Russia Dominates Nuclear Energy Market

Russia Dominates Nuclear Energy Market
WikiImages / Pixabay

Global Risk Insights is the main source of the below article (original source written by Ian Armstrong)

Global sanctions may have affected the economy a little but Russian experience in providing nuclear energy to the world is the perfect plan B.

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Slowly yet surely, Russia is moving to build a global nuclear power empire that creates opportunities for the Kremlin that far outweigh the overall risks involved. After catching Western eyes off guard with its unanticipated adventures in Ukraine and Syria, Russia has shown a proclivity to pursue foreign policy agendas that are completely unpredictable to most observers. While bold military adventures have attracted a lot of interest from all concerned parties and the global audience in general, Russia is stealthily working on another strategy that may hold equally major implications: the strengthening of the Russian nuclear energy market in vital strategic locations all around the globe.

Recalling the stigma towards nuclear power following the Fukushima disaster, the notion of building a global nuclear energy-providing empire might initially seem to be a venture destined for failure, but if the Russian strategy is looked at carefully, it is not a desperate attempt to make extra cash at all. This ambition to become the first and foremost authority to cater to global nuclear energy needs has been flying under the radar for a long time, and it appears that Russia is on the verge of playing a key role in terms of providing strategically important countries with their nuclear energy needs. Just like its exploits in Ukraine and Syria, this newly-discovered ambition is likely to go on unchallenged.

One firm for all nuclear energy needs

Thus far, the strategy has been relatively straightforward. Russia’s nuclear energy program dates back to the advent of nuclear power. Established in 2007, the Rosatom State Atomic Energy Corporation is a behemoth and the only vendor in the world that is able to offer all products and services related to the nuclear industry.

Along with its regular commercial activities, Rosatom also acts as a governmental agent, following three major goals set by the Kremlin: ensure sustainable development of the Nuclear Weapons Complex; increase nuclear contribution in electricity generation; and strengthen the country’s position on the global market of nuclear technology by expanding traditional markets and winning new ones. In the last five years or so, Rosatom has quietly dominated the nuclear energy market, systematically and cleverly seeking out agreements and contracts with around 30 nations that have shown interest in the installation of nuclear power plants (NPPs).

In short, Russian nuclear diplomacy has penetrated the international stage in such a manner that its nuclear energy provision capabilities are now in demand, and this demand will continue to grow as time progresses. It is also interesting to note that countries that have signed on to Rosatom nuclear agreements span across all corners of the globe except for North America and Australia. Moreover, every signatory is strategically placed, so there is definitely more than meets the eye to these deals.

As of 2014, Russia had promised the construction of 29 reactors abroad, and Rosatom is confident that within a few years, the number will grow to around 80, which is not surprising to see considering how far ahead Russia is in nuclear energy provision. And although the likes of the United States and France have the right nuclear know-how to do exactly what Russia is doing, neither nation nor any entity outside of Russia has sought to really capitalize on the global demand for nuclear energy. Moreover, Russian dominance of the global nuclear energy sector has important geopolitical connotations, both in the medium and long term.

Nuclear energy to revive economy

Russia’s success at maintaining pre-Fukushima nuclear power agreements means that it has been able to broaden its international NPP roll-out in a manner that has changed the notion of the supposed decline of nuclear energy that was much discussed following the Fukushima disaster. And Moscow’s success in securing several NPP contracts is a clear indicator that in the coming years, nuclear energy requirements will rise and match renewable energy requirements on an equal footing.

Moreover, sending nuclear power to all corners of the globe gives Moscow plenty of economic gains. According to the U.S. Department of Commerce, Russia stands to gain around $740 billion in revenues through nuclear power technologies between now and 2025. Combined with the fact that Rosatom has no other comparable international competitor, it can make swaths of revenue for the Kremlin. Today, Russia’s otherwise-fractured economy is relying on oil and gas and now nuclear energy to hold things together.

Expanding influence through nuclear energy

Apart from reaping the economic benefits through multiple contracts around the world, Russia stands to gain a lot of geopolitical advantages through its nuclear power expansion strategy. Many local governments are likely to receive an economic boost through the Russian NPPs and will be fine with suturing to the Russian nuclear industry and as a result, to the Russian government.

One cannot understate or underestimate the influence Russia gains through each bilateral agreement. The construction timeline for any nuclear power plant is long term, which ensures Russia’s presence in the country it signs a nuclear contract with for a long time.

This is perhaps the reason why Moscow has been keen to share its nuclear energy progress with countries that are strategically placed on the globe. For instance, Russia has a “build-own-operate” nuclear power plant deal with Turkey in a mechanism through which it builds, owns and permanently operates a nuclear power plant. Through such mechanisms, Russian-built nuclear power plants bear a striking resemblance to embassies or even military bases. This long-term presence allows President Vladmir Putin to exert considerable influence in countries that are vital clogs of regional politics.

Such deals further undermine Western influence in states like Egypt, Turkey and Algeria while justifying Russia’s presence in these countries. Moreover, it will also provide unique intelligence-gathering opportunities to Moscow that otherwise will be risky and difficult to pull off. Countries will always rely upon Russian nuclear expertise for maintenance and operational purposes, even if most countries don’t sign on for the full build-own-operate package.

Who will challenge Russia’s nuclear hegemony?

As things stand, Russia is in a great position to continue expanding its nuclear power diplomacy unchallenged and use it perfectly to broaden its sphere of influence. However, it will not be surprising to see other capable nuclear powers emerge as competitors in the near future. For instance, the U.S. has shown interest in helping Pakistan in the nuclear energy sector. Although Pakistan has not been keen on the reported terms that have been put forth by Washington, it is a clear sign that the U.S. could aspire to become a competitor to Russia in the global nuclear energy market.

This past week, Chinese diplomats secured an agreement with the United Kingdom to commission a Chinese nuclear power plant in Essex. Although the deal is very modest compared with the ones Russia has sought, it might be a sign that slowly but surely, Russia will face competition even though most competitors have a lot of catching up to do.

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