[ENG] Energy industry turned to nuclear power and LNG

Nuclear power is easing

The year 2022 was a time of great upheaval in the energy sector. Unprecedented increases in commodity and energy prices sent shockwaves throughout the world, forcing countries to change their energy mix. The EU’s ban on Russian energy commodities led to a scramble for alternative sources of crude and a surge in LNG imports. In this section, we examine global plans for the energy sector in the coming years, with a focus on nuclear power and LNG imports.

Reliable nuclear power in the EU is easing the energy crisis. Nuclear output in Europe dropped by 21% in 2022. This was the single energy source with lower generation comparing to 2021. Coal and natural gas output increased by 16% and 7% respectively. Nuclear output accounted for40.9% of total non-renewable power generation in the five biggest European economies (Fig. 1)and just of 29.8% installed power in December 2022. However, the outlook for 2023 is brighter.With the reopening of several reactors, France is again generating the biggest share of its energy from nuclear power, reducing the need for gas and helping to lower electricity prices.

Plans for nuclear are ambitious

The world increases nuclear power generation. France’s nuclear output should exceed 44GW, after the return of two reactors to standard work. Belgium and French energy producer ENGIE have agreed to extend the life of two nuclear reactors by 10 years, reversing a plan to stop using nuclear energy by 2025. Sweden is mulling simplifying the laws to build new nuclear power plants. South Korea is boosting its 2030 target for nuclear electricity generation from 24% to33% of total production.

Europe turned to LNG

During the energy crisis in 2022, gas generation increased due to stability issues in energy systems. Europe turned to LNG as an alternative to Russian gas. In January 2023, LNG should accountfor approximately 41% of total natural gas imports. A year ago, this was 30%. Secondly, almost70% of LNG exported by the US in 2022 was sent to Europe. The trend should continue in thecoming years. There are several terminals in Italy, Spain, Greece, Croatia, Poland, the UK and the Netherlands, but we observed many projects to increase LNG import capacity in Europe. Germanyrecently put into operation its first three new FSRU units, and three more are planned for 2023.

Europe - a major LNG purchaser

Europe is expected to be major purchaser of LNG until 2026. Its demand should increase by 68 billion cubic metres (44 million metric tonnes). The market will remain tight, with long-term supplies in high demand. European companies have signed 15 sale and purchase agreements for US LNG since 2021. In 2022 alone, we identified ten agreements, with estimated imports amounting to 24.4 bcm. In 2011-2022, there were 33 agreements of this kind. The US became the biggest exporter of LNG. Qatar will sign more long-term deals, too. There are also alternative sources; for example, British Shell will buy 1.1 bcm of LNG per year from Oman for 10 years, from2025. We can expect new announcements soon.

The text was published in CEE Economic Monthly 1/2023 on the 5th of February 2023.