The Dutch pension fund PME is keen to invest in nuclear investment but this must be in partnership with the Dutch government, due to it being such a “risky investment”.

The pension fund, for those working in the tech and metal industry, has published a position paper on investing in nuclear energy in the wake of the publication of the Dutch National Energy System Plan, which looks to scale up the use of nuclear energy in the Netherlands. In addition, mitigating climate change and promoting the energy transition are key themes chosen by PME as part of its impact investing strategy.

Currently, the Netherlands uses a mix of wind and solar energy in its transition to low greenhouse gas energy sources, but increasing electricity demand may lead to problems in security and supply during the 2030s.

In its position paper, PME noted that without nuclear power, renewable energy generation capacity will need to grow by 75 per cent by 2050 compared to 2020.

“That growth is stronger than the growth in electricity demand because the sun does not always shine and it is not always windy. In addition, for this reason, the base load energy system will have to be supported by electricity storage in (hydrogen) batteries,” the paper stated.

Currently, there is one nuclear energy power plant in the Netherlands, Borssele, which supplies around 3-4 per cent of the electricity used in the Netherlands. PME believes that given the urgency to switch to clean energy the construction of one or more nuclear power plants in the Netherlands is obvious.

“In doing so, PME emphasises that the commitment to the development of nuclear energy cannot be a cue to scale back on the goals with respect to other renewable energy sources, such as solar and wind. In this respect, nuclear power will eventually contribute to the complete switch to carbon-neutral energy sources,” it stated.

Making the case for nuclear energy, PME said the “manageable disadvantage” of radioactive waste and the high level of safety of nuclear power plants weigh into PME's positive view of nuclear energy as a stable addition to the energy mix.

“However, nuclear energy must be part of a broader Dutch energy vision, in which upgrading the electricity grid for current and future electricity supply is a basic condition,” is stated.

When it comes to financing, PME said the “high cost of construction and the long duration of construction make nuclear power plants a very risky investment”.

The paper continued: “Financing nuclear power plants requires a leading role of the state, which will have to assume a significant part of the risk in all phases of the nuclear power plant's life. Security of return is a basic requirement for PME so that funding also contributes to participants' pension accrual and pensioners.

“The construction of nuclear power plants takes a very long time and is very costly. It is precisely for these reasons that risk-return requirements are paramount in any financing of nuclear power.”

It therefore advocates for the use of a Regulated Asset Base (RAB) model to finance the construction of nuclear power plants. In this model, private parties bear the investment, and receive a fixed ‘fair return’ (the RAB fee) from the start of construction.In the RAB model, at each stage, the primary risk is shared between the state and the financing market party or parties.

“The RAB fee provides a reasonable level of costs and return for the investor. In the other models, the risk for each phase alternates between the state, the market, and partly both. In the participation model, the state fully finances the nuclear power plant itself. State involvement in the construction of nuclear power plants is an important prerequisite; without state funding, projects of this magnitude cannot be realised,” PME stated.

In a survey of its participants, PME found that 63 per cent are in favour of investing in nuclear energy, while 16 per cent would not. The remaining respondents are neutral or have no opinion.

“In addition to the quantitative participant survey, PME holds focus groups with participants, retirees and employers. PME also organises retiree meetings where the topic of nuclear energy was discussed recently. The basic attitude toward nuclear energy is almost always positive among the majority of constituents. However, there are concerns about the yield, the risks, the safety of nuclear power plants and the problem of radioactive waste,” PME stated.

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