A new broom sweeps clean

News items you might have missed in 2011

Nuclear bloggers work differently than the mainstream media and are not shadows of the nuclear trade press. We don't have time to report everything so we try to focus on developments that look like they'll have more than average influence on the industry. At this blog I try to answer the "so what" question about the news.

During the course of the year, as a blogger I wind up with stand alone news items that just don't fit into larger patterns. I hold on to them hoping that there will be a place to fit them into the jig saw puzzle that makes up the global nuclear industry. So for better or worse, here are a few of those "keepers" that may yet emerge in a larger picture, or maybe not. These are issues this blog will continue to watch to see where they go.

Californians like nuclear energy less, but they still like to eat

Last July conducted by the Public Policy Institute of California found a steep decline in support for nuclear energy. The poll shows a 14% drop in support from a year ago. Now just 30% of the population, based on the poll sample, support building more nuclear power plants there. There is a definite partisan split with just 23% of Democrats in favor of new reactors compared to 48% for Republicans. The new levels of "dislike" are linked to the Fukushima crisis in Japan which pumped up anti-nuclear sentiment in California.

The bad numbers appear to have left the Fresno Nuclear Group unfazed by their importance. John Hutson, who heads the effort to build two Areva 1,600 MW EPRs in the state's agricultural belt, says what else is new?

He is pushing ahead with the project which is intended to provide cheap electricity to food processing factories and to desalinate brackish water. Hutson thinks the plants could handle up to one million acre feet of water at a cost of $200/acre foot.

An acre foot is approximately 324,000 gallons. One million acre feet per year times 60 years is a lot of water, a lot for crops, and a lot of clean water for processed food factories. If I were Hutson, I might design a bumper sticker that says - Want to eat? Support nuclear energy!

Thrifty Swiss may balk at the high cost of going green

The Wall Street Journal reported Nov 29 that Switzerland's reliance on nuclear energy means a switch to other sources of energy to generate electricity may hit them hard in the pocketbook. The reason is the country's parliament voted earlier this year to close its nuclear reactors by 2034.

The country has benefited from the reactors by being a profitable net exporter of electricity and by having a stable, reliable supply of energy for heavy industries. Like Japan, Switzerland is not self-sufficient in terms of agricultural production so it exports electricity and high value finished goods and gets food in return. It's a two-way street.

Here's where the sticker shock hits. The WSJ reports that according to a leading renewable energy think tank, the cost of new investments in hydro, solar, and wind power to replace the reactors would be $108 billion, or roughly the price of 15 new 1,000 MW reactors built over the next 20 years. Then there are also the $22 billion in decommissioning costs for the current fleet which will extend into the end of this century.

A U.S. think tank put the diversion of capital into these channels in a stark light. It told the WSJ the phase out of nuclear energy in Switzerland "will have harsh consequences for economic growth and job creation."

South Korea and U.S. at odds over spent fuel

The revision of a bilateral nuclear cooperation agreement between South Korea and the U.S. is taking place during an uncertain transition to the North. South Korea wants to get U.S. agreement to support its efforts to develop a spent fuel reprocessing center to provide fuel for its growing fleet of 21 nuclear reactors.

The U.S. sees the request as a red flag for North Korea. That country might regard the new technology as 'dual use' capable of manufacturing weapons grade materials as a deterrent to the threat of invasion by the North's massive army.

The new head of what passes for a government in North Korea is said to be the 20 something son of the late dictator Kim Jong II. Anyone who thinks the kid is a real political leader, and not a "face" for the North Korean military, should line up to buy a bridge in Brooklyn.

For its part, the U.S. is nervous that the North Korean military, which is likely to be inwardly focused these days in terms of who is in charge, may not take kindly to a "provocation" from its neighbor to the south. Bear in mind the North Koreans have their own nuclear weapons capability having conducted at least one underground test.

South Korea has also become an exporter of nuclear reactors selling four of them to the United Arab Emirates in a $30 billion deal. It may be looking at the development of a spent fuel reprocessing center, and MOX fuel fabrication center, as an additional product line to meet needs for nuclear fuel domestically and elsewhere.

So when South Korea talks about the new agreement being an "important test" of relations with the U.S., the translation from diplomatic speak might be something different. South Korea has no geologic repository for a once through fuel cycle and there is value in reprocessing the fuel.

While South Korea lives under the U.S. military's protective umbrella, it doesn't see it as a reason for giving ground on the spent fuel issue. Nonproliferation experts in the U.S. worry that one day a future South Korean government might take the next step and develop its own nuclear weapons program. For now the diplomats will continue to talk with a wary eye on the North.

Bids and finances move up and down

The Czech Republic, which recently released bid documents for up to five new nuclear reactors worth an estimated $28 billion, is looking at providing the equivalent of loan guarantees to investors. The government may also seek to set guaranteed rates for the reactors over a period of years once they enter revenue service.

S&P Credit Rating System ~ Chart: S&P

South Africa is getting ready to let bid documents out for six-to-nine new nuclear reactors. A bid process for up to 12 reactor was cancelled in 2007 because neither the government nor Eskom, the state-owned utility, had the money to pay for them.

It's not clear what's changed in South Africa which may mean it expects bidders to self-finance turn-key plants with guaranteed rates for the first 15-20 years and sale of the plants in their cash cow phase to investors after that point. Bidders include the usual suspects plus China's Guangdong Nuclear Power Group.

Areva, which is a bidder for the Czech project, and an expected bidder for the South African tender, will have a more difficult time attracting capital for these kinds of projects. Standard & Poors cut the firm's financial rating to BBB-. This is the last rung on the "investment grade" ladder.

It said it expects Areva's credit standing and cash flow to remain weak in 2012 with substantial recovery no earlier than 2014. For its part Areva slashed costs and capital investments and will sell over {e}1.2 billion in assets by the end of 2013

Russia's Atomic Energy Power Corp.. got a boost from Standard & Poors which raised the credit rating for AtomEnergoProm to BBB. The occasion is that the normally secretive state-owned firm allowed its books to be audited using international financial reporting standards. S&P went on to say it expects the Russian nuclear company can depend on the deep pockets of the Kremlin for domestic projects. The export arm was not rated by S&P.

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