Italy’s lesson: Paying for Nuclear Energy You Don’t Have

by Alberto Perego

Italy is the only G8 member that doesn’t use nuclear power plants for electricity generation. Germany is on the way of phasing out nuclear, and some other countries in Europe and beyond are considering following Germany’s example. Italy stopped its NPPs a while ago. In this article, I would like to look at the cost of this policy and who paid the bill.

Brief history of nuclear power in Italy and its two referendums

After WWII, Italy developed nuclear power plants with help from the US and the UK. Throughout the 1960’s, Italy’s economy was booming and cheap electricity was key to further develop the manufacturing sector[i]. The country’s reserves of coal, oil and gas were poor. Hence, nuclear energy seemed the perfect solution to provide this rapidly growing economy with cheap electricity.

The construction of the first civil reactor began in Latina, not far from Rome. It was the British Magnox gas-cooled reactor. In 1959, General Electrics started to build a boiling water reactor near Garigliano in central Italy. In 1961, the construction of another reactor began in Trino Vercellese in Piedmont – it was the Westinghouse pressurized reactor[ii]. (Figure 1).

Italy Nuclear

Figure 1. Italy’s Nuclear Power Plants

During this first step in nuclear power development, there were several private entities working in NPP construction. However, in 1962 following the nationalization of the electricity sector and the creation of Enel[i], the nuclear plants were soon transferred to the new national company. Enel absorbed the existing plants and planned a new one – the Caorso plant in Emilia-Romagna (Figure 1). Construction started in 1970, and by 1978 the plant already delivered electricity to the national grid.

There were quite some protests against nuclear power in the late 1970’s. Despite this, the plans to expand nuclear generation capacity were approved in the 1980’s. Enel aimed at standardizing the plants using the Westinghouse design. In 1986, the Parliament approved the energy plan, which entailed an even stronger development of nuclear power in the country. However, one month later the Chernobyl nuclear disaster happened, and this was perceived as the confirmation that nuclear was an unsafe energy source by the already nuclear adverse Italian population. A National Conference on Energy was created with the aim of evaluating the nuclear program. Technicians were generally in favour of continuing with the nuclear program, but a referendum in November 1987 prompted the government to terminate the program.

The turnover was huge, and the majority was neat. What was incredible, for a country known for the lethargy of its bureaucracy, and for the huge quantity of red tape enveloping every aspect of life, was the speed with which the authority complied with the referendum outcome. Already in December 1987, the Latina plant was closed. Later, it was decided to convert the plant near Montalto di Castro, which was almost operative, to a conventional power station. Moreover, in July 1990, the decision was taken to finally shut down the two remaining operational reactors at Caorso and at Trino Vercellese.

Between 1999 and 2001, the government created a special company called Sogin[ii], with the task of safely dismantling the power plants. The company is 100% owned by the Ministry of Economy, and its record at decommissioning the power plants so far is quite poor. This low decommissioning record is partially because different political forces held the government of the country, and all had different ideas on whether nuclear plants should be in the country, resulting in a continuous change of plans.

In fact, the energy law adopted in 2004 by the pro nuclear right wing government brought about the possibility of a nuclear revival in Italy. However, seven years later, in 2011 the referendum scheduled to endorse the new nuclear investments[iii] gave once again a negative verdict for the development of this energy source in Italy. The referendum took place a few months after the Fukushima nuclear disaster, and the vote was clearly cast against restarting nuclear investments in the country.

This led to the following peculiar paradox. Italy imported about 15% of its demanded electricity from nuclear power plants abroad, mostly from France, while sitting on four perfectly functional domestic reactors. In the last years, thanks to development of gas turbines and renewables, imported nuclear electricity decreased to 10% of the total electricity consumed. However, electricity prices in Italy are still higher than the average European price.

An estimated cost of the “sudden” Italian de-nuclearization

It is a sad irony, that the cost of nuclear plants created to produce cheap electricity for Italian industry was higher than savings from the use of electricity actually produced. It’s been estimated that the nuclear decommissioning will cost about 20 billion Euro up to 2032[iv], when the dismantling should be over. This will be paid by the Italian taxpayers. The structure of this sum is as follows.

  • The fixed costs of Sogin are about 100 million Euro a year for the actual decommissioning, and a similar amount for keeping the company going.
  • Italy will probably pay sanctions of about 50-60 million Euro to France and the UK for failing to retrieve its nuclear waste from their deposits by 2019.
  • Moreover, the construction of the Italian national deposit is set to cost about 900 million Euro.

These numbers already lead us to an approximate total of 10 billion Euro (while in 2014, it was planned to finish the dismantling in 2032 with costs of around 7 billion Euro). But we must also consider that once Italians voted to denuclearize, they paid a compensation fee to Enel in their energy bills for the loss of the investments in the nuclear sector. This compensation is of about 7 to 8 billion Euro, making the total costs of denuclearization of about 20 billion Euro.

The process is also moving rather slow. The decommissioning company that was created according to the decision of the 1987 referendum only was operational in 2001. Then all sort of delays took place, including, as we said, those involving the attempts aimed at bringing nuclear power back. We can only imagine the scale of delays that are yet to come.

Lesson learned

The story of Italy can be a good example for other countries considering to denuclearize. For instance, Germany is set to close its plants within the next decade. Most probably, thanks to their Teutonic precision and management, the Germans will do a more efficient job at dismantling nuclear power plants. Moreover, they are set to dismantle nuclear after developing substantial generation capacity using renewable energy sources. Germany today has a more balanced nuclear phase-out policy[v] (with adequate substitute options) than Italy of the 1980ies. The cautionary halting of twelve nuclear power plants in France at the end of January[vi] shows that wide concern for nuclear safety is still in the air, even in nuclear friendly France. France was second in the world in 2015 in terms of its nuclear power generation[vii], and seems set to retain its 58 nuclear power plants as the main source of electricity generation in the country.

Indeed, the main lesson that could be taken from Italy’s story is to plan carefully, and not to rush in decommissioning nuclear power plants on the wave of emotions, destroying long term investments and strategic national energy plans in a few days.

 

Alberto Perego is a student at ENERPO Program, European University at Saint Petersburg. He can be contacted via email aperego@eu.spb.ru

[i] The post WWII Italian economic boom and its reasons is a well-studied phenomenon. Among many others a valid reference could be: V. CASTRONOVO, Storia economica d’Italia. Dall’Ottocento ai giorni nostri, Giulio Einaudi editore, Torino, 2006

[ii] World Nuclear Association, Italy Country Profile. The chronology of the development of nuclear plants in Italy is taken from the Nuclear association description of Italy from a nuclear prospective. Website last accessed on the 9th March, 2017: http://www.world-nuclear.org/information-library/country-profiles/countries-g-n/italy.aspx

[iii] History of Enel taken from Enel official website at: https://www.enel.com/en/aboutus.html

[iv] History of Sogin taken from Sogin website at: http://www.sogin.it/en/organization/organization.html

[v] The Italian 2011 referendum as descripted by the Economist http://www.economist.com/blogs/newsbook/2011/06/italys-referendums

[vi] Stefano Agno “Nucleare, la storia infinita di Sogin. I reattori italiani? Sono ancora tutti lì” February 6, 2017. http://www.corriere.it/economia/finanza_e_risparmio/17_febbraio_06/nucleare-storia-infinita-sogin-reattori-italiani-sono-ancora-tutti-li-c1e74870-ec5f-11e6-b0dc-72bd53481b5d.shtml

[vii] The German denuclearization policy is partially due to the Fukushima nuclear disaster, but also to a wider policy of energy transition taking place called “Energiewende. For more: https://book.energytransition.org/

[viii] Bate Felix “France was net power importer for second straight month in January” February 24, 2017 http://www.reuters.com/article/france-power-idUSL8N1G92GH

[ix] Data from the BP Statistical Review of World Energy 2016

 

 

 

 

 

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