2008 05 13 edk cra global nuclear
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Presentation on Global Nuclear power development given at the 2008 Goldman Sachs Power & Utilities Investor conferenceTRANSCRIPT
Global Nuclear Power
Goldman SachsEighth Annual Power and Utility Conference
13 May 2008
2 Eighth Annual Power and Utility Conference
These slides do not provide a complete record of the presentation and discussion.
The views expressed in this presentation are mine; these views may not be the same as those held by
CRA’s clients or by others at CRA.
3 Eighth Annual Power and Utility Conference
Four historical nuclear power regions
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Five regions with new nuclear power plans
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Russia• In 2007, Rosatom pulled together all parts of the nuclear industry• Centralized control and government involvement• Large internal build programme and strong push for exports• Increasing move to Western safety practices and partners• First floating nuclear
power plant under construction
• Building nuclear plants in Iran, China, Bulgaria and India
• In talks with other countries
6 Eighth Annual Power and Utility Conference
China• State ownership
and control of electricity sector
• Large capacity build with major role for nuclear
• Localization is key strategy
• Several nuclear fleets
• Aggressive moves to secure uranium
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India
• Existing units mostly PHWR• Goals
– 20,000 MWe by 2020– 25% of electricity from nuclear by
2050• Outside NPT due to weapons• Excluded from civil nuclear trade;
new deal with US still on hold• Developing nuclear fuel cycle to
use large thorium reserves• Russian PWRs at Kudankulam to
meet near-term demand
Kudankulam
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North Africa and Middle EastProposed Planned Under construction
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Source: Washington Post, 12 May 2008
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South Africa
• Policy that half of new baseload capacity will be nuclear
– 20,000 MW by 2025– Global warming, over-
dependence on coal• Nuclear 1 is up for
Board Approval in June 2008
– 3,400 MW– EPC contract in 2008– Operational by 2016
• Nuclear Fleet to follow• PBMR is long-term
option
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World view of new nuclear
• Electricity without fossil fuel or emissions– Energy independence (e.g., France, Japan, Korea)– More petroleum products for export (e.g., Middle East)– Clean and carbon-free (e.g., Scandinavia and US)
• Not lowest cost resource without carbon credits– High capital costs offset by stable and low energy costs– Upward pressure on electricity prices to recover capital investment– Easier for government utilities and government economies
• Vendor/design competition for world market share– Only a handful of new designs under construction; fewer in
operation– Buyers selecting designs now, before real outcomes known
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Nuclear power plant design
• International vendors competing for market share• New designs have high cost; may present risks
Most operating commercial
power reactors
Early Prototypes
Generation I Generation II
1950 2000 2005 2010 2020
Generation IV
Advanced LWRswith evolutionary
designs
Generation III+ Near-Term Build
Generation III+
20151995
• Industry moving toward standardized power plants– Pre-approved & proven designs at multiple sites– Replicate nuclear fleet approach in France and US nuclear navy
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Nuclear fleet concept
Sequentialbuild
Eskom?Coordinated construction process
Learning curve benefits captured by multiple parties in process
Mobilization of build teams, if sequence is coordinated well
Multipleidentical
units
MultipleunitsSingle unit
FranceCommon simulators, special tools, training
Co-ordination of upgrades, maintenance,
Fungible operators, maintenance teams, outage teams
Operational improvement through learning across fleet
US fleet operatorsFleet composed of mixed designs, vendors, vintages
Organizational and management scope benefits
Overhead
Purchasing
In-house expertise
US single unit ownersNo fleet
Few benefits
US style management companies formed to compensate
Some ability to share learning through industry groups
Planning flexibility
Bulkpurchase
France in 70’s & 80sCoordinated construction process
Learning curve benefits captured at multiple levels
Upstream infrastructure through large orders
Mobilization of build teams; moving from one unit to the next
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Nuclear fleet strategy linked to industry structure
Ow
ners
hip
Gov’tNone
RegulatedIOU
Merchant
Electricity MarketsTotal
US vertically integrated IOUs
US merchant nuclear
companies
RussiaChina
France in ‘75
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Source: CRA analysis
2 5
3
2
2
2
2
2
2
1
10
2
3
3
4
4
3
0 2 4 6 8 10 12 14 16 18 20
APWR
ESBWR
AES-91/92
ABWR
EPR
AP1000
In operation Under construction EPC contractCOL filed (US) Design selected (US) New Player (US)
Who is winning the global nuclear design race?
?
?
?
?
?
?
16 Eighth Annual Power and Utility Conference
Source: CRA analysis
2 5
3
2
2
2
2
2
2
1
10
2
3
3
4
4
3
0 2 4 6 8 10 12 14 16 18 20
APWR
ESBWR
AES-91/92
ABWR
EPR
AP1000
In operation Under construction EPC contractCOL filed (US) Design selected (US) New Player (US)
Haiyang TVA (Bellefonte)Ga Pwr (Vogtle)
Duke (Lee)SCE&G
(Summer)Progress (Harris)
FP&L (Turkey Point)Progress (Levy County)
Sanmen
AP1000 – Toshiba/Westinghouse
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US Evolutionary Power Reactor - AREVA
Source: CRA analysis
2 5
3
2
2
2
2
2
2
1
10
2
3
3
4
4
3
0 2 4 6 8 10 12 14 16 18 20
APWR
ESBWR
AES-91/92
ABWR
EPR
AP1000
In operation Under construction EPC contractCOL filed (US) Design selected (US) New Player (US)
Olkiluoto 3 (Finland) Flamanville 3 (EdF)
Constellation (Nine Mile Point)Ameren (Callaway)
PP&L (Susquehanna)
TaishanAlternate Energy (Idaho)
Amarillo Power
Constellation(Calvert Cliffs)
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Advanced Boiling Water Reactor – GE Hitachi
Source: CRA analysis
2 5
3
2
2
2
2
2
2
1
10
2
3
3
4
4
3
0 2 4 6 8 10 12 14 16 18 20
APWR
ESBWR
AES-91/92
ABWR
EPR
AP1000
In operation Under construction EPC contractCOL filed (US) Design selected (US) New Player (US)
Kashiwazaki Kariwa 6 & 7 Hamaoka 5
Shika 2
Shimane 3 Lungmen 1 & 2
NRG & CPS(South Texas Project)
+
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AES-91/92 VVER – Гидропресс (Gidropress)
Source: CRA analysis
2 5
3
2
2
2
2
2
2
1
10
2
3
3
4
4
3
0 2 4 6 8 10 12 14 16 18 20
APWR
ESBWR
AES-91/92
ABWR
EPR
AP1000
In operation Under construction EPC contractCOL filed (US) Design selected (US) New Player (US)
Tianwan 1 & 2 Bushehr Belene 1 & 2
Kudankulam 1 & 2
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Source: CRA analysis
2 5
3
2
2
2
2
2
2
1
10
2
3
3
4
4
3
0 2 4 6 8 10 12 14 16 18 20
APWR
ESBWR
AES-91/92
ABWR
EPR
AP1000
In operation Under construction EPC contractCOL filed (US) Design selected (US) New Player (US)
Dominion (North Anna)Entergy (Grand Gulf)
Entergy (River Bend)Exelon (Texas)
Economic Simplified Boiling Water Reactor –GE Hitachi
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Source: CRA analysis
2 5
3
2
2
2
2
2
2
1
10
2
3
3
4
4
3
0 2 4 6 8 10 12 14 16 18 20
APWR
ESBWR
AES-91/92
ABWR
EPR
AP1000
In operation Under construction EPC contractCOL filed (US) Design selected (US) New Player (US)
Luminant/TXU(Comanche Peak)
US Advanced Pressurized Water Reactor -Mitsubishi Nuclear Energy Systems
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Race has just started
Source: CRA analysis
2 5
3
2
2
2
2
2
2
1
10
2
3
3
4
4
3
0 2 4 6 8 10 12 14 16 18 20
APWR
ESBWR
AES-91/92
ABWR
EPR
AP1000
In operation Under construction EPC contractCOL filed (US) Design selected (US) New Player (US)
+
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Not much activity without US units
Source: CRA analysis
2 5
3
2
2
2
2
2
2
1
10
2
3
3
4
4
3
0 2 4 6 8 10 12 14 16 18 20
APWR
ESBWR
AES-91/92
ABWR
EPR
AP1000
In operation Under construction EPC contractCOL filed (US) Design selected (US) New Player (US)
+
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COL application and approval;3-4 year process, ~$90 million
US first wave projects
Major expenditures for equipment procurement and construction
Final NRC review/hearing, ITAAC; fuel load, startup and testing; commercial operation
0 1 2 3 4 5 6 7 8 9
Design and engineering;NRC Design Certification
-1-2
Financial commitment; execute EPC contracts
Procure long-lead components; sort regulatory/market/financing issues; negotiate EPC contracts
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New nuclear plant designs may be risky
• Little hard information available now• New construction approaches
– TVO lessons– Modular construction – how & who & where?
• Technical issues (some may lead to COL delay)– Digital I&C – generic issue for all designs– Cable connectors (modular construction)– Very large turbine generators
• Operational performance– New round of latent defects?– French N4 experience
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2,000 2,500 3,000 3,500 4,000 4,500 5,000 5,500 6,000 6,500
$/kW
TVA (AP1000, '08)EdF (EPR, '07)
China (EPR, '07)NRG (ABWR, '08)
TVO (EPR, '05)S&P ('07)
FP&L (AP1000, '07)Progress FL (AP1000, '08)
Moody's ('07)Ga Pwr (AP1000, '08)
Source: CRA analysis
New nuclear plants will be expensive
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A new generation of nuclear power plants is on the drawing boardsin the U.S., but the projected cost is causing some sticker shock:$5 billion to $12 billion a plant, double to quadruple earlier rough estimates.
New Wave of Nuclear Plants Faces High CostsMay 12, 2008
By REBECCA SMITHMay 12, 2008; Page B1
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Nuclear essential for carbon control• Nuclear not low-cost option without benefit of CO2 reduction• Still no clear way to monetize nuclear CO2 reductions
– Will lender carbon protocols raise cost of coal capacity?– Will ad-hoc cap & trade approaches be enough?
• Uncertainty is problem, given timing and size of investment
1,041
622
46 39 18 17 15 14
Coal Natural Gas Biomass Solar PV Hydro Nuclear Geothermal Wind
Life-cycle tons of CO2 equivalent per GWh
Source: "Life-Cycle Assessment of Electricity Generation Systems and Applications for Climate Change Policy Analysis," Paul J. Meier, University of Wisconsin-Madison, August 2002.
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Nuclear plant risk over timeN
RC
Tech
nica
lFi
nanc
ial
COL Commercial operation
Now
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Nuclear project risk mitigation• Technical
– Design Certification process; international build/operation– EPC contracts with delay penalties; Vendor performance guarantees
• Nuclear Regulatory– NRC one-part combined Construction and Operating license
• Financial– Revenue certainty - merchant and regulated plants– Keep options open; exits and off-ramps in contracts– Investment large; 10% or more of market cap for US electric utilities– Government role in financing; DOE loan guarantees are US equivalent
• Overall– Avoid or manage early mover risk
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Nuclear power development
Real information about cost, performance of new nuclear designs
US initial wave of COL DC filings (well after selection of design/vendor)
First COL approvals US first wave plants begin
operation
US first wave plants start construction
Middle East, North Africa nuclear programmes
Eskom (South Africa) vendor selection
Ontario vendor selection
China, Finland & EdF
building
US & global second wave development
20102008 2020
Olkiluoto EPR unit
operational
Eskom Nuclear 1 units begin operation
Chinese AP1000 & EPR units operational
Ontario Power new units operational
Flamanville EdF EPR unit operational
2015
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Nuclear SpinPro-Nuclear Anti-Nuclear
Capital costsThe past is over, lessons
were learned; nuclear looks competitive
Doomed to repeat past cost overruns and delays;
Olkiluoto EPR is proof
Operating costs Excellent experience; lowest fuel costs ever
High uranium prices not yet in nuclear fuel costs
Weapons use National policy issue Nuclear power = nuclear weapons
Safety High levels of safety TMI, Chernobyl, “close calls”
Performance Excellent recent performance; best ever
Long outages; issues with some new units in 90s
Nuclear CO2 Carbon-free energy High life-cycle C02 emissions
Spent fuel Current approach is fine; 50 years with no problem
Need million-year solution before building new plants
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What’s my spin?
Nuclear capacity essential to control carbon emissions
Nuclear is good technology . . .. . . but expensive to build, operate and maintain
Large investment decisions need more than spin– Investor economic outcomes are key– Identify and resolve issues & risks– Optimism is good; realism is better
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Edward KeeVice President
CRA International1201 F Street, NW
Washington, DC 20004(202) 662-3953