27 Apr, 2022

Iberdrola floats Spanish nuclear extensions for EU independence from Russia

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By Camilla Naschert


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Cofrentes nuclear power plant near Valencia, Spain. Owner Iberdrola is open to extending the lifetime of the asset, if needed, to shore up security of supply.
Source: Jose A. Bernat Bacete/Moment via Getty Images

Spain's nuclear fleet is on a closure pathway, but one of the country's largest operators, Iberdrola SA, would be willing to extend the life of its reactors should geopolitical volatility and the EU's pivot from Russian gas require it, CEO Ignacio Galán said April 27.

"The situation we are seeing today shows that self-sufficiency in Europe is crucial," Galán said on the company's first-quarter earnings call. "Renewables and nuclear are the main sources of sufficiency."

Spain is set to start shutting down its 7-GW nuclear fleet in 2027, when the first four reactors are scheduled to leave the grid. The closure of the last plants is agreed upon for 2035.

A seismic shift in energy policy across the European Union may yet extend those dates, mirroring developments seen in Belgium in March. Belgium was set to shut down its remaining four nuclear reactors in 2025, but lawmakers cited the Russian invasion of Ukraine as a factor in a last-ditch extension of two units through to 2035.

Spain has already placed its bet on renewables for its energy future, Galán said. "[Iberdrola's] nuclear power plants, nevertheless, are ready to operate as long as they are needed," the CEO added.

The remarks indicate a U-turn for Galán, who in 2018 said Spain could close its entire nuclear fleet before it reaches 40 years of operations without affecting the country's security of energy supply, Montel News reported at the time.

Iberdrola owns majority stakes in the Almaraz and Cofrentes nuclear plants in Spain and a 49% stake in the Trillo plant, all of which entered service in the 1980s. Other large nuclear operators in the country include Naturgy Energy Group SA, Endesa SA and EDP - Energias de Portugal SA.

Iberdrola would need support to shoulder the additional costs and investments needed for a potential extension, Galán said, likely from the Spanish government. Engie SA, the owner of Belgium's nuclear fleet, is requesting financial support from the Belgian state to deliver its lifetime extensions.

Nuclear moves into favor

Even staunchly anti-nuclear Germany, which will close its remaining nuclear plants this year, had briefly considered the idea of an extension to its three remaining plants in the early days of the war in Ukraine, but the country concluded that there was not enough time to do so safely.

In neighboring France, newly reelected President Emmanuel Macron has pledged to build six new reactors as the country bets on the technology for its energy independence and decarbonization.

The U.K. will build more nuclear capacity, the government confirmed in an energy security strategy in April. This will mean nuclear will account for about 25% of the country's projected power demand in 2050, according to the government.

As a result of the invasion of Ukraine, the European Union has pledged to end imports of Russian gas by 2027, which will require a significant transformation of the energy landscape in some countries, including Germany.

Russian state-owned PJSC Gazprom on April 27 said it had halted gas supplies to EU member states Poland and Bulgaria "due to non-payment in rubles," a move described by European Commission President Ursula von der Leyen as "blackmail."

Seen as a homegrown, low-carbon energy source, nuclear provides an alternative to Russian gas in some markets, but Europe is still reliant on Russia for much of its imported nuclear fuel. About 40% of the EU's uranium comes from Russia and neighboring Kazakhstan.

Nuclear energy was controversially included in the EU's sustainable finance taxonomy as a transition technology, just three weeks before the invasion of Ukraine.

Appetite from sustainability-minded investors for nuclear was already on the rise as a result, market experts told S&P Global Commodity Insights at the time. Since the war, concerns about energy independence have made the debate around nuclear's climate credentials "obsolete," according to some observers.

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