Saturday, December 29, 2007

Areva's EPR for Finland will be late

Start-up delayed from 2009 to 2011

Reuters reports the Areva EPR being built in Finland will come on line two years late.

French nuclear group Areva, Bouygues, and Germany's Siemens are building the Olkiluoto 3 reactor on Finland's west coast. It is the first new reactor to be built in Europe in more than a decade. Progress with the plant is being closely watched by European Union member states who are cautious about getting into new nuclear projects or, like Germany, oppose them altogether.

The EU3 billion ($4.4 billion) project experienced delays last winter. At the time Areva blamed the delays on problems with suppliers not understanding the specifications for concrete for the containment building and with overly detailed reviews by Finnish government nuclear regulators. Both of these problems have since been resolved. Areva did not say what the new schedule delay would translate into in terms of costs. It will likely be substantial and measured in hundreds of $millions.

The start-up of Finland's fifth nuclear power reactor is seen as a test case for Europe's nuclear future. The delay is a significant setback for Areva's marketing efforts for the new reactor design. Areva plans to build similar reactors for customers who have already signed deals. In the U.S. Constellation Energy wants to build a fleet of standardized EPRs. China just inked a deal for two of them last month.

The reactor is Areva's flagship product and these problems could impact future sales and the net worth of the firm itself. The problems with the reactor may impact the valuation of shares of the French state-owned nuclear corporation if or when the government offers them to investors in 2008.

Finland needs the new nuclear reactor to be generating electricity as soon as possible. Finland has no coal, oil, or natural gas deposits. It is poor in terms of indigenous energy reserves like hydropower. As a result, the country imports 44% of its energy sources.

The country currently imports electricity from Russia. Both countries are facing electricity shortages. The longer it takes to complete the reactor, the more exposure Finland has to Russia's problems with its own nuclear build program to close the supply gap in electricity generation.

Friday, December 28, 2007

Timetable reported for Idaho nuclear power plant

See Postscript below - MidAmerican canceled the project

Possibility of new nuke plant concerns western Treasure Valley residents; timetable for construction announced; Edition Date: 12/23/07 Idaho Statesman

Here's the timetable for development of a new nuclear power plant in Payette, Idaho. A team of engineers, geologists, biologists and other experts is conducting the studies they need to determine that the Payette site is as suitable as they think. Most of those studies will be completed early next year.

* By November 2008 MidAmerican will announce its decision to seek a permit from the NRC.

* The permitting process will take up to four years. The NRC says 42 months, but that's a best case scenario.

* Construction could take another six-to-eight years. This means it will be at least 12 years, 2020, before the Payette plant would be producing electricity.

Where's the due diligence?

Nowhere has anyone explored the possible actions the company might take if it turns out the Idaho site is not suitable. Will the Idaho news media please think about the possibility that the Payette site is perhaps just one of half a dozen sites MidAmerican is looking at? What if it turns out the only reason we know about the Idaho site is because one of the people doing the site analysis was more chatty than cautious in a Payette diner and that's what let the cat out of the bag for this site?

If I were them, and thinking about spending a couple of $billion on a new nuclear power plant, I'd be doing due diligence on more than one site before making a commitment to apply for a COL from the NRC.

One of the issues is that this is a "greenfield" site. There is no infrastructure in Payette for a nuclear power plant. With one exception, every other COL application submitted to the NRC so far this year, and there have been four, are pad sites at existing reactors to take advantage of the site and transportation infrastructure that already exists.

A new plant at a greenfield site will incur as much as $500 million in extra costs based on a review done by NRG for its COL for two new nuclear reactors to be built at the South Texas Plant in Bay City, TX. If I'm an investor in MidAmerican, do I want to spend an additional $500 million for a greenfield site and if so why? Where's the return on investment?

While we're on the subject of due diligence, and the question of return on investment, recall that MidAmerican announced that it is considering the new Mitsubishi nuclear reactor, a design which is not yet approved by the NRC. That's not a deal breaker, but the question needs to be asked about who is paying for the design review? The NRC began the review process for the new Mitsubishi reactor in 2006. The costs of design review are charged back to the reactor manufacturer and can cost upwards of $50-100 million which includes the license application for the first plant.

Are these costs solely with the Japanese industrial giant, or is MidAmerican thinking, as a potential empire builder, that success in Idaho with the new reactor could lead to construction of a fleet of similar reactors across the country or globally? Last July Hiroshi Inoue, vice president of Mitsubishi Heavy's Nuclear Energy Systems Headquarters, said the company plans to launch its new advanced pressurised water reactor model, the US-APWR, with a power generation capacity of 1,700 megawatts, in the key U.S. market in 2012. That's just about the time MidAmerican would be ready to start construction of the Payette plant.


"We're in a very preliminary due diligence process to look at a potential energy project in Payette County," Bill Fehrman, president and chief nuclear officer for MidAmerican Nuclear Energy Co., told the Idaho Statesman on 12/04/07.


Additional coverage on this blog, including the anti-nuclear response, here


MidAmerican pulled the plug on its Idaho venture shortly after this post was published.

Tuesday, December 25, 2007

PBMR seeks Mitsubishi investment in new reactor

Demonstration plants are expensive

South Africa has asked for funding from Mitsubishi Heavy Industries in Japan to finance all or part of 24 small nuclear power installations, at 160 Mw each, to be built by the pebble bed modular reactor (PBMR) project. They will need a lot of money because the rollout of this completely new reactor design goes far beyond building a prototype.

The challenges for South Africa are;

  • reduce the high cost and design of the demonstration reactor to commercial scale so it can be built in large numbers for domestic use
  • market it for export at a competitive price point
  • insure a profitable return to Mitsubishi for its investment

The report on the pitch to the Japanese industrial giant was published by Reuters and Business Report, a South African news outlet. They both cite the Nihon Keizai Shimbun, a Japanese newspaper, which reported earlier this month that Alec Erwin, South Africa's minister of public enterprises, had said he hoped the company would make a decision in a few months, and that Mitsubishi Heavy Industries had said it would consider the government's request. That's business talk for "can we make money on this?"

Vimla Maistry, spokesperson for the department of public enterprises, responding to a reporter's inquiry, said it had "always been government's policy to attract investment from strategic partners that had both funding and other advantages to offer the PBMR project. The turbines for the PBMR plant will be supplied by Mitsubishi, so Mitsubishi therefore is a desirable strategic partner."

Mitsubishi already in the picture

In 2005 South Africa has awarded Japan's Mitsubishi Heavy Industries (MHI) two contracts worth $15 million to help build a demonstration advanced nuclear reactor. MHI is said to be focused on supplying parts for the core barrel assembly, an integral component within the reactor pressure vessel of the new reactor design, and on turbines for power generation. It will also provide professional services for the design process that will form part of the reactor's demonstration plant to be built at Koeberg, South Africa's existing nuclear facility near Cape Town.

South Africa plans to build a PBMR as it races to find new energy sources to meet growing domestic demand for electricity. The country is facing a potential energy deficit. Assume demand grows, the South Africans have to ramp up their electric generation capacity and the apparent strategy is that it will be with home grown technology hence the commitment to the new reactor design

South Africa also plans to deploy the PBMR for export. In 2006 the South African firms involved in developing the reactor submitted white papers to the U.S. Nuclear Regulatory Commission to begin the dialog of getting the design accepted in the U.S. A full submission of a PBMR reactor design to the NRC is said to be several years in the future. Even if no PBMRs are ever sold in the U.S., approval of the design by the NRC is the gold standard for selling the reactor elsewhere.

Big plans will create big costs

South Africa has aggressive plans to build up its nuclear energy portfolio. According to Business Report, it could cost between $9.9 billion (R67 billion) and $13.8 billion to build 24 reactor installations, which together could generate 3,960 megawatts. That's expensive power coming in at $3,500/Kw at the upper end of the cost estimate.

The country's top nuclear managers say nuclear technologies are likely to become progressively more expensive as a result of bottlenecks in the global supply chain. Pricing of the PBMR has not been determined, but it will have to be offered at a lower price per kilowatt to compete with larger, conventional plants.

At $1,000/Kw, or less than half the price of a conventional reactor, a 200 MWe PBMR would cost $200 million. If it is priced near the current limit of $2,500/Kw, the units will cost $500M and won't be as competitive. If utilities are going to spend that much per kilowatt, they are going to want to be able to meet much greater levels of demand than what's available from a 200 Mw plant.

Additional competitive issues are that the design is not licensed by the NRC, and it would take longer than conventional light water reactors to complete a review because the technology is radically different. Utilities will need references to guide them to develop operating procedures and train a workforce. A utility buying a PBMR would have to estimate the additional costs of deploying a first-of-kind reactor which is very different than conventional plants. The sheer scope of regulatory and technical overhead in deploying a completely new reactor design will likely stretch out the time frame for its commercial acceptance.

Tom Ferreira, a PBMR spokesman, said: "We are pretty confident that the demonstration plant will cost R16 billion." [$2.36 billion]. Though he didn't say it, the fact is the demonstration plant will have to identify substantial cost reductions in the production model to attain a competitive standing in the global nuclear export market.

Recent efforts to price the cost of a demonstration plant in the U.S. for a high temperature gas cooled reactor [large graphic] using a "pebble bed" type design have also come up with higher than expected costs. Earlier this month Platts reported that demonstrating the commercial viability of a very high-temperature gas-cooled nuclear reactor capable of producing both electricity and hydrogen could cost between $3.8 billion and $4.3 billion. The estimates come from three contract teams competing in the Department of Energy's Next Generation Nuclear Plant (NGNP) project. INL conceptual designs have considered options for 300 MWe and 600 MWe plants.

The Department of Energy has been working on the idea the NGNP, or something like it, is to be built in Idaho for a long time according to a report in Time Magazine from January 1989. [Hat tip to Robert Hargraves]. You have to ask the question -- when is the government going to stop planning and estimating, and actually build something? Imagine how much cheaper the NGNP plant would have been if they'd gone ahead in 1989?

Here's a novel idea. Why don't the PBMR folks and the Department of Energy get together and build one prototype in Idaho and save everyone a boatload of money? Construction of NGNP at Idaho isn't scheduled to begin for at least another 10 years. In 2006 lab research managers told Congress the NGNP would be ready for operation in 2021. Maybe a partnership with South Africa, China, or both, would speed things up?

Place your bets

The bet the South Africans are placing is that it will be more cost effective to build a PBMR than conventional nuclear power. The key difference is that it could take two years to build a pebble bed unit, while a conventional nuclear plant could take four to six years or longer. China is also developing the pebble bed technology and may be betting on the same commercial factors.

Before a PBMR can operate commercially a demonstration plant will be built in South Africa. Last September the project suffered a two year delay when it was determined design documents weren't sufficient to support manufacturing. Startup of construction work was pushed back from 2007 to 2009.

A PBMR spokesman told Business Report that if environmental approval and licenses were received in 2008, construction on the fuel and demonstration plants could begin in 2009 and they could be commissioned in 2013 or 2014.

Monday, December 24, 2007

Top 12 Blog Posts of the Year

To make an omelet or egg nog you've got to break a few eggs

It's time for year-end blog round-ups and this one is no slouch when it comes to marking that tradition. However, instead of the top ten blog posts, I'm listing the top 12 in honor of the 12 days of Christmas.

In the past 10 months since this blog began, it's had over 7,800 unique readers and over 14,000 page views. The blog has 227 posts. From these numbers I've put together a list of the top 12 blog posts, based on number of page views, as reported by Google Analytics.

Down below I've included a brief list of awards for "laurels," which are good things, and "hardlys," which are not. Finally, I've included my award for best quote of the year on nuclear energy.

What is your top nuclear story for 2007? Comments are welcome.

The top 12 blog posts on Idaho Samizdat

1 Pelindaba attacked [over 1,200 page views]

Two groups of armed men attacked at Pelindaba, which is a former nuclear weapons plant in South Africa. Their attempt to steal fissile materials was thwarted, but not before they penetrated security systems using inside information. Except for a brief report in the New York Times and mysteriously, an OP ED, but no news coverage, in the Washington Post, this bizarre incident went unreported outside of South Africa.

2 Is Areva seeking uranium in Virginia? [Over 500 page views]

French nuclear giant Areva wants to build a uranium enrichment plant in the U.S. At the same time a major unexploited uranium find in Virginia is being considered for mining operations. Is Areva planning to locate the plant nearby?

3 Is there a nuclear energy plant in Utah's future?

Plans for a nuclear power plant in Utah are turning out to be more smoke and mirrors than substance, but for a while people were really excited. Two state legislators promoted a shift in ratepayer risks for construction of the plant.

4 News media misses Pelindaba story

The New York Times published a brief report on the break-in at Pelindaba. As the facts of the story developed, there appeared to be a number of crucial questions that needed answers. An analyst at Harvard's Belfer Center, who wrote the OP ED in the Washington Post, told this blog in an interview the attackers were going after HEU stored at the plant. He described their strategy and the risks of similar attacks at other nuclear weapons plants.

5 Idaho's invisible nuclear power plant

A penny stock outfit from Virginia, Alternative Energy Holdings Inc. (AEHI), says it is planning to build a 1,600 MWe nuclear power plant at a remote site 100 miles southeast of Boise. The only progress the firm really made was to buy back its stock when it dropped from $0.96/share in July to $0.23/share in November. Dale Klein, Director of the Nuclear Regulatory Commission, told the Idaho Statesman in September the plant is not on his agency's radar screen. Neither of AEHI's two named investment banking partners have experience raising funds for energy projects much less the billions needed for a nuclear power plant.

NRC's "no bozos" rule

Dale Klein, Director of the Nuclear Regulatory Commission, in a speech in June, said the nuclear industry is no place for amateurs.

7 Idaho aligns its stars for GNEP

More than 750 people turned out for a public hearing in Idaho Falls, ID, in March to support the Department of Energy's plans to build huge nuclear fuel processing centers in Idaho. No other nuclear city in the U.S. matched this response.

8 Westinghouse's China deal

The new nuclear renaissance is taking place in China. Westinghouse sold four AP1000 reactors in the first of several mega-deals there. Toshiba finally took credit for its higher than expected purchase price of Westinghouse in 2006 by spinning off 10% of the action, some $486 million, in return for access to uranium supplies in Kazakhstan.

9 Passing the baloney test for new nuclear builds

NRG submitted a combined operating license application to the NRC for its South Texas Project and checked all the right boxes. Three other proposed nuclear plants failed to pass the baloney test.

10 Moody's scary cost estimates for new nuclear builds

Moody's scared the pants off Wall Street investment houses by publishing a report that new nuclear power plants will come in at $6,000/Kw. Experts who follow nuclear energy construction costs said Moody's numbers are wrong. The mid-point of their estimates is $2,400/Kw.

11 GE seeks market share from spent nuclear fuel

Defying conventional wisdom that the only destiny for spent nuclear fuel from commercial nuclear reactors is long-term storage, General Electric says there are big dollars at the tail end of the nuclear energy value chain. GE thinks it can bring profitable solutions to market.

12 Canada dances with wolves

Canada's silence on the Global Nuclear Energy Partnership (GNEP) ended this Fall with the announcement that it would join up. A range of reactor technology and uranium deals with the Russian nuclear industry were also announced. Russia's internal nuclear build program needs the help.

Laurels & Hardlys as reported on this blog

Laurels and hardlys are pretty simply awards. You get a laurel for success in the most traditional sense. Hardlys are a bit more complicated. Mostly, they are awarded for actions that defy common sense or which simply dive into ridiculous circumstances. Here they are for 2007.

  • Westinghouse signs a deal for four AP1000s with China.
  • Areva signs a deal for two EPRs in China.
  • NRG, Duke, Dominion all file applications for new reactors.
  • Congress authorizes loan guarantees for new nuclear builds.
  • The U.S. / India nuclear deal goes nowhere wasting everybody's time in both countries.
  • California continues its 30-year ban on new nuclear power plants while canceling a coal-fired power plant in Utah.
  • New York governor Elliot Spitzer launches a campaign to close the Indian Point nuclear power complex without having the faintest idea where the replacement electricity will come from.
  • Alternative Energy Holdings Inc. (AEHI) still has no credible financing deal in place for its planned Idaho nuclear power plant.
Quote of the Year

"We are burning dinosaurs at an increasing rate, and climate change is an increasingly important issue."

Eric Loewen, a senior nuclear engineer with General Electric, who spent the a hot day last August explaining reactor physics to New York investment bankers after ringing the bell at the American Stock Exchange.

# # #