On the backdrop of the oil and gas conflict between Western countries and Russia, one of the solutions to the crisis situation for the European Union will be nuclear diversification. Some EU countries may revise their energy strategies to increase production at local nuclear power plants in the coming months. But the Deputy Director General of the National Energy Institute Alexander Frolov said in an interview with socialbites.ca that European countries have neither the money nor the time for this.
“Belgium has set a good example for its neighbors by partially abandoning its plans to disable seven nuclear power units. In two of them, the electricity generation was extended by 10 years. However, Brussels can be considered an exception in this regard. In the same Germany, three of the last six nuclear power plants were shut down in January 2022,” he said.
Sergey Kondratyev, a senior specialist at the Institute of Energy and Finance, agrees with him. The most the UK, Sweden, France and other “EU nuclear power plants” can do is to follow the Belgian example.
“Construction of a nuclear power unit using French Orana technologies takes an average of 10-15 years. The cost of one block now starts at 10 billion Euros. To completely stop the import of electricity and gas from Russia, Europe will need at least 40-100 new blocks and an investment of about 1 trillion Euros.
In his view, such energy diversification would cost Europeans France’s two nuclear programs in the 1970s and 1980s. Kondratiev concluded that the cost of Paris for the development of nuclear power generation at that time was estimated at about 400 billion euros.
what will be the tariffs
If some EU countries follow the example of Belgium by expanding nuclear generation output, the cost of electricity generation will still remain high. Kondratiev noted that a more balanced balance between coal, gas, nuclear and solar power generation would help solve the problem of rising home heating tariffs for ordinary Europeans.
“Electricity tariffs in Western European countries in recent months have been around €200-300 per megawatt hour (MWh). Extending the life of nuclear power units by 10 years will reduce the cost of electricity for EU citizens to €100 per MWh,” he said.
Frolov agreed with him. He also believes that it is not worth stopping the supply of Russian gas to Europe.
“The unfounded refusal of the EU’s political beauties to pay for Russian gas in rubles does not mean that the contracts between the Europeans and Gazprom will inevitably break. Agreements are made between private companies and not with the president of the European Commission. The European bureaucracy does not have effective leverage over them”, the analyst assured.
The way out of the energy crisis
A new plan of gas contracts with Russia will help lower electricity tariffs for European citizens. Frolov suggested that in the coming months Gazprom will sign additional agreements with a number of European counterparties.
He added that Russia’s new gas supply plan will be beneficial for both monopolistic and European counterparties. Moscow will become stronger well rubles and EU – to get significant discounts on fuel.
“The average price of Russian gas supplies to Europe in January 2022 was $ 800 per thousand cubic meters. Transferring the payment to rubles would, of course, be a breach of contractual obligations. On the other hand, nothing prevents Gazprom from reducing the cost of fuel by a third to $500-600,” he said.
Frolov said that thanks to such a plan, Europeans will leave the “transition fuel” status behind gas and the volatility of the ruble will noticeably decrease.
“Over the past month, the ruble has fallen by 20-30%. Intensive use of the national currency in international settlements will not allow a repetition of the negative trend. In addition, Gazprom’s ruble revenue in 2022 may accordingly increase by 1.5-2 times compared to 2021.