LONDON (Reuters) - Nuclear power has become hard to justify as the shale gas revolution creates an abundance of natural gas that makes it the fuel of choice to back up renewables, the chief executive of General Electric told the Financial Times on Monday.
A sharp rise in shale gas production in North America in the past five years has pulled U.S. natural gas prices down close to 10-year lows and could turn the country into a gas exporter soon.
Large conventional offshore gas findings in Europe and Africa in the past two years, vast existing reserves in Russia and Central Asia and increasing production in Australia also mean gas is abundant elsewhere as well.
At the same time, nuclear power has come under pressure following the meltdown at Japan’s Fukushima reactor during the March 2011 earthquake and tsunami, with countries such as Germany and Switzerland pulling out of nuclear power generation.
“They’re finding more gas all the time. It’s just hard to justify nuclear. Gas is so cheap and at some point, economics rule,” the newspaper quoted GE CEO Jeff Immelt as saying in an interview on Monday.
GE is one of the world’s leading power generation engineering companies and, together with Japan’s Hitachi, is also active in designing and building nuclear reactors.
“It’s really a gas and wind world today,” said Immelt, referring to two sources of electricity he said most countries were shifting towards as natural gas became “permanently cheap”.
Solar and wind power, aided by component price drops and government subsidies, have made renewable power more competitive during the higher priced peak demand hours (usually 0800 to 2000 local time).
Immelt said that because GE was active in all forms of power generation, such a shift in production trends would have a limited impact on the company.
“We’ve got them all, so in some ways when you have them all you don’t have to be so smart about anything,” he said.
Reporting by Henning Gloystein, editing by Jane Baird