Nuclear market trendsMike Saunders, President, Power & Process EuropeSellafield site investor trip: 21 June 2010Sellafield site investor trip: 21 June 2010
Agendag
Global nuclear market
Size and drivers
Market structure and characteristics
Investment costs and timelines
Challenges
UK nuclear market
Key part of energy mixKey part of energy mix
Market-driven approach
New build processNew build process
Addressing the challenges
2
AMEC’s position and strategy Sellafield panorama
Global nuclear marketCountries with nuclear power - 30; considering it - 20Countries with nuclear power 30; considering it 20
Nuclear countriesDeclared as interestedAMEC nuclear offices - main centres: UK
Hydro: 16%N l 14%
Coal: 41%G 21%
2008 global electricity
Oth 8% (~1,100 employees); Canada (~850)Nuclear: 14%Gas: 21% Others: 8%
SOURCE: WNA, IAEA
3
Note 1: Definition of ‘seriously considering’ varies between IAEA and WNA, twenty is the low figure (11 countries are ‘planning’ reactors, 5 more have ‘proposals’, others are ‘considering’ nuclear.)
Market size and driversMarket size and drivers
The numbers of planned and
New installed generating capacity after 2006 by geography (2007-2030)
GWeNet
proposed reactors in countries with existing nuclear power are constantly increasing
No of reactors
The number of countries with intent to launch nuclear programmes has increased significantly in the last 4 years
6 countries dominated nuclear market historically - represent 90market historically represent 90 percent of installed capacity
Asian countries will generate most th i t th f t
Source: AREVA estimatesgrowth into the future
B i i d l t l
* Source: WNA May 2010
4
Beginning a new and long-term cycle
Market structure and characteristics
Nuclear energy cycle Market structure
Sectors
Nuclear energy cycle
Chemistry
Enrichment Fuel fabrication
Players: countries, global OEM, nuclear utilities
Technologies: <10 globallyMining Clean up
New build
g g y
Market characteristics Political
Reactor support
Regulated
Competitive
Transmission
Distribution
End users
AMEC’s nuclear market areas
Additional AMEC activities
55
Investment costs, timelines*, and unit production costsproduction costs
Typical spend profile for a nuclear power plant (£m) Comparison of cost of electricity 1yp p p p p ( )
1500 4000Ph 3Ph 2Ph 1
25
p yp/kWh
1250
Spen
d (£
m)
2000
2500
3000
3500
ulat
ive
£m
Phase 3
Design, Construct & Commission
Phase 2
Definition, licensing,
public enquiry
Phase 1
GDA and Approvals1000
750
15
20
250
Ann
ual S
500
1000
1500
2000
Cum
750
500
5
10
00 1 2 3 4 5 6 7 8 9 10
Years
0
Annual spend
0
re w
ind
ith C
CS
ith C
CS
Biom
ass
CCG
T
re w
ind
Nucl
ear
N l i titi f l t i it
Source: Compiled from NIA published data
Cumulative spend
Offs
hor
Coal
wit
CCG
T w
i B
Ons
hor N
6
Nuclear is a competitive source of electricity* Approximate – for guideline only, using UK European Pressurised Reactor (EPR) 1 Parsons Brinkerhoff report 2010
Challengesg
Public opinion Safety, waste management, proliferation
Attraction of talent
N d i d l h i bili New designs and supply chain capability
Liberalised and volatile markets
C titi f F E t Competition from Far East
Cost
Length of process Length of process
Must continue to address challenges to ensure nuclear renaissance
7
Must continue to address challenges to ensure nuclear renaissance
Agendag
Global nuclear market
Size and drivers
Market structure and characteristics
Investment costs and timelines
Challenges
UK nuclear market
Key part of energy mixKey part of energy mix
Market-driven approach
New build processNew build process
Addressing the challenges
8
AMEC’s position and strategy Sellafield panorama
UK – nuclear a key part of energy mixUK nuclear a key part of energy mix
UK energy demand forecast to be 370TWh in 2020
Projections of (%) share of electricity t d b diff t (DECC)*370TWh in 2020
Reducing emissions by 34 percent by 2020 requires shift in energy mix
2 1 19
2008 2020
generated by different sources (DECC)*
Nuclear will remain a key part of UK energy mix
613
45 31
929
energy mix 10 plants currently operational
Aging nuclear fleet: 8 will close by 202532
822
Life extension opportunities limited Estimated energy demand today and in 2020 is 370TWh
*Assumes existing nuclear power stations are closed in line with published retirement dates and 1.6GW of new capacity is
GasCoalNuclearRenewablesOther sourcesNew build: 6 planned, 2 operational by
2020
f ‘
Source: DECC
dates and 1.6GW of new capacity is constructed by 2020 Oil
9
9Nuclear new build required to help fill UK’s ‘energy gap’
UK - market-driven approach to nuclear*pp
Labour built an environment that attracts nuclear investment
Regulatory framework
Processes to enable licensing and construction of reactors
Carbon pricing structure
Support skills development
Coalition government has signalled its continuing supportVincent de Rivas EDF's chief executive said:
"We welcome that the new Government has made clear its policy on nuclear energy through its commitment to practical t th t l t ti b ibl ”steps so that new nuclear construction becomes possible.”
Coalition government has signalled its continuing support
10
10g g g pp
*Very different to other countries – where nuclear is state funded or supported by significant subsidies etc
UK - new build process
2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018
Department for Energy & Climate Change (DECC)
Operators
Nuclear Installations Inspectorate (NII)
KeyWaste & Decom. plans
Develop funding plans
Nuclear W
hi
Justification Infrastructure Planning Commission (IPC)
AMEC involvement
Generic Design Technology approvalite Paper (Ja
Generic Design Assessment
Sitelicensing
Technology approval
an 2008)
Planning Permission
Consent to operate
Designated National Policy StatementStrategic Site Assessment
g
2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018
PermissionProgramme Implementation
11
Typical 5yr decision and consents Typical 5yr construct / commission
UK - addressing the challengesg g
Skills base
Each nuclear plant needs approx 4,000 people to build Typically 700 people to operate and maintain
UK has an aging engineering base average age 50 years* UK has an aging engineering base - average age 50 years*
Bridging the skills gap will require collaboration Government industry academiaGovernment, industry, academia
Waste (legacy and future)( g y ) NDA spending £73bn to decommission legacy UK sites
Future waste management addressed in new build planning process
Challenges must be addressed to maintain public support
12*Source: Gibson Review
Challenges must be addressed to maintain public support
Agendag
Global nuclear market
Size and drivers
Market structure and characteristics
Investment costs and timelines
Challenges
UK nuclear market
Key part of energy mixKey part of energy mix
Market-driven approach
New build processNew build process
Addressing the challenges
13
AMEC’s position and strategy Sellafield panorama
AMEC - nuclear a key sector today and in future
AMEC 2009 revenue by sectorNuclear* 10%
Natural Resources
Transmission &
Conventional Power 5%
Nuclear* 10% Power & Process
Earth & Environmental
Mining 9%
Distribution 6%
Oil Sands 16%
W t /M i i l 3%
Renewables and Bioprocesses 6%
Oil & Gas 26%
Mining 3%Energy 2%
Water/Municipal 3%
Transport/Infrastructure 3%
Federal/State/Provisional 5%
p %Industrial/Commercial 3%
N l t i f f th t 2015
14
Nuclear sector is a focus for growth to 2015*Does not include the ‘equity accounted’ Sellafield contract
AMEC - nuclear position and strategy
ClReactor N b ild Clean upsupportNew build
Defend and grow leading position as the independent nuclear
Establish AMEC as a major UK nuclear clean up contractor (Tier 1) and long term partner to NDA
Establish AMEC as the utilities independent nuclear technology
t expert for existing reactors in current geographies
term partner to NDA
Pursue international growth priorities
partner
Assure the licensing, delivery and safe
UK, Canada, CEEoperation of the reactor and associated systems
Having a position in three segments is a competitive advantage
15
Having a position in three segments is a competitive advantage
AMEC - nuclear position and strategy
Clean upReactor tNew build Clean upsupport
• Owners of Sellafield SLC (as part of NMP) t t hi l ti hi
• Largest supplier of engineering and t h i l i t EDF’ t UK
• Partnered with EDF in the UK as the A hit t E i NMP), strong partnership relationship
with NDA
• Sellafield’s largest technical services framework consultant
technical services to EDF’s current UK reactor fleet
• Positioned with EDF as a key Programme & Project Management partner (prime contract)
Architect Engineer
• Partnered with OPG in Canada as the Owner’s Engineer
• Partnered with Cernavoda in Romania • 5 year contract with utility CEZ (Czech)
for the management of active waste at their nuclear power plant in Dukovany
• Contracts through EBRD for ‘Project
partner (prime contract)
• Largest technical consultant in support of OPG in Canada
• Extending our support services across
as the Owner’s Engineer
• Contract with Belarusian Government, support for reactor purchase negotiations
Management Units’ at Chernobyl and Ignalinia (Lithuania)
• Partnered with Energy Solutions for Dounreay bid
a broader European footprint (eg support to existing reactor at Cernavoda, Romania)
• Pursuing Owner’s Engineer positions in Czech Republic, Poland, Switzerland
• Support to UK NII on reactor generic pp gdesign assessments (non-EPR)
16
Partnering in key geographies
Summaryy
Nuclear renaissance is under way Long-term upward cycle – driven by climate change and security of supply
Opportunities in domestic markets and internationally
AMEC has a clear nuclear growth strategy Long-term partnering approach with customers and other major global supplierso g te pa t e g app oac t custo e s a d ot e ajo g oba supp e s
Selective geographic focus - where we can leverage existing strong relationships
Focus on synergies from three segments
AMEC positioned to engineer the change
17
AMEC positioned to engineer the change
S l t i f tiSupplementary information• Opportunities across sectors• Europe ahead of North America
UK• UK• Canada• How a nuclear plant works• Reactor technology• Reactor technology
Opportunities nuclear renaissance
Chernobyl 1985
Industry challenges
• Public acceptability?
• Attraction of talent?
30
35
40
45
roug
ht o
nlin
e
• New designs and supply chain capabilities?
10
15
20
25
bal r
eact
ors
br • Privatised industry, private capital?
• Liberalised and volatile markets?
0
5
1956
1958
1960
1962
1964
1966
1968
1970
1972
1974
1976
1978
1980
1982
1984
1986
1988
1990
1992
1994
1996
1998
2000
2002
2004
2006
2008
2010
2012
2014
2016
Glo
b volatile markets?
• Competition from Far Eastern players?
54 reactors under construction
148 ordered or planned
438 reactors operational
56% are more than 25 years old
Western industrial decline, Far Eastern
20
p
342 proposed
SOURCE: WNA April 2010
Eastern construction continues
Opportunities reactor support
Maintaining and extending existing Number of operating reactor units by
Plant upgrades &
g g gfleet
Significant number of reactors to be supported and extended
p g yage (Jan 08)
No. of Reactors
Plant upgrades & life extension
pp
Services
Lifetime support
Operational Support
pp
Operational performance
Reactor servicing
21
More than 40 per cent of the fleet is more than 25 years old
Opportunities clean up
Completing the life cyclep g y
Driven by regulatory requirements
UK/US has the most developed clean t
Anticipated reactor closure dates
No. of Reactors (annual)
No. of Reactors (cumulative)
up sector
UK: Sellafield / Dounreay / Magnox
Anticipated Reactor Closure Dates
35
40
45
50
Annu
al
200
250
300
umul
ativ
e
Services
Decommissioning15
20
25
30
ber o
f Rea
ctor
s -
100
150
200
er o
f Rea
ctor
s - C
u
Decommissioning
Waste Management
Environmental0
5
10
2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022
Num
b
0
50
Num
be
Radiological
Some 250 reactors are anticipated to close in the ne t 15 ears
Annual Cumulative
22
Source: WNA & AMEC
Some 250 reactors are anticipated to close in the next 15 years
Opportunities – estimated size
New build
AREVA scenario for global installed capacity(GWe)
Reactor support
2020 global market estimate ~
2020 global market estimate ~
£18bn
600
700 Clean up
2020 global market estimate ~
£16bn
market estimate £55bn ~270 reactors ~630 reactors
358
72
400
500
438 reactors ~80 reactors
220 reactors 659
373 190
72
200
300~220 reactors
0
100
2008 Plant closures Life extensions New build 2030
23
2008 Plant closures Life extensions New build 2030
Sources: AREVA (WNA, USDoE, World Energy Outlook) Market estimates from AMEC analysis.
Nuclear increasingly competitive source of clean energyof clean energy
Comparison of greenhouse gas emissions
1400
gCO2 eq/kWh
Today
1000
1200 By 2050?
Today
600
800
200
400
600
0
200
Coal Gas Nuclear
24SOURCES: IAEA 2006, Paul Scherrer Institute 2003
Renaissance - Europe ahead of North America
New reactors under construction
New reactors plannedEurope
p• Primary drivers are real security of supply concerns and strong
environmental support across EU
• Olkiluoto 3 under construction in Finland, Flamanville 3 under construction in France
• Six reactors planned in UK, sites identified, consortia formed
• Feasibility studies by ENEL/EDF in Italy
• Tenders for two reactors issued in Czech Republic.
North America
• Primary drivers weaker, but growing security and environmental concerns
• Short lists for federal loan guarantees
• Duke Energy and others in negotiation with suppliers• Duke Energy and others in negotiation with suppliers
• Licence applications for 26 reactors since 2007
• Renaissance was signalled by the return to service of Bruce units 1 and 2 (Canada) and the restart of suspended construction
25
( ) pof Watts Bar (USA)
SOURCE: WNA, AREVA
UK - committed to new build
UK government approved 10 ‘new build’ sites1. Bradwell, Essex, NDA sold to EDF Energy
2. Braystones, Cumbria, NDA sold to RWE npower
3. Hartlepool, Durham, EDF Energy
Proposed
Operating
Shut downp gy
4. Heysham, Lancashire, EDF Energy
5. Hinkley Point, Somerset, NDA sold to EDF Energy
6 Kirksanton Cumbria NDA sold to RWE npower6
4
328
6. Kirksanton, Cumbria, NDA sold to RWE npower
7. Oldbury, Gloucestershire, NDA sold to Horizon*
8. Sellafield, Cumbria, NDA sold to Iberdrola/SSE/GDF-Suez
4
10
9. Sizewell, Suffolk, EDF Energy
10.Wylfa, Anglesey, sold by NDA to Horizon*7
5
91
Nuclear energy required to fill UK’s ‘energy gap’
28
*RWE npower & EON UKSource: DECC
28
Nuclear energy required to fill UK s energy gap
UK - supply chain (1 of 3) Capability
AMEC capabilityNo UK capability
pp y ( )
Item Main components UK Capability UK capability supported by global
Global supply (no UK capability)
No UK capability
Nuclear island
Nuclear Steam & Fuel Handling Systems Tanks Polar Crane Pumps (Safety Classified) Pipe-work, valves & Heat Exchangers (Safety Classified)
EC&I HVAC
Balance of Plant
Turbine Generators Tankso a t Tanks Cranes Pumps Pipe-work valves & Heat Exchangers Pipe-work, valves & Heat Exchangers Diesel Generators Transformers & grid connections EC&I
29
C& HVAC Chemical treatment system
UK - supply chain (cont 2 of 3)pp y ( )
CapabilityAMEC capability
Item Main components UK Capability UK capability supported by global
Global supply (no UK capability)
p yNo UK capability
Pre build Planning & licensing
Legal & financial services
Nuclear consultancy services Engineering & design services
Construction Project management Construction j g Building & construction Plant & Equipment On-site erection / fabrication Nuclear Island Nuclear fuel supply Commissioning – Nuclear island
30
g Commissioning BoP
UK supply chain (cont 3 of 3)pp y ( )
CapabilityAMEC capability
Item Main components UK Capability
UK capability supported by global
Global supply (no UK capability)
p yNo UK capability
Operation Operations
Nuclear fuel supply
Engineering / technical services Waste management & disposal
Decommissi Planning & licensing oning Decommissioning
31
Canada – nuclear is a pivotal part of energy mix
Nuclear will continue to be key to Canada’s economy and energy mix Approx 15 percent of Canada's electricity from nuclear powerApprox. 15 percent of Canada s electricity from nuclear power
– 18 reactors in three provinces provided over 12,600 MWe of power capacity
Committed to reducing emissions by 25 percent by 2020 – Ontario phasing out coal fuelled power generation by 2014– Ontario phasing out coal-fuelled power generation by 2014– Aging power facilities: 80 percent power plants in Ontario to be replaced or refurbished
in next 20 years
Canada produces over 50 percent of the world’s medical isotopes Approx. 33 percent of world’s uranium found in Saskatchewan
RefurbishmentRefurbishment Projects estimated at CDN$9+ billion CDN are currently underway or have been
announced– Ontario (~$6 billion)O a o ( $6 b o )– New Brunswick (~$1.4 billion)– Quebec (~$1.9 billion)
32
Canada is one of AMEC’s core nuclear markets
Canada – existing and planned
22 CANDU nuclear reactors, 17 operational as of 1 April 2008
New build: 9 planned by 2020 (potentially) Ontario, New Brunswick, Alberta and Saskatchewan
Hydro Quebec (1 operating unit)• Gentilly 2: operational
OPG* (10 operating units)• Pickering A 2&3: safe shut down
Pi k i A 1&4 ti l 1
3
New Brunswick Power (1 unit under refurbishment)
• Point Lepreau: undergoing
• Pickering A 1&4: operational• Pickering B 5-8: operational• Darlington 1-4: operational 2
5
• Point Lepreau: undergoing refurbishmentBruce Power (6 operating units)
Bruce A 1&2: under restart programBruce A 3&4: operational (next to refurbish)
4
Bruce A 3&4: operational (next to refurbish)Bruce B 5-8: operational
3
33
41
2
3
5
Global players and technologyp y gy
Global technologies
AP1000
Current reactor designs Global technologies
All current nuclear power plants are critical fission reactors
AP1000
EPR 1000
Pressurised Water Reactor (PWR) is current modern design
Several subtypes are classified at generationACR 1000
ASBWR/ESBWR
Several subtypes are classified at generation I, II, III, IV
ASBWR/ESBWR
Russia VVER
Korea KNP 1400
3535
Technologygy
N l fi i t d h t
Diablo Canyon (PWR)
Nuclear fission reactors produce heat through a controlled nuclear chain reaction in a critical mass of fissile materialmaterial
There are several subtypes of critical fission reactors, classified as Generation I, Generation II and
Superfenix (FBR)
Ignalina (RBMK) Ge e at o , Ge e at o a dGeneration III.
Igana Verde (BWR)
Q i h (CANDU)Torness (AGR) Sizewell A (Magnox) Quinshan (CANDU)
3636