effective nuclear regulation from a utility perspective seminar “tuumaenergia efektiivne...

Effective Nuclear Regulation from a Utility Perspective

Seminar “Tuumaenergia efektiivne reguleerimine”, Tallinn, 26 February 2010

Dr. Christian RaetzkeE.ON Kernkraft, Hannover

2Christian Raetzke, Effective Nuclear Regulation 26 February 2010

Contents

Introduction: E.ON and Nuclear New Build

Part One: Some basics on regulation of nuclear power plants

Part Two: Nuclear Regulation from a utility‘s perspective: reducing regulatory risk

Part Three: Making use of international progress: design standardization

Part Four: Nuclear regulation trends in the EU


Introduction: E.ON and nuclear new build


E.ON Nuclear: Existing fleet

E.ON headquartersNPP operated by E.ON

NPP under dismantling and decommissioning

Installed capacity ≈ 11 GWEmployees ≈ 3.300Availability > 90 %

Power generation ≈ 80 TWh

21 units in operation (9 units operated by E.ON, 12 with minority shares)

5 units shut down / in decommissioning

NPPswith minority stakesNPPswith minority stakesNPPswith minority stakesNPP minority shares

Source: EKK (2008).


E.ON Nuclear: New Build Activities

Finland

UK

France

Italy

Sweden

►New build footprint in countries with well-established nuclear excellence


Project Development UK: Horizon NP

50/50-JV with RWE located in Gloucester Goal: appr. 6 000 MW by 2025 Acquisition of two sites: Oldbury and Wylfa Two reactor technologies under evaluation:

EPR (Areva), AP1000 (Westinghouse)

Gloucester

Status


Project Development Finland: Fennovoima Oy

JV with Finnish partners, E.ON as the nuclear „backbone“

Decision in Principle application submitted in January 2009

Decision by Finnish Government / Parliament expected in 2010

Two sites proposed: Simo and Pyhäjoki Three technologies under discussion:

EPR (Areva)KERENA (Areva)ABWR (Toshiba)

Simo

Pyhäjoki

Status


Dr. Michael Micklinghoff April 2009

Pre-selected reactor designs subjected to site-independent review activities at E.ON:

AP1000 (PWR)Westinghouse

KERENA (BWR) AREVA

EPR (PWR)AREVA

ABWR (BWR)Toshiba/Westinghouse


Part One: Regulation of nuclear power plants


Why is regulation of NPPs so specific? (1)

Safety

Demonstration of safety is paramount Exposure to radiation during normal operation Prevention of accidents with radiological consequences Long-term safety of waste/decommissioning

High international pressure and monitoring IAEA International conventions Peer reviews Pressure by EU and neighbouring states



Politics

Nuclear is highly political: licensing of NPP is not only an administrative procedure, but also a political issue

NPPs need a national infrastructure (nuclear regulatory system, waste concept, education facilities, supply chain, service companies etc.)

„Any expansion of a nuclear power programme will require strong and sustained government support“ (OECD Nuclear Energy Agency)

Licensing and supervision needs to be kept clear of day-to-day politics



Financing

Specifics of investment in NPP: higher share of investment in levelized electricity

generating costs higher cost of capital longer period of construction

It is crucial that regulatory and licensing risk is under control in order to give certainty to investors

► Predictable, streamlined, efficient and effective licensing process needed


Main elements of a system of nuclear law and regulation General framework

regulatory body regulatory functions

Radiation protection Nuclear safety

safety of nuclear installations emergency preparedness and response safety of radioactive waste and spent fuel

management transport of radioactive material other items

Nuclear liability and coverage Non-proliferation and physical protection


National Nuclear Law and Regulations: Hierarchy

International

Treaties

and

Agreements

Nuclear

Act

Decrees/Ordinances

Technical Regulations

Codes and Standards


Safety of nuclear installations: International standardsTechnical regulations for NPPs are set by each country nationally, but the following need to be taken into account:

IAEA safety standards Mandatory for IAEA itself and for its activities (for example review

missions) Not mandatory for member states However, member states are expected to take IAEA safety standards

as a benchmark/model

WENRA reference levels WENRA: Western European Nuclear Regulators` Association In 2006, definition of appr. 300 Reference Levels RLs are basis for harmonization of national safety requirements Voluntary implementation in national regulations by 2010


International conventions

Convention on Nuclear Safety Joint Convention (on the Safety of Spent Fuel Management

and on the Safety of Radioactive Waste Management) Non-Proliferation Treaty Vienna and Paris/Brussels conventions on nuclear liability etc.

Member states have to incorporate these treaties in their national law


IAEA

Most visible in safeguards/non-proliferation Safety standards are models/benchmarks for national

regulations IAEA gives advice to newcomer countries how to install a

nuclear regulatory framework IRRS (Integrated Regulatory Review Service) missions: peer

reviews of a regulator by a team of fellow regulators, resulting in recommendations


EURATOM

EURATOM Treaty 1957

Some legislation competences in the nuclear field

But: no European regulatory authority

Recent developments 2009 Directive setting up a Community framework for

nuclear safety ENEF, European Nuclear Energy Forum ENSREG, European Nuclear Safety Regulators Group


Part Two: Nuclear Regulation from a utility‘s perspective: reducing regulatory

risk

20Christian Raetzke, Effective Nuclear Regulation 26 February 2010 20

New World for Investment in Nuclear Power (1)

In earlier days TodayRegulated markets, guaranteed return on investment through fixed rates

Deregulated and competitive markets

State-owned utilities More and more utilities are private-owned (or at least managed to commercial principles)

One state-owned project owner Joint Venture, foreign investors invited

Investors need to be able to quantify risks, including regulatory and licensing risk, before making their

investment

New market conditions


New World for Investment in Nuclear Power (2)Globalization

Emerging of multinational utilities International vendors, standardization of designs Vendor is in most cases a foreign company Applicant/licensee may be controlled/owned by a foreign

utility Money comes from foreign utilities, banks or credit

guarantee agencies

Harmonization of regulations, critical review of national procedures and cooperation of governments and regulators is mandatory


What are the important issues for utilities today?Two main issues

1. Encouraging investment by reducing regulatory and licensing risk

2. Taking account of international aspects (indeed, profiting from them): standardization of designs multinational character of vendors and operators

These issues are closely related! Example: taking an internationally standardized design

facilitates the licensing procedure and makes it more predictable


Regulatory and licensing risk

licence(s) delayed delay in schedule cost overrun (financing costs)

substantial re-design required in licensing process

cost overrun, delays trouble with vendor

construction licence not granted loss of investment incurred till then

operating permit not granted stranded investment

licence(s) cancelled by law court delay (if amended licence is issued) loss of investment (if not)

Some risks and their consequences


Reducing regulatory risk

In order to mitigate those risks, the licensing and regulatory framework must ensure that decisions taken by the national regulators are

predictable proportionate stable in accordance with a pre-defined timescale nationally coordinated internationally aligned

The regulator must be strong with a clear policy, strong project management function, and adequate resources and staffing to deliver on its tasks


Policy decision about nuclear energyDecision in principle about a particular NPP project

Licensing process (construction and operating licence)

site applicant

Surveillance and inspection during operation

design

The long road to licensing of a nuclear power plant

Pre-licensing: designs and/or sites


Firm political decision („Decision in principle“)

A firm, legally binding basic decision on a project should be taken at the outset so that political issues are kept out of the licensing process, thus giving more certainty Finland: Decision in principle, endorsed by Parliament Switzerland: General Licence, endorsed by Parliament

and, as the case may be, by the People in a referendum


Pre-Licensing

Design certifications (owned by vendors)

Design 1

Design 2Design 3

Site licences (owned by utilities)

Site BSite A

Pre-licensing (project-neutral) Licensing of particular NPPs

Design 2

Applicant

Design 3

ApplicantSite B

Site A

NPP 1

NPP 2


Policy decisions and pre-licensing

(government incentives,e.g. loan guarantees)

design certificationearly site permit

US

UKWhite Paper

National Policy Statement

Multi-year plan on electricityproduction investment

Decision in principle

Generic Design Assessment(National Policy Statement)

(Generic letter on a designby ASN)

FIN

France

GER


Pre-Licensing in smaller countries?

For a smaller country with only one or two NPP projects, pre-licensing should also be considered

Disadvantages only one design will eventually be built review of several designs consumes resources

Advantages review of several designs keeps competition between

vendors open pre-licensing facilitates the take-over of design approvals

from other countries


Timeliness of licencing process

Sticking to a pre-agreed timeline is essential

Time is more important after start of construction work

What about Legal timelines? (“Decision about application must be taken xxx months after application is filed”)

For the political decision (decision in principle): probably not feasible

For nuclear licensing: Mandatory timelines are not a remedy for lengthy procedures They depend on a complete application being filed (which may be

subject to discussion) Consequences are doubtful (licence “deemed to be issued”?!?) Much more important:

►strong project management by government►strong staffing and resources of regulator (see UK)


Nuclear licensing: one-step or stepwise? (1)

The main investment decision has to be taken when construction begins. At this point in time, there must be certainty that operation will be allowed. This can be assured by issuing one licence for construction and operation only: US: Combined construction and operating licence, COL UK: Nuclear Site Licence France: The “autorisation de création”, issued by

decree of government, is the main licence. The operating permit, issued “only” by the authority, is a predictable milestone.


Nuclear licensing: one-step or stepwise? (2)

COL, Combined construction and operating licenceUS

UK Nuclear Site Licence

construction licence

operating permit

operating licenceFIN

France

GER 1st CL 2nd OL2nd CL 1st OL

autorisation de création

►start of construction


Licensing: Managing a multitude of processes

For an NPP, a number of licences/permits/authorisations is neededNPP as nuclear installation Licence according to Nuclear ActNPP as large infrastructure projectPlanning permission, construction

permit, land use planning NPP as large electricity generator Licence according to Electricity

ActImpact on environment (general) EIA, separate permit (if

applicable)Conventional parts of NPP Separate permitCooling water (extraction and discharge)

Permit from water protection agency

Discharge of radioactivity Discharge permitModification of dyke/embankment Permit by coastal protection

authority► Strong government coordination and management required


Safety of nuclear waste / spent fuel management (1)

To give certainty to all stakeholders, an overall national strategy (embedded in legislation and policy papers) is needed

Responsibility for waste management: Who does it? Who pays for it?

Who pays? The operator (polluter-pays principle) Accumulation of funds during operating lifetime of installation


Safety of nuclear waste / spent fuel management (2)Who performs waste management activities?

Interim storage: operator or sometimes government agency Final disposal:

Sometimes operators or commercial waste management companies Sometimes a government agency (especially spent fuel repositories)

Final disposal of high level waste and spent fuel Deep geological disposal as only practical solution Discussion on multinational repositories for smaller countries

Further decisions to be taken on a national level Reprocessing to be allowed/prescribed? Import/export of nuclear waste and spent fuel to be allowed?


Nuclear liability

Nuclear third party liability: liability for damage suffered by a third party (not the operator) caused by a nuclear incident

Firm and clear liability regime is important

Nuclear liability regime governed, for most countries, by international conventions: Vienna or Paris

convention (Estonia: Vienna Convention) or by national legislation (USA: Price-Anderson Act)

Nuclear liability regimes have some special features, aimed at Protection of victims Just and equal distribution of existing resources for compensation Compensation across national borders Enabling development of nuclear industry

Improved Licensing Procedures for NPP in Europe 13th May 2009 KK-NNR-Dr.Rae/Stb 37

The Finnish case (1): Licencing procedure

Decision-in-principleGovernment decision and Parliament ratification

Energy Policy

Construction LicenceGovernment, based on STUK safety assessment

Operating LicenceGovernment, based on STUK safety assessment

Nuclear Safety


The Finnish case (2)

Positive aspects Legislation and regulations fairly recent: Nuclear Energy Act

1987, Council of State Decisions 1991, Safety regulations (YVL guides) updated constantly

Decision in Principle as general political decision on an NPP project; the following licencing process can concentrate on nuclear safety

Two-step licensing (construction and operation) does not really seem to cause uncertainty

Very competent and respected authority (STUK) The overall Finnish licensing approach is good and does not

need to be overhauled


The Finnish case (3)Aspects which are not perfect

Many reasons for the delays in Olkiluoto 3 project are not specific to the Finnish approach, e. g. „first of a kind“ design, shortage in experienced personnel, lack of harmony between vendor and applicant etc.

Some regulatory issues: Construction licence issued at an early stage of design completion,

making further design work during construction necessary Some Finnish safety requirements deviate from the European

„mainstream“, leading to re-design and to uncertainty More openness to design and manufacturing standards of other

countries would be helpful Very strict requirements on management by licensee; risk of

inconsistency of STUK approach with a „turnkey contract“ model?


Part Three: Making use of international progress: design standardization


Reducing regulatory risk: design standardizationThe vision:

If a design is assessed and licensed in one EU country, authorities in other countries should not do it all over again

The goal should be mutual acceptance of design approvals or a joint design approval

This would reduce risk and uncertainty for the investor, once a First-

of-a-kind (FOAK) of a design is licensed in Europe reduce the strain on regulators make the licensing process more efficient and effective lead to a coherent approach to safety actually increase safety, due to a better basis for

experience feedback


Vision: Pre-Licensing of designs in an international context

Design certifications (owned by vendors)

Design 1licensed in country A

Design 2licensed in country B

Design 3licensed in country C

Pre-licensing (project-neutral) Licensing of particular NPP

Design 2

Applicant

Site

NPP Validation

Design 1

Design 2

Design 3


Existing regulatory/legal situation

Each reactor project needs a licence issued in a specific procedure after full assessment by the competent regulatory body

Licence is issued according to special national licensing procedures, which vary considerably

Licence is based on national safety requirements, which vary considerably in details

► This does not facilitate deployment of standardized designs across a range of countries

► A design approval in one country is irrelevant for others


Initiatives for Cooperation and Harmonization Worldwide

MDEP (Multinational Design Evaluation Program): regulators of 10 new build countries worldwide

WNA CORDEL Group (Cooperation in Reactor Design Evaluation and Licensing): industry‘s response to MDEP

Europe: WENRA: safety reference levels to be implemented in

national regulations by 2010 EU Commission initiatives, including the recent Directive

on nuclear safety (see next chapter)


The CORDEL proposal: 3 steps towards standardization

World Nuclear Association (WNA) Cooperation in Reactor

Design Evaluation and Licensing (CORDEL) Group Founded in January 2007 Membership: includes all major vendors and many utilities

interested in new build

CORDEL proposes 3 subsequent steps to achieve

international validity of design approvals and thus to

achieve full international standardization of reactor

designs


Step 1: Share design assessment

design reviewdesign review design reviewdesign review

Regulator BRegulator BRegulator ARegulator A

design approvaldesign approvalby regulator Aby regulator A

design approvaldesign approvalby regulator Bby regulator B

shareshare

elements of design elements of design review, for example review, for example

calculations or calculations or modelling of event modelling of event

sequencessequences


Step 2: Accept design approvals after validation

design reviewdesign review

validationvalidation

Regulator BRegulator BRegulator ARegulator A




Step 3: Issue multinational design approval

Team of Regulators: A, B, CTeam of Regulators: A, B, C(or, much later, International Agency)(or, much later, International Agency)

design reviewdesign review

multinational design multinational design approvalapproval

Country ACountry A Country BCountry B Country CCountry C


Some boundary conditions to be respected

Sovereignty of each country’s regulator has to be respected

Regulators are bound by law to apply their national safety requirements and licensing procedures

Regulators need to build up knowledge of the design


Design approval as part of the overall regulatory processpolicy decision about nuclear energy

decision in principle about a particular NPP project

licensing process (construction and operating licence)

design site applicant

surveillance and inspection during operation


A recent example for international design acceptanceItaly‘s new Act on Energy Companies, Act no. 99 of 23 July 2009, Art. 25, 2 i):

[Government is empowered to issue] a provision that licences relating to technical requirements and specifications for reactor designs which have been licenced in the past 10 years by the competent authorities in member states of OECD-NEA, or in states linked to Italy by bilateral agreements ... in the nuclear sector, will be considered to be valid in Italy after approval by the Nuclear Safety Agency


Harmonization of national safety requirements• Absolutely necessary for standardization

• Differences are ever more difficult to justify (why should requirements of one country be “safer” than others....)

• However, combination and “piling up” of the strictest requirements to be avoided

• IAEA Safety Standards as a model

• Good opportunity for newcomer countries to start right away with regulations based on international consensus


Part Four: Nuclear regulation trends in the EU


European Commission Initiatives in the Nuclear Field

European Nuclear

Energy Forum

Opportunities, Risks

& Transparency

Politicians, Industry,

Politicians, Industry,

Finance, Civil society

Finance, Civil society

High Level Group (now ENSREG)

Safety Harmonisation& Waste Management

27MS 27MS Regulators/Safety Authoriti

es +EC

Regulators/Safety Authorities +EC

Sustainable Nuclear EnergyTechnology Platform

R & D – FP 7

Major nuclear Stakeholders,Major nuclear Stakeholders,

EC, Academics, ResearchersEC, Academics, Researchers

First Meeting, 12/10/07 Launched on 26/11/07

Launched on 21/09/07


New EU Directive on nuclear safety

Directive 2009/71/EURATOM of 25 June 2009 establishing a Community framework for the nuclear safety of nuclear installations

Aims at „continuous improvement of nuclear safety and its regulation“ and at a „high level of nuclear safety“

Obliges Member States to establish and maintain a national legal and regulatory

framework establish and maintain a competent regulatory authority

with sufficient powers and resources ensure that licensees fulfil their responsability for safety ensure arrangements for education and training ensure that information is made available to the public


Coming up? EU Directive on Nuclear Waste Stakeholder Consultation Process started ENEF WG „Risks“, SubWG „Waste Management“ is working

on a paper ENSREG is working on a paper

Some possible principles Each Member State has to establish a national plan for

management of radioactive waste and spent fuel Probably no timeframe set by EU, but national plans

should include a timeframe High level waste and spent fuel: deep geological disposal

required


Subgroup „Nuclear Legal Road Map“ of European Nuclear Energy Forum (ENEF)

Work on licensing and harmonisation issues

Paper „The Importance of New Approaches in Licensing“ produced by the Subgroup in October 2008

Under preparation: Survey of licensing procedures in Europe

► Towards a licensing document of the EU?


Summary


Summary

More efficient, more predictable and more harmonized licensing processes are vital to reduce licensing risk and to enable investment decisions in new nuclear projects

International alignment of approaches and regulations and international cooperation among regulators are needed to reflect the “international” world of licensing new reactors

effective nuclear regulation from a utility perspective seminar “tuumaenergia efektiivne...

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