Part of a Special Section covering the Nuclear Construction Summit USA 2009, October 26-27 – Washington DC
The Nuclear Construction Summit, USA 2009 was attended by professionals who finance, plan and develop next nuclear projects. Professionals delivered information that will form blueprints for successful financing and construction risk assessment and management at every phase of the construction cycle. From government and regulatory bodies to operator insight and in-depth contractor experience.
- Presented by Colette Lewiner, Capgemini –
The attached pdf presentation from the NCS meeting details Capgemini's Introduction to New Build Nuclear
Agenda
Global Energy Outlook
Present Crisis impact
Nuclear renaissance
Energy, Utilities & Chemicals Global Sector
• Present status
• Impact of economic recession: contrasted situations
Conclusion
How to limit our energy consumption and our CO2 emissions?
Energy consumption:increase from BRICs and other developing countries will not be balanced by the stabilization of developed world countries’ resulting in an overall 1.2% per year growth
Our planet fossil fuel resources are limited: 40 years in Oil, 60 years in Gas, 146 years in Coal. We need to use them cautiously and they generate CO2
We have to limit our Green House Effect Gases (including CO2) emissions in order to avoid global warming which would be very damageable for our planet
Carbon capture and storage is at a development stage and very expensive (increases by 50% the kWh cost). It could eventually be implemented.
Market Evolution: The crisis’ effect Fall in Demand and CO2 Emissions
• Main European countries’ H1 2009 electricity consumption fell by 5% and gas consumption by 8% compared to H1 2008 (mainly due to industrial sector decline of 10-20%monthly).
• 2009 electricity total consumption to drop worldwide by 3.5% & gas consumption by similar amount.
• CO2 emissions drop mainly resulting from fall in energy consumption:
• In 2008, the drop for the ETS sectors emissions in Europe was around 3.7% (compared to 2007) and the total European CO2 emissions should have
dropped by 1.5%.
• A further 3% drop for 2009 anticipated.
• Renewables: The 2020 target is challenging: 20% in energy consumption translates into 33% in electricity generation shares – we are at 16%
• Consumption and CO2 emission drops are
more cyclical than structural.
• More actions need to be taken at European and
worldwide level.
• However in the USA the Waxman Markey bill
and the cap and trade system are encountering
difficulties.
• The Copenhagen summit outcome is very
uncertain.
Financial Crisis Impact on Utilities companies
- To restore consumer buying power, governments could impose windfall taxes or set caps on energy prices.
- As a result of oil prices drop, Utilities are benefiting from lower gas prices but wholesale prices are strongly decreasing
- Utilities revenue is decreasing as a consequence of the economic difficulties of their clients.
• What about their margins?
• And credit rating?
- After an intensive activities in Mergers and Acquisitions, Long-term Decline in Credit Quality (US Utilities)
- Their “war chests” have decreased
- Their gearing levels have increased
- Credit crunch and demand decrease are impacting negatively investments in plants, grids, and pipelines.
Utilities with strong balance sheets are needed
After M&As, divestments are announced
- War chests have decreased
- Investments are delayed
• Early this year half of the top ten US utilities have announced reductions to planned capital investments 2.7 $ bn)
• In Europe big players are announcing investments cuts: E-ON from 36 to 30 € bn, ENEL from 44 to 32 € bn
- Divestment plans are announced
• E-ON & ENEL: €10bn , EDF:€5 bn
- Security of Supply:
• In Europe, UCTE revised down its forecast from 50,000 MW to 20,000 MW of additional electricity generation needed to maintain security of supply.
• However many generation projects are delayed
Utilities appetite for new investments is decreasing. An upturn in investments after the crisis is unsure and could be insufficient
Nuclear Energy development is key to meet the future challenges
After the end of the crisis we will see many of the precrisis challenges come back:
• Tight global energy demand and supply
• Limited resources, insufficient investments and increasing demand from developing countries
• Aging infrastructure in Western countries creating need to build new power pants
• Global energy security of supply:
• Oil and Gas resources are concentrated in a limited number of countries
• Uranium is abundant and well spread geographically; it is only small component of total nuclear energy cost
• Climate Change issues calling for carbon free energy
sources
• Nuclear with hydropower are the only carbon-free schedulable energy source able to produce large volume of electricity as at affordable cost
Nuclear industry has matured up: safety, workers radioprotection, plant availability and economics have improved Nuclear energy is back in the game
We are witnessing a nuclear renaissance
Overview of existing nuclear plants and project capacities (as of April 2009)
Worldwide, 436 reactors are in operation, 44 under construction and 382 planned or forecasted (April 2009, World Nuclear Association)
The biggest future investors are in Asia (China, Japan and India), Russia, Ukraine and UAE
Impact of recent events on nuclear renaissance:
Common points
Negative:
Fossil energy prices decline
CO2 prices decline
Demand slow down
Credit crunch impacting project development
However differences according to project owner:
• Whether it is in the public or private sector.: projects supported by State don’t require the same ROI as do private investors
• The size of its market capitalisation Electricity generating costs in selected regions
• The strength of it’s balance sheet.
Positive:
Construction costs should decrease
Public opinion getting more positive
Decreasing incentives for renewables
Security of supply back on the European agenda
Global Green House Gases emissions reduction objective is widely adopted
Different regional impacts of the crisis on nuclear development lead to contrasted situations
US: a contrasted situation
Negatives
Stronger financial crisis impact than in other regions
Smaller Utilities: Investment in a large PWR represents about 10% of the balance sheet of an average US Utility versus 3%-4% for EDF, RWE or E-ON)
Impact of New US administration positions :
• ”No new nuclear or coal plants may ever be needed in the United States, Jon Wellinghoff chairman of FERC
• No solution for the used fuel after
• President Obama decision to cancel Yucca Mountain project
• A lot of funds going to renewable energies
First delays and cancellation:
• Ameren is walking away from it’s EPR plant project in Missouri
• Progress Energy Florida announced plans to put back by 20 month the construction schedule for two WAP1000 units
US: a contrasted situation
Positives
Many Utilities have new reactor projects
Under the 2005 energy law, $18.5 billion Federal Loan Guarantee will be allocated. Projects are being assessed
Vendors are investing in plants to manufacture components for these new reactors: Areva/Northrop Grumman ,Westinghouse/the Shaw group, BWX Technologies
Projections by CERA* 4 to 8 reactors operating by 2020
President Obama to set a commission on spent fuel disposal
Investments in cutting-edge nuclear energy research and development: $44 million funds from DOE allocated
In response to Jon Wellinghoff declaration Senator Lindsey Graham said: “I’m afraid if we follow his advice, we may be marching into darkness.
* CERA: Cambridge Energy Research Associates
Nuclear is on the mid-term agenda;
Steven Chu “I'm supportive of the
fact that the nuclear industry should
be part of the mix“.
A nuclear revival in Europe
Europe
• Finland: First EPR reactor in construction at Olkiluoto. Government to decide about a 6th unit
• France: EPR reactor in construction at Flamanville Second EPR at Penly to be built from 2012
• Italy: The new government plans new nuclear build. In February 2009, EDF formed a JV with Enel to conduct feasibility studies for 4 EPRs
• Sweden: The government decided to cancel the present phase out policy
• Germany: After the recent elections, the “Phase Don’t know Support for nuclear production has grown significantly in the European Union Out” policy will be abandoned. An important move for Europe too.
Former Eastern Europe Countries
• Programs to invest in new nuclear plants
• This winter gas crisis has strengthen these plans
Russia and the former CIS
• Russia: By 2030 nuclear share of electricity is expected to grow to 25% (16% now). However, scale back of the construction program due to economic recession.
• Ukraine: Plan to build and commission 11 new reactors by 2030
The crisis should have a limited impact on this renaissance.
United Kingdom: a steady progression for an ambitious program
Target of 25 GW new nuclear built by 2030
European Utilities are targeting new UK reactors build:
• EDF acquired British Energy
• RWE/EON consortium formed
• GDF-Suez/ Iberdrola and Scottish & Southern
UK government is following its path for launching new nuclear plants:
• National Policy statement by end 2009
• Sites selection process: NDA sites allocated to
E.ON and RWE at Wylfa
E.ON and RWE at Oldbury
EDF Energy at Bradwell
• Some British Energy sites will be auctioned by EDF
• Waste and Decommissioning policy (end 2009):
Consultation launched for establishing a fixed price for the disposal of intermediate level waste and spent fuel from new nuclear reactors
• Generic Design Assessment (early 2011)
International collaboration decided
Despite this progression,commissioning new plants in 2018 will be challenging
India: a new play ground
Very large electricity growth and large investment needs
Diversification of fuel mix to benefit India on commercial, environmental and security of supply fronts
Nuclear is part of the energy mix
• 17 existing nuclear plants
• 6 reactors under construction
Big government push
By 2032 778 GW needed to sustain 8% growth
• Plan for 20 000 MW nuclear capacity operational by 2020 and for
• 25% of electricity from nuclear power by 2050
Boosted by
• The new international agreements allowing India to access international technology despite them not signing the Non Proliferation Treaty
• Nuclear vendor’s competition Election’s results confirmed the government nuclear policy
China: a strong acceleration
In March 2009, China Nuclear Energy Agency proposed to increase the nuclear capacity from 40 to at least 75 GW in 2020. Nuclear will account then or 5% of
total installed capacity and 8% of power generation.
Each year, for the following 10 years, China needs to launch around 6 new large reactors
Conclusion
“The economic crisis could delay the implementation or expansion of nuclear power programs in some countries for a limited period, but in the medium and long term
global demand for energy will continue to increase significantly as countries everywhere seek to improve living standards”, the director-general of the International
Atomic Agency said.
The OECD Nuclear Energy Agency’s (NEA) high projection is for global nuclear power capacity to grow by around 66 percent by 2030,
However many prerequisites need to be in place for this worldwide nuclear renaissance to sustain and turn into a success.
Effective nuclear non-proliferation control
Stringent safety management
Mastering the exceptionally long project lifetimes and large investments
Ensuring nuclear energy’s financial competitiveness
Smooth industrial ramp up and
Re-build the human competencies
Public opinion acceptance
Click here for the complete Capgemini's Introduction to New Build Nuclear