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Funding for new build and decommissioning

Fiona ReillyNuclear Lead - Capital Projects and Infrastructure,PwC

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• Funding nuclear new build

• Decommissioning and waste funding

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Money!• New Build Investment

• Government – cash and guarantees

• Mankala/ Exceltium

• BOO (D)

• Equity

• Debt

• ECAs

• Revenue• CFDs

• PPAs

• Funds• Waste and decommissioning funds

• Security packages

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Role of Government

• Historically government funded

• Move toward private sector development

• Costs so high need equity partition/ various debt options

• Continued government involvement – policy maker, rule of law, owner, insurer of last resort, guarantor of debt, support mechanism etc.

• UK – CFD and IUK Guarantee

• Decommissioning and waste management solution

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Sharing risks Balancing regulatory and financing requirements

Government

Developer

Operator Co

Owner Co

Equity

EPC , FSA , LTSA etc

Debt

Commercial ECA

Offtaker

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Payment cascade• Operating costs

• Decommissioning funds

• Debt repayments

• Profits – dividends

Decommissioning funds and fund management Prepayment – money deposited in separate

account to pay for decommissioning

External sinking funds (Nuclear Power Levy) – built up from a percentage of rates charged to consumers, held in trust fund.

Surety fund, letter of credit or insurance – to cover the decommissioning even if utility defaults

EBRD support funds established by EC and governments to support the closure and decommissioning of reactors where safety concerns – Bulgaria, Slovakia and Lithuania e.g. Kozloduy International Decommissioning Support Fund 1-4, also Chernobyl funds

Japan: Payments into external fund for disposal of HLW – administered and managed by Radioactive Waste Management Funding and Research Centre – levy 200 yen/Mwh on sales; each power company must establish its own reserve fund for decommissioning

Sweden – Swedish Nuclear Waste Fund (Kärnavfallsfonden): State controlled fund, paid into by Operators

Belgium: Internal funds managed by utility

Germany: Provisions made into internal funds managed by each utility

Finland: National Nuclear Waste Management Fund, managed by Ministry of Trade and Industry

France: EDF provisions in its accounts for funding, based on percentage of kWh sold

USA: Trust funds, funded by payment from ratepayers 0.1 to 0.2 cents/kWh, reporting to NRC

UK – FDPs: Operator established, ring-fenced, Nuclear Liabilities Funded Assurance Board

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UK New Build Decommissioning

Nuclear site licensee must implement a Funded Decommissioning Programme (FDP) containing:

• A decommissioning and waste management plan (DWMP); and

• A funding arrangement plan (FAP)

Must be approved by the SoS

Audited initially and periodically by the Nuclear Liabilities Financing Assurance Board

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Nuclear New Build - DWMP

• Clear structure

• Full decommissioning and waste management plan

• Robust cost estimates

• Conservative

• Contingency

• Risks

• Uncertainty

• Roles and responsibility set out

• Durable

• Updated

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Nuclear New Build - FAP

• Establishing/ creating the Fund

• Structure and ownership

• Role

• Contributions waterfall over the life of the plant

• Management strategy

• Administering including making payments

• Winding up of the Fund and excess funds

• Tax and accounting analysis

• Other security packages available to deal with insufficiencies.

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Nuclear New Build - Fund

• Fund independent of the owner/operator

• Insolvency remoteness

• Trust fund

• Managed

• Ensure sufficiency

• Restrictions on use of fund assets

• CNE security package

• Shortfalls covered by Operator

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Conclusions• Complicated/ no one size fits all

• Equity

• Debt

• Role of government (guarantees/ PPAs/ CFDs ….)

• Revenue

• Funds

• One think for sure – without all of the above coming together there will be no new build project

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Understanding of the nuclear market• We advise on nuclear new-build,

operational nuclear issues and on decommissioning and waste management

• We understand policy, regulatory and financing issues associated with the nuclear sector and why certain solutions are not universally applicable.

Mining

Conversion

Enrichment

Fabrication

Reactorconstruction

Power generation

Decommissioning

Storage

Reprocessing

Vitrification

Disposal

• We know participants and stakeholders across the globe

• We understand the risks faced by participants in different countries and different parts of the value chain

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For over 17 years Fiona has been involved with projects in the nuclear industry. She remains a highly regarded specialist, particularly by industry, in the nuclear market. She is familiar with and has worked on all aspects of the nuclear cycle from new build and licensing to decommissioning, fuel storage and waste management.

She has a detailed understanding of the international regulatory framework within which the nuclear industry works and frequently advises on liability regimes and nuclear insurance, regulatory and reporting requirements, the development of regulatory regimes, feasibility studies and structuring as well as the financing, development, construction, operation and maintenance of nuclear stations and the fabrication, reprocessing and storage of nuclear fuel and waste.

During her early career , while at an engineering company, she worked at a nuclear power station in the UK

She is recognised as an expert in the development and financing of nuclear projects by the International Atomic Energy Agency (IAEA) and has served as a designated expert on the financing, development and structuring of nuclear projects at special meetings of the IAEA.

She is co-author of the chapter on the resolution of disputes in the nuclear industry in “Dispute Resolution in the Energy Sector: A Practitioner’s Handbook.”

She is a Non Practising Solicitor Advocate (civil) and is a Member of the International Bar Association, member of the International Nuclear Lawyers Association, member of Women in Nuclear among other organisations.

Fiona has worked on nuclear new build projects in the UK, Central Europe, Russia and the Middle East and has worked for the Nuclear Decommissioning Authority and International Nuclear Services in the UK.

Fiona ReillyPwC | Lead on nuclear for Capital Projects and InfrastructureOffice: +44 (0) 20 7804 7266Email: fiona.j.reilly@uk.pwc.com