Areva inks India nuclear deal

It covers the first two of a planned six pack of power stations

The Wall Street Journal reports that Areva, a French state-owned firm, has signed a (euro)7 billion deal with state-owned Nuclear Power Corporation India Ltd (NPCIL) for two 1,600 MW EPR reactors. The deal envisions construction of four additional reactors plus fuel for 25 years.

The reactors will be located at seacoast city of Jaitapur in the western state of Maharashtra, about 550 Km south of Mumbai (map) The first two units are expected to enter revenue service in 2017.

The signing ceremony took place at the highest levels. It included French President Nicolas Sarkozy, Indian Prime Minister Manmohan Singh, Areva CEO Anne Lauvergeon, and the Chairman of NPCIL Dr. S.k. Jain.

Areva said in press statement about the deal the scope of the agreement includes reactors, steam generators, and related components. The agreement lays out contractual terms and conditions.

India’s harsh nuclear liability law has frozen out U.S. firms from India’s $150 billion new build. Areva, which has sovereign immunity, and its Indian counter parts said only that they would establish a “framework” to deal with the law.

The Times of India reported Dec 6 that no reactor will break ground until there is resolution of two issues -- India's nuclear liability law and pricing.

In a joint statement, Indian and French government officials said:

"Following India's enactment of a civil nuclear liability legislation, both countries stand ready to further exchange views on this issue so as to ensure the appropriate framework for the sound development of their cooperation. "

Russia not happy about liability law

Even the Russians are complaining about the Civil Liability for Nuclear Damage law. Section 17 assigns liability to suppliers in the event of a nuclear accident long after the components are installed in an operating reactor.

The Hindu, India’s largest newspaper, reported Dec 5 that Gregory O. Kumani, VP of Atomstroyexport, said the Russian state-owned firm has not agreed to accept the new liability law as a condition to do business with NPCIL.

While the Russian firm has sovereign immunity, it may be worried about the appearance of liability if something were to do wrong, and the impact on its ability to sell Russian built reactors in other global markets.

India’s big stake in Russian reactor technology

The Russian company is building two 1,000 MW reactors at Kudankulam on India’s southern coastal tip. A follow-up deal calls for two more 1,000 MW VVER design reactors and two rated at 1,200 MW.

Construction is done on the first unit which is now in its start-up phase. The second unit will complete construction soon. Both units will likely be in revenue service in 2011.

Impact on Indian supply chain

As a practical matter, as the Russians and the French “localize” production of reactor components, the burden of the liability law will fall more on Indian firms. Former Indian Atomic Energy Chairman Anil Kakodkar said as much in an interview with the Economic Times Dec 5. He complained that Indian firms could face increased liability risks.

Kakodkar has been a staunch advocate of localization of production of components for India’s massive program to build 20 GWe of new reactor power stations.

He called for a cost effective insurance program to handle liability coverage so that investment funds for growth in production capacity are not diverted into financial instruments that don’t contribute to the new build.

NDTV News Coverage from India

Buffet’s $50 million launches IAEA fuel bank

It will help nations peacefully develop nuclear energy

The New York Times reports that a $50 million privately funded initiative by philanthropist Warren E. Buffett (right) has added enough funding for an international nuclear fuel bank to start operations.

The fuel bank will be administered by the International Atomic Energy Agency (IAEA). Buffett told the NY Times he made the contribution because, "the spread of nuclear weapons of incredible destructive capability is the No. 1 problem facing mankind."

Buffett made the $50 million commitment in September of 2006 contingent on the IAEA receiving an additional $100 million in funding to jump-start the reserve, a condition that was met in 2009 when Kuwait donated $10 million.

According to the NY Times, other backers of the fuel bank include the U.S., the European Union, Norway, and the United Arab Emirates. Total funding for the fuel bank is now at $157 million, enough to buy the first fuel load for a new nuclear reactor, about 60-80 tons of uranium.

Nonproliferation experts say the implementation of a fuel bank creates opportunities for nations to develop nuclear energy without the threat of nuclear weapons.

Real the full details exclusively at CoolHandNuke a nuclear energy jobs portal and a whole lot more -- now online.

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30th Carnival of Nuclear Energy Blogs

The 30th Carnival of Nuclear Energy blogs is up at Yes Vermont Yankee

The carnival features blog posts from the leading U.S. nuclear bloggers and is a roundup of featured content from them.

If you want to hear the voice of the nuclear renaissance, this is where to find it.

Past editions have been hosted at NEI Nuclear Notes, Next Big Future, Atomic Insights, ANS Nuclear Cafe, Idaho Samizdat, and several other popular nuclear energy blogs.

If you have a pro-nuclear energy blog, and would like to host an edition of the carnival, please contact Brian Wang at Next Big Future to get on the rotation.

This is a great collaborative effort that deserves your support. Please post a Tweet, a Facebook entry, or a link on your Web site or blog to support the carnival.

Thank  you.

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China's ambitious nuclear energy program

Capacity planning targets keep going up

The 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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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.

The 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

While 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.

Paradis 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.

The 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

• December 18, 2009 – Want to buy a used reactor company?
• July 18, 2009 – Is AECL down for the count?
• March 8, 2009 – AECL’s destiny to be decided at Darlington

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