This is the "show me" news post in which I take "Missouri citizenship" about a variety of news events in the nuclear industry, including one in Missouri.
Exelon to NRG: I have you in my clutches my dear
Chicago-based Exelon (NYSE:EXC), which exemplifies the spirit of a city that will not take “no” for an answer, claims it now has 51%or a controlling interest in New Jersey-based NRG Energy (NYSE:NRG). Although, most of what Exelon wants isn’t in New Jersey. Look west for the reason. NRG has two operating nuclear plants in Texas and two more that are under construction at the same site.
Exelon said in a news release that 125 million shares, worth $2.38 billion, or 51% of the outstanding NRG stock, had been tendered since Exelon extended its offer for the company. Exelon extended the offer again, until June 26, to buy each NRG share for 0.485 Exelon shares.
In short, Exelon’s hostile all-stock takeover of NRG will net it two operating nuclear reactors, and two new ones under construction, for less than the price of a new one. This is the part of the “nuclear renaissance” that the Medici family would easily recognize.
The Dallas Morning News reported Exelon executives interpreted the results of the tender offer to mean that NRG shareholders would accept the offer, even though the tender doesn't bind a shareholder to sell his or her shares.
"If NRG still refuses to listen to its shareholders, we will have no choice but to press forward to seek election of an expanded NRG board with new independent directors," Exelon chief executive John Rowe said in a prepared statement.
The Wall Street Journal reported that is NRG refusing to recognize reality, that the fair maiden really is tied up on the railroad tracks. In response Exelon says it will nominate its own slate for the board.
William Von Hoene Jr., Exelon's general counsel,said Exelon would pursue a proxy contest to replace NRG's board with its own nominees at the next annual meeting.
"We are fully prepared in the event that they do not [negotiate], to solicit the proxies and attempt to change the composition of the board."
Exelon’s all stock hostile bid depends on NRG shareholders actually selling their stock. Right now Exelon is holding offers to sell. Watch this space in June.
Missouri Governor balks at change in nuclear energy law
Missouri Gov. Jay Nixon says he doesn't think a law should be changed this year to help Ameren build a second nuclear power plant. The Associated Press reports that Nixon, a Democrat, told St. Louis radio station KMOX that Ameren should first get the NRC license before focusing on financing.
Nixon is concerned that Ameren could collect money from a rate increase to pay for the plant for the next several years, get the NRC license in 2012, and then decide not to build the plant.
"I think that we need to be very careful, especially in these economic times, that we aren't putting additional stress on families out there and their heating bills and their cooling bills and all that for something that might happen in the future," Nixon said.
Legislation designed to help Ameren has backing by both Republicans and Democrats, but the criticism of the bills also has been bipartisan. The law, if changed, would allow Ameren to collect money from the rate base to pay for the plant while it was being built. Current Missouri law, dating back to the 1970s, prohibits this practice.
Missouri AFL-CIO President Hugh McVey said in a written statement released Friday to The Associated Press that lawmakers should continue negotiating and try to get the bill passed this year.
"The passage of this legislation and the construction of this plant will move our state in the right direction," McVey said. "While there is still time for compromise, there is not time for delay."
The Missouri Energy Development Association, a trade group for investor-owned utilities such as Ameren, estimates that residential customers would pay 1% to 3% more per year and just over 10% for the entire project.
Critics of the legislation estimate that electric rate increases could be significantly higher. Missouri Public Counsel Lewis Mills, who advocates for consumers before state utility regulators, has said that he expects rate increases will be at least double Ameren's estimates.
MIT Geeks swoon over Traveling Wave reactor concept
Intellectual Ventures, a patent mill that aggressively seeks revenue through licensing of high technology intellectual property, has a sideline called Terrapower LLC funded by the Microsoft foundation. It is an effort to build a radically new nuclear reactor.
There are an estimated 35 nuclear reactors currently being built in 11 countries, (notably China, South Korea, Japan and Russia) and 22 applications under review for new reactor construction in the U.S.. It is no surprise to anyone reading this that energy policy experts expect increasing use of nuclear energy worldwide.
This reality apparently motivated Nathan Myhrvold, who runs Intellectual Ventures, to direct his company to find better solutions to problems of managing spent fuel and proliferation concerns associated with traditional nuclear power. His idealistic vision contrasts remarkably with a well-honed instinct for lawsuits and conflict over licensing of computer and electronics patents. He’s attracted plenty of critics over his business practices.
MIT’s Technology Review named the TerraPower project one of the ten emerging technologies of 2009 and it hired NY Times reporter Matt Wald to do the write up. Wald presented this breathless prose to readers.
The traveling-wave idea dates to the early 1990s. However, Gilleland's team is the first to develop a practical design. Intellectual Ventures has patented the technology; the company says it is in licensing discussions with reactor manufacturers but won't name them. Although there are still some basic design issues to be worked out--for instance, precise models of how the reactor would behave under accident conditions--Gilleland thinks a commercial unit could be running by the early 2020s.
This optimism is seriously overwrought. There are very significant reasons why it could take much longer for the reactor to catch on.
The first is the weight of all the light water reactors that have decades of useful revenue service in front of them.
Second, every reactor in the world coming off the drawing boards today, except for a few “pebble beds,” is a light water reactor. Nuclear utilities are very risk adverse and always go with the “known knowns” of the engineering world. That’s one of the reasons why MOX fuel has had such a slow rate of adoption. It is a different fuel type that requires new operating procedures, safety plans, and has new economic issues.
Third, no one knows whether such reactor will work. No prototype has been built. All we have is Gilleland’s word for it. Even if Microsoft with all its money wants to build a prototype, it had better think about committing at least $500 million to $1 billion to accomplish that result, which can only take place after it convinces the NRC to grant the project a license.
Fourth, once Microsoft has a prototype, it has operate it for a period of time to figure out whether it is really as safe as claimed and to get numbers to figure out whether anyone can make money with one. My guess is 2020 could turn out to be 2040.
If you think these questions are without merit, just take a look at the history of the Pebble Bed design which was first developed in Germany in the 1950s. Six decades later it is just getting to the point where one country, China, is developing a commercial version. Similar efforts in the U.S. and South Africa are seriously lagging behind the Chinese effort.
There is also some evidence that TerraPower isn’t putting all its eggs in one basket. A review of job listings issued by the firm calls for nuclear engineers with experience designing liquid metal or molten salt reactors (large graphic) (video). That hint in a job description suggests a parallel effort to explore sodium cooled reactors or an entirely different design which is the Liquid Fluoride reactor, a thermal breeder first developed at Oak Ridge National Laboratory.
The R&D director at TerraPower is Kevin Weaver who previously worked on the Next Generation Nuclear Plant (NGNP) mission at the Idaho National Laboratory. The NGNP is a high temperature gas-cooled reactor. The question now becomes how many irons does Microsoft really have in the fire and which way is it really going?
My key question remains which is that with all these obvious barriers to market, what makes Microsoft think they can leapfrog decades of history in terms of diffusion of innovation in a very capital intensive industry? This isn’t software. It’s hardware. I’ll take Missouri citizenship on this one. Show me.
Russia faces “show me” questions about its nuclear build
A Canadian think tank has published a study that should be required reading for anyone making an assessment of Russia's efforts to export nuclear technologies and to build up its own infrastructure.
Russia's ambitions for its "nuclear renaissance" face many obstacles, concludes a report released by The Centre for International Governance Innovation (CIGI).
“The Russian Nuclear Industry: Status and Prospects” provides a detailed analysis of the current state of the nuclear power industry in Russia and shows that although this industry has recently been greeted with renewed funding and enthusiasm, achieving its ambitious plans will require it to overcome considerable problems and limitations.
"Continuing a tendency from Soviet-era days, the Russian government has shown a predilection for developing grandiose plans for the expansion of the nuclear energy sector that are not fulfilled," writes Miles Pomper, author of the paper. "While the first post-Soviet nuclear plans called for a total of 38 new nuclear reactors to be built, only three have actually been constructed and with capabilities that are not superior or even equal to its Western competitors."
The author examines Russia's plans to recombine the nuclear complex into one entity in order to centralize control, promote investment in profit-generating projects, and attempt to make the industry self-supporting by 2015.
He argues that limited financial resources and strained technical capabilities will stand in the way of the country meeting its goals of both rapidly developing new reactors and fostering a fully self-sustaining nuclear industry by 2015, especially if Russia will have to decommission many of its aging Soviet-era nuclear reactors and deal with the growing problem of nuclear waste.
China readies four new 1,000 MW units in Anhui
The China Daily reports that the China National Nuclear Corp (CNNC), builder of the Qinshan and Tianwan nuclear plants, set up a new company in Anhui province on Wednesday to develop its Jiyang nuclear power plant.
The project, located in Chizhou, a city on the Yangtze River, is designed to have four 1000-MW nuclear reactors, with a total investment of over 50 billion yuan ($7.31 billion). The reactors most likely will be an indigenous design similar to other reactors already under construction.
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