Saturday, July 4, 2009

Short week news stack for 7/03/09

Ameren calls it quits

Ameren switched gears this week asking the NRC to stop its review of the utility’s license application for a new nuclear power plant at Callaway, MO. The action by Ameren probably means the Callaway II new nuclear build is dead. It is an exasperating defeat for pro-nuclear business groups in Missouri. The experience had all the grace and finesse of a state fair demolition derby.

Ameren spokesman Mike Cleary told the St. Louis Post Dispatch on July 2, “We decided it was not prudent to have the NRC continue its review.”

The firm says it is giving up because the Missouri General Assembly refused to overturn a 1976 law that banned “Construction While in Progress” or CWIP. Had the legislature acted in Ameren’s favor, the utility would have been able to recover construction costs while the new reactor was being built avoiding costly interest charges.

The cost of the new reactor was pegged at $6 billion or $3,750/KW. Had it gone forward the utility would have broken ground in 2011 with revenue service available in 2016.

The legislative initiative failed in large part because Ameren failed to understand and respond to rate payer concerns about how it would control costs for the new build. It’s largest customer, the Noranda aluminum mill, actively lobbied against the change to the CWIP ban as did a coalition of anti-nuclear and consumer groups.

Ameren entered the front end of the legislative session with political leaders in both houses championing its cause, but by the end of the session, these same politicians, who took Ameren’s $300,000 in campaign contributions in the last election, were running for cover. The reason was the utility’s initial positions on a broad range of rate payer rights issues. Even the Public Utilities Commission, which is nominally neutral in such matters, came out against the measure as drafted by the utility.

In July 2008 Ameren filed electronically 8,000 pages with the NRC in a license application on which it says it spent $75 million. It is now seeking to recover those costs from the rate base. Ameren will likely sell off its place in line with Japan Steel Works for large forgings for an Areva 1,600 MW EPR. Those contractual obligations, the utility says, are liabilities worth $85 million.

Ameren still has to figure out what it will do about its next base load electric generation plant. While the current recession may put a crimp on growth in demand for electricity, by 2018-2020 the utility is going to need those 1,600 MW in one form or another. A federal carbon tax and cap-and-trade program, if implemented in 2010, will by 20178 surely make coal a very expensive choice.

Japanese utilities fade on MOX use

japanese-sunsetJapanese utilities confirmed to NucNet that their program to spin up the use of MOX fuel at 18 nuclear power plants has been delayed by at least five years. The Japan Atomic Industrial Forum (JAIF) announced that the Federation of Electric Power Companies made the decision on June 12.

The key reason is that the start of operations of a MOX fuel fabrication plant by Japan Nuclear Fuels has been pushed back from October 2012 to June 2015. The plant is is still scheduled to break ground in 2009, but this date itself is two years behind schedule. Construction of the plant at Rokkasho in Aomori prefecture is also opposed by a broad swath of local government groups. In Japan these political entities have standing to block such projects.

The original plan was for 11 Japanese utilities operating 18 nuclear plants to start using MOX fuel by April 2010. The delay will likely increase costs to Japanese ratepayers as the country is in a world wide race to secure uranium for nuclear fuel.

Paradoxically, Japan developed its plans for a plutonium fueled electric utility industry in order to get out of competition with China for Middle Eastern fossil fuels. Now with the focus on global warming, and China’s massive commitment to building new nuclear power plants, MOX fuel seems to like a plausible competitive advantage. The strategy will only work if the Japanese can extricate themselves from endless bureaucratic delays.

MHI to get Comanche Peak order?

MHI nuclear logoOne bright note for Japan’s nuclear industry is the Bloomberg wire service reported on June 28 that Mitsubishi Heavy Industries (MHI) is said to be on the verge of receiving an order for two of its new 1,700 MW Advanced Pressurized Water Reactors (APWR) from Luminant, a Texas based private equity owned nuclear utility. The order, expected to be worth approximately $6.3 billion, would be for Luminant’s Comanche Peak plant.

Luminant is in an unusual position in the Federal loan guarantee program. It is in the 5th position relative to four firms that are short-listed for the loan guarantees. If one of them drops out, they move up. The APWR reactor is still undergoing design certification review at the NRC.

Meanwhile, Bloomberg also reports that MHI will double the number of its employees in the U.S. to 200 people. Additional employment growth is forecast if the order to Luminant goes through. Construction could begin sometime in the 2011/2012 timeframe with revenue service set for 2020 at the latest.

China sets new nuclear energy goal at 86 GWe

chinese-dragon-mosaicChina is reportedly revising its plans for new nuclear power plants. A new estimate, still be be made official by the government, calls for 86 GWe of nuclear generation capacity. This is a nearly 10 fold increase from its current capacity of 9 GWe.

According to the China Daily for July 2, an English language newspaper, the plan "will call for the government to accelerate nuclear power development in coastal provinces and autonomous regions, namely Liaoning, Guangdong, Zhejiang, Fujian, Guangxi, Jiangsu, Shandong and Hainan," the sources said.

In order to achieve the goal, the government will also set up a "reasonable number of nuclear power plants in inland provinces in Jiangxi, Anhui, Hunan and Hubei", the anonymous sources said.

According to an assessment by World Nuclear News, the plan for 86 GWe would place China’s eventual build at second rank globally behind the U.S. fleet which is now at 100 GWe but ahead of France at 63 GWe and Japan at 46 GWe. These rankings could change over time depending on how the other nations pursue nuclear energy as a response to global warming.

There is some skepticism as to whether China has the internal manufacturing capability to build the equivalent of seven more 1200 MW plants by the end of the next decade. The country will likely have to build its own large forgings plant, which would be a multi-billion dollar endeavor. Also, it will have to train at least 300-500 nuclear engineers a year for at least ten years. The need for skilled crafts people capable of delivering nuclear grade concrete and steel fabrication services will be a serious challenge.

China National Nuclear Corp, the biggest nuclear power operator in the country, China Guangdong Nuclear Power Holding Co Ltd and China Power Investment Corp, the parent company of the Hong Kong-listed China Power International Development Ltd, are currently the only players in the nuclear power sector. How they will meet the demands for people and materials will be interesting to see.

By comparison in the U.S the Nuclear Energy Institute (NEI) sees only four-to-eight new nuclear power plants being built in this country by 2020. The same capacity issues face the U.S. nuclear industry.

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