Saturday, August 30, 2008

Turkey to open bids Sept 24th

Energy minister rejects pleas for an extension

gulerHilmi Guler, (left) Turkey's energy minister, told a press conference this week in Ankara that there will be no delay in the date for opening bids on Turkey's new nuclear power plant. He said the government would open bids on Sept 24. He rejected a request from four potential bidders for a delay which included questions about legal issues and insurance. "At this point we expect interested companies to work more and to adopt our conditions and the fixed date for the tender," he said.

Guler cited the urgent need to increase energy production and ruled out any delay or postponement in Turkey's first nuclear power plant tender, saying, "We have no time to lose."

Turkey needs to make a total $70 billion investment in energy production and distribution network by 2020 to meet its increasing demand, a government body said this week. It also said net energy import in 2008 is expected to hit $46-47 billion.

One bidder may pull out

One of the major consortiums considering a bid said in response it would now have second thoughts after hearing the government's position. Sabanci Holding, a Turkish conglomerate, told Bloomberg wire service it may drop out of participation in the bid process.

Bloomberg reported that Sabanci was one of those seeking an extension, and after the government's refusal said, "we are reconsidering our position together with our partners."

Guler SabanciSabanci Holding Chairwoman Guler Sabanci (right) told reporters in Istanbul, "Apart from extending the deadline for auction, there are many unanswered questions about several issues, including licensing and insurance of the plants."

Sabanci has partners that include Spain's Iberdrola SA and General Electric Co. Iberdrola controls one Spanish nuclear plant and has stakes in five others. General Electric is partnered with Japan's Hitachi and may offer their newest boiling water reactor (BWR) design if the firm submits a bid.

Critics weigh in on management issues

The Turkish Daily News reported that critics of the project said that even if the government makes a contract award, there are still significant challenges ahead for the project.

Iskender Gökalp, Director of the National Scientific Research Center based in Paris, said Turkey lacks the necessary engineering talent and skilled trades to design and build a nuclear power plant.

"Turkey might be the first country where a nuclear power plant will be built without necessary scientific and engineering personnel. I do not think there are countries with nuclear power plants without a firm grip on nuclear technology." he said.

Haluk DireskeneliEnergy Expert Haluk Direskeneli (right) added that the lack of personnel is one angle that cannot be ignored because it will lead to a mismanaged power plant. He said the country has trouble managing its fossil-fueled power plants. He also noted that Russian and Chinese companies might come to dominate the nuclear energy sector, a sector that was supposed to reduce Turkey's dependency on overseas resources.

"Turkish firms are not capable of anything but laying the groundwork of the plant site. Turkey is simply not ready," he said.

Government scoops up nuclear protestors

While the bid process was being worked over in the capital, Turkish police detained 32 people involved in an anti-nuclear protest in Sinop. They held a demonstration at the provincial governor's office by laying down and pretending to be dead bodies from a nuclear accident.

The Associated Press reported that Niklas Hartmann, of the group European Youth for Action, said the police arrested the group which included American, German, and French citizens. The group had been camped near the site since Aug 9 according to a statement on its web site. It wasn't clear from press reports what the grounds were for the arrests other than the protest was an embarrassment to the government at the time it was trying to push forward with the nuclear bid process. Hartmann claimed the police disregarded the right of free speech in Turkey.

List of potential bidders

Turkey initiated a tender for the construction and operation of a nuclear power plant in the Akkuyu district of Mersin province in March of this year.

According to a list circulated by the Energy Ministry on Aug. 25, Vinci SA of France, Brussels-based Suez-Tractebel SA, China Guandong Nuclear Power Group Co., AECL Inc., Japan's Itochu Corporation and ZAO Atomstroyexport of Russia are among companies that received the tender documents.

Istanbul-based Alarko Holding AS, a venture including Hema Enerji AS and another venture led by Dogan Sirketler Grubu Holding AS of Turkey that includes Canada's Bruce Power LP are also among the potential bidders. The Canadian contribution could include participation by AECL for its new ACR1000 rector which is still in the design stage. However, Turkey might not accept an unproven reactor in a bid.

Turkey plans to build a nuclear power plant with a capacity of 3,000-5,000 megawatts. Turkish Electricity Trading and Contracting Company (TETAŞ) will sign a contract with the lowest bidder to purchase the power generated in this nuclear plant for at least 15 years following the start of operations. Turkey also plans to build a second plant near Sinop on the Black Sea coast.

Prior coverage on this blog

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Friday, August 29, 2008

Areva's double trouble with EPRs

Delays at Olkiluoto and Flamanville hit the bottom line

DoubleTroubleReuters reports that French nuclear giant Areva will have to take a significant charge against earnings due to increases in the cost of its EPR under construction at the Olkiluoto site in Finland. At the same time Platts reports that the new nuclear power plant under construction at Flamanville in France, also an EPR, is nine months behind schedule. (EPR image WNN)

In Finland Areva, and its prime contractor Bouygues, said they were cleared this week of charges made by Greenpeace of disregarding quality instructions for welding. Staff for the Finish nuclear safety authority (STUK) reportedly said that following its own inquiries it was confident that "the welding procedures, qualification of welders, and the welds themselves are well done."

Bloomberg wire service reported STUK also said Aug 29 the supervision and "safety culture" of welding at the Olkiluoto-3 nuclear plant did not meet all of its standards and must be improved. The agency has specified changes after inspecting the site and interviewing workers last week. However, the regulator said it found no quality problems that threaten the durability of the welds.

Overall, costs for the plant, including the price of concrete and steel, have increased by 50% and upcoming labor troubles with Polish workers may add to the project's woes.

The problems in France at Flamanville cropped up last May due to missing or misplaced steel reinforcements in the concrete foundation. Electricite de France said despite the problems, the Flamanville plant was on schedule to enter revenue service in 2012. The firm did not say what steps it will take to reduce the schedule variance.

EPR costs catch up to U.S. new build estimates

The cost of the new reactor in Finland is reported to have increased from 3 billion(euros) to 4.5 billion(euros) or $6.7 billion. The cost per kilowatt for the 1,600 MWe plant is said to have increased from $2,800/Kw to $4,200/Kw which puts it in the low range of cost estimates for new reactors planned to be built in Florida by Progress and FPL. This means that despite the headlines in the financial wire services, Areva's plants, which were started several years ago, are faced with the same construction cost realities as new plants that were announced this year. This may make the cost increases in Europe less of a barrier to Areva's planned entry into the U.S. market. More on this below.

Record profits offset cost increases

Areva logoAFP reports that Areva is setting aside 1 billion (euros) or $1.46 billion as a provision to absorb the new costs. However, the Associated Press also reports that Areva also booked record profits in the first half of 2007.

The world's largest nuclear reactor builder told AP net profit more than doubled in the January to June period to 760 million (euros) ($1.12 billion), up from $295 million (euros)($432 million) year earlier. Areva also credited growth in its nuclear waste treatment business.

Areva's reactor business posted an operating loss of 258 million (euros) ($380 million) in the first half, after the company made new provisions for the Finnish reactor project.

Merger madness put on ice

Forbes reports that as a result of the troubles at the two reactor construction sites that plans for a capital increase or merger with other firms have been put on hold by the French government. The majority of Areva's shares are owned by the government.

turbineForbes cited a report by a German banker as the basis for the new development. German engineering firm Siemens holds a 34% stake in Areva and is also supplying the turbines for the Olkiluoto site. French turbine maker Alstom, which also wants to increase its holdings in Areva, said it could expand without a merger. Anne Lauvergeon, Areva's CEO, wants the capital expansion but is opposed to mergers with other firms.

U.S. market - separating prime rib from baloney

Areva is planning a major marketing push to sell the EPR into the U.S. nuclear reactor market. New projects with the near-term likelihood of moving forward are at Comanche Peak in Texas, Ameren in Missouri, and Calvert Cliffs in Maryland. Areva has a joint venture with Constellation to build a standardized fleet of EPRs in the U.S. Last December Areva filed for design certification of its US EPR design with the NRC. The NRC expects to complete its review in Spring 2011.

baloneySome of its planned reactors are slated for projects which are more conjecture than reality including Amarillo Power in Texas and AEHI in Idaho. The two projects have consistently failed the world famous "baloney test" for new nuclear builds.

As a result Areva's early enthusiasm for them may give way to financial realities. The company may decide its credibility in the market makes hanging out with visionaries a risky venture. As NRC Chairman Dale Klein says, the nuclear industry is no place for people without experience in the industry or the ability to work credibly in it. As things work themselves out at Olkiluoto and Flamanville, Areva will have plenty of experience to bring to the U.S. market and will likely make it a formidable competitor to Westinghouse and GE-Hitachi.

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Prior coverage on this blog.

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South Africa to reprocess spent nuclear fuel

Eskom wants ship it overseas to make MOX fuel

Eskom logoSouth Africa is seeking commercial contracts with foreign countries to reprocess spent nuclear fuel. Currently, the electric utility has about 1,000 tons of it. The current inventory of spent nuclear fuel comes from a single reactor at Koeberg.

Potential contractors for the job are France, Japan, and the U.K. There is no plans to build a reprocessing plant in South Africa. Moreover, the resulting MOX fuel could be sold to other countries rather than used at home.

Paying for a new build

Eskom has plans to spend upwards of $44 billion on the construction of 24-30 Pebble Bed Modular Reactors (PBMR) to supply electricity and process heat for domestic use. Of this amount ($44B), at least half ($22B) will have to be raised via global investment markets. Recently, credit rating service Moody's downgraded Eskom's ability to borrow because the South African government did not allow it to raise rates by as much as 60%. Instead, the government granted a rate increase of about half that amount, but left the door open to future incremental increases. Eskom may have to turn to the World Bank for financing of its new nuclear build.

Revenue potential of spent nuclear fuel

Sale of the fuel could help pay for the massive investment. If this turns out to be the official plan, it will make South Africa the first nation to recognize the revenue potential of exporting its spent nuclear fuel. The exports would also help South Africa keep more of its mined uranium for its own use and help pay for the massive new build of PBMRs. The revenue might also help raise its credit rating and gain more favorable terms for loans from the World Bank.

Eskom infrastructureIn the past two years South Africa has faced crippling shortages of electricity due to failure to raise rates and to invest in new generating capacity. The economy has suffered significantly especially in the key sectors of mining, smelting, and manufacturing all of which are big users of electricity.

LWRs on tap

In addition to the new PBMRs, South Africa also has plans to build as many as 12 new conventional light water reactors (LWRs). Since South Africa has no nuclear fuel manufacturing capability of its own, it is likely the contracts for the new plants would involve retrograde of the spent fuel either back to the country of origin or offered for sale as part of the newly announced export plan. The bidders on the 12 new LWR plants may have to take this new announcement by South Africa into account.

PBMR EPC contract awarded for $242 million

World Nuclear News reports that Canada's SNC Lavalin has announced that a joint venture with Murray & Reports has been awarded a $242 million contract for engineering, procurement, and construction services (EPC) for South Africa's PBMR project. A finished PBMR unit is expected to enter revenue service in 2014. It would produce 165MW and be built in networks or "packs"of eight at a time. An "eight pack" would generate 1,300 MWe or 15% more than a Westinghouse AP1000.

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Prior coverage on this blog

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Barack Obama's Nuclear Energy Policy

Candidate comes out for nuclear power in Denver speech

barack-obama[Update 11/02/08] For some time Democratic presidential candidate Barack Obama has stepped around the issue of nuclear energy so as not to offend the party's "green" base of votes and campaign donations. Thursday night in his acceptance speech in Denver he came out four square with an energy policy that includes nuclear energy. Here it is.

"As President, I will tap our natural gas reserves, invest in clean coal technology, and find ways to safely harness nuclear power. I'll help our auto companies re-tool, so that the fuel-efficient cars of the future are built right here in America. I'll make it easier for the American people to afford these new cars. And I'll invest $150 billion over the next decade in affordable, renewable sources of energy -- wind power and solar power and the next generation of biofuels; an investment that will lead to new industries and five million new jobs that pay well and can't ever be outsourced."

That's clear. He said "safely harness nuclear power," and without the usual qualifiers that have dogged his previous campaign statements including most recently his response to John McCain's visit to Fermi II in Michigan.

Obama is not out on a limb with this position even with politicians from that greenest of states California. The San Francisco Chronicle reports that Senator Barbara Boxer (D-Calif) said at the Democratic convention this week,

"Under any scenario, we're going to see more nuclear power, because it's just going to be more cost-effective once there's a price on carbon."

It looks like a positive development for the Democrats. It closes the gap between the two candidates on this issue. Maybe now that the primaries are behind us and the general campaign is underway, common sense is rising to the top?

Oh yes. I really like his point about the fact that jobs associated with wind and solar energy projects can't be outsourced. Just for the record, neither can you "outsource" the operation of a nuclear power plant.

Note to parents . . . tell your sons and daughters that if they want one of those high paying jobs in the energy field, including solar, wind, and nuclear, to include math and science courses in high school and strongly consider engineering majors if planning on college.

Watch this space for updates.

On the net . . .

Barack Obama's web site - energy policy

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