Wednesday, August 25, 2010

Update on nuclear energy exports

Global markets for sale of reactors are expanding

exportsExport of nuclear reactors is a growing business despite the global economic downturn. The most interesting aspect of it is that state-owned corporations in China, Russia, and France are the leading exporters of nuclear technology.

In December 2009 a consortium of South Korean firms joined this exclusive club with a $20 billion deal with the United Arab Emirates (UAE) to build four 1,400 MW reactors.

U.S. participation in global nuclear markets is led by Westinghouse, but it is owned by Toshiba, a major Japanese firm. The firm is building four reactors in China with prospects for more. The primary U.S. firms involved in the nuclear export industry are engineering procurement construction (EPC) firms like The Shaw Group, Bechtel, and others.

The key success factor for Russian and Chinese exports is their willingness to finance the construction of the reactors in return for guarantees of profitable rates over a fixed period, usually several decades. This is the form Russia’s agreement took with Turkey. Russia is also building four new reactors for India and recently inked a deal to build the first two reactors in Vietnam.

Russia

kiriyenkoBloomberg wire service reports Aug 24 that Sergei Kirienko, CEO of Rosatom, (right) Russia’s state-owned nuclear corporation, said he expects the number of nuclear reactors globally to double by 2030. According to the World Nuclear Association, in 2010 there are 440 reactors in operation worldwide.

Kirienko told an investor conference in Toronto that Rosatom wants to capture a significant share of that growth. The company is also seeking market share in the front end of the nuclear fuel cycle with its acquisition of a controlling interest in Uranium One for $610 million plus interests in two uranium mines in Kazakhstan.

China

The Wall Street Journal reports Aug 24 that in a first China is talking with South Africa about building nuclear reactors there. Previously, China had not sought to export its domestic PWR designs which resemble the Westinghouse AP1000. What makes the Chinese offer attractive to South Africa is that they will could finance the construction costs and obtain payback from electricity revenues. Eskom, the state-owned utility that supplies most of the country's electricity, will have to convince the government to approve rate increases to make such a deal work.

South Africa has tried and failed to attract external investment for new reactors cancelling a tender to build 12 light water reactors in 2008. Also, South Africa’s efforts to develop a commercial version of the 165 MW Pebble Bed Modular Reactor (PBMR) collapsed earlier this year with the withdrawal of government funding.

It is unlikely that China would transfer its work on a Pebble Bed reactor technology to South Africa without considerable financial return. A first-of-a-kind commercial version is under construction in China.

China is also reportedly in talks with Argentina to build that country’s fourth nuclear reactor.

France

Areva EPRAreva’s efforts to export its reactors to the UK and the US are having mixed results. In the UK Bloomberg reports Aug 25 that the firm’s design for a 1,600 MW European Pressurized Reactor (EPR) is likely to be approved by regulators in 2011. In the U.K. several utilities are planning to build the EPR at one or more of the 10 sites approved by the government for new nuclear power stations.

U.S.

In the U.S. the failure of Congress to pass new loan guarantee legislation in 2010 is seen as a setback for the construction of new reactors. Areva’s plans to develop a $363 million reactor component manufacturing facility in Newport News, VA, has been postponed to 2013.

A company spokesman told wire services the delay is directly related to market demand. Without the loan guarantees, Constellation’s Calvert Cliffs III reactor project, which is slated to be a US version of the EPR, will not go forward. It would have been the first customer for components from the factory.

The biggest export deal that you never heard of is a proposal by Chicago-based Exelon Corp., a nuclear utility, The Shaw Group, and Toshiba, to build nuclear reactors in Saudi Arabia. Toshiba and Shaw would provide the reactors, the construction expertise, and Exelon would operate the reactors once they are built.

While Saudi Arabia is the world’s biggest exporter of oil, it is burning huge amounts of it to generate electricity. The country wants more oil to go to earning exports which is why it is interested in nuclear reactors. According to a report in World Nuclear News Jul 14, Saudi Arabia is setting up an Atomic and Renewable Energy Center to manage the country’s efforts.

Currently, there is no diplomatic agreement between Saudi Arabia and the U.S. to manage the export of nuclear technologies to that country. A legal agreement is needed under Section 123 of the 1954 Atomic Energy Act. A key issue is that if the Kingdom of Saudi Arabia (KSA) wants to build reactors, it must decide how to fuel them. The ‘make or buy’ issue for enriched uranium will be a key aspect of U.S. negotiations with KSA.

# # #

No comments: