Stephen O'Sullivan

Managing Director, Energy Research
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Europe’s energy security “trilemma”: Nuclear scores well

The current crisis in Ukraine, and the associated potential for a disruption in gas supplies from Russia, has highlighted the near-term risk of power and heating outages in parts of Central and Eastern Europe this winter and sparked renewed debate over how to improve overall European energy security. In an interview he gave during a visit to Serbia on 15 October, President Vladimir Putin made clear that the present price dispute with Ukraine risked resulting in a repeat of the January 2009 gas crisis that produced a freezing fortnight for the countries most exposed to the Ukrainian transit pipeline. The European Commission has reported the results of a “stress test” exercise that models a cut off of Russian gas supplies to Europe through Ukraine and, in a still more serious scenario, via all other pipeline routes. These results depict an improved picture in comparison with 2009 thanks to expanded storage capacity and interconnectivity – while at the same time highlighting the underlying challenges of security of supply.

Gas, Russia – not the whole story

This is therefore a good time to take stock of the subject of European energy security in the round. There is much more to this challenge than Russia and gas. The first and most fundamental perspective to establish must be that energy security is only one of three components of an optimal energy policy, the other two factors being the cost of energy to consumers, and reduced environmental impact (in particular lower carbon emissions). No fuel can singlehandedly resolve this European energy “trilemma”: all the fuels in the current energy mix can help to solve some of these problems, while at the same time creating others.

It follows that nuclear is no more a panacea than any other fuel. But a close look at nuclear suggests that despite the antipathy towards it in some countries it can certainly form one element of the balance that is required to optimize Europe’s energy economy – and even that the horns of the trilemma might be blunted were nuclear to increase its share in Europe’s energy mix.

Hydrocarbons: Oil, coal, gas

The main source of security of supply risks is that Europe’s energy mix will continue to be dominated for decades to come by hydrocarbons – increasing shares of which, owing to indigenous production declines outpacing energy conservation efforts, need to be imported. In 2012 the EU28 countries imported 53% of their energy needs, with oil imports making up 30% of this total, gas 15% and solid fuels 7%.

90% of all oil consumed in Europe – and vital for the transport sector – is imported, while the import share of coal consumption is only 40% (though 60% for hard coal). The energy security risk of this import dependency is low given liquid global markets for these two commodities with multiple suppliers. Coal has the additional advantage of being relatively inexpensive, with the average price falling by a third in the past year to as low as US$70/tonne.

On the other hand, oil is relatively expensive (even after recent price falls) and polluting, while coal is highly polluting – hence the EU’s Large Combustion Plant Directive mandating the closure of many coal-fired power plants by 2018.

Among the hydrocarbons, gas is demonstrably the least harmful to the environment. The problem for gas in Europe is security of supply and price. The EU28 countries import 66% of their gas and around half of those imports come from Russia. Much of these gas imports come through pipelines and the inherent risks of this inflexible transport infrastructure are highlighted by the transit pipeline through Ukraine during the present crisis. The ability of Europe’s significant LNG receiving capacity (up to 200bcma) to offset this risk is constrained by rising costs owing to robust Asian demand for LNG and patchy connections between coastal regasification plants and the European hinterland.

As for price, the continuing link between gas prices and oil prices, although gradually breaking down, has created a price environment that leaves the fuel uncompetitive relative to coal.


This last point is relevant to renewables. Against their obvious advantages – environmental above all, and also avoiding dependence on imports – must be weighed not only high installation costs (in particular offshore wind and solar PV) and associated subsidy requirements but also renewables’ own security of supply issues resulting from the intermittency of solar and wind power.

This intermittency requires base load power to plug the gap. That job is increasingly been done by coal which, owing to price falls, is displacing gas as a fuel for electricity generation. The result is increased carbon emissions in Germany and other countries that have accelerated renewable energy development – in effect preventing the full benefits of renewables being felt. The difficulties of the trilemma are very clear in this case.


This background highlights the role that nuclear energy can play as a reliable source of base load power that creates no carbon emissions: the sector already contributes 13% of the EU’s energy supply and 27% of its electricity generation via 131 units located in 16 countries. The choice of nuclear power as an option in the power generation sector is a multi-layered and often controversial issue with the following main elements:

  • Safety – both in operations and waste disposal.
  • High capital costs and consequent financing difficulties for many countries.
  • Complexity of plant operations and the associated need for experienced management – which is a barrier to entry for countries new to nuclear power.
  • Security of supply issues connected with the need to import fuel (the EU imports 95% of its uranium requirement) and the difficulty for competing suppliers of fuel rods of replicating the intellectual property in reactor designs.

An important finding of this study is that the risks of politically motivated abuse of market power in the nuclear sector are negligible.

  • Although there is a security of supply risk stemming from the industry’s inveterate proneness to delays and cost overruns, our analysis suggests that there is very little likelihood of such delays being politically motivated.
  • The problems of politicization of contract awards for reactor design and construction and dependency on a foreign operator (especially in the case of Build-Operate-Own contracts such as awarded to Russian suppliers in the case of Turkey’s Akkuyu plant) can be offset by transparent procurement processes. The experience of the Czech Republic’s Temelin nuclear power plant contrasts favourably here with the way that the Hungarian and Bulgarian authorities have dealt with Russian and US suppliers in their respective Paks and Kozloduy projects.
  • Once a plant has been completed the risks reduce sharply:
  • In general, any contractor who was seen to be heavily influenced by political considerations would soon find itself with no future contracts;
  • The market for uranium fuel is competitive – so, as with oil, heavy import dependency entails no security of supply risk;
  • The provision of fuel rods is also competitive. Any dependency stemming from unique reactor features such as the hexagonal shape of the fuel rods in Russian-designed VVER reactors can be mitigated by increased fuel storage or by consumers encouraging alternative suppliers of one and the same fuel assembly design to invest in production capacity;
  • There will of course be a cost to this strategy of diversifying sources of fuel supply; but the price of security of supply is one that needs to be addressed across all fuels in the European energy mix, not just nuclear power.

As things stand in the nuclear sector the present balance of market and regulatory forces would appear to be functioning adequately from the perspective of energy security. The biggest challenge to the nuclear supply industry is not security of supply concerns but the question of cost competitiveness; and as with the gas sector, a combination of regulatory pressure that encourages market forces to operate efficiently would appear to be the optimal way forward.

If you would like to receive a copy of a detailed report that we have produced on this subject, please contact Raphaela Wendorff at

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