Euratom report focuses on security of fuel supply

Analysis of Nuclear Fuel Availability at EU Level from a Security of Supply Perspective, a report from the ESA Advisory Committee Working Group on Prices and Security of Supply, is dated March 2020 and was released by the agency on 4 May. The report identifies the threats and restrictions which could potentially jeopardise the availability of nuclear fuel and the provision of electricity at affordable prices to all EU consumers. It updates a previous report published in 2015.

The working group methodology assessed risks from threats to supply and demand balance, commercial and technical causes, and political and regulatory causes. Each risk was rated according to its probability, the scale of its likely consequences and the duration of its impact on supply. This allowed the group to draw up a ranked list of the 10 most significant risks to security of supply.

Fuel supply and inventories continue to be sufficient to ensure stable operations of all nuclear power plants in the EU, the report concludes. However, the situation of some fuel market sectors has not improved since the publication of the 2015 risk report, it says. The 'top three' risks identified in the latest report - a lack of transport hubs open to nuclear shipments; lack of investments in conversion facilities; and the permanent reduction of production and withdrawal from uranium exploration - differ from those identified in 2015, which were a lack of investment in new mines, overdependence on a single source of supply, and a lack of harmonisation and over-regulation in transport authorisation.

The transport sector - which the authors of the 2020 report say is "often unnoticed by end users" - is exposed to various challenges which can easily endanger the security of supply, the report says. Difficulty finding transport companies or ports to receive nuclear material shipments is becoming the main problem for transportation, making it increasingly expensive and more complex.

Installed UF6 conversion capacity has significantly exceeded demand for years, the report says, and together with the extensive use of secondary supplies has resulted in depressed prices which in turn has led some conversion facilities to stop production and others to produce well below their nominal capacity. Investment in new capacity, however, requires stable and sustainable prices as constructing and licensing such facilities can take 10 years or more.

"If the supply is reduced and not replaced, this may lead not only to an imbalance in supply and demand in terms of volumes, but also to a reduction in the diversification of the supply sources," it notes.

The third highest risk - a permanent reduction of production and withdrawal from uranium exploration - is mainly the result of economic constraint, the report found. Currently, the supply of uranium concentrates is plentiful and prices are stable and low, but this can lead to a reduction in production by the mining industry to stabilise or push prices up by avoiding further excess production. Low prices also hamper the desire to invest in exploration, which is needed to discover and construct new mines to replace exhausted production and meet future demand growth.

"When market conditions are unfavourable, the mining company may decide to reduce production, put a mine under care and maintenance or shut it down for good. … If the impact on market prices is not as expected, a permanent closure of the mine will follow a first reduction of production. The lack of investment in new mines and withdrawal from uranium exploration may have consequences on the market in the medium and long-term, leading to an imbalanced market between production and demand of uranium.

Recommendations

 
The two major measures utilities should take to mitigate supply chain risks are maintaining an appropriate strategic inventory level and diversifying supply, the report says.

Regarding transport, simplifying procedures and reducing administrative burdens would save time and resources, while developing a project for licensing the companies transporting nuclear material that is common for the territory of all EU countries could reduce the administrative burden and lead to more cost-effective and less time-consuming shipments, it says. To address the specific issue of a lack of transport hubs open to nuclear shipments, it recommends putting in place alternative routes as well as the use of dedicated charter vessels.

"It is also important to make different stakeholders aware of the excellent safety record of the transport of radioactive materials," it says.

The maintenance of "appropriate levels" of inventories by EU utilities and producers would mitigate risks of nuclear fuel supply shortages in the short term, but long-term investments in new facilities are needed, it adds.

ESA is mandated under the Euratom Treaty to ensure that all users in the EU receive a regular and equitable supply of ores and nuclear fuels. Members of the Working Group on Prices and Security of Supply are drawn from nuclear generators and fuel cycle companies from various EU countries.