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By Dr Valentina Dedi*senior economic advisor, Consulting International, KBR
Today’s emphasis on climate commitments, while ensuring energy security and affordability, appears to have created new momentum for nuclear energy. Latest global developments, particularly after Russia’s invasion of Ukraine, have caused many governments to rethink their energy strategies and reconsider the role of nuclear energy as they seek to diversify their energy mix. supply and decarbonize their economies.
Momentum for the deployment of nuclear energy appears to have re-emerged in Albania too, following the recent announcement of the construction of a nuclear power plant in cooperation with Italy. The country does not have a nuclear power plant but has expressed interest in deploying nuclear energy as a new vector to try to strengthen its energy security.
The idea was first conceived about 15 years ago, when the Albanian government was considering the construction of a nuclear power plant that would not only meet the country’s energy needs, but also export excess electricity to other Balkan countries, as well as to Italy via a rail network. submarine cable. Italy, which gradually abandoned its use of nuclear energy following a referendum in 1987, as well as Croatia are said to be interested in the project. However, plans for this never came to fruition.
In pursuit of nuclear energy
Nuclear power is considered an important source of low-emission electricity. Today, it represents the second largest source of energy after hydroelectricity, with a share of around 10% of global electricity production.
Over the years, countries in Europe, North America and Asia have turned to nuclear power to strengthen their national energy security by reducing their exposure to imports. Nuclear power can provide significant volumes of electricity. A single large-scale reactor can produce more than 1,600 MW of energy, which is the largest technology among all technologies, while in comparison, hydropower, which comes second in terms of capacity, can produce up to around 800 MW (IEA, 2022). Nuclear power’s potential to contribute to the decarbonization of the power sector has also added to its popularity.
Given these favorable attributes, the deployment of nuclear energy could positively contribute to Albania’s energy security. The sustainability of the country’s electricity supply has become one of the main national challenges, with Albania remaining a net importer. Its electricity sector depends almost entirely on hydropower, making it vulnerable to weather conditions. As such, nuclear power could complement the leading role of hydropower, contributing to the safe operation of the system and helping to avoid power outages that have a socio-economic impact on the country and its citizens.
Electricity production by source in Albania
Source: IEA
The Cost of Capital Burden
However, if we consider the financial feasibility of such a project in Albania, things do not look so encouraging. Nuclear power plants are large, complex construction works, requiring a large workforce, enormous quantities of steel and concrete and multiple systems to operate. Due to their complexity, they involve long lead times, averaging around 7 years – although lead times can vary considerably – and they often perform poorly on on-time delivery.
This makes nuclear power plants very capital intensive, with costs for a single reactor installation ranging from $4 billion to $10 billion, which may explain why nuclear projects have historically required some form of government support. In the case of Albania, however, the government’s ability to finance such a project is seriously questioned, as these costs can represent up to half of the country’s GDP. Furthermore, for a country like Albania, which does not have a previous nuclear program, such projects can carry significant risks of cost overruns and delays, which can further affect the total cost of such an undertaking. .
Lack of national expertise and regulatory framework
The participation of foreign investors could help – to some extent – alleviate some financial and construction challenges for a country without prior experience in building and operating nuclear power plants. However, it remains imperative that Albania develops its national expertise and invests in the human capital necessary to safely run such an enterprise. As the International Atomic Energy Agency (IAEA) says, “responsibility for security cannot be delegated to another country or organization.”
The development of an adequate regulatory and legal framework, which is also currently lacking, as well as the establishment of independent regulatory control are important prerequisites for the safe operation of a nuclear power plant, as well as for strengthening public confidence. Safety and the potential for environmental damage from the radioactive waste produced are also crucial for the safe deployment of nuclear energy.
The ability to secure and store uranium, the primary fuel for nuclear reactors, as well as develop an effective nuclear waste management program are challenges that the government must seriously consider.
Building a resilient energy system
Ultimately, improving energy supply to support Albania’s economic development and growth will require a diverse mix of energy sources. There should also be a focus on deploying cleaner forms of energy. Although the role of nuclear energy is not ruled out, the government should strive to develop an energy master plan consistent with the country’s broader economic, social and environmental situation.
Primary energy mix by source in Albania
Source: IEA
Due to current barriers to nuclear energy deployment, there is a stronger economic and strategic rationale for prioritizing less capital-intensive and faster-to-adopt alternatives, such as wind and solar, than construction of a nuclear power plant. This provides the government with a faster, more versatile approach to solving long-standing electricity supply problems and building a more resilient system.
Opportunities for renewable resources are numerous in the country. According to IRENA’s Renewable Energy Readiness Assessment Report (2021), the country enjoys some of the highest annual sunshine hours in Europe, while possessing potential significant and competitive wind power in terms of costs. As investments in wind and solar increase, these sources can begin to provide an increasing share of electricity generation and complement the use of hydropower, which can serve as a dispatchable baseload resource. Hydropower has significant operational flexibility and storage potential and could contribute to a robust energy system, as estimates show that only about a third of the country’s hydropower potential has been developed so far.
In the medium to long term, once the appropriate foundations have been laid, Albania could reconsider the inclusion of nuclear energy in its energy portfolio to further support its vision of improved energy diversification and security .
*Dr Valentina Dedi is an economist, specializing in international oil and gas markets and energy transition projects. She currently works for KBR in the international consulting sector as a Senior Economic Advisor. She is based in Dubai, United Arab Emirates. Valentina is Vice President of Women’s Access to Energy and the Greek Energy Forum.
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