cambridge july 2016 _enkom

Agenda

1) Introduction

2) Enkom’s nuclear experience & capability

3) Nuclear Decommissioning costs & financing

Types of decommissioning

Analysing the challenges of long-term provision of funding

Evaluating the importance of estimating costs

Identifying the future of finance for decommissioning projects

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July 2016

Who we are, what we do & who we work with

Enkom is an Independent consultancy offering professional services to the Nuclear and Energy sectors

Lifecycle Baselines & Whole Life Costing

Establish Programme Management Offices and Project Controls teams with clients

Develop Contract Strategies and Project Execution Plans which are aligned with business objectives

Independently verify scope, schedule & costs at Project, Programme & Enterprise level

Provide Subject Matter Expertise and Assurance for all phases of nuclear projects

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Timeline of projects our team has supported

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Major Clients / Projects 02/03 03/04 04/05 05/06 06/07 07/08 08/09 09/10 10/11 11/12 12/13 13/ 14 14/ 15 15/ 16 16/ 17

Environmental Services (BNG) Baseline Decommissioning Plans

(BDP)

British Nuclear Group Ltd Preparation of LCBL /

NTWP

British Energy Verification of

DWMP

Magnox North Limited Consultancy support to central Project

Controls

Magnox South Limited Consultancy support

Optimised Plan

Magnox Limited Strategic Programmes

Cost Capture & Benchmarking

Magnox Limited (Business) Consultancy support - Central Cost

Function

Nuclear Decom Authority (NDA), Magnox & MWH

Benchmarking Report

Cost Reviews

Sellafield Limited and Tier 2 Contractors

Commercial Assistance

Nuclear Decommissioning Authority (NDA) – SpecialNuclear Services – Lot 6

SNS - GDF Estimate Review

NDA - IR & BCP - Deloitte Review &

Benchmarking

NuGeneration Limited –Assurance of DWMP

Cost & Technical

Our story is one of evolution & strong relationships

The Enkom team has evolved from our work on;

the development of early Baseline Decommissioning Plans,

drafting procedures and processes to allow best practice to be applied,

establishing SLC internal Integrated Assurance processes to allow challenge,

developing Benchmarking methodologies to support value for money,

providing Subject Matter Expertise on national decommissioning portfolios, and

Advisors on Decommissioning Waste Management Plans for nuclear New Build

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July 2016

Decommissioning Costs and Financing

Types of decommissioning

Analysing the challenges of long-term provision of funding

Evaluating the importance of estimating costs

Identifying the future of finance for decommissioning projects

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Types of Decommissioning

July 2016

Types of decommissioning -Immediate vs Deferred Immediate and deferred dismantling may be considered to present specific benefits

and disadvantages.

National policies determine which approach is adopted and, for any selected approach, adequate funding is required as well as;

trained personnel

regulatory oversight

adequate waste storage and disposal facilities

Regardless of the option selected it is vital that early and clear decisions are taken about the timing of the closure of facilities and intended future use of the site.

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Immediate Decommissioning

Advantages Disadvantages availability of highly qualified workforce

and experience and knowledge on the operational history of the specific facility

easier radiological characterisation and reduced effects of deterioration and ageing

less risk of loss of knowledge and corruption of records

dilution of economic effects for the region

earlier reuse of site

responsibility for the decommissioning is not transferred to future generations

the motivation of personnel might be a problem when demolishing a plant where the workers will lose their jobs

higher radiation exposure during dismantling

greater precautions needed during dismantling

larger volumes of decommissioning waste classified as radioactive

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Deferred Decommissioning

Advantages Disadvantages reduction of residual radioactivity due to

decay

reduction of radiation hazard during dismantling and reduction of volume of radioactive waste

possibility to wait for availability of disposal routes for rad-waste or for expected improvements in techniques (e.g. Robotics)

possibility to co-ordinate the decommissioning of different units in multiple reactor sites

time for decommissioning funds to grow or to be additionally raised

possibility to increase the size of the fund though effective investments policies

some materials or buildings, including concrete and steel, may deteriorate

costs for maintenance/disposition may increase

knowledge of operational history lost over time

new qualified staff required

no foreseeable changes in boundary conditions e.g. availability of waste disposal routes or changes in the regulatory framework

leaves the burden to be borne by future generations

risk of losing fund value.

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Challenges of long-term provision of funding

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Decommissioning funds - what they cover

Preliminary decommissioning planning

Spent fuel management

Site decommissioning and restoration

Waste management

Long term storage / disposal of waste materials

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Current vs future liabilities – who pays for what ?

State funding Operator funding

UK existing legacy funded by government

UK New build funded by operators –Funded Decommissioning Plan (FDP)

Germany – ongoing dialogue between Government & utilities

Sweden – contributions to fund

Finland – operators responsible for all costs

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European position - revenue and investment

• Costs of decommissioning generally paid for by operators

• Influenced by factors such as;

• Electricity prices

• Subsides and taxes

• Political issues

• Final disposal costs

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Importance of Cost Estimating

July 2016

Key drivers for decommissioning cost estimates

• Decommissioning policy & strategy.

• Regulatory involvement

• Dismantling techniques

• Waste management

• Oversight and management costs (overheads)

• Management of Spent fuel and operational waste

• Long term storage / disposal of waste material

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• Uncertainty and contingency

Reactor shutdowns

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UK Nuclear Provision – previous 5 years

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Estimating uncertainty application in Europe

Source - NEA (2016, p. 82). Costs of Decommissioning Nuclear Power Plants Paris: OECD

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Future of financing decommissioning

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UK Energy Act 2008 – Funded Decommissioning Plan

Energy Act 2008 requires nuclear operators have secure financing in place to meet full Decom / waste costs

The FDP must set out realistic, clearly defined and achievable plans

Decommissioning Waste Management Plan (DWMP) the part of the FDP that sets out and costs the steps involved in decommissioning a Nuclear Power Station.

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European - Funding Policy and Strategy

• Considerable variations between countries in the details of funding requirements.

• Need for planning, updating cost estimates, collecting and securing the funding and financial risks management...

• Funding arrangements are vulnerable to earlier than expected permanent plant closures (e.g., political decisions, or permanent market price declines),

• Practices vary widely among countries

Extract from The Financial Times : Guy Chazan Berlin 15th March‘16

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Contact Details

Martyn Jenkins - Managing Director

Email - [email protected]

Website - www.enkom.co.uk

Phone - 00 44 (0) 7968 756 695

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mailto:[email protected]

cambridge july 2016 _enkom

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