Global Nuclear Power DevelopmentsAsia Leads The Way
Nuclear Energy Asia 2010Hong Kong
7 December 2010 Nuclear Power Asia 2010 2
Disclaimer
The slides that follow are not a completerecord of the presentation and discussion.
The views expressed in this presentation and discussion are mine and may not be the same as those held by NERA’s clients or my colleagues.
7 December 2010 Nuclear Power Asia 2010 3
Global marketsReactor design evolution
7 December 2010 Nuclear Power Asia 2010 4
Global marketsGen III & III+ attributes
Attributes of Gen III, III+ designs– Large size
– Aircraft crash resistance
– Lower Core Damage Frequency (CDF)
– Passive safety (e.g. AP1000, ESBWR)
– Longer refueling cycle & higher fuel burnup
– Modular, top-down construction (e.g., ABWR, AP1000)
– 60 year operating life
– Load-following & part-load capability
7 December 2010 Nuclear Power Asia 2010 5
Global marketsGen II+, III & III+ reactor designs
0 10 20 30 40 50 60 70 80
ESBWR
APWR
APR1400
OPR 1000
VVER-1000
EPR
ABWR
CPR 1000
VVER-1200
AP1000
In operation Under construction Planned Proposed
7 December 2010 Nuclear Power Asia 2010 6
Global marketsGen II+, III, III+ by country
0 20 40 60 80 100 120 140 160
Vietnam
Turkey
UAE
Japan
ROK
USA
India
Russia
China
In operation Under construction Planned Proposed
Non-government utilities
7 December 2010 Nuclear Power Asia 2010 7
Strategic issuesIndustry Consolidation
Framatome
Babcock & Wilcox (USA)
Siemens
Mitsubishi Heavy Ind.
Combustion Engineering
ASEA
Brown Boveri et cie
Westinghouse
Toshiba
Hitachi
GE
Framatome
Siemens
Mitsubishi Heavy Ind.
BNFLAsea Brown Boveri (ABB)
Westinghouse
Toshiba
Hitachi
GE
Framatome ANP
Mitsubishi Heavy Ind.
Westinghouse
Toshiba
Hitachi
GE
AREVA NP
Mitsubishi Heavy Ind.
GE-Hitachi
AREVA
Siemens
Mitsubishi Heavy Ind.
GE-Hitachi
Westinghouse
Toshiba
Westinghouse
Toshiba
MinAtom MinAtom MinAtom MinAtom Rosatom
1980s 1990s 2000s 2006 2010
BWR
PWR
Both
7 December 2010 Nuclear Power Asia 2010 8
Strategic issuesNew industry competitors
South Korean companies – offering APR1400 to export market
Chinese nuclear companies – talking about selling Chinese version of AP1000 and CPR1000 into export market
India looking to sell its PHWR to smaller countries with new nuclear programs
New companies with small and innovative reactor designs (e.g., B&W, Hyperion, NuScale)
7 December 2010 Nuclear Power Asia 2010 9
Strategic issuesOvernight capital costs
$0
$1,000
$2,000
$3,000
$4,000
$5,000
$6,000
Swiss PWR BelgianPWR
French EPR USA GenIII+
JapanABWR
ChinaAP1000
ChinaCPR1000
ROKAPR1400
Source: OECD 2010, Table 3.7a, overnight costs in USD/kWe
2.5 times!
7 December 2010 Nuclear Power Asia 2010 10
Strategic issuesProduct development cycle
Concept Mature
Conceptual cost
estimates
Actual cost first unit
Uni
t Cos
t
Years
Detailed engineering& licensing
EPC contracts
Learning on additional units
reduces time and cost
Long production lines for standard unit components
FOAK Learning
7 December 2010 Nuclear Power Asia 2010 11
Strategic issuesCommercial approach (e.g., USA)
Concept Mature
Conceptual cost
estimates
Actual cost first unit
Uni
t Cos
t
Years
Detailed engineering& licensing
EPC contracts
Learning on additional units
reduces time and cost
Long production lines for standard unit components
FOAK Learning
First Wave Buyers Later BuyersSecond Wave Buyers
7 December 2010 Nuclear Power Asia 2010 12
Strategic issuesNational approach
Concept Mature
Conceptual cost
estimates
Actual cost first unit
Uni
t Cos
t
Years
Detailed engineering& licensing
EPC contracts
Learning on additional units
reduces time and cost
Long production lines for standard unit components
FOAK Learning
Build capability Build fleet
7 December 2010 Nuclear Power Asia 2010 13
Strategic issuesNew nuclear countries
High growth rate in developing world, but– Multiple smaller countries = multiple reactor sales
– Physical and administrative infrastructure lacking
– Financial viability
Nuclear power development models– IAEA – slow – build infrastructure, then NPP
– UAE – fast – buy infrastructure and build NPP
– Russia – faster – build and operate nuclear IPP
7 December 2010 Nuclear Power Asia 2010 14
Strategic issuesSize of nuclear build programmes
Low costs come from large fleet/build programme
High demand growth = high nuclear potential– China, India, etc
Lower demand growth = lower nuclear potential– USA, Europe
– High cost to shift from fossil to nuclearShut down existing coal units?Impose significant carbon tax?
7 December 2010 Nuclear Power Asia 2010 15
Strategic issuesFrench nuclear fleet
0
1,000
2,000
3,000
4,000
5,000
6,000
7,000
8,00019
58
1961
1964
1967
1970
1973
1976
1979
1982
1985
1988
1991
1994
1997
2000
MW
e (b
y C
OD
)
0
10,000
20,000
30,000
40,000
50,000
60,000
70,000
80,000
MW
e
Annual Cumulative
1958 - Framatome founded; obtains
Westinghouse PWR license
1968 - Seven 900 MWe units
ordered
1974 - OPEC oil crisis; Sixteen 900 MWe units ordered
1976 - Ten 900 MWe units and
twenty 1,300 MWe units ordered
Four 1,500 MWe N4
units
7 December 2010 Nuclear Power Asia 2010 16
Multiple Identical
Units
Organization & Management
A single organization with a unified approach and economies of scale to accomplish:
• Training
• Purchasing
• Management
• Engineering
• Regulatory affairs
• Training
• Simulator
• Operators and management
• Refueling outage skills & equipment
• New procedures & equipment modifications
• Shared spare parts, special tools, and strategic spares
Learning from:
• People involved in construction and operation of multiple units
• Modification of the design or the construction approach and schedule
• Documenting and sharing lessons learned
• Vendors build in learning for later bids
Volume orders may allow upstream component suppliers to invest in longer production lines due to bulk procurement
Volume orders may bring discounts from NPP vendors that reflect expectedlearning curve benefits and upstream component savings
Sequencing of construction is key
Teams move from one project to the next without interruption (also may allow simultaneous work on multiple units)
Teams could work on similar tasks for many units, allowing significant commitment to hiring & training
French nuclear industrial development is model
Investment in new production facilities
Over time, such local suppliers should be able to use their experience (and their own learning curve benefits) to become competitive suppliers in the export market
LearningCurve
Effects
VolumeOrders
MobilizeTeams
Industry&
Employment
Strategic issuesNuclear fleet benefits
Nuclear Fleet Concept
7 December 2010 Nuclear Power Asia 2010 17
Sequentialpurchase
Multiple procurements
Potentially coordinated construction
Learning curve benefits may not be captured by owner
Financial flexibility, vendor market power, fewer options for buyer
Multiple identical unitsMultipleunitsNo fleet
Single ownerCommon simulators, special tools, training
Co-ordination of upgrades, maintenance, outages
Fungible operators, maintenance teams, outage teams
Operational improvement through learning across fleet
Smaller fleet operatorsNuclear fleets, composed of multiple reactor types (BWR and PWR and other), reactor designs, constructors, and vintages
A mix of units built by owner and acquired
Benefits from single overhead, purchasing, engineering, and management
Single nuclear unit/plant ownerSome multi-company efforts to gain fleet benefits through cooperation
US nuclear management companies a more formal approach to multi-company efforts
Some ability to share learning through industry groups
Bulkbuild
Owner is builder
Coordinated construction, mobilization benefits
Learning curve benefits captured
Large build allows upstream infrastructure
Large financial commitment, large benefits
Strategic issuesNuclear fleet development
China’s approach
7 December 2010 Nuclear Power Asia 2010 18
Role of GovernmentRange of approaches
StateCapitalism
China
Russia
Electricitymarkets
UK
US marketregions
India
Mixed
US regulatedstates
Japan
US publicpower
SouthKorea
France
7 December 2010 Nuclear Power Asia 2010 19
Role of GovernmentState Capitalism
Strategic and long-term state domination of markets
National Corporations & State-Owned Enterprises
Strategic goals above profits
Inside & outside host country
China and Russia leading examples
7 December 2010 Nuclear Power Asia 2010 20
Gov’t long-term strategy
for nuclear power
Gov’t orders large reactor
fleet
Nuclear is low cost energy option
Fully integrated
nuclear supply chain
Gov’t captures
significant learning curve
benefits
Export market sales?
Nuclear industrial capacity
developed
Role of GovernmentState capitalism - nuclear power
Outside vendors
?
7 December 2010 Nuclear Power Asia 2010 21
Role of GovernmentIntegrated nuclear power industry
Operation and maintenance
Front and back -
Nuclear fuel cycle
R&D
Financing
Training and
education
Licensing
Components and
construction
Engineering
7 December 2010 Nuclear Power Asia 2010 22
Summary
Pivotal time for nuclear power industry, with high capital costs and project risk
Large nuclear fleet build by governments– Capture learning curve benefits of large orders
– Build confidence through completed projects
– Build integrated national nuclear infrastructure
Will commercial vendors be able to compete with state nuclear suppliers?
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Edward KeeVice PresidentWashington, DC+1 (202) [email protected]