Pillsbury Presentation--2012 Developments in the Global...

20122012Developments Developments

in the in the Global Nuclear Global Nuclear

IndustryIndustry

George Borovas (Tokyo, London)George Borovas (Tokyo, London)Elina Teplinsky (Washington, DC)Elina Teplinsky (Washington, DC)

Developments in the Nuclear Industry: Table of Contents

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Future of Nuclear Power

▪ Economics: Supply/price of natural gas ▪ especially in the U.S., but likely internationally as

well

▪ Climate change: especially impacts on coal

▪ Post-Fukushima: especially political and regulatory impacts

▪ Long-term energy strategy: Middle East and North Africa as post-fossil backbone for energy supply; China and India

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U.S. Reactor Developments

▪ New Plants▪ Vogtle, V.C. Summer licensed and

under construction▪ Other projects – licensing continuing

without commitments to build▪ UniStar – coming apart without US

partner?▪ AP 1000’s continuing; US EPR’s ?

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▪ Waste Confidence▪ D.C. Circuit decision vacating rule needed

for licensing of new plants, license renewals ▪ environmental consequences of spent

nuclear fuel at reactor sites beyond license term

▪ Commission order that no new plant licenses or license renewals until either new rule or site-specific analysis completed▪ Could (but shouldn’t) take years.

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▪ Current plants▪ Fukushima impacts▪ Seismic, severe accident review▪ Additional equipment for loss of power, flooding▪ Spent fuel pool instrumentation▪ Costs certain, but operational impacts less likely

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▪ Current plants▪ Economics▪ Gas prices

▪ Physically troubled plants▪ Crystal River▪ San Onofre Nuclear Generating Station (SONGS)

▪ Politically troubled plants▪ Indian Point▪ Vermont Yankee

▪ Impact of power uprates▪ U.S. nuclear industry added a total of 6,194 MW

to the grid via uprates since 1977▪ Applications with NRC for 2,911 MW in uprates

are pending; NRC expects additional applications totaling 1,246 NW in uprates

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International: Regulatory and Political Developments

▪ Japan▪ Limited restarts – Ohi 1 & 2▪ Likelihood for additional restarts?▪ Local political approvals▪ Economic consequences

▪ Restructured regulatory system▪ post-Fukushima energy mix▪ September 2012: announced new energy policy, would seek to

phase out nuclear power by 2040▪ strategy subject to vast change due to political changes

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International: Post-Fukushima Regulatory and Political Developments

▪ Germany▪ May 2012: government decides to shut down all

reactors by 2022▪ leaves 8 oldest reactors closed; remaining 9 closing by end

of 2022▪ Germany expecting to increase electricity imports from

France, Poland and Russia, mostly from coal and nuclear sources, and Russia is expected to export significantly more gas.

▪ Germany's four nuclear power utilities pressing claims for compensation and suing the government over continuing with the nuclear tax on the 8- and 14-year license extensions agreed in September 2010

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▪ Belgium ▪ 2003 Act: moratorium on new plants, limited operation of existing plants

to 40 years (to 2014-2025)▪ phaseout can be overridden by a recommendation from the electricity and

gas regulator if Belgium's security of supply is threatened▪ 2009: commissioned panel recommended 10-year life extension for

three oldest reactors; 20-year life extension for other four▪ Due to elections, recommendations never implemented; new government

decided to proceed with phaseout if adequate power could be secured from other sources and prices would not rise unduly

▪ July 2012: Council of Ministers announced that Doel 1 and 2 are to close in 2015 after 40 years of operation; Tihange 1, which will turn 40 in 2015, to be permitted to operate to 2025 to avoid risk of blackouts.

▪ Other four Belgian reactors not immediately affected by decisions.▪ Newly discovered reactor pressure vessel flaws in Doel.

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▪ France▪ Impact of Hollande Election ▪ Pledged to lower France’s reliance on nuclear energy ▪ In April 2012, backed away from accord with the Greens to

shut 24 of France’s 58 nuclear reactors by 2025 in light of union support for the industry and the perceived threat to jobs

▪ Near-term: ▪ EDF’s oldest plant at Fessenheim to be closed within five years

because of safety concerns ▪ New EPR at Flamanville in Normandy will be completed

▪ Mid-longer term:▪ Proportion of power production from nuclear lowered to 50%

(currently 75%) by around 2025.

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International Developments: New Plants

▪ UAE▪ Federal Authority on Nuclear Regulation (FANR) issued construction

license for Braka NPP in July 2012▪ August 2012: Emirates Nuclear Energy Corporation (ENEC) awarded

six contracts worth $3 billion related to the supply of natural uranium concentrates, conversion and enrichment services and thepurchase of enriched uranium product.

▪ Saudi Arabia▪ Plans to build up to 16 reactors to meet growing energy needs▪ King Abdullah City for Atomic and Renewable Energy (K.A.CARE)

established in 2010 with mandate to launch program▪ Saudi Arabia has signed nuclear cooperation agreements with the

Republic of Korea, France, China, and Argentina, among others; 123 Agreement discussions with the U.S.

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▪ Turkey▪ Akkuyu plant (Atomstroyexport design) received site license; site

works expected begin mid-2013, with full constructed expected to start in 2015.

▪ In discussions with Japan, Canada, China and South Korea to build a second nuclear power plant at Sinop.

▪ Jordan▪ Expected to start building a 750-1200 MWe nuclear power unit in

2013 for operation by 2020 and a second one for operation by 2025.

▪ May 2012: the lower house of parliament voted to suspend the country’s nuclear program.▪ Jordan Atomic Energy Commission stated that motion was qualified in

effect to endorse its cautious proceeding.

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▪ China▪ China National Nuclear Power Co. (CNNPC) and China Nuclear

Engineering Construction Co. Ltd (CNECC) planning IPOs▪ CNNC’s IPO will go toward financing part of five power projects worth $27.2B

▪ India▪ Kudankulam (constructed by Atomstroyexport)

▪ Unit 1 expected to begin start-up by Dec. 2012; unit 2 is three months behind unit 1

▪ Westinghouse signed early works agreement with NPCIL in June 2012▪ Mithi Virdi in Gujarat will host up to six Westinghouse AP1000 units.

▪ Republic of Korea▪ Shin-Kori 2 came online in July 2012▪ KHNP postponed construction of 10 nuclear plants due to expected

delays in obtaining governmental approvals post-Fukushima

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▪ Vietnam▪ Preparations underway for construction of the first NPP (VVER) in

central Ninh Thuan Province, construction scheduled to commence in 2014, operation in 2020.

▪ Japan negotiating to build second plant▪ Interest for possible third project

▪ Malaysia▪ Undertaking feasibility, site selection and regulatory studies

contemplating construction of 2-4 reactors

▪ Thailand▪ New nuclear development postponed after Fukushima

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▪ Czech Republic▪ July 2012: CEZ accepted bids from Westinghouse, AREVA and

Atomstroyexport to build two new reactors at Temelin▪ Vendor for $10B project to be selected next year

▪ Lithuania, Latvia and Estonia▪ Visaginas nuclear power plant, a single 1350 MWe ABWR, to be

constructed by Hitachi-GE in Lithuania▪ Stakes in the project: Hitachi - 20%; Latvia - 20%; Estonia – 22% and

Lithuania – 38%; concession agreement with Hitachi signed in May 2012▪ European Commission issued favorable opinion for construction of

project▪ Lithuania held a non-binding referendum on new plant in October 2012—

final political decision expected by May 2013

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▪ Poland▪ State-controlled Polska Grupa Energetyczna (PGE) tasked, to lead a

consortium to build 6 GW of nuclear capacity by 2030▪ Tender for project, originally scheduled for Q2 2012, delayed because

government is still working on financing model for project▪ GE Hitachi, AREVA and Westinghouse likely bidders▪ Ministry of Treasury stated it would like several state-owned power and

mining companies to combine to finance the project

▪ Bulgaria▪ Shelved plans to build a new plant at Belene in March 2012 after

failing to attract foreign investors▪ August 2012: selected Westinghouse to prepare proposal to build third

reactor at Kozloduy site

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▪ UK▪ Horizon Nuclear Power – JV between German-based RWE with E.ON,

planned three AP1000s or two EPRs▪ 2012: RWE and E.ON sold Horizon to Hitachi, Ltd.

▪ EDF and Centrica (acquired British Energy) plan to build four EPRs ▪ UK government in discussions regarding a fixed “strike price” for the electricity

from proposed new reactors

▪ Finland▪ TVO now projects August 2014 for commercial operation of Olkiluoto 3▪ Other potential new projects: Olkiluoto 4 (1000-1800 MWe PWR or BWR)

and Hanhikivi 1 (1250-1700 MWe EPR or Toshiba ABWR)

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▪ Russia▪ Ten reactors under active construction, including a large fast neutron

reactor. ▪ 14 further reactors are planned, some to replace existing plants; by 2017

ten new reactors totaling 9.2 GWe should be operating.

▪ Kazakhstan▪ Proposals to construct 20 or more small reactors each of 50-100 MWe

to supply dispersed towns

▪ Belarus▪ In July 2012, signed a $10B contract with Russia to build its first, two-

unit, nuclear power plant.▪ Russia will provide Belarus a $10B loan for the project

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Developments in Nuclear Liability

▪ Post-Fukushima questions about:▪ adequacy of insurance coverage post-Fukushima ▪ “grave natural disaster” exceptions

▪ Nuclear liability in Japan▪ Japan’s Law on Compensation for Nuclear Damage:▪ operator has unlimited liability; required to maintain JPY 120B ($1.5B) insurance per reactor▪ government may relieve the operator of liability if it determines that damage results from “a

grave natural disaster of an exceptional character”▪ Japanese Government did not deem Fukushima a “grave natural disaster of an

exceptional character”

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Developments in Nuclear Liability

▪ Japanese Government concluded Indemnity Agreement with TEPCO for JPY 120B ($1.5B)

▪ As of August 2012, TEPCO estimate of nuclear damage compensation: JPY $2,809B ($38B)

▪ In 2011 Japanese government established “Facilitation Corporation” to manage a fund which receives contributions from the government and TEPCO

▪ Insurance issue:▪ TEPCO formerly covered by the Japan Atomic Energy Insurance Pool▪ Pool did not renew TEPCO’s contract after it expired in mid January 2012. ▪ TEPCO is seeking coverage from private-sector insurers.

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Nonproliferation Issues

▪ U.S. 123 Agreements (nuclear cooperation agreements)▪ In accordance with Section 123 of the U.S. Atomic Energy Act (AEA), provides a

framework under which the U.S. can transfer certain nuclear material and equipment to other nations;

▪ AEA Section 123 dictates required provisions in agreements, including:▪ ENRICHMENT AND REPROCESSING: Transferred material and material used in or produced

through the use of transferred material or facilities shall not be reprocessed or enriched without the U.S. consent.

▪ RETRANSFER CONSENT: transferred facilities or special nuclear material produced through the use of such facilities or transferred material shall not be retransferred to third parties without U.S. consent.

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Nonproliferation Issues

▪ “Gold Standard”▪ In 2008, the U.S. and the UAE signed a 123 agreement; in that

agreement, the UAE has agreed to forego enrichment and reprocessing▪ this portion of the agreement goes beyond requirements of the AEA,

became known as “Gold Standard”▪ Advocates in Congress for making “Gold Standard” pledge a pre-

requisite for all future 123 Agreements (HR 1280)▪ current agreements under negotiation: Vietnam, Jordan, Saudi Arabia

▪ In January 2012, State and DOE sent letter to Congress stating that “Gold Standard” was going to be applied on a case-by-case basis

▪ Interagency recommendation that “Gold Standard” be applied to all except countries with reprocessing/enrichment, Korea and IAEA.

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Supplier Developments

▪ Toshiba▪ Currently holds 67% percent of Westinghouse▪ Purchased the Shaw Group's 20% stake in the company▪ Prior to purchase, interested in selling a 16% stake in

Westinghouse as it looks to prioritize its nuclear business in emerging markets▪ would look to sell the stake to nuclear technology companies

that have strong links to emerging markets

▪ Chicago Bridge & Iron Co. (CB&I)▪ Agreed to buy Shaw Group Inc. for ~$3B▪ extends CB&I’s growth into the U.S. power generation market ▪ combined company will rank third (behind Bechtel and Fluor) in

size of contracts

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Small Modular Reactors

▪ Key Features ▪ Less than 300MW (U.S. definition)▪ Manufactured completely at a factory and delivered and installed at a site in modules

▪ Advantages▪ Small size allows faster deployment▪ Much lower accident risk ▪ Reduced parts modular construction▪ Weapons proliferation resistant ▪ Simplified regulatory and licensing structure▪ Improved safety and security ▪ Reduced capital cost▪ Shorter construction schedules▪ Improved quality with factory fabrication▪ Meets electric demand growth incrementally

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▪ Licensing Challenges▪ NRC has identified policy and regulatory challenges with

licensing SMRs (SECY-10-0034)▪ Implementation of the Defense-In-Depth Philosophy▪ Appropriate Source Term, Dose Calculations, and Siting▪ Appropriate Requirements for Operator Staffing for Small or

Multi-Module Facilities▪ Security and Safeguards Requirements for SMRs

▪ Key challenge is NRC resources and willingness to dedicate resources to SMRs versus large reactors▪ Most SMRs will not be deployed in the U.S.

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Name Capacity Type DeveloperKLT-40S 35 MWe PWR OKBM, Russia

VK-300 300 MWe BWR Atomenergoproekt, Russia

CAREM 27-100 MWe PWR CNEA & INVAP, Argentina

IRIS 100-335 MWe PWR Westinghouse-led, international

Westinghouse SMR 200 MWe PWR Westinghouse, USA

mPower 150-180 MWe PWR Babcock & Wilcox + Bechtel, USA

SMR-160 160 MWe PWR Holtec, USASMART 100 MWe PWR KAERI, South Korea

NuScale 45 MWe PWR NuScale Power + Fluor, USA

ACP100 100 MWe PWR CNNC & Guodian, China

HTR-PM 2x105 MWe HTR INET & Huaneng, China

EM2 240 MWe HTR General Atomics (USA)SC-HTGR (Antares) 250 MWe HTR Areva

BREST 300 MWe FNR RDIPE, Russia

SVBR-100 100 MWe FNR AKME-engineering (Rosatom/En+), Russia

Gen4 module 25 MWe FNR Gen4 (Hyperion), USAPrism 311 MWe FNR GE-Hitachi, USA

FUJI 100 MWe MSR ITHMSO, Japan-Russia-USA


▪ Impact on component suppliers▪ Simplicity could result in fewer components for SMRs, but it may be that SMR designs,

by the time that they emerge from the NRC review, are significantly more complex than they look today

▪ SMRs likely to supplement conventional large reactor designs, not to replace them▪ If SMRs make it to the market, most of them will likely be in places that wouldn't have

supported large reactors. ▪ If SMRs are deployed, there will be a much larger market for the industrial components

needed for the factory construction of modules ▪ May be a different market for component suppliers, may require other types of components

that aren’t installed in large reactors today

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▪ LIFE Reactor▪ Inertial Confinement Fusion▪ Fusion shots are a daily occurrence at the National Ignition Facility at the Lawrence Livermore National

Laboratory (LLNL)▪ The world’s most powerful lasers provide the energy to fuse deuterium and tritium▪ Ignition and energy gain expected in months, not years▪ LLNL has developed a concept for a commercial inertial confinement fusion plant to generate electricity –

laser inertial fusion energy -- LIFE▪ Quietly, major vendors, utilities, AEs and foreign governments have toured the NIF and learned of the promises of

LIFE▪ For the last year, Pillsbury has been advising LLNL on commercial and regulatory issues involved in the

commercialization efforts

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▪ LIFE: ▪ Advantages▪ A high-temperature design that: can be air-cooled without

unacceptable reductions in efficiency; can provide process heat to convert coal to gasoline; can shut down without off-site sources of electrical power

▪ A technology that will assure U.S. competitiveness in the market for energy technology and new power plants for many years.

▪ A power plant that will deliver fusion energy in a timeframe that makes it feasible to commercialize LIFE technology over the next few years.

▪ LLNL is considering a public-private partnership to develop a demonstration plant

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Pillsbury Winthrop Shaw Pittman LLP

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