CORPORATE FINANCE FINANCIAL INSTITUTIONS ENERGY AND INFRASTRUCTURE TRANSPORT TECHNOLOGY

Nuclear developments across Europe

Weero KosterPartner24 November 2009

2

Nuclear energy in Europe

• World’s largest producer of nuclear energy (131,623 MW(e))

• 145 nuclear power plants in 15 EU Member States• Generating around a third of the electricity consumed in the

EU• Many nuclear power plants under construction or

announced• A growing majority of EU member states a choosing nuclear

energy for power generation or reversing earlier opt-out decisions

3

Nuclear energy in Europe

• Recently completed and ongoing projects:– Romania (connected 07), Finland, France, Slovenia

• Announced new reactors: – Italy, UK, Poland, Romania, France, Bulgaria, Czech

Republic, Finland, Hungary, Lithuania, Slovakia, Slovenia

• Evolution in nuclear policies:– New build decided: Italy, UK– Phase-out reversed: Sweden, Germany, Belgium

4

Reasons renewed interest “Nuclear Renaissance”

• Nuclear Renaissance vs nuclear decline?• Reasons for the decline:

– Accidents/ public opposition– Economics

• Reasons renaissance ?– Concerns about security of supply– Climate change and emission reductions– Availability of reliable base-load capacity– Competitiveness of power prices

5

Generation Gap

• Because of EU ambition of nuclear as low-carbon base-load power provider the choice is not between renewables OR nuclear, but for investment in renewables AND nuclear

• Renewables can only do 60 % of the emission reduction targets; the remaining 40 % should come through CCS or nuclear generation

6

Increased Capacity

• Nuclear capacity increase can come through:– Lifetime extensions– New built

• Average age of EU nuclear park is 23 yrs• US: 50 % of reactors licensed for 60 yrs• Thus: lifetime extensions

– taken/ announced in Finland, France, Hungary, the Netherlands, Spain, Germany and

– prepared in Czech republic, Belgium and Slovakia

7

Increased Capacity• Flipside lifetime extensions: “windfall profits”• France: Report Commission Champsaur 24/04/09• Belgium/ Germany: similar approach• Competitiveness of French nuclear plants not reflected in

power prices: prices based on “merit order”• Two solutions:

– Tax and reallocate (to consumers or regulated activities) and

– Regulated access to base-load nuclear production (October 09 Nome law project)

8

Nuclear Renaissance?

• General concerns:– Windfall profits– Public vs private funding– Zoning, planning– Grid connection, -management– Decommissioning– Security and safety (liability)– Waste– Skills and the supply chain

9

Divergence of approachesFrance• Largest EU generator of nuclear power/ production

from nuclear power: 77%• Expand/innovate its nuclear power capacity and

replace its current ‘fleet’• EPR new build decisions in 2006 and 2009;

prototypes IIIrd+ and IVth generation in 2012/2017 and 2035

• Current average life is 30 yrs and no regulatory life time, so: extend by at least 10 yrs and phase-in new fleet and windfall profits addressed

10

Divergence of approachesUK• First on nuclear energy in 1956: 48 reactors and 1 new

build planned/ production from nuclear: 13%• All State owned until 1996; BE now part of EdF• 2006 – go ahead from government for new generation

reactors/ Infrastructure planning Commission now set up

• Reasons: energy security/ legally binding targets on CO2 emissions:

– 34 % reduction by 2020/ 80% by 2050– 5 year carbon budgets.

11

Divergence of approachesGermany• Nuclear reactors: 17; production nuclear: 23%• 1998 phase-out agreement; first 7 in 2010-2012• 2002 Nuclear Energy Act amended:

– ban on construction– fixed production amounts per reactor.

• Coalition agreement 2009:– nuclear needed to bridge generation gap– reverse phase-out/ additional operating times– Windfall profits partly to RES, CCS, prices

12

Divergence of approaches

Belgium• 7 reactors; production: 6000 MW/ 54%• In 2003 decided

– phase out use of nuclear reactors/ life time 40 yrs (not operating hrs)

– prohibit the new-build,– but deviation for “force majeure”, which may be

insufficient generation capacity and dependency on imports

13

Divergence of approaches

Belgium• Also 2003: Law Decommissioning NPP’s

– Synatom to build up decommissioning reserves– reserves paid by nuclear operators, but 75 %

can be reinvested in them– part of Suez group, but credit rating link, golden

share and commission to control– excess reserves to be returned to operators

14

Divergence of approaches

The Netherlands• 1 PWR at Borssele of 495 MW, production: 4%;

much debate as JV between two operators and one recently privatised

• 1963 Nuclear Power Act and Decree on conditions• Life time extended to 2033 (60 yrs) by covenant

with operators, with concessions:– top 25 % quality requirement– Investments in renewables (EUR 125 mio)

• Coalition agreement: no decision on construction until 2011

15

Divergence of approaches• 2009 technical revision Nuclear Power Act on de-

commissioning security sparkled debate• MEA consulting and working on 3 scenario’s and 3

sites• One operator filed EIA for new build at Borssele• Dutch government has announced not to issue the

licence before the end of its term (i.e. before 2011)• Other operator (Essent) acquired by RWE• Second covenant on public interests Borssele,

which will apply to private owners and will set tone for new Act

16

Divergence of approaches

• Second covenant: – Public interests part of corporate decision-

making– Information and disclosure obligations– Sale only to parties non-proliferation treaty– Hefty penalty clause

• Windfall profits addressed at the time of liberalisation and “stranded costs”

17

Public or private ownership

• Position Dutch government:– No decision on construction, but need to cover

“generation gap” by CCS or nuclear – public sector only facilitates and sets boundary

conditions for investments and research in nuclear technology and new NPPs by private sector

– economics dictate that private investors should invest and that exclusive public ownership of NPPs is not a viable option

CORPORATE FINANCE FINANCIAL INSTITUTIONS ENERGY AND INFRASTRUCTURE TRANSPORT TECHNOLOGY