main challenges to nuclear power: financing · irrespective of approach , go back to basics...
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Mainchallengestonuclearpower:financing
GEORGEBOROVAS
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GovernmentFunding/SupportIsEssential….
• Manyofthebenefitsofnuclearenergyaresovereigninnature• Energysecurity• Energydiversification• Climatechangemitigation• Industrialdevelopment• Promotinghighereducation,highlytrainedworkforces• Promotingresearchanddevelopment
• Onlygovernmentscanproperlyvaluethesebenefits
• Experienceshowsthatnonuclearprojectwillgoaheadwithoutsignificanthostgovernmentinvolvement
• Governmentinvolvementcantakedifferentforms,includinglongtermPPAs/sovereignguaranteesandinvestment
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….However
Analyzingnuclearprojectsbasedonprojectfinancingmodelswillhelpidentifyandmitigatetherisksjustlikeaprudent/conservativefinancialinstitutionwould
Attractingprivatesectorfundingrequiresgovernments/developerstobeginplanningandthinkingasprivateinvestorswould
Governmentfundingandsupportshouldbeseenasabridgetoprivatesectorsupportwithgovernmentsupportdecreasingovertime
Purerelianceongovernmentfundingmayleadtolackoffiscaldiscipline/lackofaccountability/inefficiency
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• Straightgovernmentprocurement• Governmentfinancing-Taishan• Utilitybalancesheet/corporatefinance-EDF-Flamanville• Vendorequity• ExportCreditAgency(ECA)financingandguarantees• Investorfinancing–TVO (Mankala)• BOOwithlong-termPPA-Akkuyu• ContractforDifference(CFD)-UK• USGovernmentLoanGuaranteeprogram• USConstructionWorkinProgress• UKRegulatedAssetBasedModel• CapitalMarkets-CGN
FinancingApproachesUsed
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Irrespectiveofapproach,gobacktobasics
Answeringthesequestionswillallowyoutodevelopaplantoprocure/construct/financeandoperateanuclearpowerplant
• OnceyouanswerthesequestionsthenyoualsoneedtoanswerHOW:• Willyoubuildit?• Willyouoperateitand
generatethepower?• Willyoumaintainitin
thelongtermandcontinuegeneratingthepower?
• Willyoudecommissionitandcleanupthesiteattheendofitslife?
• Firstanswerthefollowing5questions:• Doyouneedanuclear
powerplant?• Doyouwantanuclear
powerplant?• Canyouaffordit?• Howwillyoupayforit?• Canyoumanageand
supportit?
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Thenyouneedtoestablishclearobjectives
Reasonableandachievableprojectscheduleandbudget
Electricitytothegrid?Localindustry?
Longtermrelationship/partnership
7New Projects and Newcomer Countries-Lessons Learned
Complywithallregulatoryobligations– workwithregulatortoensureasafeproject
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Speakingtoinvestorsearlyandintheirownlanguage
Industrysays…“Latesttechnology”
…BankhearsFOAKrisk
Industrysays…“Provensafetyrecord”
…BankremembersChernobyl,TMI,Fukushima
Industrysays…“Constructionschedule”
…BankworriesaboutHistoricaldelays/costverruns
Industrysays…“Consortium”
…BankthinksInternaldisputes
8New Projects and Newcomer Countries-Lessons Learned
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Finallylearnfromindustrysuccessesandfailures
Industryturningacorner• FirstEPRinoperation• FirstAP1000in
operation• Westinghouseemerging
frombankruptcy• Increasingnumberof
technologyproviders(fromUS,Russia,France,Japan,Korea,China)
• GettingclosertocommercializationofSMRs
Profilerecentprojectsthathavebeendevelopedandfinancedwithoutserioussetbacksdrawoutthereasonsforthesesuccesses:focusonwheretheprivatesectorplayedarole
Profilerecentprojectsthathavebeendevelopedandfinancedwithserioussetbacksdrawoutthereasonsforthesesetbacksandavoidthesamemistakes
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Conclusions
10New Projects and Newcomer Countries-Lessons Learned
• Successfulprojectshaveoccurredandarepossible• Withthesignificantlevelsofcommitmentbyallparties• Withtherightprojectpartner/s• Withexperienced,committedandinspiredadvisers
(butinasupportingrole)• Takingfullaccountofalllessonslearned• Willingnesstotakealongertermandholisticviewof“success”• Withtherightleadership
• Developingnewnuclearpowerplantsisacomplextask• Shouldbeundertakenwithinaclearhostgovernmentpolicywithclearmechanismsofgovernmentsupport
• Financingisaprimarychallenge– engageearly• MakeuseoftheIAEAGuidanceonNuclearPowerInfrastructureDevelopment(MilestonesintheDevelopmentofaNationalInfrastructureforNuclearPowerandINIRreviewprocess)whichcanhelpmitigatethefinancialrisks
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Questions?THANKYOU!
Source:BloombergandENEC
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GEORGEBOROVAS