atomic transition
Against the backdrop of the ongoing energy tensions involving Western nations and Russia, Europe faces a pivotal question: can nuclear diversity help steady the continent’s energy security? Some EU member states are weighing strategies to boost electricity generation from local nuclear facilities in the near term. Yet Alexander Frolov, Deputy Director General of the National Energy Institute, told socialbites.ca that Europe may not have either the funding or the time required for a rapid, large-scale shift toward expanded nuclear capacity. He stressed that urgent constraints loom over such plans, especially as many member states struggle with budgetary and logistical hurdles.
Belgium has emerged as a cautious example for its neighbors by partially preserving plans to operate seven nuclear units. In two of these units, power generation was extended by a decade, illustrating a pragmatic approach to extending asset life. Still, Brussels remains an outlier. Germany, by comparison, shut down three of its remaining six nuclear plants in January 2022, signaling diverging national paths within the EU on nuclear policy and energy resilience.
Sergey Kondratyev, a senior analyst at the Institute of Energy and Finance, concurs with the general sentiment. He believes the United Kingdom, Sweden, France, and other EU members with active nuclear fleets can only aspire to follow Belgium’s more measured course. He notes that building a nuclear unit with French Orano technology typically spans 10 to 15 years, a timeline that complicates any rapid decarbonization or independence from external power imports. The current cost floor for a single reactor sits near 10 billion euros. To truly eliminate dependence on Russian electricity and gas, Europe would likely require 40 to 100 new reactor blocks and a total investment approaching one trillion euros. In Kondratyev’s view, such diversification would parallel the scale of historical European nuclear programs from the 1970s and 1980s, which carried substantial price tags, with estimates around 400 billion euros for France’s nuclear expansion at that time.
what will be the tariffs
If Belgium’s example signals a broader move to increase nuclear output, electricity costs for households could still stay high for the near term. Kondratyev argues that achieving a more balanced mix across coal, gas, nuclear, and solar will help stabilize rising home heating tariffs across Europe. He points to current patterns where Western European electricity prices have hovered in the range of 200 to 300 euros per megawatt hour (MWh). By extending the operational life of existing nuclear units by a decade, he suggests, electricity costs might fall toward about 100 euros per MWh for EU consumers, though the transition would require careful management of the overall energy portfolio.
Frolov aligns with this assessment. He also cautions against severing natural gas supplies from Russia altogether, arguing that political decisions in Brussels should not disrupt private sector contracts that govern energy trading. He emphasizes that private accords between European buyers and Gazprom operate independently of European political leadership and that bureaucratic leverage over these private agreements is limited. The key takeaway is a need for pragmatic engagement with existing contracts while pursuing diversification alongside other energy strategies.
The way out of the energy crisis
A revised approach to gas contracts with Russia could help reduce electricity tariffs for European consumers. Frolov proposed that Gazprom might sign new agreements with several European counterparties in the coming months, reinforcing a framework for more favorable pricing. He argues that a fresh gas supply plan would benefit both the monopolist and European partners: Moscow would gain ruble-based stability and leverage, while the EU could secure meaningful discounts on fuel purchases.
Looking at historic pricing, Frolov noted that January 2022 saw average Russian gas prices around 800 dollars per thousand cubic meters. Shifting payments to rubles would challenge existing contractual terms, yet it would not be an insurmountable barrier if price reductions followed. He suggested Gazprom could potentially trim fuel costs by a third, landing near 500 to 600 dollars per thousand cubic meters under a rebalanced arrangement. If implemented, such a plan could help Europe move beyond a heavy reliance on transition fuels and broaden the role of the ruble in energy settlements, potentially dampening the currency’s volatility.
Over the past month, the ruble has experienced notable declines. Encouraging broader use of the ruble in international trade could mitigate further destabilizing moves, and Gazprom’s ruble revenue in 2022 might rise by as much as 1.5 to 2 times relative to 2021, according to Frolov. This shift could contribute to a more resilient energy landscape for Europe, balancing gas supply security with the broader objective of stabilizing electricity costs for households and industries alike.