Virtual presentation to the EUAA CLimate Change briefing in Sydney
TRANSCRIPT
Edward KeeVice President
Sydney [live Web connection with Washington]
20 August 2009
Global Nuclear Power
EUAA National Climate Change Briefing
Presenter
Presentation Notes
Apologies that I cannot attend in person. I am aware that nuclear power is not consistent with current government policy in Australia, however, there is a lot going on in other parts of the world. My aim is to provide some insights into nuclear power as input into the Australian debate
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Disclaimer
The slides that follow do not provide a complete record of this presentation and discussion.
The views expressed in this presentation are mine; these views may not be the same as those held by our clients or by my colleagues.
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New nuclear power
Electricity without fossil fuel or emissions– Energy independence (e.g., France, Japan, Korea)
– Clean and carbon-free (e.g., Scandinavia and US)
May not be low-cost resource without carbon credits– High capital costs offset by stable and low energy costs
– Upward pressure on electricity prices to recover capital investment
Vendor/design market shake-out underway– Only a handful of new designs under construction; fewer in operation
– Winning vendors/designs determined in next decade
– More units sold early more orders learning curve/supply chain
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Nuclear opinion polls
22%
43%
35%
Support Don't know Oppose
“Should your country start using or increase the use of nuclear power?”
- March 2009
“Do you support or oppose Australia developing nuclear power plants for the generation of electricity?” - 27 Jan 2009
29%
57%
55%
62%
67%
40%
24%
33%
29%
29%
31%
19%
12%
9%
4%
0% 100%
World
USA
S. Africa
China
India
Yes Yes, if concerns addressed No
Presenter
Presentation Notes
Accenture’s poll has US favorable of 57%, with another 24% of Americans would support nuclear if their concerns were addressed (for a total of 81%). The “concerns” in the Accenture poll are related to safety, used fuel disposition, protection from terrorism, and link between nuclear power and nuclear weapons proliferation.
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Uranium (5% enriched) CoalFuel 3 kg
(300 cubic cm)400,000 kg
(265 cubic meters)
Waste 3 kg (no reprocessing) 0.1 kg or 10 cubic cm (with
reprocessing)
1,090,000 kg of CO2, NOx, SOx, particulates,
ash, arsenic, mercury, etc
Energy Density
Producing 1 GWh of electricity requires:
Presenter
Presentation Notes
Nuclear power is the conversion of mass into energy when a large uranium atom fissions into 2 or more smaller atoms - a small amount of mass difference creates a large amount of energy Fossil fuel combustion is relatively low energy density chemical reaction Compared to coal, nuclear power Uses a tiny amount of fuel Produces a tiny amount of waste that is highly regulated and controlled
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Nuclear energy = green?
Exelon Energy -Emission-Free Energy Certificate (EFEC) – energy is from nuclear, wind, and other carbon-free sources
RWE - ProCLimate 2011 in Germany – nuclear and hydro at fixed prices
Atoomstroom.nl -nuclear energy retailer in Netherlands – CO2 free and subsidy free nuclear
Presenter
Presentation Notes
In the US and other countries there is a debate about whether nuclear energy is clean, green, or even renewable. These terms may be defined in laws, tax codes, and other places and usually do not include nuclear In reality, policy debates may implicitly link renewables to clean electricity (i.e., no CO2 emissions), even though some renewables emit CO2 (e.g., biomass and waste) Exelon Energy announced “Emission-Free Energy Certificate (EFEC)” in early 2009; energy is from nuclear, wind and other carbon-free generation; customers can claim carbon-free energy use RWE ProCLimate 2011 offers carbon-free energy in Germany (mix of nuclear and hydro) that comes with a 3-year price freeze (result of stable generation costs) Atoomstroom.nl sells “Clean, CO2-free, subsidy-free” nuclear energy in Netherlands. Greenpeace challenged ads with Dutch regulator; “Clean” was not allowed (due to nuclear waste), but “CO2-free” and “subsidy-free” were allowed. Atoomstroom customers get a tiny “nuclear waste” container for their keychain – this is the estimated amount of nuclear waste produced in a year for a typical household
Overnight capital cost ESTIMATES from public reports
Presenter
Presentation Notes
These are estimates only; too soon to tell what the final installed costs will be. Finland’s OL-3 project, with significant First-of-a-Kind issues, has costs that have already gone well over the fixed price contract signed by AREVA NP, with several years of construction remaining.
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Nuclear carbon control
1,041
622
46 39 18 17 15 14
Coal Natural Gas Biomass Solar PV Hydro Nuclear Geothermal Wind
Life-cycle tons of CO2 equivalent per GWh
Source: "Life-Cycle Assessment of Electricity Generation Systems and Applications for Climate Change Policy Analysis," Paul J. Meier, University of Wisconsin-Madison, August 2002.
Not easy to monetise nuclear CO2 benefits
Uncertainty may delay or stop investment
Presenter
Presentation Notes
Nuclear may not be low-cost option without including value of reducing carbon emissions; but there is still no way to monetise CO2 reductions from nuclear An ad-hoc approach to carbon control might mean some higher electricity prices for nuclear (benefit, for sure), but not the clear and predictable revenue that some other carbon reduction approaches might provide Uncertainty of timing and amount of carbon reduction benefits is problem, given timing and size of a nuclear plant investment. Life cycle output of nuclear typically 15 to 25 tons per GWh – some extreme analyses of nuclear life-cycle CO2 emissions push this to a higher number – much lower than coal or gas, the only other large scale utility power plants
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Nuclear vs. other options
Source: "The Economics of Nuclear Reactors,” Mark Cooper, June 2009, p. 56Notes: US dollars and cents; Circle size and number are estimated construction time in months
Presenter
Presentation Notes
The Cooper study developed this graphic presentation of “levelised electricity cost” information from a June 2008 report by Lazard. My comments on the Lazard report assumptions: Nuclear capital cost lower than some estimates (but much higher than Russian/Chinese units) Coal with CCS has technical, environmental and cost issues to be resolved The capital cost of some renewable options are lower than real projects The capacity factors of some intermittent renewable options, particularly solar and wind, are much higher than actual project experience would suggest The renewable system integration costs and costs of “firming up” intermittent renewable generation sources is not included
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Nuclear power plant design
Vendors competing to become a world standard design – Identical pre-approved designs at multiple sites around the world
– Long production lines for components; sharing of strategic spares, etc
– Replicate nuclear fleet approach in France and US nuclear navy
– 50Hz units dominate now; fewer North American 60 Hz units
Most operating commercial
power reactors
Early Prototypes
Generation IGeneration II
1950 2000 2005 2010 2020
Gen IV
Evolutionary LWRs with advanced safety and other features
Generation III+
20151995
Presenter
Presentation Notes
Gen III+ reactor designs are evolutionary, based on decades of Gen II experience and learning; involves improved fuel technology, enhanced and passive safety systems, standardised design approach. Industry moving toward standardised power plants; allows use of pre-approved and proven designs at multiple sites, replicate nuclear fleet approach in France and US nuclear navy International vendors competing to be the world standard – market success is the measure While the new Generation III+ designs are incremental and build on prior experience, these designs have unproven costs, schedule, and operating performance. Generation IV includes new and different designs (e.g., HTGR/PBMR). Still in R&D or pre-commercial phase
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Global nuclear construction starts (MWe)
Gen III
Gen II
2000 - 2008 2009 - 2018
AP1000 EPR ABWR VVER CPR1000
Presenter
Presentation Notes
Size of the bubble is MWe – for example the CPR-1000 bubble in the “2009 - 2018” column is about 47,000 MWe (about half of current US nuclear capacity) These units started (or are scheduled to start) construction in: - 1/1/2000 to end of 2008 - recent projects that are now under construction ([i.e., does not include some long-term stalled construction projects) - 1/1/2009 to end of 2018 - assumes that ALL US COL applications result in first-wave construction starts (not likely to happen) and that Chinese and Russian plans proceed (likely to happen) The US is focused on a small number of Generation III plants, only a few of which may proceed to construction start in the next decade. The Chinese are now building a large number of Generation II units, while developing a Generation III design based on the AP1000.
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Under Const. (16 units, 14,517 MWe)
Sanmen 2 x AP1000
YangJiang 6 x CPR1000
Hongyanhe (WaFangDian) 4 x CPR-1000
Qinshan IV 2 x CNP-600
Ningde 6 x CPR1000
Fuqing 6 x CPR1000
Fangjiashan / Qinshan V 2 x CPR1000
Shidaowan 1 x HTR-PM (200 MW PBMR)
Operating (11 units, 8,587 MWe)
Daya Bay 2 x 944 MW PWR
Qinshan I II III 1 x 279 MW PWR, 2 x CNP-600, 2 x CANDU-6
Tianwan 4 x AES 91 VVER
LingAo 4 x CPR1000
Beijing
Taishan 2 x EPR
Bailong 6 x CPR1000
Changjiang / Hainan Island 2 x CNP-600
, 4 x CPR1000
Planned (59 units, 60,219 MWe)
HaiYang 6 x AP1000
Rushan / Hongshiding 6 x CPR1000
Lianyungang 6 x CPR1000
Wuhu / Bamaoshan 6 x CPR1000
Xianning 4 x CPR1000China
Presenter
Presentation Notes
China has pervasive state ownership and control of the electricity sector, with multiple companies and multiple levels of ownership. Large capacity expansion in electricity sector; major role for nuclear Localisation of nuclear power plant and supporting industry is key strategy China’s approach will have multiple fleets of several designs (CPR-1000, CNP-600, AP1000, etc.) Aggressive moves to secure uranium supplies There are at least 20 more units (a mix of Generation II CPR1000 units and AP1000 units) that have been mentioned in the press that that may appear in the “planned” category in the next year or so
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Russia
Moscow
Bilibino 4 x 11 MWe LWGR
Operating (31 units, 21,983 MWe)
Rostov/Volgodonsk 2 x 950 MWe VVER
Smolensk 3 x 925 MWe RBMK
Kola 4 x 411 MWe VVER
Beloyarsk 1 x BN600
Leningrad 4 x 925 MWe RBMK
Kalinin 4 x 950 MWe VVER
Kursk 5 x 925 MWe RBMK
Novovoronezh 2 x 385 MWe, 1 x 950 MWe VVER
Balakovo 5 x 950 MWe VVER
Severodvinsk 2 x 40 MWe KLT PWR
Under Const. (9 units, 6,755 MWe)
, 4 x 1200 MWe VVER
, 2 x 1200 MWe VVER
, 1 x BN800
Planned (11 units, 13,200 MWe)
Nishhegorod 1x 1200 MWe VVER
, 2 x 1200 MWe VVER
Baltic/Kaliningrad 2 x 1200 MWe VVER
Tver 1x 1200 MWe VVER
Sversk/Tomsk 1 x1200 MWe VVER
Presenter
Presentation Notes
In 2007, about 130 Russian nuclear companies and entities combined into the State Atomic Corporation (Rosatom) as a new state monopoly Rosatom controls the entire nuclear industry, including fuel, R&D, construction, major equipment, operating power plants, and other activities. Rosatom plans to build new nuclear plants inside Russia and to sell (through its Atomstroyexport subsidiary) nuclear plants into the export market (e.g., China, Iran, Eastern Europe, etc.). Rosatom and Atomstroyexport VVER reactors are comparable to Western Generation III+ PWR designs. The new Russian VVER designs have a proven record of on-budget and on-time delivery and are considered a viable alternative to Western vendors in Middle East and Asia.
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Operating (17 units, 3,779 MWe)
Narora 2 x 202 MWe PHWR
Rajasthan 1 x 90, 1 x 187, 4 x 202 MWe PHWR
Kakrapar 2 x 202 MWe PHWR
Tarapur 2 x 150 MWe BWR, 2 x 490 MWe PHWR
Kaiga 4 x 202 MWe PHWR
Madras/Kalpakkam 2 x 202 MWe PHWR
India
Under Const. (6 units, 2,910 MWe)
Kudankulam 2 x 917 MWe VVER
, 1 x 470 MWe FBR
Planned (10 units, 11,360 MWe)
Jaitapur 2 x 1600 MWe PWR
, 2 x 640 MWe PHWR
, 2 x 640 MWe PHWR
, 2 x 1600 MWe PWR
, 2 x 1200 MWe VVER
Presenter
Presentation Notes
Nuclear Power Corporation of India, Limited (NCPIL) is the sole owner and developer of all nuclear power plants in India. Existing Indian nuclear units are mostly PHWR/CANDU design India’s plans are to have 20,000 MWe of nuclear power by 2020 and 25% of electricity from nuclear by 2050. Very ambitious, given the progress to date. Developing a thorium nuclear fuel cycle design to allow use of India’s large thorium reserves, rather than import uranium Recent nuclear trade deal opens door to new development – aside from purchases of uranium and additional Russian VVER units, still too early to see results
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Middle East and North Africa
Proposed Planned Under construction
Presenter
Presentation Notes
Iran - Russian VVER at Bushehr is in pre-operational testing – this nuclear power generation unit is ill-suited to any use in a weapons programme UAE is moving briskly and with resolve; expected to announce procurement decision soon (3Q 2009 is target); may start construction as early as 2010 Turkey - Russian nuclear IPP/BOO deal in last stages of negotiations. Turkey to take and buy power – Rosatom/ASE will build, own, and operate the plant; this is the Rosatom preferred approach to nuclear development in countries without an existing nuclear power programme Jordan and Egypt - looking to take next steps; some public tenders for advisors Eskom’s new nuclear project was shelved at the end of 2008 as a result of global financial issues and uncertainties of the 2009 South African elections
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Role of Government
All existing nuclear power plants were built with government/public ownership or support
– Government or government utility owner
– Regulated utility owner
Most of the world new nuclear build is by governments (China, Russia, etc.)
Some existing units operate as merchants (e.g., Constellation, Entergy, Exelon in US, BE in UK)
Unclear if there is a feasible merchant power plant model for new nuclear, even with government assistance (e.g., US DOE Loan Guarantees)
Presenter
Presentation Notes
You probably noticed that the activity in the four prior slides involves governments or government utilities investing in new nuclear power plants. In China and Russia, government companies are also building the nuclear power plants. Electricity markets have yet to demonstrate that they will provide consistent and timely incentives for new large baseload power plants, much less for a nuclear plant. A new nuclear power plant has High capital cost & capital intensity (i.e., low operating costs) Long development and construction period (may be more than 10 years) 60+ years of operation (much longer than the typical 25-year project finance deal) A long tail of internalized decommissioning and spent fuel disposal costs
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Gen III market share in US
Source: EDK analysis, Aug 2009
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2
2
2
2
2
0 2 4 6 8 10 12 14 16
ESBWR
APWR
ABWR
EPR
AP1000
In operation Under construction Development Planned
?
Presenter
Presentation Notes
All these projects are options; many will not be built in the first wave (i.e., start construction in 2012); some will be built in a second wave, and some will never be built. AP1000 is way ahead in the US EPR units have merchant commercial viability issues ABWR units also merchant project GE’s ESBWR remains on this list, even though there is no activity on processing the NRC license applications and little prospect of this design being built in the foreseeable future
In operation Under construction Development Planned
& &
Presenter
Presentation Notes
VVER units are a combination of the AES-91/92 1,000 MWe units and the newer AES-2006 1,200 MWe units ABWR units include the operating units in Japan, the units under construction at Lungmen, and the units planned in Japan In the next year, there will be some developments that will change this chart, as the UAE makes a vendor selection, France may start another EPR project, and some Eastern European projects become firmer.
New construction approaches– Lessons from Areva OL-3/TVO – nuclear build is not easy
– Modular construction – how & who & where?
Technical issues still unresolved– Passive safety approach
– All-digital Instrumentation & Control
– Very large single-unit turbine generators
Operational performance– New round of latent defects?
– French N4 design experience
Presenter
Presentation Notes
The new Generation III+ nuclear power plant designs are based on several decades of experience, with millions of full-power hours of operation, hundreds of existing light-water power reactors in multiple countries. However, the companies and individuals that built the earlier generation of nuclear power plants are largely retired - a new set of companies and individuals must go down the learning curve. Also, the new Generation III+ units have different construction approaches that must be tested and refined in actual projects. And most importantly, these new designs have some new technical features that are not yet fully approved and tested in operation. The earlier generation of nuclear plants were designed really well, but there were issues with steam generators that only became apparent after years of full power operation (i.e., a latent defect).
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Rise of the i-nuke
Toshiba 4S (Super Safe, Small and Simple; 10 MWe)
Hyperion (25 MWe)
NuScale (40 MWe)
Presenter
Presentation Notes
Personal experience with consumer electronics has benefited from Moore’s Law - more capability in ever smaller phones, PCs, etc. - why not nuclear power plants? Moore’s law is about the number of transistors that will fit onto silicon chips, not about power generation Power involves large power plants and large transmission wires; higher thermal efficiency and lower electricity cost come from increases in size to benefit from scale economies Economies of scale still apply and apply strongly to nuclear power plants If micro-nuke designs include design/conceptual breakthroughs that result in significantly lower fixed capital cost or fixed operating costs, these designs might be able to produce electricity at lower costs than Generation III nuclear plants. Any US NRC approval of these designs is uncertain and would not be final until more than 10 years from now, despite press releases
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Nuclear renaissance – overtaken by events?
Economic depression/recessionDifficult to finance any large capital projectElectricity demand lower, need for new capacity lower/laterNatural gas cheaper, increased use for electricity generation
Climate change policy (in US)Emphasis on renewable energyNuclear not in stimulus bill or energy billsCarbon benefits for nuclear remain unclear
High capital cost estimatesConservative, so less chance of cost overrunsNuclear power economics not so good
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US second wave projects
US COL & DC filings
First US COL approvals
US first wave project COD
US first wave construction begins
UAE vendor selection
China, Finland & EdF
building
20102008 2020
OL-3 EPR COD
First UAE unit COD
First Chinese AP1000 COD
Flamanville EPR COD
2015
Many uncertainties about new nuclear resolved – much lower risk for 2nd
wave investors
US second wave construction starts
Presenter
Presentation Notes
Second-wave strategy benefits come from additional information that is available from the experience with first-wave projects. First-wave projects will not be completed and placed into in commercial operation until 2018 or later, even though a few may start construction in 2012 Most important information is on the success of designs/vendors – no buyer of a nuclear plant wants to have “orphan technology” Strategy, if capacity needs allow, seems to favor a second wave that starts in about 2020
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Pro-Nuclear Anti-Nuclear
Capital costs: Past lessons were learned; nuclear can be competitive
Cost overruns and delays will happen again; OL-3 is proof
Performance: Excellent recent performance; best ever
Long outages and issues with some units remain
Nuclear CO2: Carbon-free energy Life-cycle C02 emissions
Spent fuel: Current on-site approach is fine; 50 years with no problem
Need million-year solution before building any new plant
Weapons: National policy and IAEA Nuclear power = nuclear weapons
Safety: Very high level of safety TMI, Chernobyl, “close calls”
Nuclear Spin
Presenter
Presentation Notes
In the nuclear power industry, there is little information about the new nuclear plants. So, it is important to understand the spin. Nuclear industry proponents have a very difference story than industry opponents. The lack of real information means that spin gets a lot of attention
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What’s my spin?
Nuclear power needed to control CO2
Nuclear power is good technology; but expensive to build, operate and maintain to meet current high level of safety and reliability
Very large capital investment– High operating margins once operational
– 60-year or longer operating life
– Commercial projects difficult
– Governments role may be required
Presenter
Presentation Notes
If global warming is a problem that can be solved by lowering emissions of CO2 from the power sector, it is hard to see how this will happen without extensive development of new nuclear power plants (in addition to clean renewables, conservation, and other measures) The experience over the last 2 decades has shown that, with an appropriate safety culture, nuclear power plants can operate very safely and very reliably. The fixed operating costs are high, but balanced by the low fuel cost. Biggest problem is the high capital cost. The electricity industry has moved toward electricity markets and market-driven power plant investments. It may not be easy or even possible to develop a new nuclear power plant as a commercial, market-based project. More likely, government will have to play a role, even if this is only to provide low-cost, long-term loans or loan guarantees. The countries that have decided that the proper role for government is to build, own and operate nuclear power plants (e.g., China) are moving ahead smartly.
The Sanmen 1 AP1000 site in China in July 2009. Placing this first and largest module, one of hundreds that will be built off-site and installed in the plant, is a key step in the construction process. The extra-heavy-lift traveling crane is one of the world’s largest. The safety-related concrete pour (the industry measure of the start of construction) happened about 2 months earlier and construction is proceeding at a fast pace.
