Thursday, December 2, 2010

China's ambitious nuclear energy program

Capacity planning targets keep going up

China nuclear 2The latest dizzying numbers for China's planned construction of new nuclear reactors, released in early November by the country's National Development & Reform Commission, soared to 114 GWe by 2020.

The new target represents a significant increase from a prior target of 70 GWe issued last May by Zhang Guobao, head of China’s National Energy Administration.  Chinese officials later scaled back their estimate of the revised target from 114 GWe down to 80 GWe.

Reuters reported on November 23 that the China Nuclear Energy Association, headed by Zhao Chenkun, said the 70 GWe target is too low. China has a reported 23 reactors under construction and another 140 on drawing boards in various stages of readiness to proceed.

That said, some analysts ask the relevant question of how will China be able to execute these ambitious plans. The older target of 40 GWe by 2020 could involve at least 30 new reactors.  Whether the nation can achieve a goal of building three times that number is an open question.

To achieve the new targets, the country will have to become self-sufficient in reactor design, fuel cycle, and workforce development, construction as well as reprocessing of spent fuel and activities related to waste management. The country will also need to make significant investments in rail and road transportation infrastructure for reactors located inland away from coastal seaport serviced sites.

Read the complete details of the elements of China’s massive nuclear new build exclusively at the ANS Nuclear Cafe now online.

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Wednesday, December 1, 2010

Ontario revives Darlington nuclear projects

It projects spending C$33 billion on two new reactors and refurbishing ten more. However, the future of AECL is in doubt as the government wants to sell it.

AECL SymbolThe Canadian provincial government in Ontario is making a second run at a plan to build two new nuclear reactors at the Darlington site. The energy plan would refurbish 10 other reactors over a two decade period as well as invest in renewable energy projects.

The announcement comes as the federal government in Ottawa pushes to sell off Atomic Energy Canada Limited (AECL), a crown corporation, with thousands of employees in Ontario.

Under the revised plan, Ontario expects to spend C$87 billion over 20 years. The goal is to provide 50% of the province's electricity from nuclear energy. Whether the government can execute the plan is an open question. Two years ago the bid process for two new reactors at Darlington was cancelled as a result of the government getting cold feet. AECL and Areva were the only bidders.

Ontario says it needs at least 2 Gwe of new nuclear powered electricity generation, which could be met by two of AECL's new ACR1000 (advanced Candu) reactor. However, the ability of AECL to make an offer on the new reactors is questionable since the federal government is evaluating bids for it from SNC-Lavalin Group and Bruce Power. Both firms have stated they have no interest in completing the costly development of the new reactor design.

In addition to new reactors, 10 other reactors in Ontario need refurbishment and could be offline for as long as three years. During these outages, Ontario would rely on natural gas plants. Ratepayers would see higher costs for energy for several years as a result.

Additional spending on energy under the plan included C$9 billion for solar projects, C$4 billion for biomass, and the remainder for enhancements to existing gas plants.

What it really costs to build two new reactors

Of the C$87 billion to be spent on new energy projects, C$33 billion is allocated to reactors. When the bids were submitted two years ago for two new power stations, the price of the reactors alone was about $2,700/Kw. Assuming this cost hasn’t changed, 2,000 MW of building this power would come in at C$5.4 billion. That doesn't include future fuel loads and decommissioning costs.

The bulk of the nuclear funds, $27 billion, will be spent on refurbishment or just under C$3 billion each to extend their service lives by at least another 20-30 years.

The high estimated cost of refurbishment may be a reflection of the unanticipated high cost overruns, C$446 million, which have occurred at the AECL reactor in Port Lepreau, New Brunswick.

AECL’s troubles with the Port Lepreau refurbishment project contributed significantly to the New Brunswick provincial government cancelling plans for two new reactors.

Ontario asks for delay in sale of AECL

no saleWhile all this planning for spending is going on, Ontario Provincial Premier Dalton McGuinty has asked Canadian Prime Minister Stephen Harper to delay the privatization of AECL.

In a letter released to the Canadian news media Nov 10, McGuinty made it clear that the Darlington new build would use AECL reactors which would be a confidence booster for possible exports.

This may be a faint hope as both India and China, which bought AECL reactors in prior decades, have ruled them out for their massive new builds which are now taking place. South Korea, which also bought Candu reactors, now has its own 1,400 MW unit based on the System 80+ design. It inked a deal in December 2009 to build four of them for the United Arab Emirates.

All Ottawa wants is cash on the barrelhead

Canadian Natural Resources Minister Christian Paradis isn't buying the arguments from McGuinty. He said he wants the sale of AECL "to take place sooner rather than later." However, he hasn't made any statement about whether the two bids he has in hand are acceptable or if not, what terms would close the deal. Press reports indicate the bids came in far below the government’s expectations.

fresh squeezeParadis says continuation of federal government ownership of AECL "is unsustainable," and points to more than C$500 million spent on development of the ACR1000 and losses racked up by AECL on other projects.

Separately, the government has had to pour millions into repairs at the Chalk River reactor that makes radioactive medical isotopes. Previously, the government had hoped to replace it with two smaller reactors. The twin Maple Reactors were never put into production due to unresolved technical problems and cost overruns.

Is ACEL another Studebaker?

If Ottawa sells off all or pieces of AECL before Ontario can close a deal for the two new reactors, then AECL will be relegated to a niche player maintaining the installed global fleet. This is what happened to the Studebaker car company which went out of business in Ontario after a series of business mis-steps in the U.S.

studebakerThe Organization of Candu Industries (OCI), which represents about 150 firms that supply components and services to Canada's 18 AECL reactors, has issued an angry statement demanding that the provincial and federal governments stop "finger pointing," and make sure Ontario buys AECL reactors. Presumably, that includes finding the funds to complete the design and licensing of the ACR1000.

As for exports, OCI president Neil Alexander told wire services, "It is very difficult to convince the rest of the world to buy from you when you're not selling in your home territory."

The anti-nuclear group Greenpeace criticized efforts to save AECL. Shawn-Patrick Stensil, a spokesman, told wire services the financial issues could be set aside if Ontario would invest all of its C$87 billion on renewable energy technologies.

Export potential questionable

Ontario's energy minister Brad Duguid says the federal government's drive to sell off AECL in the middle of the procurement process "is very troublesome to us."

He complained that without the orders for two new reactors, AECL will not provide an economic stimulus to the nuclear industry in Ontario. Dugid also promoted the exports argument calling the opportunity a "trillion dollar market."

While such an estimate might play well in Ontario, few in the industry think AECL has that kind of sales potential. The case for exports as leverage to keep AECL in one piece seems to be a weak hand.

Anyway you look at it, AECL is caught in a squeeze play caused by not innovating fast enough with new technology, failing to win the original Darlington bid, and having high legacy costs from Candu reactors that only it can fix. AECL would have a stronger position if it could wrap up the Port Lepreau project and apply lessons learned from it to control costs for the refurbishment of the 10 reactors in Ontario.

Prior coverage on this blog

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Tuesday, November 30, 2010

New Millennium Nuclear Energy Summit


Third way logoThird Way / Idaho National Laboratory to host Summit on the Future of Nuclear Energy

The event will bring together government, private sector leaders including Energy Secretary, White House, NRC Chair, Members of Congress, and Industry CEOs,

Update 12/08/10:
Washington tries to think about nuclear energy

INL banner

Washington, DC – Third Way and the Idaho National Laboratory (INL) on 12/07/10 will host the New Millennium Nuclear Energy Summit, a bipartisan forum on the future of nuclear energy in the United States.

The event will feature

Steven Chu, U.S. Secretary of Energy
•Carol Browner, White House Office of Energy and Climate Change Policy director
•John Grossenbacher, Idaho National Laboratory director
•Gregory Jaczko, Nuclear Regulatory Commission chairman
•Marvin Fertel, Nuclear Energy Institute president and CEO
•Peter Bradford, Union of Concerned Scientists vice-chair of the board
•John Krenicki, GE vice chairman, president and CEO of GE Energy
•Doug May, Dow Chemical vice president of Energy & Climate Change

    Senators Tom Carper (D-DE) and George Voinovich (R-OH) are honorary co-chairs of the event.

    Purpose of the event

    Consensus_icon.svgDespite the deep divisions in Washington over energy issues, many on both sides agree that nuclear energy must play a role in the nation’s energy and economic future.

    The summit will provide a forum to start developing broader consensus on the future of nuclear energy in the United States and determining the steps needed to revive the nation’s nuclear energy industry.

    WHEN: Tuesday, December 7, 2010

    TIME: 8:45 am – 11:30 am EDT

    WHERE: Newseum, 555 Pennsylvania Avenue, NW, Washington, DC
    Knight Conference Center, 7th floor (map)

    Media: A transcript of the proceedings will be available Tuesday afternoon 12/7 at the Idaho lab website.

    For credentials, please contact Jessica McCreight (202) 464-6959 / email to: JMccreight@skdknick.com

    Blogger comment

    Here’s a short list of questions I’d ask if I was at the press table.

    • reporter3What is it that got the White House to wake up and smell the coffee on nuclear energy? Why now?
    • Is the loss of the U.S. global technological leadership a compelling issue, e.g., relative to China, or is this just a hunt for short-term domestic consensus on energy policy?
    • How can American firms, including fabrication and supply chain manufacturers, get back in the global market?
    • What will the meeting do to address the issue of spent nuclear fuel? Will the Obama administration support development of a federal corporation, modeled after TVA, to handle it?
    • Where is the White House on loan guarantees for merchant plants now that Constellation has bailed from Calvert Cliffs? What can the government do beyond loan guarantees to help reactor projects get competitive financing?
    • How will the government assure the business community congressional and federal agency commitments to nuclear energy won’t fall apart just as plants are starting to be built in 2012-2015?
    • small reactors What will the government do to encourage the development of small modular reactors (SMRs) including changing the NRC cost recovery rule?
    • How will the administration respond to environmental and nonproliferation groups and their posture that the safest nuclear reactor is one that is never built?

    What questions would you ask if you were at the press table?

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    Nuclear news roundup for 11/30/10

    Areva commits to 2012 for Oli 3

    Olkiluoto_3_dome_(TVO)The much delayed and increasingly costly Olkiuoto 3 nuclear reactor being built by Areva in Finland may see revenue service in 2013.

    Areva announced in a press statement Nov 29 that the first fuel will be loaded in late 2012. The reactor will be connected to grid in 2013.

    Areva reported several significant milestones including the installation of the reactor vessel in June 2010, the pressurizer, and start of work on the steam generators.

    The Finish reactor is a first-of-a-kind project so cost increases are not an unexpected risk to project success. Areva is building a similar reactor in Flamanville, France, which has also experienced schedule delays and cost increases.

    Areva had hoped to start building its first U.S. reactor at Calvert Cliffs in Maryland in 2012. Constellation, the merchant utility involved in the project, cashed out of its relationship with Electricite de France (EDF) leaving that firm to seek a new U.S. partner. On Nov 29 EDF named a senior executive from its French operations to take over the U.S. effort.

    South Africa needs reactors and cash to build them

    prudent investorSouth African government officials are once again publishing huge numbers to describe the country’s need for new nuclear reactors and the funds to pay for them.

    According to financial wire service reports, South Africa needs to build at least five new nuclear power plants, at an average cost of $7 billion each, by 2030. If construction started in the next three years, by completion, the power stations would supply about one-third of the nation’s electricity.

    State-owned electric utility Eskom has walked away from prior tenders for up to 12 conventional LWR plants due to its inability to obtain financing for them. The World Bank turned a deaf ear to its inquiries on the grounds it does not fund nuclear energy projects.

    Meanwhile, South Africa continues to experience power shortages that hobble its key mining and manufacturing industries slowing down exports and diminishing GNP. The government has limited Eskom’s ability to raise electricity rates to self-finance the new reactors on social welfare grounds. The nation has a large population of people who are desperately poor and a 25% unemployment rate.

    The next try at building the new reactors will like follow a change to the South African law that bans private investment in new power stations. It isn’t know whether any vendor would agree to self-finance a single reactor or all five.

    Italy’s nuclear renaissance slows down

    The government of Silvio Berlusconi isn’t having a good day with its plans to start building new nuclear reactors by 2013. Earlier this year the government minister who had been spearheading the effort resigned over an unrelated scandal involving payoffs for prime real estate deals.

    Now the government is pinning its hopes on an 85 year old physician who Berlusconi appointed to head the nuclear safety agency. According to press reports, Dr. Umberto Veronesi didn’t even want the job, but said he was pressured to take it anyway.

    Next, the government stripped provincial authorities of their power to say “no” to site plans for the new reactors. This tactic hasn’t worked particularly well, politically speaking, so the government is thinking about using the sites of reactors it shut down more than two decades ago for the new power stations.

    This week the New York Times reported that Berlusconi has been hanging out with the Russians and a lot more than makse sense given what Italy’s geopolitical status would suggest. The Times reported . . .

    "An intriguing alliance: American diplomats in Rome reported in 2009 on what their Italian contacts described as an extraordinarily close relationship between Vladimir V. Putin, the Russian prime minister, and Silvio Berlusconi, the Italian prime minister and business magnate, including “lavish gifts,” lucrative energy contracts and a “shadowy” Russian-speaking Italian go-between."

    In April 2010 Russian English language media touted a deal to potentially build VVER reactors in Italy. This may have unnerved Italian utilities and Areva which hoped to cash in on the nuclear renaissance unfolding next door.

    If Berlusconi’s governments falls, which appears likely, Italy’s plans for a nuclear renaissance may be delayed along with Russian dreams of an Adriatic coastline site for one of its VVERs.

    Shaw Group gets stake at South Texas Project

    The Shaw Group Inc. has agreed to help expand a nuclear power plant at the South Texas Project (STP). There NRG is build two 1,350 MW ABWR reactors from Toshiba.

    Shaw will partner with Toshiba Corp. in a $10 billion plan located in Bay City, Texas, about 90 miles southwest of Houston.

    Shaw CEO J.M. Bernhard Jr. said Shaw will invest $250 million in its alliance with Toshiba, with $100 million to be available as a credit facility.

    The credit line will convert to equity in the Toshiba-NRG venture pending issuance of an NRC license.

    Under the pact, Shaw will have opportunities for work on Toshiba's advanced boiling water reactor nuclear power plant projects worldwide, except in Japan and Vietnam.

    The ABWR reactors being built at STP are boiling water reactors (BWR). Shaw owns 20% of Westinghouse which is building four pressurized water reactors (PWR) in China.

    The agreement with Toshiba, which owns the majority stake in Westinghouse, positions Shaw to work across both reactor designs in terms of engineering services and manufacturing of components for them.

    World Nuclear News added that the contract is an exclusive arrangement between the two firms.

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    Turkey switches horses for second round of reactors

    South Korea worries about risks related to Turkey’s long term stability

    turkey nuclearA month ago the buzz was that Turkey would ink a deal for its second nuclear power station. News media reports from South Korea and Turkey suggested another victory for the same consortium that won a $20 billion contract with the United Arab Emirates just a year ago. Not so fast.

    Turkish English language press reports indicate the two countries failed to agree on a number of critical issues. Worse for South Korea’s prospects, Turkey has opened negotiations with Japan’s Toshiba.

    The main sticking point between South Korea and Turkey is the delivered price of electricity from the reactors once they enter revenue service. Of course, that depends on the cost of building them. Following the money trail one comes to the issue of risk management and who would be left holding the bag for cost overruns.

    Turkey’s merchant model

    The expected value of two 1,440 MW reactors and related infrastructure was said to be $10 billion. According to an analysis published in the Korea Times Nov 21, Turkey wanted South Korea to finance the project on a turnkey basis.

    cash_registerThis is equivalent to a merchant plant in the U,S. in which the builder assumes all the risk and reaps no revenue until the plant is licensed and generating electricity.

    South Korean officials are reportedly worried about Turkey’s long-term stability and in its capricious past in starting and cancelling prior nuclear projects. South Korea insisted on stronger guarantees from Turkey’s government and a better price to take risk into account. A financial failure in Turkey could impact South Korea’s efforts to gain market share in future projects where the government is more stable.

    Opening for Toshiba

    Three days after the talks between Turkey and South Korea broke down, Turkey’s Energy Minister Taner Yildiz opened discussions with Toshiba about building a nuclear power station at a site on the Black Sea coast. Toshiba is reported to be discussing its ABWR 1,300 MW reactor rather than the Westinghouse AP1000.

    Two years ago when Turkey offered the tender for its first nuclear power station, Westinghouse executives refused to consider bidding on it. Their view that the process would not end happily was borne out when all the bidders, except Russia, walked away from the process due to Turkey’s refusal to provide guarantees related to protection of intellectual property and an agreement of purchase of electricity from the plant.

    Russia’s gain

    Turkey’s first nuclear power station will be built by the Russians at Akkuyu in Mersin on Turkey’s Mediterranean coast. The facility will involve four 1,200 MW VVER reactors. Turkey has guaranteed it will buy electricity from the plants at market rates for the first 15 years of operation.

    The Russians are providing much of the financing and expertise needed to build the reactors. Also, Russia will supply fuel for the reactors and retrograde spent fuel insuring that Turkey will not need uranium enrichment nor spent fuel management facilities.

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    Monday, November 29, 2010

    Video of secret meeting at NRC over Yucca

    This is satire. Any resemblance to reality is a coincidence!

    Hat tip to Stephen Power at the Wall Street Journal

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