Admiral Frank L. (Skip) BowmanUSN (Retired)

President and CEONuclear Energy Institute

December 3, 2007

The Resurgence of Nuclear Power

Briefing to the Nuclear Science and Engineering Department at Massachusetts Institute of

Technology

Today’s Briefing

Nuclear Power — Today and Tomorrow

Opportunities

Challenges — “Yes we need more nuclear, but …

… what about safety?”

… what about used fuel?”

… what about proliferation?”

… what about the infrastructure?”

… what about the cost?”

NuclearPower — Today and Tomorrow

Sources of U.S. Electricity20.0% Natural Gas

Low construction costVolatile fuel cost

Combined cycle capacity factor: 39.9%Steam plant capacity factor: 17.2%

Emissions: NOx, CO2

Source: Global Energy Decisions / Energy Information Administration

1.6% Oil Volatile fuel cost

Capacity factor: 14.9%Emissions: SO2, NOx, CO2

3.1% Renewables (and Other)

Very high construction costNo fuel cost

Capacity factor: 26.8%Emissions: None

49% CoalHigh construction costCapacity factor: 71.1%

Emissions: SO2, NOx, CO2,

particulates, mercury, toxic metals

19.4% Nuclear High construction cost

Stable fuel costCapacity factor: 89.6%

Emissions: None

7.0% HydroLarge-scale opportunities gone

No fuel costCapacity factor: 31.8%

Emissions: None

(2006)

Nuclear Power in the United States — Today

104 operating commercial reactors (102 operating naval reactors)

Stable and affordable production costs 1.7 cents/KWh 90% average capacity factor 20% of US electricity supply with 12% of the installed

capacity

Used fuel safely stored on 64 sites Zero emissions during electricity production Valuable business assets Safe and secure operations No proliferation risk from commercial nuclear

fuel

What’s Driving the Interest in New Nuclear?

Growing need for baseload generation Near-term need for new generating

capacity (e.g., Northeast, mid-Atlantic, Southeast, South, Texas)

Increasing environmental concerns and potential controls on carbon emissions

Chronic volatility in natural gas prices Nuclear power safety record

Nuclear Power in the United States — Tomorrow Evolutionary advances of light water

reactors in use today Westinghouse AP 1000 General Electric - Hitachi ESBWR General Electric ABWR Areva EPR Mitsubishi US APWR

17 companies (or groups), 31 reactors 3 COLs for 5 reactors submitted to the

NRC, 1 or 2 more COLs expected in 2007

Opportunities

Growing appetite for clean, safe, affordable energy

Governors and other state and county officials express desire for new plants in their districts

Energy Policy Act of 2005: bipartisan support for new nuclear plant construction

Grassroots support: CASEnergy — “clean and safe energy”

Policymakers Support Nuclear Power

National Leadership Leaning Toward Nuclear Energy

“We also need to take advantage of clean safe nuclear power. Nuclear power is the one existing source of energy that can generate massive amounts of electricity without causing any air pollution or greenhouse gas emissions.”

President BushSeptember 28, 2007

“Nuclear power is almost the only answer for clean electricity to meet our growing needs. When I look at all the options, I think nuclear is the leading technology.”

Sen. Lamar Alexander (R-TN)January 28,2007

Strong Public Support Near Existing Plants

82% Favor

nuclear energy

81%Utility

protecting environment

86%Favorable impression of nearest

plant

Source: Bisconti Research Inc.

August 2007 poll of 1,152 U.S. adults; margin of error is +/- 3%

71%Willing tosee new reactor

built near them

86%Give

nuclearhigh safety

rating

Challenges

Yes, We Need Nuclear Energy, But …

“The vast majority of the members on my committee support nuclear power, and so do the majority in the Senate.… I don’t think there is any question that we are going to be seeing new plants.”

Sen. Barbara Boxer (D-CA)Chair, Environment and Public Works Committee

December 17, 2006

“The technology has changed, and I bring a more open mind to that subject now because I think we should look at this technology, and compare it to the alternatives.…It has to be on the table.”

House Speaker Nancy Pelosi (D-CA)February 8, 2006

“Nuclear power faces some difficult problems … there’s the waste problem … the cost problem … there are continuing safety issues …”

Sen. Hillary Clinton (D-NY)November 10, 2007

“Yes, But … What About Nuclear Safety?”

Nuclear critics say: “Inherently dangerous technology … no independent oversight … no way of knowing whether nuclear plants are safe.”

Nuclear Safety

Safety is our highest priorityOperating practices and process

Government/industry oversight

Outstanding safety performance shown by safety related metricsUnplanned shutdowns are at near-record

lows

Lost-time accident rates at record low levels

Forced plant outage rates and unplanned safety system actuations – all are down

“Defense in Depth” Safety Approach

Dedicated, talented, and professional workforce receives comprehensive integrated training and education and is fully qualified within rigorous standards

Plant design includes redundant, reliable safety systems

Strict knowledgeable procedural compliance Industry-wide database to catalog plant

operating experience so that the entire industry can learn from each plant’s operations

Multiple barriers to accidental radiation release

Nuclear Safety Process Nuclear Regulatory Commission

Resident and regional inspectors Baseline inspections—at least 2500 man-hours per year Key Performance Indicators Routine resident inspector walk-arounds GAO gave positive assessments of the NRC reactor

oversight process

Institute of Nuclear Power Operations On-site inspections once every two years, lasting two

weeks INPO team and industry peers inspect Exit interviews conducted by INPO Formal out brief with CEO, CNO, Site VP and General

Manager INPO CEO discusses evaluation score with utility CEO

“Yes, But … What About Used Fuel?”

Nuclear critics say: “Used fuel is a threat to publicsafety and to the environment … Nuclear plants have been operating for decades so there must be lots of used fuel piling up … Neither the industry nor the government know what to do with used fuel … There’s no plan …”

Simple Facts About Used Nuclear Fuel

Uranium is a highly concentrated source of energy: After 50 years of nuclear plant operation,

only small volume of used nuclear fuel Would cover one football field 7 yards deep

Solid, ceramic material: Easy to manage, store, monitor and secure

In 50 years of commercial operation, zero impact on public health or the environment

Deep Repository Plan

Once through fuel cycle Technically sound, secure and

safe Most countries with used nuclear

fuel use this plan (some with partial reprocessing)

Straight Talk About the Yucca Mountain Project

International scientific consensus (including U.S.

National Academy of Sciences): Optimum

approach is underground disposal in stable

geologic formations

$9-billion of independent research by America’s

top scientists has demonstrated Yucca Mountain

is suitable site for nuclear waste disposal

Before construction and operation, Yucca

Mountain project must be licensed by the

Nuclear Regulatory Commission

Three-Part Integrated Plan for Used Nuclear Fuel

Consolidated interim storage at centralized sites Conduct research and technology development to

demonstrate techniques to recycle used nuclear fuel Extract additional energy from used nuclear fuel Reduce volume and radiotoxicity of waste by-products

requiring permanent disposal Consolidate used nuclear fuel at future recycling

centers

Build and operate permanent disposal facility for waste by-products Repository monitored for 100-300 years to ensure

safety

“Yes, But …What About Nuclear Proliferation?”

Nuclear critics say: “We can’t have developing nations have access to nuclear power … it’s like giving them nuclear weapons …”

Preventing the Proliferation

of Nuclear Weapons

Global mission that requires the transparent participation and cooperation of all nations

Material accountability, physical security and monitoring is the basis of international nonproliferation policy

IAEA safeguards program verifies a country is living up to the agreement not to use commercial nuclear programs for nuclear weapons purposes

The commercial use of nuclear technology is vital for generating cleanelectricity, diagnosing diseases and treating cancer, sterilizing medical equipment, irradiating food products, and hundreds of other purposes.

Misuse of Uranium Enrichment or Recycling Facilities

Uranium used in nuclear power plants CANNOT be used to make a nuclear weapon

Uranium enrichment or reprocessing used fuel can yield sufficient material for nuclear weapons, however… International protocols ensure facilities are

not used as “covers” to disguise production of highly enriched uranium

Reprocessing can be conducted in a way that does not result in a pure plutonium byproduct

The IAEA monitors and inspects fuel cycle facilities

Ensuring Non-Proliferation Today

Nations and companies that already have enrichment and reprocessing capabilities can provide an assured supply of fuel to other nations seeking to develop commercial nuclear technology

Additional expensive and exploitable uranium enrichment and reprocessing facilities would not have to be built

U.S. nuclear plants already make a significant contribution to nonproliferation

Megatons to Megawatts program is a 20-year, $8 billion government/industry partnership

Since 1993 uranium from the equivalent of 11,000 Russian warheads has been used to produce electricity

Fuel is used to produce 10 % of all of the electricity in the United States

“Yes, But … What About the Infrastructure?”

Nuclear critics say: “We stopped building nuclear power plants 30 years ago … there are no U.S. manufacturers to supply materials and no skilled workforce to build the new plants …”

Infrastructure: Workforce Resurgence of interest in nuclear careers most

notably evidenced by the rapidly increasing enrollments in nuclear engineering programs Undergraduate enrollments grew from just 470 in

1998 to 1,933 in 2007 Graduate enrollments also climbed from 220 in 1998

to 1,153 in 2007

America Competes Act creates the framework for addressing challenges in the Science, Technology, Engineering and Math workforce

Each new plant that is built will require between 1,400 and 1,800 workers for construction and between 400 and 700 workers for operation – these are great jobs!

Repatriating jobs in the manufacturing sector

Infrastructure: Manufacturing

17 companies or consortia have announced that they are developing combined license applications for up to 31 new nuclear reactors

Major investments are underway in long-lead procurement items and should force expansion of U.S. manufacturing capability

More vendors and manufacturers are expressing interest in entering the commercial nuclear industry and some have taken the next step and applied for and/or received their N-stamp

Recently Babcock & Wilcox and Peter Kiewit renewed their nuclear accreditation

“Yes, But …What Aboutthe Cost of Nuclear Power?”

Nuclear critics say, “Nuclear power costs too much … Nuclear power can only survive because it’s heavily subsidized … New nuclear power plants are too costly and cannot compete…”

Fast Facts About Nuclear Power Economics

104 operating nuclear power plants are lowest-cost source of baseload (24-by-7) electricity Stable fuel costs Higher (90% average) availability than any other

source of electricity Nuclear power plants are immune to …

Volatility in fossil fuel prices Increasingly stringent controls on air pollutants and

carbon dioxide emissions New nuclear power plants will be competitive

with other sources of clean electricity All energy sources are subsidized (because

energy supply is a public good) Nuclear energy is not the most heavily subsidized

0.0

2.0

4.0

6.0

8.0

10.0

1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006

Coal - 2.37Gas - 6.75Nuclear - 1.72Petroleum - 9.63

U.S. Electricity Production Costs

1995-2006

Production Costs = Operations and Maintenance Costs + Fuel CostsSource: Global Energy Decisions

Operating Nuclear Plants

centsper

kwh($2006)

Average nuclear plant production costs have declined more than 30 percent over

past 10 years

New Nuclear Power Plants:Competitive with Other Sources

All baseload technologies have high capital cost Capital cost less important than lifetime operating cost

Total nuclear operating cost comparable to advanced coal-based plants and better than gas-fired plants

Renewables do not compete with nuclear Nuclear Baseload 24-by-7 (90% availability) Wind Intermittent (30% availability)

New nuclear benefits justify use of investment support Federal government Support for debt financing through

loan guarantees State governments Assurance of investment recovery

through rates

A portfolio of fuels, technologies is essential to meet U.S. energy security, environmental

goals

All Energy Sources Are Subsidized

Since energy crises of the 1970s, federal government spending on R&D (1976-2006)*

Nuclear $4.2 billionCoal $5.9 billionRenewables $7.3 billion

Federal expenditures on energy (R&D, tax benefits, etc.) since 1950

Oil and natural gas $435.9 billionCoal $93.4 billionHydro $80.5 billionNuclear $64.7 billionRenewables $43.9 billionGeothermal $6.4 billion

* Management Information Services, Inc., Federal Expenditures on Energy 1950-2006, November 2007

Energy Policy Act of 2005:Investment Stimulus for New

Plants Federal loan guarantee

Not nuclear-specific: All clean energy sources qualify Reduces cost of capital and cost of electricity

Federal delay insurance $2 billion of coverage for first six new nuclear plants Covers delays beyond the private sector’s control

Production tax credit Provides emission-free nuclear power with similar tax

treatment as renewables

Price-Anderson Act renewal Over $10 billion industry-funded accident insurance

protecting the public

Subsidy or No Subsidy?Sub-si-dy (sub’si dé). n., a direct financial aid

furnished by a government to a private commercial enterprise

Incentive in Energy Policy Act

How the Program OperatesSubsidy or No Subsidy?

Loan Guarantee

Program is self-financing: Private sector pays cost to federal government of issuing loan guarantee, plus all administrative fees

No subsidy

Delay Insurance

Program operates like commercial insurance: Private sector pays Department of Energy a premium to receive coverage

No subsidy

Production Tax Credit

Unlike production tax credit for renewables, nuclear tax credit is limited to 6,000 megawatts of capacity, is not indexed for inflation

Limited subsidy

Price-Anderson Insurance

Federal government has never paid a claim under Price-Anderson. Insurance program is financed by nuclear industry.

No subsidy

Return on Investment The True Measure of a Subsidy

2005 Energy Policy Act provides $6 billion of tax credits to new nuclear plants: Is it worth it?

Benefit of a typical nuclear power plant over its 40-year operating lifetime: $27.5 billion to $32 billion Local, state and federal taxes Salaries to personnel who operate the plant

and indirect employment that results Value of the electricity produced by the plant

$6 billion investment by the taxpayer produces $165 billion to $192 billion* in value

Subsidies: A Rational Perspective

Subsidies are an essential part of American life

(subsidy is not a pejorative)

Subsidies encourage production of goods and services that serve the public interest and general welfare

For example, federal government manages a $1.1 trillion loan guarantee portfolio

Loan guarantees widely used to ensure development of critical infrastructure

“[I]t is the interest of the society … to submit to a temporary expense, which is more than compensated by an increase of industry and wealth, by an augmentation of resources and independence, and by the circumstance of eventual cheapness …” Alexander Hamilton, Report on Manufactures, December 1791

Conclusions

What’s in Our Future? "The future ain't what it used to be." Yogi

Berra

Solid base of political and public support Nuclear is recognized as essential part of

U.S. electricity supply Industry must address

challenges/preconceived ideas 15 to 20 COLs by the end of 2008 6 to 8 plants start construction 2010 - 2011 4 to 6 more start construction 2012 - 2015 10 to 14 plants on line by 2020

An Energy Policy forAn Energy Secure Nation

Implement energy efficiency and conservation in all phases of electricity generation and use

Employ renewable energy sources to the full extent possible

Rely on proven, large-scale, emission-free energy sources for baseload generation

Questions ?