Nuclear Decommissioning: The Never-Ending Story

The fate of Spain’s nuclear power plants resembles one of those endless Venezuelan soap operas with infinite seasons that never seem to end. Public memory may be short, but throughout the 2010s we spent the entire decade quarrelling over this issue, with owner companies claiming that the nuclear plants were loss-making, with the unilateral closure of Garoña against the government’s stance at the time, and even a whole season in which it seemed Almaraz would be closed, back around 2018.

At the beginning of 2019 it seemed the soap opera might be drawing to a close. The owning companies and the Government agreed on an orderly closure of the plants over the next sixteen years, reaching a consensus that the plants would operate until 45-46 years, a midpoint between those who wanted closure at forty and the one who wanted it at fifty. A note of interest: at that moment the price of natural gas was 15 €/MWh and the electricity market expectation 45 €/MWh, insufficient for the viability of the plants.

“The certification of the closure pact for the nuclear plants was one of the foundations on which Spain’s energy policy was built.”

The certification of the closure pact was one of the bases that built Spain’s energy policy. The PNIEC (Plan Nacional Integrado de Energía y Clima) solidified the pact and sent a message to all international investors that Spain, besides aiming to electrify with renewables and replace thermal generation, would need in the following sixteen years around 55 TWh of additional renewable generation to substitute nuclear production. Dozens of billions of euros have flowed into Spain attracted by that policy and trusting in the country’s energy strategy.

The nuclear plants want to extend themselves

Today, those who wanted to close all the nuclear plants at forty years—the same ones who later agreed to close them—now intend to backtrack and extend three years for Almaraz I and two years for Almaraz II. But there are conditions: One, explicitly hinted in the press release announcing the request, that the Nuclear Safety Council not obligate them to invest more money in the plants. The second, not explicitly stated but permanently demanded in public statements, the reduction of taxation on nuclear plants. In other words, a tailor-made fiscal regime with no need to invest anything.

What has changed? Gas is at 30 €/MWh and the market expectation nearly 60 €/MWh for the remainder of the decade. The short-term economic case, bolstered by that fiscal push and assuming no investment cost, appears to have shifted. And it is legitimate for companies to express or seek it if they deem it appropriate. What does not make sense is to trigger the country’s energy policy and the signal sent to all international investors with opportunistic, short-term politics.

“A second breach of our energy policy in fewer than fifteen years would mark Spain as an unreliable country in its commitments”

I think we are not aware of what it would mean to undo the nuclear closure agreement in a country like Spain, which still carries distrust and arbitration awards for decisions made thirteen years ago about renewables subsidies. A second breach of our declared energy policy within fifteen years would brand our country as an unreliable state in its commitments and an evident regulatory risk concerning future energy investments.
 
Let me put some numbers on this. Spain currently has more than 30,000 MW of renewables with construction authorization and about 5,000 MW of battery storage projects in processing. Not all will probably be built, but if tomorrow the Government of Spain reopens the nuclear issue, practically nothing will be built. Undoing the nuclear pact would destroy the predictability of our energy policy, paralyze investment and leave thousands of projects dead that have spent many years in permitting, wasting enormous efforts and driving hundreds of companies to ruin.

Why extending the life of nuclear plants makes no sense

Is it worth it? The answer is clearly no. With a simple hypothesis you’ll see why: imagine that next year the price of gas falls and returns to around 20 €/MWh, which is where it has traditionally stood. The market expectation would go back to the 45 €/MWh seen before the nuclear pact—or even lower—and the companies themselves would not want to operate under those conditions no matter what tailor-made fiscal regime they obtain. We would return to a scenario where the plants would want to close, compounded by having self-sabotaged our energy policy and our pipeline of voluntary projects.

“Entrusting the country’s energy policy to nuclear technology under current circumstances would make Spain its hostage.”

I should also point out how terribly problematic it is to offer a tailor-made fiscal regime to a technology like nuclear. We are not talking about any ordinary technology that, within a liberalized market, any company could promote. It is a technology restricted to the seven reactors that currently exist, since it is economically unviable to build new reactors without extreme subsidies. They are reactors owned by a handful of dominant companies that wield market power and supply about 20% of the country’s electricity. Entrusting the country’s energy policy to this technology in these circumstances would turn Spain into its hostage. What would happen if, in 2030, they no longer accept tax breaks? Do we subsidize them? Do we pay them 85 €/MWh as in Belgium, giving them a public loan to invest in modernizing the plants and remove any financial risk at the expense of the Treasury? I think there’s no need to spell out how problematic the scenario would be and the unfair treatment of other technologies.

To reopen the nuclear closure pact there would have to be exceptional circumstances that are not present today. The PNIEC projected a demand increase of nearly 80 TWh between 2019 and 2030. In 2025 we will close with a demand even lower than in 2019, meaning our demand is far lower than projected. Yet, since 2019 we have installed renewables capable of generating around 72 TWh per year, only slightly below the PNIEC’s forecast. There is no sense in keeping generation that was planned to be eliminated when there is no demand to justify it.

This energy is also not the answer to a blackout

There are no technical reasons for it either. It is now said that maintaining the nuclear plants would help to manage voltage, yet the voltage oscillations recorded in the last week of September occurred while both Almaraz reactors were operating and, more recently, conventional plants have stated that they cannot meet the voltage-control directive more than 75% of the time. Moreover, Aelec itself has acknowledged that the nuclear plants are not prepared for dynamic voltage control. The facts stubbornly converge on a reality that anyone who is not determined to maintain a 20th-century electrical system recognizes: that renewables, distributed across hundreds of sites, are the ones that can best perform effective voltage control, and that synchronous condensers (one already commissioned for the Almaraz node, by the way) will provide inertia and the necessary extra voltage control.

“It is the renewables, distributed across the territory in hundreds of sites, that can best perform effective voltage control”

There may come a moment when the closure of a nuclear plant must be postponed due to a sudden surge in demand, for security-of-supply reasons, or for other reasons, but there is now no justification for doing so. Undoing the closure pact would blow up our energy policy, paralyze investment in renewables and return us to being an unreliable country in the eyes of international investors. If we go down that path, by 2030 we would face four plants to close in the same year, shattering any gradual, progressive closure criteria. The Government will be between a rock and a hard place, and we will again witness a new soap opera about the need to subsidize them at the consumer’s expense. A country’s energy policy cannot be subjected to these perpetual tensions.

Let us end this drama with a script from the century-old era and its predictable plots. Let us entrust the country’s energy policy to a new generation of technologies—newer, faster, cleaner, cheaper and much more distributed among actors. The country will thank us, and so too will the public debate.