(Updated April 2014)
- Since the 'oil shocks' of the early 1970s, energy security has been a high priority in energy policy for many countries.
- With uncertain fuel prices it is also a factor for utilities in making investment decisions.
When the price of oil on world markets increased dramatically in 1973, several countries which were major energy importers reviewed their energy policies and took steps to reduce their vulnerability to political and economic uncertainties. France embarked upon a major program of nuclear power construction to replace most of its fossil fuel imports used for electricity, and Japan set out to diversify its electricity generation, including a significant proportion of nuclear power, alongside coal and gas.
The following graph on primary energy illustrates the dependence of some countries on net primary energy imports, and raises the question of supply and price vulnerability in those. It also shows the significance for four countries of net exports, with major economic implications and in one case political influence. But the import side is the point here:
France imports half of its net primary energy, and this is a significant justification for its heavy reliance on nuclear power for electricity, since uranium is a small part of the power cost. This policy of having three quarters of its electricity from nuclear power was set in 1973 – see Figure 2. France is a world leader in nuclear fuel cycle and reactor building, and uranium is easily stockpiled.
Germany imports more than half its net primary energy and in the past it has addressed this vulnerability with one third of electricity from nuclear, and also major incentives for renewables.
Japan imports nearly 85% of its primary energy and has framed energy policies in the light of this vulnerability. Its policy since the 1970s has been to have a balance among coal, gas and nuclear, with this changing since 2000 to increase the nuclear proportion. However, since the Fukushima accident this is being reviewed.
The UK imports less than 20% of its net primary energy, but this is set to increase with depletion of North Sea gas. Continuing a high reliance on gas would make it vulnerable to supply interruptions from Siberia and the Middle East.
The USA imports almost 20% of its net primary energy today (less than in the 2007 diagram), mostly as oil and gas, and this is regarded as having a major influence on its defence budget. The advent of low-cost shale gas is helping its situation in the short term.
Not shown in the Figure below, but also significant are:
Italy, which is the world’s largest net importer of electricity – 44 TWh net in 2010, about 15% of its consumption – which has been typical for a decade. Most of the imported power comes from French nuclear plants.
South Korea imports almost all of its energy and had a 12-fold increase in electricity demand from 1980 to 2009. It now gets 35% of its electricity from nuclear power while planning to increase this to 43% in 2020 and 59% by 2030.
Implications of energy imports
There are geopolitical, economic and availability implications of a country relying on energy imports. The early 1970s 'oil shocks' showed that fuel supplies from international sources could not be taken for granted. France’s response to this for its electricity generation is evident in the following graph.
Evolution of French Electricity Generation Mix
Today, much of the internationally-traded oil and gas comes from relatively few sources, and political instability there or in countries traversed by pipelines is a constant risk to supplies and hence a major economic vulnerability.
Coal supplies are more diverse geographically and less uncertain. Uranium is sourced from a still wider variety of countries geographically and politically, which gives it a very high rating in respect to energy security. It also comprises a very small part of the cost of power generation, so is a more affordable fuel to stockpile than fossil fuels.
In April 2014, following Russia’s annexation of Crimea, the Polish prime minister called for a Europe-wide energy union including a single body charged with purchasing gas supplies, as a means of confronting "Russia’s monopolistic position with a single European body charged with buying its gas". The dependence of at least ten of the EU’s 28 members on Russian state-controlled gas exporter Gazprom for more than half their consumption highlighted the need for greater EU infrastructure, notably gas interconnection and storage. Member states should work more closely together on energy infrastructure to guarantee the security of supplies and better utilise fossil fuel resources in eastern EU states, particularly coal and shale gas, he said. LNG imports from the USA and Australia should be used. The EU’s Euratom facilitates joint purchasing of uranium for nuclear power, showing what could happen with gas. Bilateral energy contracts should be made transparent and contract templates, along with a role for the European Commission, should be introduced. In the past seven years Poland had invested more than EUR 2 billion on gas storage and other infrastructure to diminish reliance on Russia.* It is also planning to build two large nuclear power plants totaling 6 GWe.
* Financial Times 21/4/14.
Uranium's low cost per unit of contained energy and its wide geographical and political availability do not remove all concerns regarding energy security. Some countries see the prospect of trade restrictions or transport disruptions affecting their security of supply, so seek to maximize not only indigenous sources of uranium (and other fuels) but also the transformation of uranium into reactor fuel – notably enrichment. But because so little uranium is needed to produce a large amount of electricity, and a few years supply is easily stockpiled, it is sometimes considered to be effectively an indigenous energy source.
Stockpiling fuels for electricity generation
Any country or power utility may see the need to stockpile reserves of fuel sufficient to endure a major political upheaval in a source country.
If this is a large reserve supply there are obvious constraints in both paying for it and storing it securely.
Most kinds of coal can be stored, but with over 3 million tonnes required annually for a 1000 MWe power plant, that storage has space, dust and visual implications. Natural gas can be stored underground, but capacity in most countries is not great – a few months’ supply at best. Uranium can very readily be stored long-term, and with only about 200 tonnes of natural uranium, or less than 30 tonnes of fabricated fuel, required per year for a 1000 MWe power plant, the advantage is obvious.