Financial Investment in Nuclear Plants in the Philippines

By: Ed Francis B. Escopete

• Introduction

Due to an increase in the human population in the Philippines for the last few years, the demand for essential goods has also increased, particularly electricity. With the increasing consumption of energy, the production demand for energy increases measurably. Most nations rely primarily on fossil fuels for the generation of electricity to obtain sustainable energy as seen in Figure 1, but in recent years, this has put our planet at risk of climate change and environmental harm due to its emission of carbon dioxide. Therefore, implementing an alternative way of producing energy through nuclear power and its carbon-free resource can help provide the Philippines with a sustainable energy source and a clean air environment. [1]. 

Figure 1: World consumption of energy resources both renewable and non-renewable [2].

Nevertheless, the cost of nuclear energy is its main drawback, especially in the beginning. The rapidly increasing cost estimates for the construction of reactors is one such issue that makes it more difficult to obtain investor funding and is specific to the nuclear industry [3]. That is why the Nuclear Plant that is located in Bataan was never put into operation because of financial struggle and safety issues related to earthquakes.

• Dangers of Nuclear

Nuclear power plants produce waste that is radioactive and dangerous to any nearby living things, although it is a carbon-free source of energy. High radiation exposure can also be fatal. Uranium is served as a material for reactors to generate electricity and is extremely hot and radioactive [1], however, the waste that was produced from nuclear can be contained, unlike any energy source. Due to mechanical failure, enormous quantities of radioactive elements were released into the environment in an incident that happened in 1974 and damaged a significant number of properties in the area. In addition to those already under government control, the Nuclear Regulatory Commission was established to oversee all nuclear plants and materials [4].

• Financial Challenges of Nuclear Power Plants

As mentioned in the introduction capital cost of building a Nuclear Power Plant in the Philippines and its geographic location. According to [5] three factors determine a project's viability and life-cycle costs: (i) the investment cost, (ii) the operational costs, and (iii) the discount rate utilized. Building a new nuclear plant can cost anywhere and although it seems to have risen over the past few years from one nation to another. Its cost factor varies from location, cooling water availability, seismic activity, labor and material costs, as well as the cost of capital.

• Contribution of Investments in Nuclear Plants

According to [6] the data gathered from 15 countries with the most percentage usage of nuclear energy as shown in Table 1, was used to ascertain the impact of nuclear energy investments on economic and financial development.

Table 1: 15 Countries with Highest Nuclear Energy Usage

Therefore, when a country focuses on providing investments in nuclear plants the economy of that certain country will gain a small increase in economic growth and can produce its electricity independently by reducing the imports of energy from other countries. It then provides financial development thanks to the use of nuclear energy.

• Conclusion

In conclusion, the study's primary goal is to determine the advantages of financial investments for the construction of nuclear power plants in the Philippines and how those investments will help the nation. By doing so, it can not only solve or lessen the energy crisis the nation is currently experiencing despite its excessive population growth and consumption levels; but also improve the environment's air quality. We cannot, however, ignore the difficulties and drawbacks of developing this alternative energy source. Perhaps in the near future, the nation will make plans to build a plant with a secure location and enough funding.

• References

[1] G. Lewis, “Fossil Fuels vs. Energy,” March 2017

[2] N. Albokhari, “Electricity: Nuclear vs. Fossil,” March 2017

[3] C. Zau, “Financing of Nuclear Power Plants: Traditional Government Funding and the Alternative Methods,” March 2018

[4] J. Mak, “Nuclear Safety in the United States,” March 2017

[5] H. Khatib and C. Difiglio, “Economics of nuclear and renewables,” April 2016

[6] Dinçer, H., Yüksel, S., Çağlayan, Ç., & Uluer, G. S. (2020). “The Contribution of Nuclear Energy Investment on Sustainable Financial and Economic Development.”  Journal of Financial Economics and Banking, 1(1), 39–51.