholders, and other stakeholders, including EPC suppliers for components/construction. Currently, because the nuclear power plant project has not yet reached the licensing and tendering stage by the offtaker, accumulated risks, such as tender risk premiums, construction/financing risk premiums, operational risk premiums, volume risk premiums, and regulatory/unpredictable risks, remain very high, indicating a high risk of default. As the project progresses, assets accumulate, thereby mitigating the risks. However, from the beginning until the COD stage, the rules prohibit the sale of these assets to other parties.

IESR Words

  • Although nuclear power is known for its low emissions and stable energy, radioactive waste management, accident risks, and financing challenges for nuclear power plant projects in Indonesia mean that risks remain present throughout the construction and licensing phases. All stakeholders must consider these factors.

    “Studies of Gen-III/III+ projects show a trend of nuclear power plant construction delays of up to 2.3 times and costs that have soared 2.3 times higher than initial estimates, including for the latest technologies such as Small Medium Reactors (SMRs). These recurring issues highlight the need for a critical examination of the significant risks associated with the FOAK nuclear power plant project, including insurance costs and the risk of significant delays.”
    – Pintoko Aji, Data and Modeling Group Research Coordinator​, IESR

Description for

Children (14-18 years):

The documentary miniseries “The Meltdown: Three Mile Island” (released in 2022) can be used as a resource for supervised communication. This miniseries depicts the accident that occurred at Three Mile Island in 1979, despite the site’s recommended safety protocols. The accident, triggered by a combination of equipment failure, design issues, and worker error, led to a partial meltdown of TMI-2 and a very small off-site release of radioactivity (NRC, 2024). This radioactive release, although very small, led to the permanent shutdown of the TMI-2 reactor area, and the Three Mile Island site was closed for 14 years for cleanup. This incident also prompted the United States government to revise regulations regarding the design of commercial-scale nuclear power plants and protocols for workers at the plant site.

The miniseries “The Days,” available on Netflix, can also be a valuable resource for supporting communication about the risks of nuclear power plant accidents. Focusing on the 2011 accident at the Fukushima Daiichi Nuclear Power Plant in Japan, the series provides a look at three perspectives: the government, corporate organizations, and those who risk their lives to view the phenomenon.

The Days series, due to its proximity to the situation, will be more relevant to Indonesia’s current situation and context.

Global nuclear energy capacity continues to decline. This means the risks posed by nuclear power plants are not commensurate with the costs and energy produced. Furthermore, developments in renewable energy technology have enabled cleaner, safer electricity production (with less security risks than nuclear power plants). The need for clean and safe electricity production can be met by optimizing renewable energy sources such as wind and solar.

Description for

Adults (19 years and over):

The use of nuclear power on a large scale also carries significant risks. The most dangerous risk is radiation leakage. The safest, most recent nuclear technology currently does not exist.

In addition to the strict governance required for large-scale nuclear power use, financing must also be considered, given the declining global trend in nuclear power capacity and the relatively long construction time for nuclear power plants.

Every nuclear accident, such as Three Mile Island, Fukushima, or Chernobyl, results in the shutdown of the power plant area for decades. Nuclear power plant accidents are similar to airplane crashes (rare but fatal). As technology advances, renewable energy technologies can be prioritized to produce clean energy.