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Nuclear Energy Market: A New Energy Crisis? - Erkin Sancarbaba

Due to the increase in geopolitical crises, countries have sought alternative policies to establish energy security. However, governments and the energy sector have mainly concentrated on feasibility and due diligence on oil and natural gas transmission. Of course, the search for alternative oil and natural gas transmission lines is of the essence. It will be in the interests of countries and companies to activate new, diversified and sustainable energy routes.

On the other hand, it is necessary to protect promising energy production methods from the effects of geopolitical crises. The sustainability of energy production facilities that have been implemented or are under construction should be ensured. Nuclear power plants are at the forefront of energy production facilities. It should not be forgotten that after installing nuclear power plants, an uninterrupted supply of nuclear fuel is required to maintain energy production in these facilities. It makes the continuity of the supply of nuclear fuel, namely uranium, an issue of energy supply security.

In the current global energy crisis, due to the problems in natural gas and oil supply and excessive price increases, policies implemented by Russia always take place in the discussion. However, when considering nuclear energy, Russia should not be placed at the center of the current threats when assessing the dangers to energy supply security. It must be admitted that Russia has a sphere of influence in the global nuclear power market because it has built and continues to build many nuclear power plants beyond its borders.

In 2021, 32 countries were operating 439 nuclear power reactors worldwide, producing about 10% of the world's total electricity supply. Of the 439 reactors mentioned above, 38 are located in Russia, and 42 are of Russian water-water energetic reactor (VVER) type and are in operation in various other countries (15 of them in Ukraine). Besides, by the end of 2021, 15 Russian-designed nuclear were under construction in different countries. In this direction, it is evident that Russian nuclear energy institutions and companies have a production capacity in and outside of Russia and know-how thanks to years of experience.

Uranium fabrication, enrichment, and conversion processes are highly complicated since very few companies have the technical capacity in this field. In addition, the fuels required for nuclear reactors are particular and vary according to the design of the reactors. Therefore, purchasing nuclear power plants from a small number of suppliers can lead to years of dependency on technology and supply.

When the global uranium suppliers are analyzed, it is revealed that Kazakhstan produces more than 40% of the global uranium supply, while other producers are Canada (12.6%), Australia (12.1%), and Namibia (10%). Russia's production corresponds to 5% of the global uranium supply, which makes Russia a minor actor. Thanks to its geopolitical position, Russia's influence in the nuclear energy market is not limited to reactor production. Most of the uranium ground in Kazakhstan, the leading producer, passes through Russia before reaching the global markets. Other parts of the supply chain also reach the global markets via Russia. Due to the situation above, Russia undertakes the task of being a logistics center in the supply of uranium, which is vital for nuclear power plants.

Another critical issue to be considered is converting ground uranium to uranium hexafluoride to enrich uranium. Very few facilities in the world can perform this process. Russia produced approximately one-third of the world's uranium hexafluoride supply in 2020, with the majority of uranium coming from Kazakhstan. Russia also has 43% of the global uranium enrichment capacity, followed by Europe (33%), China (16%), and the United States (7%).

In light of the developments in the energy sector, there is no doubt that the share of nuclear power plants in energy production will increase. It should not be forgotten that the construction of nuclear power plants and the fuel supply that will be required in the subsequent operational processes involve sophisticated processes. Nuclear energy requires governments and companies to have a dynamic roadmap. While managing the construction and production processes of nuclear power plants, which are a breakthrough for their countries, governments must also fulfill multidimensional and comprehensive diplomatic and political requirements. After the Ukraine Crisis, some countries have turned the current political crisis into an energy crisis by adopting an irrational attitude toward the natural gas and oil supply policies, which are directly related to the balances in their domestic markets. However, energy policies are strategically important, so they cannot be sacrificed to short-term and temporary political upheavals. Therefore, it is crucial for governments and companies to understand the importance of nuclear power plants and not to allow geopolitical crises to get in the way of long-term energy policies and sustainable energy production goals.


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