Post on 14-Jul-2020
Nuclear Energy 2009
Status and Outlook
RICHARD MYERS
Vice President, Policy Development
Nuclear Energy Institute
March 30, 2009
Today’s Briefing
Review of 2008 Operating Performance
New Nuclear Plants
– Progress and Expectations
– Economics and Financing
Politics and Policy: The Year Ahead
Review of 2008
Operating Performance
60
65
70
75
80
85
90
95
'90 '91 '92 '93 '94 '95 '96 '97 '98 '99 '00 '01 '02 '03 '04 '05 '06 '07 '08
Sustained ReliabilityU.S. Nuclear Plant Average Capacity Factor
91.1% in 2008
91.8% in 2007
89.6% in 2006
89.3% in 2005
90.1% in 2004
87.9% in 2003
90.3% in 2002
89.4% in 2001
88.1% in 2000
Highlights
Refueling outages: 66 in 2008, 56 in 2007
Average refueling outage duration: 37.6 days in 2008, 40.4 days in 2007
Sources: Ventyx Velocity Suite, U.S. Energy Information Administration,
U.S. Nuclear Regulatory Commission, NEI estimate for 2008
Sources: Ventyx Velocity Suite, U.S. Energy Information Administration,
U.S. Nuclear Regulatory Commission, NEI estimate for 2008
Steady OutputFrom the Operating PlantsU.S. Nuclear Generation (billion kilowatt-hours)
806 in 2008807 in 2007787 in 2006782 in 2005789 in 2004764 in 2003780 in 2002769 in 2001754 in 2000
Highlights
5,640 MW of power uprates approved since 1977
595 MW of uprates under review
2,882 MW of uprates expected by 2013
51 Granted 3 in 2008
21 Under NRC Review 10 Filed in 2008
24 Intend to Renew
Source: U.S. Nuclear Regulatory Commission
8 Unannounced
Other Key Highlights From 2008
… And America’s 105th Plant Is Well Under Way
TVA sanctioned Watts Bar 2 completion in August 2007
5-year, $2.5 billion project
On schedule and on budget for April 2012 construction completion
Currently employs 1,500 people on-site
License RenewalsContinue ...
Best Regulatory Performance Ever:93 Plants “In the Green”
0
20
40
60
80
100
NRC Action Matrix Summary
Quarter
Nu
mb
er
of
Un
its
Increasing Regulatory Oversight Column 1
Column 2
Column 3
Column 4
New Nuclear Plants:
Progress and Expectations
The Business Case for Nuclear Power
Need for new baseload
capacity
Constraints on carbon
emissions
Solid business case for
new nuclear plants at
commercial operation in
2016 and beyond
Source: The Brattle Group, “Transforming America’s
Power Industry: The Investment Challenge 2010-2030,”
November 2008
New Generating Capacity NeededAssumes 0.7% Annual Growth in Peak Load
133 GW
216 GW
Road Map to Commercial Operation
0 1 2 3 4 5 6 7 8 9 10
Building a new nuclear plant is not a one-step process or decision. It is a sequence of decisions, which provides substantial flexibility.
Years (estimates)
1
2
3
U.S. NRC review of COL
Long-lead procurement of major components, EPC contract negotiated, financing secured, site preparation, limited construction work
Construction
Progress Toward New-Plant Development
2007
− 3 early site permits granted
− 2 design certifications submitted
− 4 COL applications submitted
2008
− 1 design certification submitted
− 13 COL applications submitted
− 3 engineering and procurement contracts signed
− Fabrication of long-lead components
2009-2010
− Site excavations begin
− 1 early site permit expected
− Additional COL applications
Major New Plant Issues Being Managed by the Industry
Financing
Licensing Supply Chain
Work Force
New Licensing Process Reduces Uncertainty and Financial Risk
COL Application And Review
References a specific design; may reference an early site permit
Construction
Inspections, Tests, Analyses and Acceptance Criteria (ITAAC) review
Operation
Potential for challenge, but major capital investment has
not occurred
High threshold for hearing (must prove ITAAC have not been or will not be met) and narrow
scope if it occurs
HearingPotentialHearing
Managing the Licensing Process
Industry approach: design-centered working
groups to achieve standardization
NRC approach: single review of standard
materials, “one issue, one review, one
decision”
Protocols for construction inspection and
ITAAC being developed
U.S. Manufacturers Ramping UpSupply Chain and Fuel Supply Expansion Plans
AREVA and Northrop Grumman
Newport News, Va.
Shaw Group and Westinghouse
Lake Charles, La.
Curtis Wright
Cheswick, Pa.
Alstom
Chattanooga, Tenn.
National Enrichment Facility
Eunice, N.M.
American Centrifuge Project
Portsmouth, Ohio
GE Hitachi Nuclear Energy
Wilmington, N.C.
Rebuilding the Work Force:Supply Responds to Demand
42 community college nuclear partnership programs
16 state-based work force development initiatives
500 percent increase since 1999 in nuclear engineering enrollment
New Nuclear Plants:
Economics and Financing
New Nuclear Power Plants Will Be Competitive
FPL, Progress, SCE&G filings
• FPL: nuclear superior in 8 of 9 scenarios
• Progress: nuclear “better than AFBC, pulverized coal and coal
gasification”
Brattle Group analysis:
Technology Nuclear SCPC SCPC
w/ CCS
IGCC IGCC
w/ CCS
Gas CC Gas CC
w/ CCS
Capital
Cost
(S/kWe)
4,038 2,214 4,037 2,567 3,387 869 1,558
Levelized
Cost
($/MWh)
83.40 86.50 141.90 92.20 124.50 76 103.10
Source: “Integrated Resource Plan for Connecticut,” The Brattle Group, January 2008
Levelized Cost of Electricity, $/MWh
Cost of CO2, $/Metric Ton
NGCC ($8-10/MMBtu)
All costs are in 2007 $; Rev. October 2008; Copyright EPRI
Comparative CostsOf New Generation Options: 2015-2020
50
60
70
80
90
100
110
120
0 10 20 30 40 50
140
130
Average 2007 U.S. wholesale electricity price = 66 $/MWh
Coal without CCS
Levelized Cost of Electricity, $/MWh
Cost of CO2, $/Metric Ton
NGCC ($8-10/MMBtu)
Wind (32.5% CF)
Nuclear
All costs are in 2007 $; Rev. October 2008; Copyright EPRI
Comparative CostsOf New Generation Options: 2015-2020
50
60
70
80
90
100
110
120
0 10 20 30 40 50
140
130
Average 2007 U.S. wholesale electricity price = 66 $/MWh
Coal without CCS
Levelized Cost of Electricity, $/MWh
Cost of CO2, $/Metric Ton
NGCC ($8-10/MMBtu)
Wind (32.5% CF)
Nuclear
All costs are in 2007 $; Rev. October 2008; Copyright EPRI
Comparative CostsOf New Generation Options: 2015-2020
50
60
70
80
90
100
110
120
0 10 20 30 40 50
140
130
Coal with CCS (2020)
Average 2007 U.S. wholesale electricity price = 66 $/MWh
Coal without CCS
Levelized Cost of Electricity, $/MWh
Cost of CO2, $/Metric Ton
NGCC ($8-10/MMBtu)
Wind (32.5% CF)
Nuclear
Solar PV = $250/MWh
Central Station Solar = 175 $/MWh
All costs are in 2007 $; Rev. October 2008; Copyright EPRI
Comparative CostsOf New Generation Options: 2015-2020
50
60
70
80
90
100
110
120
0 10 20 30 40 50
140
130
Coal with CCS (2020)
Average 2007 U.S. wholesale electricity price = 66 $/MWh
Coal without CCS
Electric Sector Capital Spending
Credit crisis could not have come at a worse time
Industry in early stages of major capital investment cycle
Total capex for 2010-2030: $1.5 trillion - $2 trillion
Financial crisis: 2009 capex down 10% or more
35.9%
14.4%
11.7%
24.5%
8.9%4.7%
2008 Capital Spending
Generation Environment
Transmission Distribution
Gas-Related Other
Rapid Capex Growth Since 2004
43.041.8
40.7 40.2 41.1 42.043.6
45.3
48.4
51.9
55.1
58.559.9
62.464.3
66.2
69.171.4
74.6
77.8
35.0
40.0
45.0
50.0
55.0
60.0
65.0
70.0
75.0
80.0
2003
Q4
2004
Q1
2004
Q2
2004
Q3
2004
Q4
2005
Q1
2005
Q2
2005
Q3
2005
Q4
2006
Q1
2006
Q2
2006
Q3
2006
Q4
2007
Q1
2007
Q2
2007
Q3
2007
Q4
2008
Q1
2008
Q2
2008
Q3
Capital Spending: Trailing 12 MonthsU.S. Shareholder-Owned Electric Utilities ($ Billions)
Source: Edison Electric Institute
Rate Cases on the Rise
15
11
14
23
20
28
24
34
4846
36
0
10
20
30
40
50
60
1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 3Q of
2008
Rate Cases FiledU.S. Shareholder-Owned Electric Utilities
Source: Edison Electric Institute
Awarded ROEs Trending Down
9.5
10.0
10.5
11.0
11.5
12.0
12.5
13.0
13.5
Average Awarded ROE: 1990 - Q3 2008
(Quarterly)
Sources: SNL Financial/Regulatory Research Associates, Edison Electric Institute
Recent Authorized ROEs(Highest to lowest by state − First 9 months of 2008)
8
8.5
9
9.5
10
10.5
11M
O
WI
VT
HI
MI
IL NV
WV
MN IL
MA
MT
UT
WY
ID NM
NM AZ
DC
CT
NY
NY
% R
OE
Au
tho
rize
d
Source: Edison Electric Institute
Bond Spreads Dramatically Wider
-
100
200
300
400
500
600
Utilities' 10-year Bond Spreads vs. Treasuries
Average Spread Over Treasury by Calendar Quarter (bps)
Source: Edison Electric Institute
Industry Leverage Beginning to Rise
Capitalization StructureU.S. Investor-Owned Utilities
6.30.08 12.31.07 12.31.06 12.31.03
Equity 43.9% 45% 45.9% 38.2%
Debt 56% 54.9% 54% 61.3%
Source: SNL Financial, Edison Electric Institute
Credit Quality Started to Slide in 2008Rating Actions: U.S. Shareholder-Owned Electric Companies
13.8
46.4
60.3 60.9 60.3
40.5
253
110121
110121
42
0
50
100
150
200
250
300
0
10
20
30
40
50
60
70
2003 2004 2005 2006 2007 2008*
Upgrade Percent Total Actions
* Activity through 9/30/08
Sources: Fitch Ratings, Moody’s, Standard & Poor’s
Downgrades outpaced upgrades in 2008 – first time since 2004
The Business Case for Nuclear Power
New nuclear projects still in early stage of
development
– Cost estimates will firm up as design/engineering completed
Capital cost important but does not measure
economic viability
Relevant metric is the cost of electricity produced
relative to:
– alternative sources of electricity
– market price of electricity at COD
Based on what we know, all signs suggest solid
business case for new nuclear plants
Financing New Baseload Capacity
Nuclear is competitive but has a structural
challenge: very large projects relative to the size
of the companies building them
This challenge can be managed
– Supportive rate policies at the state level
– Loan guarantees from the federal government
• Higher leverage (up to 80 percent)
• Non-recourse to sponsor’s balance sheet
$4$4$4$5$5$10$11$11$12$13$15$15$18$18$21$24
$30$138
$22$32
$40$38
$56$76
$59$130
$146$139
$349
$0 $50 $100 $150 $200 $250 $350 $400
SCGNRGCEGDTEAEEPGNAEPPPLFE
ETRPEGPCGDUK
DFPLSO
EXCBRK
ENDENELRWE
IBEEONEDF
COPBP
CVXRDSXOM
Market Value $ in billions
Oil Majors
Europe Power
U.S. Power
Market Value of Energy CompaniesU.S. Power Companies Are Undersized
$300
The Structural Challenge(Market values as of 3.26.09)
Exelon $30.2 billion
Southern $23.9 billion
Dominion $18.5billion
FPL $21.2 billion
Duke $18.6 billion
Entergy $13 billion
Two-unit nuclear power station $12-16 billion
PPL Corp. $11.3 billion
Progress $10.04 billion
AmerenUE $4.95 billion
DTE Energy $4.62 billion
NRG $4.16 billion
SCANA $3.75 billion
Status of Loan Guarantee Program
$18.5 billion in loan guarantee volume for nuclear
power projects authorized
Applications from 14 projects (28,800 megawatts) for
$122 billion in loan volume
Co-financing from export credit agencies in France,
Japan will stretch existing U.S. loan guarantee
authority
Need more loan volume, permanent financing platform
for clean energy technology deployment
State Policies Favoring Nuclear
Legislation in place that helps secure financing
Regulation in place that helps secure financing
Legislation and regulation in place that help secure financing
Legislation that includes nuclear in clean portfolio standard
Potential location for new nuclear plant
Politics and Policy:The Year Ahead
A New Political Environment
Increased Democratic
majority in both House and
Senate
Despite changes, still solid
base of support for nuclear
power
House Energy & Commerce
Committee: significantly
more liberal
The New Secretary of Energy on Nuclear Power
“The first [priority] is to accelerate this loan guarantee program for several [new] nuclear reactors.”
“[N]uclear power … is going to be an important part of our energy mix. It is 20 percent of our electricity generation today, but it is 70 percent of the carbon-free portion of electricity today. And it is baseload. So I think it is very important that we push ahead.”
—Dr. Steven Chu during his Senate confirmation hearingJan. 13, 2009
Key Energy Priorities for the New Administration and Congress
Green jobs
– Nuclear sector expanding, not contracting
– 15,000 new jobs created
More energy efficiency and renewables
– Significant new baseload capacity still required
Climate change
– Analysis of all major climate change legislation
requires nuclear expansion
Key Nuclear Energy Priorities
Sustained, safe, reliable
operation of current fleet
New plants
– Predictable licensing
– Financing
Used fuel management
A Reasoned Approach to
Used Fuel Management
Three-part strategy
– Long-term technology
development to recycle
nuclear fuel
– Eventually … permanent
disposal facility
– Interim storage
Create “blue ribbon” commission to conduct
reasoned reassessment of the government’s
program
Strong Public Support Continues
72%
Safe and
Secure
85%
Renew
Licenses
89%
Important
for
Future
69%
Definitely
Build New
Reactors
75%
Acceptable
at
Nearest
Site
Source: Bisconti Research Inc.
September 2008 poll of 1,000 U.S. adults; margin of error is +/- 3%
The New Politics of Nuclear Energy
State and local government
officials, business leaders
Organized labor
Organized grassroots
organizations
(CASEnergy Coalition)
State coalitions
Nuclear industry employees
New alliances
The Value Proposition
Operating plants are safe, reliable and profitable
New plants are financeable and profitable,
particularly in a carbon-constrained world
New nuclear plant construction will contribute
significantly to President Obama’s top priorities:
– Jobs
– Climate change
– Energy security
Nuclear Energy 2009
Status and Outlook