New Methods for Evaluating Energy Infrastructure Development Risks

Abstract

Many energy technologies that can provide reliable, low‐carbon electricity generation are confined to nations that have access to robust technical and economic capabilities, either on their own or through geopolitical alliances. Equally important, these nations maintain a degree of institutional capacity that could lower the risks associated with deploying emergent energy technologies such as advanced nuclear or carbon capture and storage. The complexity, expense, and scrutiny that come with building these facilities make them infeasible choices for most nations. This paradigm is slowly changing, as the pressing need for low‐carbon electricity generation and ongoing efforts to develop modular nuclear and carbon capture technologies have opened the door for potentially wider markets, including in nations without substantial institutional capacity. Here, using advanced nuclear technologies as our testbed, we develop new methods to evaluate national readiness for deploying complex energy infrastructure. Specifically, we use Data Envelopment Analysis—a method that eliminates the need for expert judgment—to benchmark performance across nations. We find that approximately 80% of new nuclear deployment occurs in nations that are in the top two quartiles of institutional and economic performance. However, 85% of potential low‐carbon electricity demand growth is in nations that are in the bottom two quartiles of performance. We offer iconic paradigms for deploying nuclear power in each of these clusters of nations if the goal is to mitigate risk. Our research helps redouble efforts by industry, regulators, and international development agencies to focus on areas where readiness is low and risk correspondingly higher.

Towards energy sustainability: Exploring the nexus between global value chain participation and energy security in developing and developed countries

“…There is a favorable relationship between income level and overall energy security indicators, except for energy intensity and emissions in developing countries and only emissions in developed countries. Generally, countries characterized by a greater GDP per capita place significant emphasis on energy security through the implementation of diversified energy sources, substantial investments in infrastructure, and the adoption of efficiency measures [ 54 , 55 ]. Based on the results regarding NI-FDI and energy security, shed light on the importance of FDI in order to improve energy security.…”

“…In general, higher GDP per capita is associated with higher energy consumption, as increased economic prosperity increases the demand for energy across all sectors of the economy [ 53 ]. A country’s ability to diversify its energy sources and invest in energy infrastructure can improve as its economy grows; however, this growth also increases the need to have access to consistent and secure energy sources [ 54 , 55 ]. Therefore, countries with higher GDP per capita emphasize energy security initiatives, such as the development of local energy resources, investment in energy efficiency measures, and diversification of energy supply sources.…”

Potential Early Markets for Fusion Energy

“…Building large infrastructure projects anywhere is risky, and such projects often go over their original budget and/or schedule. Considering energy factors such as how much clean energy a country already has, economic factors such as GDP, and institutional factors such as regulatory quality, a recent study [20] finds that 85% of demand growth will be in countries with below-median economic and institutional readiness. Fusion will find more success in these markets, and more rapidly, if plants are small and modular, so that their output can be more easily absorbed by the grid and they require less from the receiving country in terms of finance, construction, and oversight.…”

Realizing ambitions: A framework for iteratively assessing and communicating national decarbonization progress

“…Current energy-systems modeling doesn't generally capture one or more elements of this complexity. For example, Ford and Abdulla (2021) identify investments in energy infrastructure as facing different risk levels, and thus national readiness for deploying complex energy infrastructure needs to be evaluated, necessitating a change in development paradigm; Capros et al. (2019) call for energy-system modeling to take into account ambitions, policy feasibility, technological uncertainty, and required capability building in order to best inform EU strategy toward climate neutrality.…”