Urenco Annual Report 2022

10 Urenco Annual report and accounts 2022 Improving market fundamentals for nuclear In 2021, the increasing urgency of net zero, as highlighted during COP26, contributed to greater acceptance that nuclear needs to be part of the solution in achieving net zero goals. Following this, an energy crisis, initially precipitated by economies coming out of domestic COVID lockdowns, and then further exacerbated by Russia’s invasion of Ukraine in February 2022, refocused attention towards energy security as a priority. Nuclear power is firmly back on the agenda as economies seek to decarbonise and boost their energy independence. Several nations, fromJapan to South Korea to the United States, have made policy changes on nuclear power over the past year amid soaring energy prices. The policy reversals range from extending the lives of the existing nuclear fleets, to embracing new build projects, both large scale reactors and SMRs. SWU price : the enrichment spot price was at its lowest point in August 2018 at US$34/SWU. Since then, the enrichment spot price has recovered, as reported by both Tradetech and UxC reaching US$110/SWU and US$125/ SWU respectively by the end of December 2022. Market impact caused by Russia’s invasion of Ukraine Russia’s invasion of Ukraine in February 2022 has had a tangible impact across the market, with an evident shift by utilities in countries with nuclear energy looking to diversify their nuclear fuel supply, including in Sweden and Finland. In the enrichment market, the average spot and long term enrichment prices (of Tradetech and UxC) increased fromUS$58.50/ SWU and US$64.00/SWU respectively in January 2022, to US$117/SWU and US$136/SWU respectively in December 2022, reflecting these newmarket dynamics. Non-Russian suppliers across the front- end fuel cycle have taken action during 2022 to ensure security of supply. For example, a number of uraniumminers have announced plans to reopen mothballed mines, as illustrated by Cameco’s announcement to restart uranium production at its McArthur River mine and Key Lake mill, idled since 2018 due to low demand. Cameco demonstrated their confidence in the future direction of the nuclear industry by taking a 49% stake inWestinghouse, with investment firmBrookfield Renewable Partners holding the rest.Westinghouse itself had been acquired fromToshiba by Brookfield Business Partners out of bankruptcy in 2018. Conversion capacity is also a critical element to providing security of supply. Alongside Converdyn’s ongoing plans to reopen its Metropolis facility in Q1 2023, Westinghouse is exploring reopening the conversion facility at Springfields in the UK. The market for nuclear in 2022 continued to build in momentum Markets overview Strategic report 01 Canada : During Canada’s Fall Economic Statement, SMRs were included amongst clean energy technologies eligible for a new investment tax credit.This is the clearest signal yet that Canada considers nuclear power to be on par with other low carbon technologies. USA : Significant support for the nuclear industry at the federal level was provided by the US Congress in the Inflation Reduction Act of 2022 (IRA) and the implementation of the Bipartisan Infrastructure Law’s Civil Nuclear Credit (CNC) program.The IRA provides a wide range of provisions to support the nuclear sector, including a production tax credit that will support continued operation of existing nuclear power plants with an estimated value of up to $30 billion over the next 10 years.This tax credit in the IRA is intended to avoid premature retirements of reactors due to financial challenges, which has forced around a dozen reactors to close.The IRA also includes $700million for the US Department of Energy’s efforts to support development of new domestic capacity to produce high assay low enriched uranium (HALEU) fuels for advanced reactors, research reactors and medical isotope production in the United States. The CNC is a $6 billion program to assist nuclear power plants at risk of closing, citing the need to continue the use of nuclear energy, which is the largest carbon-free energy source of power in the United States, to combat climate change. In California, PG&E became the first utility to receive a conditional award of credits valued up to $1.1 billion from the CNC program.This is to be used to extend operations at the Diablo Canyon Power Plant for five years beyond its current licence expiration in 2025. On the new build front, the Nuclear Regulatory Commission (NRC) gave Southern Nuclear Operating Company (SNC) the green light to load fuel and begin the operation of Vogtle-3. Unit-3 of the two unit new build project, the first to be built in the US in over 30 years, is expected to enter service in the first quarter 2023, with unit-4 following in the fourth quarter.