In an effort to dismantle longstanding interdependencies with Russia, the West is disrupting global energy markets because of the Ukraine war. Despite the disruptions affecting most notably the trade in natural gas and oil, they have also impacted the global nuclear energy market, resulting in unpredictable consequences for global energy security.
For their role in strengthening the Kremlin’s nuclear arsenal and supporting the occupation of Ukraine’s nuclear power plant Zaporizhzhia, Russia’s state-owned nuclear company Rosatom has been sanctioned by the United States, the UK and Ukraine. All European states with longstanding nuclear energy ties with Russia have already accelerated their efforts to break them, with Hungary being the only notable exception.
In particular, the Czech Republic, Slovakia, Bulgaria and Ukraine have all announced plans or signed agreements to switch to U.S.- and French-produced fuel for their Russian-origin VVER large light-water reactors. Likewise, Rosatom has been all but excluded from competition in those countries looking to build new reactors. In order to build its first nuclear reactors, it has signed deals with Westinghouse and KHNP.
Despite operating VVERs for many years, Ukraine is considering a new reactor unit, and the Czech Republic is considering a new reactor unit, choosing between Westinghouse, KHNP, and Framatome. NuScale, an Oregon-based company that will build the first U.S. small modular reactors with government support, appears to be interested in Romania becoming one of its first customers.
Those concerned with energy security and geopolitical leverage would see perfect sense in decoupling from Russian nuclear fuel and reactors. Disruptions in any energy sector can impose significant costs—and sometimes threaten supply stability. Western companies are unlikely to be able to serve as alternative suppliers in the nuclear industry.
There have been delays in building new nuclear power plants based on Westinghouse and Framatome reactors for more than a decade, and overruns have surpassed their multibillion-dollar budgets. Consequently, both companies have gone bankrupt. It is also uncertain whether they will be able to supply the current VVER reactors in Central and Eastern Europe with nuclear fuel of consistent quality.
Westinghouse had previously provided fuel assemblies that resulted in costly incidents in both the Czech Republic and Ukraine. Framatome, however, does not possess the expertise or experience to manufacture VVER fuel, so it has begun constructing a production line via a joint project with Rosatom which has been met with criticisms from German government officials. To demonstrate the capability of their goods and to allay worries regarding delivery timescales, Framatome stated that their products would mirror those designed by Russia, therefore circumventing usual licensing procedures, which usually take considerable effort. While these promises may assuage these stakeholders, it highlights how haste can lead to endangerment of safety protocols.
It is equally challenging for nuclear energy in the rest of the world to finance and build reactors, in particular. With a record of building and financing 34 reactors in 11 mostly developing countries in need of low-carbon, stable energy sources, Rosatom is the world’s largest nuclear energy exporter.
Russia attained numerous nuclear energy agreements, with highly subsidized financing that w
as beyond the reach of its three primary rival nations—the U.S., France and South Korea—as a result of their membership in the Organization for Economic Cooperation and Development (OECD).
However, stringent sanctions applied to Russian bodies and economic practices has made it difficult for Russia to supply funds for planned projects. What’s more, particular sanctions against subsidiaries and associates belonging to Rosatom could make conducting international dealings even harder if any funding can be obtained.
When Rosatom withdraws entirely from its overseas new-build commitments, South Korea may fill a small gap, but it is unclear whether and how quickly the country’s nuclear supply chain will recover from the previous administration’s phaseout policy. China may also make limited progress after the two Hualong One reactors it exported to Pakistan became operational, demonstrating their viability overseas.
Even if countries are willing to import Chinese reactors, it is unlikely that the Chinese nuclear industry will be able to meet domestic demand. Currently, China has the largest number of reactors under construction in the world, surpassing France with the world’s second-largest nuclear fleet. Ten new reactors have been approved since 2022.
In any case, Westinghouse and Framatome, as mentioned, have limited capacity and are occupied with their existing contracts in Eastern Europe, so there is no indication that other countries’ nuclear sectors will step up to fill the void. Furthermore, despite finding spare capacity, rising materials costs and interest rates—arguably the most significant cost factors in nuclear energy—are sure to make the existing cost issues worse.
The rise of SMRs has been hailed by policymakers as a potential game-changer, but the reactors have yet to clear regulatory hurdles, let alone be evaluated for commercial viability in an industry prone to cost overruns.
For NuScale’s first SMR project, inflationary pressures led to a 50 percent increase in estimates. It is unlikely that significant commercial construction of SMRs will take place before the end of this century, despite NuScale’s ambitions. In addition, many firms that market SMRs are just getting started, making them more susceptible to venture capital financing in recent months.
As a result of the war-precipitated energy crisis, one silver lining for the nuclear industry has been a pause or, in some cases, reversal of phaseouts in many traditionally nuclear-dependent countries and regions. The European Union considers nuclear investments climate-friendly as part of its REPowerEU plan to phase out Russian fossil fuels.
In contrast, Swiss politicians are advocating for the preservation of current nuclear outputs, while Belgium is delaying its phaseout date by a decade. By lowering nuclear energy’s percentage from 75 percent to 50 percent in the national mix, French legislators relieved the burden. The same package of legislative measures also analyzes the proposal for 14 French reactors and provides additional funding for advanced reactors and SMRs.
A global nuclear revival is taking place in Asia. South Korean President Yoon Suk Yeol reversed the phaseout policy of his predecessor and even urged the construction of more nuclear reactors, while Japanese Prime Minister Kishida Fumio plans to restart reactors closed since Fukushima. In South Korea, nuclear energy is expected to generate 35 percent of electricity by 2036, up from 27 percent now.
In the wake of recent events, the United States has placed an added emphasis on nuclear power. Ukraine’s conflict drove home the need to cultivate domestic uranium enrichment. Additionally, there is a marked advantage in bolstering American nuclear exports to regions like Eastern Europe which are desiring alternatives to Russian gas and favoring US-based sources such as alternative fuels and liquified natural gas instead.
Despite years of stagnation and decline, the nuclear industry in the U.S. and Europe has been given a new lease on life by the conflict in Ukraine. However, this may be their last chance. Rosatom’s monopoly in the global nuclear market has been shaken, resulting in a return to competitiveness, driven both by geopolitics and commercial interests.
Despite the chaotic reshuffle of the global market, the nuclear industry worldwide must avoid a race to the bottom. In spite of the temptation to sacrifice high standards for competitive advantage, nuclear exports must adhere to the standards of nuclear safety, security, and nonproliferation that have governed nuclear exports for decades and become more stringent, not less.
When considering climate change, it is important to keep an overall view. Nuclear energy is a reliable and carbon-free energy resource for many countries. To ensure its future, continuous improvements in things such as reactor technologies and fusion need to be developed along with global collaboration. For the nuclear industry to remain successful, it is imperative that safety, security, nonproliferation, and climate change be observed collectively.
