Saturday, February 9, 2008

South Africa's electric dreams

Areva and Westinghouse bid new nukes for South Africa

Bloomberg reports Eskom, which supplies about 95% of the country's power and most of it from coal, forced its biggest customers to cut consumption by 10 percent this month to stabilize the grid and avoid a national blackout. The shortage of electricity comes on the heels of years of policy disputes, poor planning for new power plants, and failure to recover real costs from the rate base.

South Africa's economy has been hobbled by power shortages in recent years as demand outpaced supply, with the problem hitting crisis proportions. The power shortage will probably cut growth in Africa's biggest economy to 3.7 percent this year, the lowest in five years, JPMorgan Chase & Co. told the wire service.

In response French nuclear giant Areva said it was ready to build up to 12 nuclear power plants in South Africa, where massive electricity shortages and brownouts shut down the key mining industry this month and slowed down the economy overall. Toshiba's Westinghouse matched Areva's proposal for an entire fleet of nuclear power plants.

Areva bids a dozen EPRs to solve South Africa's power crisis

Areva said that it would offer 12 its third generation systems through to 2025 for a total of 19,200 MWe of nuclear electric generation capacity. These plants would be built in partnership with construction conglomerate Bouygues and electricity giant EDF of France, alongside South African engineering firm Aveng. Areva said it was offering South Africa "a total partnership, covering the construction of EPR reactors and joint development of the South African nuclear industry."

French President Nicolas Sarkozy is due to visit South Africa on February 26-27 and will be accompanied by Anne Lauvergeon, Areva's CEO. There he hopes to once again ink a major nuclear deal following his success in China last November.

Westinghouse weighs in with AP1000s

Westinghouse Electric Company also announced that it submitted its response to provide three AP1000 nuclear power plants to South Africa beginning in 2016. The company then submitted a second response to match Areva's bid by providing up to 20,000 MWe of nuclear power generation (20 AP1000s) in South Africa by 2025.

The Westinghouse responses were submitted in cooperation with the Shaw Group and Murray & Roberts Ltd of South Africa, a major construction company. Westinghouse, Shaw and Murray & Roberts will team together to implement the project and operate a technology transfer program for South Africa.

No government officials from either the U.S. or Japan are slated to match Sarkozy's high profile visit to South Africa. Undoubtedly, there will be back channel diplomatic communications, but who knows?

No one considered submitting bids proposing to build Pebble Bed reactors. In 2007 South Africa announced an ambitious program to deploy the new reactor technology and sought outside investors for the project. The high cost of a planned demonstration plant was noted by several analysts. There have been calls in the South African parliament to scrap the program due to budget constraints. That's unlikely as the PBMR is positioned as a future flagship export product in the next decade.

Money honey, but it is not enough

At $2,500/Kw the new nuclear capacity for PWR technologies included in either bid for approximately 20,000 MWe would cost $80 billion. According to press reports Eskom has plans to spend $39 billion over the next five years. Assuming Eskom plans to completely build out either bid, it will need to raise an additional $41 billion over the next 15-20 years either through government funding or outside investment most likely both.

The government's plan to give Eskom limited funding, which will be announced in the annual budget on Feb. 20, is a reversal from October last year. Wire services report that at that time, Finance Minister Trevor Manuel and National Treasury Director General Lesetja Kganyago said Eskom would have to finance its own expansion plan by selling bonds and taking out loans. They changed their minds when Eskom started turning out the lights.

Eskom still expects power cuts to continue until at least 2012, when the first of its new built power plants start operating. Bloomberg also reports the government's plan to give Eskom a capital injection "takes uncertainty out of the Eskom credit story,'' said Leon Myburgh, Africa strategist in Johannesburg at Citigroup Inc. "They still have to borrow quite a bit'' from capital markets," he said.

Idaho energy expert endorses nuclear energy

Top energy expert calls nuclear a "proven resource"

One of Idaho's most experienced energy experts told state senators that nuclear power is a good fit for the Gem State according to a report in the Twin-Falls Times. His comments come at the time when progress towards that goal is mostly unfinished.

Nuclear energy's promise has been shown elsewhere in the world, but it is still bogged down by political and social pressures, Jim Yost, a recent appointee by Gov. C.L. "Butch" Otter to the Northwest Power and Conservation Council, told the Idaho Senate Resource and Conservation Committee.

"Nuclear energy is a proven energy source," he said. "It has some political and social acceptance that needs to be overcome." He said that nuclear energy would be "OK" but needs to be sited properly.

The NPCC was formed by Congress in 1980 to provide Idaho, Montana, Oregon and Washington a voice in determining the future of resources common in the state.

No nuclear in Idaho yet

Idaho has no commercial nuclear power plants. A proposed plant by MidAmerican energy for a site in Payette, ID, was scrapped last month mostly for financial reasons, including an apparent lack of other investors to share the risk, and the high estimated costs of first-of-a-kind components for a new reactor design.

Another proposed nuclear plant is slated for a site 100 miles south east of Boise. Alternative Energy Holdings Inc. (PK:AEHI) claims it will build an Areva EPR in a joint venture with Constellation Energy (NYSE:CEG). However, the firm is still invisible on NRC's radar and has not brought forward a credible financial plan.

Idaho needs the power. Hydro and wind vary with the weather. Sooner or later someone is going to get their act together and come up with a proposal for nuclear energy in the Gem state that makes sense.

Austin Energy faces NRG investment decision

Municipal energy utility must step up to the plate or walk away
[NRC delays review of NRG COL; Updates 02/13/08, 02/14/08]

A minority investor in NRG's South Texas Project has received a consultant's report that recommends against investing in two new reactors there. The City of Austin, TX, hired Worley Parsons Resources & Energy of Houston. The firm determined that the expansion's cost could be at least $1 billion more than estimated, and take two years longer, according to a memo to the City Council as reported by the Austin American newspaper. NRG estimates the expansion will cost $6 billion and take seven to eight years to complete. The firm filed for a COL with the NRC last September as the nation's "first mover" in the nuclear energy field. [background report].

Austin could join NRG Energy Inc. (NYSE:NRG) and San Antonio's CPS Energy in their proposal to build two new reactors at the Matagorda County facility. Austin currently owns 16 percent of the plant which includes two operating reactors. The expansion proposal more than doubles the size of the South Texas Project in terms of generating capacity. A vote on the decision to invest in the plant expansion is scheduled by the City Council for next month. City council members are reportedly divided on the issue, and several said they wanted more time to make up their minds.

Even if the city decides not to be an investor, it may still continue as a customer of the unregulated merchant plant. NRG spokesman David Knox told the newspaper the company understands and respects Austin's decision not to participate, but looks forward to working with the city as a potential customer of the expanded plant.

"Our goal has always been to work with Austin and let them be able to make their own decision," Knox said. The new reactors' design has been used at four plants in Japan, and all of them have come in on time and on budget, Knox said and he addd NRG is confident that success rate can be duplicated in the United States.

Austin Energy projects that it will need to generate an additional 152 megawatts of electricity by 2020. Austin currently has 2,900 megawatts of power production capacity, 400 megawatts of which are supplied by the nuclear plant.

Quote: If you come to a fork in the road, take it. Yogi Berra

Updates 02/13/08, 02/14/08

San Antonio would take 50% share if Austin walks away

CPS Energy, San Antonio's public utility, could become a 50-50 partner with NRG Energy in an expansion of the South Texas Project nuclear plant if Austin decides not to take the 16 percent ownership stake to which it is entitled, a key CPS official said this week.

Last week it became clear that several members of the Austin city council are getting cold feet about signing up to invest in the new NRG reactor after its city-owned utility, Austin Energy, advised against such a move. The Austin utility said cost and time estimates on the plant were "overly optimistic."

The Houston Chronicle reports that San Antonio will have the need for another plant that produces electricity in about seven years, and a study by CPS indicates that nuclear power may be the least expensive source.

Austin has the right to be a 16 percent stakeholder in the plant's expansion, the same ownership it has now. CPS now owns a 40 percent stake in the plant, and NRG 44 percent.

CPS has a deal with NRG that says if Austin decides not to participate, "we are 50-50 partners," a spokesman said. That's the contract language, but if Austin drops out San Antonio will look for another investor to take its place and buy Austin's 16% share. "We wouldn't be against bringing in a third partner," a CPS spokesman said.

The two new NRG reactors are designed to supply 2,700 MWe. Austin's 16% share would come to 432 MWe of which the city says it only needs 152 MWe by 2020 or about one-third of the total potential investment share of the new capacity. What hasn't been reported in the press so far is whether Austin would sign up for just 152 MWe or 5.6% of the new reactor capacity and offer the rest to other investors acceptable to CPS and NRG. It is hypothetical, but surely someone with some negotiation horse sense must have thought of it by now?

NRC puts part of NRG's COL on hold

The Dallas Morning News reports that the NRC suspended portions of its review of NRG Energy's application for a license to build two new nuclear reactors in South Texas. The newspaper says the NRC told the New Jersey power company in a letter in late January it will continue to review some sections of the application but must stop reviewing incomplete sections.

A spokesman for NRG said the company continues to negotiate with some equipment vendors, and therefore cannot yet finish some portions of the application. Most likely the negotiations involve large components with long lead time like turbines and large reactor forgings.

CNN reported on 02/14/08 that the NRC issued a notice that indefinitely postponed the public comment period on NRG's application for two new units at its facility in Bay City, Texas, about 90 miles southwest of Houston. The comment period was supposed to expire on Feb. 25, at which point a public hearing would have been scheduled.

NRG last month told federal regulators that cost negotiations were continuing with its reactor vendors, which would make it difficult for the company to respond to specific design questions the government has about the application, NRG spokesman David Knox said.

Tuesday, February 5, 2008

Energy budgets boost nuclear power for 2009

DOE & NRC see increases in key nuclear programs

Today was budget day for the Department of Energy and the Nuclear Regulatory Commission. Both agencies unveiled budgets for FY 2009 that support new nuclear power plants. That's good news.

The challenges ahead include two U.S. Senators, both Democrats, running for President and both need environmental votes and cash to make it to the finish line. Once someone is elected reality may set in. The Nuclear Energy Institute weighed in with a statement of support for the budgets. (more on this below).

The budget is just a plan, and the appropriations process will prove out politically who gets what when. President Bush is in his final year in office. As these things go he is a "lame duck" which means he has little political clout to influence the appropriations process. New Mexico Senator Pete Domenici is retiring so his influence will wane as well. The situation is more diffuse in the House. Rep. Pete Visclosky, who has the leadership role for DOE's appropriation, supported new nuclear R&D in 2008. It is still too early to say much more than that.

The top nuclear energy official for the Department of Energy, Dennis Spurgeon, told Platts Nuclear Conference this week that the "number one priority" for DOE is to get new nuclear plants under construction. The budget numbers show it.

Spurgeon called the Nuclear Power 2010 a "success story" that shows how government and industry can work together to "jump start" the nuclear industry. He cited the Bush administration's fiscal 2009 request for $241.6 million, more than double the previous year's allocation.

Platts also reported . . .

DOE requested $241 million for Nuclear Power 2010, a joint government-industry cost-sharing program testing the US Nuclear Regulatory Commission's licensing process and developing new standardized reactor designs and bringing them to market. Congress provided $135 million in fiscal 2008 for the effort. So this is a major increase in funding for a key program to get nuclear reactors licensed and built.

Nuclear R&D fared less well in the budget submission to Congress. The Advanced Fuel Cycle Initiative, which covers research and development on advanced reprocessing and fast-reactor technologies as part of the department's Global Nuclear Energy Partnership, would receive $302 million under the request. Last year's request for GNEP overall was $405 million. Congress provided $179 million for AFCI in the current fiscal year.

Generation IV Nuclear Energy Systems Initiative, on "next-generation nuclear energy concepts," would get $70 million in fiscal 2009. For fiscal 2008, Congress provided $116 million for Gen IV. Much of this work is done in Idaho. With Sen. Larry Craig having tap danced himself into legislative limbo, it's unclear who will be the advocate for this funding.

Back at the Platts conference Spuregon said that to keep the share of electricity from US nuclear power at its current 20% will take construction of at least 45-50 new nuclear units over the next 20 years or by 2030. All those plants will have to be approved by the NRC.

NRC budget exceeds $1 billion for 1st time

NRC's FY2009 budget request exceeded the billion-dollar mark for the first time. The $1.02 billion budget is $91 million more than its FY2008 funding level. Platts reported NRC is requesting $787 million in FY2009 for nuclear reactor safety activities, up $6 million from the $741 million it received in FY2008. That request includes $238 million for activities related to new reactors, up $4 million from $234 million the agency received in FY2008. The agency also is requesting $184 million for nuclear materials and waste safety activities, up $36 million from the $148 million it got in FY2008.

NEI supports DOE's budget

Over at the Nuclear Energy Institute the DOE budget got a positive nod from the industry's trade association.

Nuclear Energy Institute President and Chief Executive Officer Frank L. (Skip) Bowman said the budget request properly recognizes the need for nuclear energy to remain a key element of the nation’s diverse electricity portfolio for generations to come.

“Nuclear energy enhances our energy independence, and new nuclear power plants are essential if the United States hopes to meet its energy and environmental challenges. The promise of nuclear energy technology extends beyond electricity production to include production of hydrogen and process heat for other applications. For these reasons, the administration’s investment in the Nuclear Power 2010 program, the used fuel management program and the loan guarantee program are welcome and warranted."

[Hat tip to NEI's blog.]

Links for Budgets

The budgets are huge and for those that want to dive into the details you can get them at this web links. The whole link is shown so you can cut and past this part of the blog post into an email.
  • Department of Energy

Like all federal agencies DOE puts its annual budget proposal and justification language online for access by the public.

The official DOE press release with top level information

DOE Office of Nuclear Energy budget documents, highlights, and briefing slides

  • Nuclear Regulatory Commission

Budget press release

Budget briefing slides and documents

Monday, February 4, 2008

Nuclear fuel R&D firm recruits former IAEA Director

Hans Blix signs on at Thorium Power

Thorium Power Ltd. (OTC:THPW), a developer of nuclear fuel technology and provider of advisory services for emerging nuclear programs, announced that Dr. Hans Blix has joined Thorium Power as a Senior Advisor. Dr. Blix will augment Thorium Power's advisory services for nations interested in developing a civilian nuclear industry.

The company said in a press release Dr. Blix will work with the company's team of experts in nuclear energy deployment and technology Lars Hogberg, the former Director General of the Swedish Nuclear Power Inspectorate, and Tom Murley, the former Director of Nuclear Reactor Regulation at the U.S. Nuclear Regulatory Commission.

A profile published by the BBC shows Blix is a diplomat who has long experience with nuclear nonproliferation issues. Currently he is the Chairman of the Weapons of Mass Destruction Commission, Dr. Blix was the former Director General of the IAEA (1981-1997), Chief of the United Nations Monitoring, Verification, and Inspection Commission for Iraq (2000-2003) and Foreign Minister of Sweden (1978-1979).

"Hans Blix is one of the world's leading authorities on the role of nuclear energy and we are honored that he has chosen to join Thorium Power as a senior advisor," said Ambassador Thomas Graham, Jr., Thorium Power's Executive Chairman.

"Dr. Blix is a person of unquestioned integrity and has been one of the leading voices for the peaceful expansion of civilian nuclear power. We are pleased that he has chosen to join us in our efforts to assist nations in establishing nuclear programs founded on transparency and non- proliferation."

* * *

For more information on the prospects for thorium as a nuclear fuel check the World Nuclear Association's pages on the metal. According to WNA . . .
  • Thorium is much more abundant in nature than uranium.
  • Thorium can also be used as a nuclear fuel through breeding to uranium-233 (U-233).
  • When this thorium fuel cycle is used, much less plutonium and other transuranic elements are produced, compared with uranium fuel cycles.
  • Several reactor concepts based on thorium fuel cycles are under consideration.
India, Norway, and Russia are interested in building thorium-fueled reactors.