IAEA counters Iran's spin on uranium enrichment

Texas sized claims will be tested by IAEA inspectors

Iran said last week it is now capable of "industrial-scale" uranium enrichment. The fear is Iran has begun expanding its capabilities so it can make atomic bombs. Iran's Atomic Energy agency said that the facility at Natanz plans to install 3,000 centrifuges in the near future and has plans for 50,000 which goes way beyond anything previously announced by Iran.

So the question is whether the Iranians really are making enriched uranium at an "industrial scale?" The IAEA and the Russians say maybe not. The IAEA went so far as to impolitely point out that Iran has only hundreds of uranium enrichment centrifuges at work and not 50,000.

A rich interpretation of the Russian perspective is that the Iranian's are simply faking it. Foreign Ministry spokesman Mikhail Kamynin said in a statement Russia was "unaware of any recent technological breakthroughs in the Iranian nuclear program that would change the format of its enrichment effort." He should know. The Russian government is helping build Iran's only nuclear reactor at Bushehr. The Russians are more up to speed on what Iran is doing with its nuclear program than anyone else except perhaps for the IAEA.

For their part Foreign Minister Sergey Lavrov told reporters in Moscow, "We haven't got a confirmation yet that they have actually begun uranium enrichment at the new cascades of centrifuges." The Bushehr nuclear plant is scheduled to begin operations in March 2008. Six months prior to that date, about October 2007, the Russians are scheduled to deliver nuclear fuel for the reactor.

David Albright, president of the Institute for Science and International Security in Washington and a former United Nations weapons inspector, agrees Iran might be bluffing. He told the NY Times Iran seems more interested in scoring diplomatic points than in making technical advances.

“Ahmadinejad is trying to demonstrate facts on the ground and negotiate from a stronger position. If they enriched today it would destroy the ability to go forward on any negotiation. Such enrichment would escalate the confrontation. It raises all kinds of worst-case scenarios that, if not managed correctly, could escalate up to a military action.”

To get more to the point of whether Iran is blowing diplomatic smoke, the IAEA emphasized it has inspectors on the ground in Iran. IAEA's director Mohamed El Baradei confirmed that IAEA inspectors were in Iran and could provide the first independent assessment of Iran's assertion.

Two IAEA inspectors arrived in Iran this week . During their formal inspection visit they will investigate the status of uranium reprocessing work at the Natanz enrichment facility. Their conclusions will shape the next IAEA report to the UN Security Council on Iranian NPT compliance, to be delivered following the nuclear watchdog's board meeting in late May.

If Iran doesn't let the inspectors see the centrifuges it claims it has working, or the inspectors confirm the number of operational machines are in the hundreds, and not tens of thousands, it could be a significant setback for that country's public credibility on matters nuclear and particularly that of Iranian President Mahmoud Ahmadinejad who has been the chief nuclear boaster and purveyor of the "stick it" message to the UN.

Another problem for Iran is its not so subtle threat to withdraw from the Nuclear Nonproliferation Treaty (NPT). Iran's threat to withdraw from the NPT is also likely a bluff and a bad one at that because of the ramifications if it follows through. This week Iran's chief nuclear negotiator Ali Larijani warned that Tehran could withdraw from the Non-Proliferation Treaty if the international community imposes further pressure over its nuclear program. A third round of UN sanctions might occur after the IAEA's report to the UN Security Council due in late May.

Given all the other inflated rhetoric coming out of Iran, leaving the NPT seems like a particularly bad idea. Withdrawing from the NPT would be equivalent to saying that their intentions are not peaceful. It would be a clear signal that Iran's nuclear program is for weapons purposes. This opens up a host of hostile possibilities none of which are good for regional political stability in the Mideast or the price of oil. While the US has repeatedly denied it plans to use military force against Iran, that country's neighbors are not be happy about the prospect of having a new nuclear power next door especially one that also threatens to drop its commitments in the NPT.

The final debunking of Iran's boast also came from the Russians. "We have heard the Iranian president's statement and have adopted a serious attitude to what is going on in relation to the Iranian nuclear program," Lavrov said. "But we would like to proceed from facts, not from emotional political gestures."

Here's a quick interpretation of diplomatic speak. In Texas that might translate as a a plainer description of Iran's uranium enrichment program and its latest round of bellicose claims. In reality the Russians and the IAEA say Iran's nuclear claims are "all hat and no cattle." Can anyone say that in Farsi? Does Iran get the message even without the translation?

NRDC, UCS give GNEP 40 whacks plus 40 more

A tough stance with no interest in compromise

The Natural Resources Defense Council (NRDC) told the Department of Energy two weeks ago that the environmental impact statement (EIS) the agency is preparing for the Global Nuclear Energy Partnership (GNEP) is a dead duck. NRDC claims the EIS will not survive a legal challenge. At a scoping meeting held in Washington, DC, NRDC drew a line in the sand telling federal officials the EIS is "headed for a collision course" with a legal challenge by the group.

According to a nuclear industry trade newsletter NRDC claims the EIS fails to address three factors.

• Nuclear terrorism
• Risk of a nuclear reactor meltdown
• Technology alternatives to nuclear energy such as wind, solar

In March 2006 NRC published a detailed 14-page analysis of GNEP titled "Peddling Plutonium." Thomas Cochran, the author at NRDC, wrote the Bush administration’s "vision of a taxpayer-funded global enterprise to extract and recycle plutonium is uneconomic, unrealistic, unreliable and unsafe."

NRDC wasn't the only group to swing a rhetorical broad axe at the hearing. Edwin Lyman, a scientist with the Union of Concerned Scientists (UCS) called GNEP, "ill-advised, thoughtlessly conceived, and a poorly designed program."

In a fact sheet posted on the group's website, Lyman wrote that GNEP is "dirty, dangerous, and expensive." He added it would increase the threat of nuclear terrorism. Overall, he said, "it is a bad idea." In his prepared statement for the EIS hearing, Lyman said,

GNEP threatens to greatly increase the likelihood of nuclear terrorist attacks and undermine the nuclear nonproliferation regime while wasting tens of billions of dollars and utterly failing to achieve its stated goals with regard to improving the management of nuclear waste. Instead of devoting its attention to cleaning up its Cold War nuclear waste legacy, DOE is planning to divert resources and focus to a program that will dump additional nuclear waste into an inventory that DOE has proven unable to safely stabilize.

Lyman's campaign against the program has been picked up by anti-nuclear groups in the US and Europe. If the Bush Administration is planning a global nuclear partnership, it should come as no surprise that it will also pick up global opposition as part of the process.

Energy Secretary Samuel Bodman plans to make a decision on where to put the GNEP facilities in June 2008. NRDC and UCS know the history of nuclear energy is littered with the remains of grand programs that evaporated in the face of political opposition and they've had a role in producing these outcomes. If environmental groups have their way, GNEP will be one more instance where the only place the latest round of nuclear energy plans will go is the circular file.

Advocates for the GNEP program, including communities that want the sites, have until June 4th to file their comments on the EIS. Based on strength of the opposition, they probably want to address these issues as well.

International Isotopes converts debt to stock

International Isotopes (OTC: INIS), in Idaho Falls, ID, announced this week that investors holding $650,000 in debt have converted their principal, and $23,000 in interest, to 8.4 million shares of commons stock. Steve Lafflin, CEO, said the move will improve the firm's balance sheet.

It's a big bet by the investors. Total revenue in 2006 was $4.5M compared to $3.0M in 2005. Startup costs for new products and a transportation subsidiary ate into revenues producing a loss of $1.0M in 2006.

Lafflin says he expects to be profitable in 2007. In a prepared statement he said ,"We anticipate no further significant increases in these operational expenses during 2007 and should, in fact, begin to see a portion of these operational expenses shift into cost of goods sold for fluorine products manufactured and sold by the subsidiary."

Texas utility plans massive nuclear plants

TXU, the Texas utility giant, has scrapped plans to build a large fleet of coal-fired power plants and hopes to build the biggest nuclear power plants in the US according to a report in the Wall Street Journal for April 12th. According to the newspaper three other utilities in Texas are also planning to build nuclear power plants. They are NRG Energy, Exelon Corp., and Amarillo Power. If all the planned plants are built, Texas will have more nuclear reactors than any other state.

The reactors selected by TXU are designed and built by Mitsubishi Heavy Industries, Ltd, Japan and weigh in at 1,700 Mw each. The WSJ reports that executives for Mitsubishi claim to be able to build the plants for $1,500 per Kw of capacity.

US-India nuclear deal on verge of collapse

India follows Iran with test firing of nuclear capable missile

The pending agreement between the US and India over exchange of nuclear energy technologies is reported to be on the verge of collapse. According to USA Today, India is demanding the right to continue to test nuclear weapons which is a deal breaker.

Henry Sokolski, head of the Non-proliferation Policy Education Center, a Washington think tank devoted to nuclear issues, issued a "I told you so" type of statement having opposed the deal from the start. Last March he told the Council on Foreign Relations that sending fresh nuclear fuel to India would free up domestic resources to be solely dedicated to making more bombs. Now some six weeks later he observed that his prediction has come true. "The Indians are being greedy." He said the US-India nuclear agreement might not be implemented before the Bush administration leaves office.

Nicholas Burns, the undersecretary of State who leads the negotiations, acknowledged that three rounds of talks with India have produced very little. "There is a fair degree of frustration in Washington that the Indian government has not engaged seriously enough or quickly enough with both the United States and the IAEA." According to government sources quoted by USA Today, India is making three demands.

• Permission to buy uranium-enrichment and plutonium-reprocessing technology from the United States. Both have military applications, and sales are prohibited in most cases by U.S. law.

• No limits on testing nuclear weapons. The administration has told India that the United States reserves the right to terminate nuclear cooperation if India tests again. Its last test was in 1998.

• U.S. approval to reprocess used nuclear fuel from power plants. Such fuel can be turned into bombs.

What Burns is saying is that India is asking for exactly the practices the US wants it to give up. Here's the real rub. India may want to scuttle the deal to protect its domestic nuclear power plant construction industry from foreign competition. Robert Einhorn, a proliferation expert at the Center for Strategic and International Studies in Washington, told USA Today India's Department of Atomic Energy "may want the deal to fall through" to shield itself from competition from foreign contractors with nuclear engineering expertise, such as General Electric and Westinghouse. Einhorn didn't say so, but the real competition may be coming from AREVA, the French nuclear giant.

Where things stand now is that there is an appearance that political powers inside India don't want the deal to go through since they are demanding conditions which the Bush Administration has opposed from the start. Even if the White House were to agree, Congress would likely prevent the deal from going through if it includes India's current demands.

Just in case nobody got the point that India's military is prepared to push the envelope at all costs, this week that country test fired a long range ballistic missile capable of carrying a nuclear warhead more than 1,900 miles. Interestingly, this is exactly the sequence of events that took place about the time the UN Security Council was voting to impose sanctions on Iran. It test fired a missile with a range of 1,200 miles which was capable of carrying a nuclear warhead. So far there is no evidence Iran has a nuclear weapon or the near-term capability to make one. Still firing a missile that is designed to carry a nuclear warhead while not having one, and at the same time denying that you want one, leads to serious credibility problems with people who feel threatened by such acts.

Obviously, the new way things are done in the nonproliferation business is that if you want to make a point about your defense posture, regardless of who you are negotiating with or over what, that the way to do it is fire a missile capable of carrying a nuclear warhead proving to everyone the hot heads and not statesmen are making policy in your country.

Nicholas Burns, the State Department's lead negotiator on the India deal, might be hitting his hand on his forehead thinking "I could have had a V-8" instead of having to put up with India's in-your-face tactics. Surely, he's thinking he's seen this show before. The only question is whether the US is going to get tired of re-runs and leave the theatre before it the show is over.

Energy Solutions plans $20B GNEP facility for Idaho

Changing the Settlement Agreement is the key challenge

Energy Solutions, a Salt Lake City firm, came to Idaho Falls this week with a vision of a $20 billion nuclear energy facility that would generate 10,000 construction jobs and 5,000 permanent jobs in the region. The plant would be built as part of the Department of Energy's Global Nuclear Energy Partnership program (GNEP). The company made its announcement at an informal public meeting designed to present the firm's proposal to the community.

The company is proposing to use a 3,300 acre site just south of the Idaho National Laboratory on the edge of the tiny community of Atomic City, ID . The Atomic City site was chosen because of rail service, a state highway, and access to water rights.

Alan Dobson, an executive with Energy Solutions, who previously led work for a major contractor at the Idaho National Lab, told an audience of about 30 people at the Red Lion Inn if the Atomic City site is selected for a nuclear fuel reprocessing plant and advanced reactor that construction would task seven to eight years. A fully operational fuel reprocessing center would handle 1,000 tons per year of spent fuel.

During the course of an hour long slide presentation Dobson indicated that there are significant challenges ahead for the Idaho site. Chief among them is the current Idaho Settlement Agreement between the State of Idaho and the Department of Energy which bans the import of commercial spent nuclear fuel. Asked what confidence he had that the two parties could find a way forward that would lift the ban, Dobson said there is no prospect for any GNEP facility in Idaho unless there is change to that provision in the Settlement Agreement. Overall, Dobson said, "it will take a concerted effort to secure the location in Idaho." If the Idaho site is not selected, Energy Solutions may still be in the running for a GNEP facility with proposals for similar facilities at Barnwell, SC, and Roswell, NM.

Beatrice Brailsford, who spoke at the meeting on behalf of the Snake River Alliance, noted that most of the presentation by Energy Solutions was about nuclear fuel reprocessing and largely silent on an advanced reactor. She ask Dobson to be more specific about water use, water recycling, and measures the firm would take to protect the environment. Interestingly, Brailsford didn't directly oppose the project. Instead, she launched into a long statement on federal energy policy issues. She said that if Energy Solutions and the Federal government are interested in a revival of the nuclear energy industry, they would be better off seeking full funding for the Nuclear Regulatory Commission (NRC) than spending money on GNEP.

In his slide presentation Dobson stated that nuclear fuel reprocessing is essential due to the rising price of uranium. He said the economics of recycling are now favorable which means GNEP can be a success if funded and built. He argued that even at $95/lb the world uranium supply will not meet demand for all the plants that will be built. "Recycling is essential," he said, and added, "the nuclear industry will not expand if we continue to choose direct disposal of spent nuclear fuel as our way of dealing with it."

Asked about Energy Solutions $500 million IPO, Dobson said the firm cannot comment on it at this time as papers (SEC Edgar CIK 1393744) were filed on March 29th with the Securities and Exchange Commission (SEC). Asked if the firm would seek additional investors if selected to build GNEP plants, Dobson said, "a public-private partnership is the best way to proceed."

The other GNEP proposal for Idaho is organized by the Regional Development Alliance in partnership with AREVA, Battelle/BWXT, the Washington Group, Japan Nuclear Fuels, and is proposed to be sited on the Idaho National Laboratory with all three GNEP plants - a fuel recycling center, advanced reactor, and fuel r&D lab.

The environmental analysis on the Atomic City site, and all other GNEP sites, is due to the Department of Energy on May 1st. The comment period is open until June 4th.

FPL, Entergy, Ameren plan new nuclear power plants

FPL plans NRC license application in 2009

Florida Power & Light (FPL) plans to diversify and increase its power generating capacity by about 28% by 2016 to meet increasing demand for electricity. However, the utility said generation of electricity from a new nuclear reactor was at least 12 years in the future. FPL currently owns and operates four nuclear power plants: St. Lucie and Turkey Point in Florida, Seabrook in New Hampshire and Duane Arnold in Iowa.

"Nuclear has a very important role to play in a carbon-constrained environment," said Lew Hay III, chief executive officer of FPL Group Inc.

The company notified the Nuclear Regulatory Commission (NRC) in April 2006 of its intent to submit a licence application in 2009 for a new nuclear power plant in the Florida. FPL has been evaluating more than a dozen potential sites. It has identified the Atlantic-coast Turkey Point nuclear power plant site as one potential site for a new reactor.

The company's ten-year resource plan anticipates adding some 6700 MWe of generating capacity to its current capacity of 24,360 MWe. FPL currently has a generating mix of 50% natural gas, 21% nuclear, 15% purchased power, 9% oil and 5% coal.

Near-term plans for new generation of electricity focus on coal. FPL got a wake up call using natural gas for generating electricity when hurricanes Katrina and Rita interrupted delivery of gas to its plants. FPL also got a poke with a sharply worded guest editorial published in the the Florida Sun-Sentinel last week which said FPL had "strayed off course" by seeking approval for the Glades coal-fired power plant. The article, written by two prominent environmentalists, made this point.

Unfortunately, Florida Power & Light's rush to build one of the largest coal plants in the nation sets back the state's efforts toward a clean energy future and dramatically increases global warming pollution. To its credit, FPL is the largest owner of clean wind power generation in the country. Yet in Florida, they've strayed off course with coal. And while FPL is a leader in wind development in other parts of the country, where they are using clean technology to break into new markets, in Florida FPL has chosen dirty coal for its captive customers.

The coal plant will be online a lot quicker than a new nuclear plant and it appears FPL needs the generating capacity sooner rather than later. That's critical for FPL, which adds an average of 100,000 residential and business customers each year.

"Given the demand they are facing and the overall demand increase through 2030, they know they have to build some baseload power," said Mitch Singer, spokesman for the Washington-based Nuclear Energy Institute, an industry group.

Entergy Nuclear gets early site permit from NRC

Entergy Nuclear has received from the Nuclear Regulatory Commission an early site permit for a possible new nuclear unit at the Grand Gulf site in Mississippi. An early site permit certifies that the site is suitable for a new nuclear unit and resolves many safety and environmental issues related to the site. The permit remains valid for 20 years.

This early site permit will constitute the environmental report for an application for a combined construction and operating license that is targeted for submittal by the end of 2007. The COL application will be from NuStart, a consortium of 12 nuclear companies that includes Entergy Nuclear. NuStart announced Sept. 22, 2005, that it had selected Grand Gulf as one of two plant sites for which it intends to submit COL applications.

NuStart also selected GE’s Economic Simplified Boiling Water Reactor technology as the design for reference in the COL being developed for the Grand Gulf site. GE’s ESBWR design is among the handful of designs that have been submitted to the NRC for certification.

Entergy Corporation is the second-largest nuclear generator in the United States. It operates ten reactors at eight plant sites.

Ameren plans filing with NRC for new nuclear reactor in 2008

Utility firm Ameren Corp. said Thursday it plans to file an application by the end of next year for a license to build and operate another nuclear reactor.

The St. Louis-based company, which operates Missouri's only nuclear power plant, cautioned that it has not decided to build a reactor and did not identify any potential locations.

The company, whose Missouri reactor is in Callaway County, said its AmerenUE unit signed an agreement to help prepare the application with UniStar Nuclear, a joint venture between Baltimore's Constellation Energy Group Inc. and France's state-owned Areva Group, which has a U.S. subsidiary based in Bethesda, Md.

George Vanderheyden, president of UniStar Nuclear, said his company also expects to announce within the next two months which one of Constellation Energy's nuclear plants will file a license application for a new reactor. In the running are the Nine Mile Point plant in upstate New York and the Calvert Cliffs plant in Maryland. UniStar also is working with investors in Amarillo, Texas, Fresno, Calif. and Idaho on potential nuclear plants.

Vanderheyden also said the federal government needs to finish regulations for the loan guarantees that were included in the 2005 energy bill. Those guarantees are designed to give banks confidence to provide financing for the estimated $3.5 billion to $5 billion cost of building a new reactor.

"If we would get the federal loan guarantees finalized, you would see orders being placed for nuclear power plants very quickly," Vanderheyden said.

New nukes will pour concrete by 2010 - CERA

Cambridge Energy Research Associates (CERA), a leading consultant group in the energy field, says in a report released this week the "nuclear renaissance" in the US "is already here." Most activity is in the form of license extensions for existing plants and expansion of existing reactor facilities. By 2010, just three years from now, CERA estimates US nuclear firms could be pouring concrete for the first new reactors which pretty damn fast.

Nuclear is a strategy for coping with climate change even if Al Gore doesn't think so. CERA’s long-term scenario work indicates it is very difficult to curtail rapidly rising global carbon dioxide (CO2) emissions without expanding nuclear power generation.

In the short-term two factors could limit the expansion of the nation's commercial nuclear electric generating plants. The first is a shortage of skilled labor, that is, people who know how to build and run a nuclear power plant. The second is a shortage of manufacturing capacity to make nuclear plant components. CERA also noted that rising uranium prices could be an issue.

The outlook for nuclear power remains positive, says the firm, which has chiefly followed global markets for fossil fuel over the past two decades.

"Over the past few years, high fossil fuel prices, energy security and climate change concerns and increasing urgency about reducing greenhouse gas emissions have all converged to improve the position of nuclear power relative to other options,” CERA Senior Director Jone-Lin Wang and Associate Director Christopher J. Hansen write in the new report Is the “Nuclear Renaissance” Real?

So when will US firms build plants you might ask? CERA thinks it has an answer. The CERA report identified the following key near-term milestones in the United States:

• Late 2007–2008 – Submission of Construction and Operation License (COL) applications
• 2007-2008 – Ordering long lead-time items such as large forgings
• Around 2010 – COL approval, final board decisions, site preparation, ordering major components
• After 2010 – Pouring first concrete

Money honey that's what it's all about

CERA believes success in capital-intensive projects like nuclear power requires "efficient and stable government licensing and regulatory processes as well as a predictable rate structures for power markets."

The reason is nuclear plant costs will be higher for initial units. Because many leading reactor designs have never been built before, first-of-a-kind engineering and the need for experience to move down the cost curve will mean higher costs and, often, government subsidies and loan guarantees.

CERA argues that successful demonstration of cost and performance in new designs is important for faster nuclear expansion. "Multiple design option competition and widespread risk-sharing among vendors, engineering, procurement and construction should support efficiency."

Wouldn't it be something if these competitions could be held at the Idaho National Laboratory (INL)? The lab could provide infrastructure support and be an impartial judge of the technical and economic merits of each entry.

Cost-competitiveness relative to fossil matters mightily

The CERA report identified several key factors that will determine nuclear power’s competitive position.

Recent worldwide trends toward higher fossil fuel prices, combined with low interest rates, low inflation, and the increasing importance of carbon emissions as a direct power generation cost, have improved the relative economics of nuclear power. However, there are daunting capital costs to consider. CERA writes that capital costs have a significant bearing because they represent two-thirds to three-quarters of the per-kilowatt-hour cost of nuclear generation;

• High capacity factor -- 90 percent for the best run fleet--is more important to nuclear than other types of plants due to nuclear energy's high initial capital costs and high fixed costs.

• Cost of capital affects nuclear more than other types of plants; government funding or loan guarantees can cut unit cost of nuclear generation by 10 to 15 percent.

• Carbon emissions charges favor nuclear power; a $10 per ton charge on CO2 raises cost of coal- and gas-fired generation by amount equivalent to 7% to 15% of nuclear unit costs.

The bottom line for CERA is if new plants can be built at $2,200 to $2,550 per kilowatt, nuclear is competitive with natural gas when natural gas price is at least $6 per million British thermal units.

AREVA targets India's nuclear power plans

India invites proposals for "ultra mega-plant" nuclear facilities

It's bigger than anything you could imagine in the power industry. The Hindustan Times and wire services report that as part of the ongoing negotiations between the US and India, the Indian government this week offered to relax conditions allowing private international firms to build very large nuclear power facilities in India.

The state-run Nuclear Power Corp plans to build a multi-reactor facility to generate 10,000 Mw of electricity using European presurized reactors (EPRs). The plants will be composed of six 1,650 Mw reactors.

In an effort to get past the history of the failed Dabhol Power Plant, which could not sustain itself economically due to state politics affecting the rate base, the Indian government said it would establish a "lifetime cost base" for electricity purchased from such plants and reduce the dominance of the public sector in setting rates.

Reuters reports that Areva wants a shot at these "ultra mega faqcilities." The firm is in talks with Indian firms to develop nuclear power projects in India, said Philippe Guillemot, an executive with Areva. Guillemot said Areva was waiting for a landmark nuclear technology deal between India and the U.S. to be finalized before forging any new ventures. The deal also has to be approved by the 45-nations Nuclear Suppliers Group and the International Atomic Energy Agency.

US-India Talks will continue despite arms export case

India and the US are expected to continue talks on a bi-lateral nuclear technology deal despite the unsealing of indictments against an Indian firm for exporting sensitive technologies from the US. A calming note came from State Department spokesman Sean McCormack who said this week, ' I don't see any connection between these two things.' Asked if the case was a serious matter, he said, 'Well, any time you have allegations of violations of the Arms Export Control Act, which is the law under which these indictments were made, it is a serious matter.'

It's a good thing for India's nuclear energy plans that the US isn't allowing the indictments for violations of the Arms Export Control Act to derail the talks. With India's enormous appetite for electric power, sooner or later US firms will be in that market.