In Western countries the nuclear sector currently stands somewhere between a rearguard battle and the preparation of still distant conquests in the future. If there is to be a nuclear renaissance, it will be more difficult and will take longer than some people initially hoped for at the dawn of the new millennium. However, two factors suggest that nuclear power does, in fact, have a promising future.
The first of these factors is technological innovation. I talk about this specifically in another article: The future of nuclear power remains open in France. The second factor, which interests us here, is that of globalization, understood first of all as the globalization of markets. To what extent and under what conditions can nuclear players still hope to find new areas of development outside their native perimeters? I say “still”, because the question is not a new one: nuclear power has already become global over the last thirty years. But the evolution of the international context can only lead to a re-examination of the question, which needs to be integrated within the systemic framework. At the heart of the matter is the question of whether technological innovation strategy and globalization go hand in hand.
1. An international market for energy independence, from the start
The construction of the French nuclear fleet was completed in the 1990s, after an effort spanning some thirty years1, during which a technology under American license2 was gradually frenchified. The ambition was to export this new know-how, haloed by the success of the French program. Among the bilateral relations forged within this framework, cooperation with China (PRC) has been a key element since the early 1980s.
In the words of Christian Stoffaës in 1992, the question at the time of the EPR project was how nuclear power could “possibly distance itself from the nationalism of its origins, if that is to be the condition for recovery?”. Everybody seems to have adopted his answer, which was to completely separate the civil and military dimensions, in order to fully integrate nuclear power into the emerging process of a global society. Almost thirty years later, nuclear power continues to position itself as an irreplaceable asset within the energy system to achieve carbon neutrality by 2050.
In an energy context characterized by the liberalization of markets and therefore by increased competition between operators, nuclear power is nevertheless struggling to make its mark, notably because of its cost, which has become less competitive. There are two reasons for this: on the one hand, the choice to offer a top-of-the-range and therefore expensive product, and on the other hand, the progress of renewables and the emergence of efficient combined-cycle gas power plants.
If we add to this the environmentalist opposition in some European countries, accentuated by the Fukushima disaster, the announced nuclear renaissance has not taken place as planned. What had been planned was a global renaissance, with a host of new projects all over the world. What has happened instead is rather a localized renaissance in certain specific countries, in a context of growing rivalries between great powers.
Basically, commercial states like Germany have ended up opting for more competitive technologies in the short term, by outsourcing the issue of energy independence via competition between her hydrocarbon supplies. The real nuclear market tends to be linked to the willingness of some states to access a technology that provides greater energy independence in the long term. This impression is confirmed by the United Kingdom’s decision to reverse some of its energy market reforms around 2010, which were believed to lead to a risk of long-term capacity underinvestment. Hence the UK’s desire to build new nuclear power plants, if necessary by instituting guaranteed long-term prices3.
The most active states in the field of nuclear power are Russia, China, India, Turkey, the United Kingdom, Saudi Arabia, Canada, and the United States, which recently announced their intention to regain their technological leadership in this field, so as to better ensure the non-proliferation of atomic weapons in the world.
If we had to identify as closely as possible the true nature of the nuclear export market, I would say that it is the market of energy independence4.
2. Specific benefits and risks of globalization
Today, the two EPR reactors at the Taishan site in the PRC are the only ones that are operational. While the Chinese are capable of building second-generation reactors on their own, they still need French technology and know-how for EPR-type reactors and, potentially, for waste reprocessing. Cooperation also includes other aspects, such as mutual programs for training and education. China has also become a partner in the EPR project at the Hinkley site in the United Kingdom.
The main argument in favor of the globalization of nuclear energy is, therefore, exportation, as well as the development of scientific, industrial, and educational cooperation. If well organized, the export of technology enables economies of scale, scope, and learning.
I have situated nuclear as a technology fitting the needs of the energy independence market. The quest for independence is all well and good, but by its very nature, it tends to lead the student to be able to manage without the teacher or even to compete with him on international markets in order to surpass him. In fact, one only has to look at what happened during the construction program of the French nuclear fleet to fully appreciate what could happen to the French in China: the frenchification of American technology in one case, the sinization of French and Western technologies in the other.
This is not an uncommon scenario. Since the end of the 2000s, China has thus been able to design its own high-speed train independently, using technologies already transferred by Western companies in joint ventures: Siemens, Alstom, Bombardier. I do not know whether in this case there was an underestimation of the risk of favoring the emergence of a new competitor in the medium term, or on the contrary acceptance of this risk – or even lack of real choice since the market simply couldn’t be left to competitors: in short, a situation that would correspond to a prisoner’s dilemma, for those interested in game theory.
This example based on the railway sector would, however, deserve to be qualified. Alstom continues to win contracts in China. But its Chinese joint venture can put French factories in direct competition with their counterparts in China.
The other risk specific to opening up lies in the increased uncertainty of the environment, which starts with the cultural barrier but also touches on institutional differences. In the nuclear sector, these differences may particularly concern nuclear safety authorities.
3. A dominant strategy: combining openness and technological innovation over the long term
3.1. Asking the right questions when picking a partner
Technological catch-up through absorption, which characterizes developing markets, is a risk, not a certainty. We have seen that opening up to these markets can bring significant benefits. Let us now look at how the risks that these markets entail are manageable. The dominant strategy for managing these risks is simple to state but difficult to execute: it is to combine openness and innovation5, and to build on the virtuous cycle between these two factors. This virtuous cycle makes it possible to make this choice consistent over time: innovate to export, export to become more efficient, and thus to have more resources to continue investing in innovation.
Nevertheless, getting around the European obstacle of reduced nuclear prospects through globalization remains vague and increasingly uncertain in the current context. From a systemic perspective, the decisive criterion for firm A must be the ability to manage the risk of technological absorption by firm B. However, this capacity depends on two factors, of which technological advance is only the first. These two factors are :
- The technological advance of A relative to B.
- The relationship between A’s capacity to protect strategic information in relation to B and B’s capacity to acquire strategic information in relation to A.
3.2. Situations of complementarity
Cooperation is all the more mutually beneficial when it brings together complementary actors.
A company’s performance may differ in several dimensions. In the case of nuclear power, the value chain admits many specializations: construction, components, maintenance, fuel, reprocessing, decommissioning. This is the first level of complementarity, along the segments of the value chain.
Another major source of differentiation lies in the distinction between design capacity, execution capacity, and financing capacity. Other functional aspects could be added, but do not play such an obvious role in terms of differentiation.
In the context of the struggle to gain access to international markets, the nuclear sector is thus witnessing many joint ventures between companies of different nationalities. The aim is to combine assets to assert leadership and win contracts.
3.3 Impact of a More Uncertain Global Environment on Demand for Energy Independence
A final factor to be taken into account is the evolution of the level of uncertainty within the global system. If the level remains stable, or low, the main argument for nuclear power in the energy market remains carbon neutrality. On the other hand, it is possible to anticipate that in the event of a more unstable process of globalization, the demand for long-term energy independence, such as can be met by nuclear power, is likely to increase.
Three examples illustrate this idea. Let us first take the case of Japan. The current Japanese government wants to increase the share of nuclear power in electricity generation to 20% by 2030. A low level of systemic uncertainty could lead to a change of course, following a new government, for example. But a higher level of uncertainty could lead to this orientation being maintained beyond the current government.
Next, consider the case of Australia. Australia banned all nuclear development following the French military tests at Mururoa in 1995. But this position could change, especially since Australia has vast reserves of exploitable uranium. A higher level of instability in the global system is likely to encourage such a reexamination.
Let’s finish with China. If the level of uncertainty in the global system were to decrease, it is not impossible that the Chinese system would reduce the importance of the objective of energy independence and increase the weight of market cost competitiveness. Such a development, which may seem unlikely in the current context, would then present similarities with the evolution of the European system as a whole since the 1990s.
Conclusion: Who will seize the opportunities of the future?
European nuclear players need international markets to be able to develop but need to remain a step ahead by maintaining or increasing their technological lead, to avoid becoming non-essential to their international partners.
In this context, access to a reliable and discreet platform of scientific and technological experts, such as Presans, can make all the difference between a project that fails and one that succeeds!
- Counting from the abandonment of the graphite gas industry at the end of the 1960s; but it would be possible to count from the end of the Second World War.
- Technology transfer decided by President Nixon.
- Perhaps the British are in fact ahead of the rest of Europe in this area, having previously been one of the great inspirers of the liberal reforms of the European market.
- But this point is debatable: the long-term economies of scale, the reduction of air pollution, the reduction of greenhouse gas emissions are also real arguments.
- Similar idea in DARPA, the F-35, and the return of Russia: in a world of new conflicts, technological leadership requires open organization, J. Knight, open-organization.com (2018)