Redefining Leadership in Nuclear Energy
Nuclear Power: Political & Market Drivers in a Shifting Global Landscape to 2030… for US Nuclear Infrastructure Council (USNIC.org) July 2015
Andrew D. Paterson
[email protected] 571-308-5845 www.environmentalbusiness.org
Walter S. Howes Verdigris Capital, llc
[email protected] 202-342-5323
Urban electricity, 21st Century Global trade and development
Nuclear Energy: CURRENT GLOBAL LANDSCAPE
While the USA leads the world in Operating reactors (99 units), USA no longer leads in construction. China does.
Most reactor build is outside NATO-- in Asia, MidEast. *How much of that market is open to US companies, allies?*
Simply “restoring US leadership” in nuclear power is not possible. USA lost capabilities to make major components. Japan owns US vendors. 2007
US utilities are smaller, and not active globally.
Financial markets will NOT lead on new financings – New reactor build requires a national strategy, federal investment, alliances, and risk-sharing.
2006
July 2015 CHINA AND RUSSIA LAY FOUNDATION FOR MASSIVE ECONOMIC COOPERATION
“Getting the government out of the way” is not a viable national strategy in the nuclear sector. Well-negotiated financing can leverage federal funds, better than $10 to $1 (vs. just subsidies). 2
P5
Elite UNSC “P5 Club”… still more than half all operating reactors
Nuclear Generation by Country - 2010 Portion of electricity from nuclear (vertical) by volume (width); P5s still dominate. China + India are >50% of new reactor build, but still over-dependent on coal.
?
28 different owners
P5
P5
USA
China P5 P5
P5
P5 = UN Security Council Permanent Voting Member: USA, UK, France, Russia, China – Nuclear powers
3
Nuclear is not a technology we just leave to others (like wind or solar)
Nuclear Power in 21st C – What’s at stake? A USA “without nuclear power” is a USA failing in its role of global leadership in a sector that goes to the heart of national sovereignty and our position as a P5 power. Without federal leadership, half the US reactor fleet could be largely shutdown before 2040 (one generation hence)… any global leadership position will have eroded long before that. Clearly, this sector is too important to be just “left to the market”.
USA
Andrew Paterson World Nuclear Symposium London 2012 (Paper developed at GMU For PUBP 502 / A.Cronin) Nuclear Engineering International (UK) Annual Yearbook 2013
4
IFNEC: Nation-States Govern Nuclear Acceptance Despite Fukushima and higher costs, more countries are weighing nuclear…
why?
5
Why we still need Nuclear Power… (after Fukushima) Why We Still Need Nuclear Power -- Making Clean Energy Safe and Affordable “In the US, an already slow approach to new nuclear plants slowed even further in the face of an unanticipated abundance of natural gas. It would be a mistake, however, to let Fukushima cause governments to abandon nuclear power and its benefits. Electricity generation emits more carbon dioxide in the US than does transportation or industry, and nuclear power is the largest source of carbonfree electricity in the country.” Dr. Ernest Moniz, then director of MIT Energy Initiative; now US Secretary of Energy (2013+) “Why We Still Need Nuclear Power”, Foreign Affairs, December 2011
How Nuclear Power Can Stop Global Warming (Dec. 2013) Leading climate scientist James Hansen of NASA, now Columbia University: "Environmentalists need to recognize that attempts to force all-renewable policies on all the world will only assure that fossil fuels continue to reign for base-load electric power, making it unlikely that abundant affordable power will exist and implausible that fossil fuels will be phased out… A preferable approach, for the sake of both global climate and local pollution reduction, would be a combination of renewable energy and advanced (3rd and 4th) generation nuclear power plants.” www.scientificamerican.com/article/how-nuclear-power-can-stop-global-warming/ 6
We have already lost those technologies: >90% of units made overseas
NOT P5
Wind and Solar face challenges also… NYT: Solar Meets Polar as Winter Curbs Clean Energy
US market share: 100 miles)
US market share: 10%
7
More than 5,000 MW (2 GWe; one nuclear plant) in just three states
Wind Power – fragmented deployment
Nuclear units – N.America >70% East of Miss. River (near major cities)
66,000 MW, but 80 GWs by 2050 ! Building 30 GWs entails $180-220 billion over two decades, a mix of debt and equity finance.
NOW
“US Nuclear Cliff”
100 GW USA stalled by cheap gas, no load growth
50%
Dec. 2012
Sources: IAEA, WNA 2012
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US Leadership eroding already…
BRICS take the lead in Nuclear after 2025 To maintain 20% share of US electricity; 30 GWs must be built by 2030; and >80 GWs by 2050 ! Building 30 GWs entails $180-220 billion over two decades, a mix of debt and equity finance. China building most BRICS steal the market
NOW
India also planning more than 40GWe Russia building at home, avidly selling abroad with finance
UK rebuild to 16 GWe E. Eur wants to build
?
S.Korea building at home and abroad. USA stalled by cheap gas, no load growth
Fuku shima
Japan in slow recovery from Fukushima, but building overseas.
2030 Sources: IAEA, WNA
France in limbo…? Germany shuttering (as is some of EU) 24
Challenges going into COP 21 “Nuclear for Climate” in COP 21
5 May 2015
“Nuclear 2.0: Why a Green Future Needs Nuclear Power,” By Mark Lynas (2013)
Cost overruns and delays, once blamed on environmental opposition, now are almost always a result of problems in the construction. The Nuclear Regulatory Commission (NRC) -- which protects public health and safety -- is not equipped to license a new reactor, and it is believed that a new reactor type would have to spawn a whole new regulatory bureaucracy. One aspirant with a new nuclear design says ruefully, "It's as though the FAA had recertified every aspect of flying when the jet engine came along." The NRC, even its staff admits, is slow and ponderous. What they don't admit is that the commission is not only protecting the public, by making sure that today's reactors are safe, but it's also preventing the public from having better nuclear power in the future.
July 2014
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Sen. Alexander, 2015: “A USA without Nuclear Power” ?
PRESS RELEASE, Feb. 5, 2015
NEI: Sen. Alexander's Nuclear Energy Push Comes at Important Time http://globenewswire.com/news-release/2015/02/05/703643/10118895/en/Sen-Alexander-s-Nuclear-Energy-Push-Comes-at-Perfect-Time-NEI-Says.html
WASHINGTON, DC (GLOBE NEWSWIRE) -- Sen. Lamar Alexander (R-Tenn.), chairman of the Senate Appropriations Subcommittee on Energy and Water Development, made a major energy policy speech today at the Nuclear Energy Institute. Painting a grim picture of "The US Without Nuclear Power," Alexander outlined policy prescriptions to keep nuclear energy a vital element of a diverse U.S. energy portfolio.
Transcript of Alexander’s Speech: "The United States without Nuclear Power" www.nei.org/News-Media/Speeches/Sen-Lamar-Alexander,-%E2%80%9CThe-United-States-Without-Nu “We’re about to take a year-long look at all this. Our subcommittee will begin expanded oversight with budget hearings in February and March, and then in April we’ll turn toward a series of hearings about the What federal future of nuclear power in our country – and what it would be like for the US to be without it. tools could boost this?
POLICY DISCUSSION 1) Build more nuclear reactors – “I have proposed that we build 100 new reactors.” 2) 3) 4) 5) 6)
Solve the nuclear waste stalemate – “Yucca Mountain can and should be part of the solution.” Relieve the burdens of excessive regulation – “make sure it’s not an undue burden.” Tax reform to balance the portfolio – Renewable sources cannot be the only low emissions sources. Double energy R&D – “Important technological advances involve some government-sponsored R&D.” Encourage energy diversity – “We need more than one way of producing reliable, base-load power.”
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G7 2014: Whither Europe on Energy ? Europe currently imports 53 percent of its energy, and more than 60 percent of its gas consumption, with Russia accounting for 39 percent of natural gas imports and 27 percent of the EU’s gas consumption. In addition, Russia provides much of Europe’s crude oil and nuclear fuel. Although global oil and uranium markets provide more security in terms of supply, the EU’s refinery industry is nonetheless heavily dependent on Russian crude oil and increasingly Russian ownership of EU refineries in Central Eastern Europe, where most crude oil supplies arrive from Russia through the Druzhba pipeline. Similarly, Russia’s nuclear technology is well represented in Eastern Europe, further highlighting Europe’s energy dependency on Russia.
April 2014
With some countries almost entirely dependent on gas and electricity imports from Russia, Eastern Europe poses a particular problem in terms of energy security. The most exposed are the Baltic States, where electricity and gas supplies come exclusively from Russia. Similarly, Finland, Austria, Czech Republic, Slovakia and Bulgaria import more than 50 percent of their gas from Russia. http://globalriskinsights.com/2014/07/03/europemoves-to-reduce-energy-dependency-on-russia/
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MEANWHILE… back on the Global Gameboard
Russia – India Mega-deal on Reactors, 2014 Russia - India: Putin agrees to build 10 nuclear reactors
Dec. 2014 July
US$100 billion New Development Bank (NDB)
Russia will help India build at least 10 more nuclear reactors, Indian Prime Minister Narendra Modi has said following a visit by Russian President Vladimir Putin. http://www.bbc.com/news/world-asia-india-30408274#
Egypt: Putin inks deal for reactor near Cairo (Feb. 2015)
PUTIN
Feb. 2015
http://www.aawsat.net/2015/02/article55341374/russia-signs-deal-build-new-egyptian-nuclear-plant
EL-SISI
“PICKING WINNERS”: Russia and China understand the STRATEGIC value of nuclear…
Rosatom: “A market leader in Asia, outside China”
P5 Vendors P5
P5
[ China, India, Bangladesh, Vietnam ]
P5
P5
P5
ROSATOM: Igor Karavaev, Chief Strategy and Investments Officer WNA 2012: http://proceedings.world-nuclear.org/london/presentations/
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July 2015: Brazil, Russia, India, China, S.Africa: Infrastructure and energy sectors
BRICS Bank now open for financing member projects $200 Billion India, Russia to accelerate civil nuclear energy cooperation The nuclear cooperation includes building on negotiations to sign advance contract for the design of the third and fourth reactor units to come up at the Kudankulam site in Tamil Nadu. A contract for the design (of the third and fourth power units) has been under negotiation. http://indianexpress.com/article/business/business-others/pmmodi-vladimir-putin-discuss-indias-accession-tosco/#sthash.RrorS0PO.dpuf
Finance ministers and governors of the central banks of BRICS countries convene New Development Bank Governing Council, 7 July 2015 HQ in Shanghai. Regional office in Johannesburg, SA.
Kundapur Vaman Kamath (India), former CEO of Industrial Credit and Investment Corporation of India, will head the Bank, capitalized at $100 billion ($10B from each, plus “$50B equity on call” as needed). Each founding country 1 vote; no vetoes. PLUS, the BRICS countries' currency reserves pool is $100 billion. China will contribute $41 billion, while Brazil, India and Russia will provide $18 billion each and South Africa will put forward $5 billion – “an insurance instrument against financial risks and the risks related to the situation on the world financial markets”.
July 2015 www.russia-direct.org/russian-media/brics-development-bank-begins-operation
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US Congress lets Ex-Im Bank expire…(June 2015)
June 24, 2015 Export-Import Bank to expire at month's end as Congress fails to act, but may be revived http://www.usnews.com/news/business/articles/2015/06/24/gop -led-congress-prepared-to-let-export-import-bank-expire
L.A. Times, July 2, 2015
Export-Import Bank's expiration a victory for billionaire Koch brothers
Congress Should Recognize the Dynamic Benefits of Imports May 11, 2015
114th Congress drawing rotten reviews By ADAM B. LERNER 5/21/15 5:45 PM EDT The 114th Congress is only four months old, but it’s already drawing terrible reviews. According to a new poll from the Pew Research Center, only 23 percent of Americans believe that the GOP kept the promises it made during the 2014 campaign in its first 100 days. And only 4 percent of respondents said the 114th Congress has accomplished “more than expected” in the same time frame. The survey found widespread disapproval of Congress among both Republicans and Democrats. Only 17 percent of Democrats said that GOP leaders are keeping their campaign promises, while 37 percent of Republicans expressed the same disappointment. www.politico.com/story/2015/05/114th-congress-drawing-rottenreviews-118193.html#ixzz3fYcauGJb
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Risk-based Financing, not just subsidies -- Budget scoring only entails $120M to $500M
New DOE Loan Solicitation for Nuclear: $12Billion Borrower Pays the “Credit Subsidy Cost” of the loan [Probability of default]
Sept. 2014
US SITES ONLY
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Meanwhile…
Consortium of Japanese electric utilities
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Backed by SCO and BRICs Bank; Russia to provide Security role
China’s New Silk Road “Economic Belt”; 2 Routes Feb. 2015: Mackinder Revisited: Will China Establish Eurasian Empire 3.0? China has emerged as a new contender for control over Mackinder’s “Heartland.”
China’s called shot Babe Ruth Oct 1932, Wrigley Field
http://thediplomat.com/2015/06/eurasian-silk-road-union-towards-a-russia-china-consensus/
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“A modern shakeup in Geo-politics” with advent of oil and overland rail power in late 1800s
Mackinder (1904): Land Power > Sea Power Strategic ellipse: 70% of oil and gas
World-Island Heartland Who rules East Europe commands the Heartland: Who rules the Heartland commands the World-Island: Who rules the World-Island commands the World. Mackinder: (Democratic Ideals and Reality, 1919)
Boundary of “World Island”
In 1904 Mackinder gave a paper on "The Geographical Pivot of History" at the Royal Geographical Society, in which he formulated the Heartland Theory. This is often considered as a, if not the, founding moment of geopolitics as a field of study. In 1895, he was one of the founders of the London School of Economics.
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Geo-politics & Energy: Boundary Conflict in Asian Seas
Trade Routes
37
Barnett: “Non-Integrating World” resists modernity 2004: Briefing for all AF Generals “After 9/11/2001 major threats to the Function Core emerge from the Non-integrating zone.”
Shanghai Cooperation Organization [“Eurasia 3.O”] Functioning Core Functioning Core
Non-integrating Zone
Energy consumption per capita serves as a strong indicator for onset of “modernity” and integration with the “Functioning Core”. http://unesdoc.unesco.org/images/0022/002257/225741e.pdf
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The Nuclear Sales map for the 21st Century?
Major Urban Areas: 1950(red) vs 2010(blue)
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Russia-China deal on Small Floating Reactors Floating Nuclear Power Plants Might Be the Future of Energy By Kayla Ruble; August 1, 2014 Following a $400 billion gas supply DEAL signed by the countries in May, the export sector of Russia’s state nuclear reactor company Rosatom penned a memorandum of understanding with China on Tuesday to develop waterborne nuclear power plants (NPPs) starting in 2019. Rosatom previously announced that in 2018 it would implement the first floating NPP in the world, just offshore in the country’s eastern region of Chukotka. https://news.vice.com/article/floating-nuclear-powerplants-might-be-the-future-of-energy
Russian floating nuclear powerplant "Academic Lomonosov" under construction (RIA Novosti / Alexei Danichev); 2 x 35MWe
MIT Thinking Outside of the Box with Floating Nuclear Plant MIT researchers are now working on a nuclear power plant design that for off-shore floating nuclear power plants, which would be built in shipyards and moored out to sea, about eight to ten miles off shore. This would keep them in territorial waters, but allow them to be placed in water deep enough so that tsunami events would never hit them. Tsunami events, a potential disaster for coastal nuclear power plants, do not take place in deep water, said MIT in a recent release. They only build up to dangerous levels in shallow water environments. A floating nuclear reactor, built on an oil-rig type of platform, would have the reactor components underwater for balance and to keep potential overheating events from ever occurring, given the seawater could passively cool the reactor. In general, during normal operations, cool water from lower ocean layers would be pumped up to cool the reactor and the warmer water would be released near the surface, where the water is already warmer – making for a zero-impact reactor regarding its affect on the thermal conditions of the ocean. Nuclear Street News, June 25, 2015
300 MW
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COUNTER – THRUSTS
Japan sells in Turkey (Sinop site; MHI-Itochu), 2013 May 2013
Sinop (Black Sea), $22B for 4.4 GW
Japan’s Abe marketing in Asia, 2013-14
http://thediplomat.com/2013/07/shinzo-abe-japans-nuclear-salesman-in-chief/ March 2014
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Not just a Company, a Nation-State stands behind the performance of the project
South Korea Signs for Barakah in UAE, May 2014
ROK President Park Geun-Hye
http://www.korea.net/NewsFocus/Policies/view?articleId=119513
May 2014
http://www.wam.ae/en/news/emirates/1395250425368.html
Modi rocks MSGarden in NYC, UN Assembly, 2014 “Long live, Mother India”
भारत माता की जय
Sept 2014 (18,000+)
http://rpbdlondon2014.co.uk/pm-narendra-modi-speaks-at-madison-square-gardens/
“Inclusive Development for a more Sustainable World”
Largest event held for a foreign leader on American soil since Cornwallis surrendered at Yorktown.
Joint Op-Ed in Washington Post, 30 Sept 2014 “This will be an agenda that enables us to find mutually rewarding ways to expand our collaboration in trade, investment and technology that harmonize with India’s ambitious development agenda, while sustaining the United States as the global engine of growth. When we meet today in Washington, we will discuss ways in which we can boost manufacturing and expand affordable renewable energy, while sustainably securing the future of our common environment.” By Narendra Modi and Barack Obama September 30, 2014
Obama visits India for Republic Day, Jan. 2015
PROBLEM: No Coop with Japan yet… "The Japanese have large financial interest and technological inputs into Westinghouse and GE," says Prof. Rajaraman. "So any reactor we buy from these American companies may also require Japanese consent and India doesn't have a nuclear deal with Japan.“ [Power-Technology.com]
US “Atoms for Prosperity” Delegations…, 2013-15
October 30, 2013: Deputy Assistant Secretary Chandra Brown and other U.S. government officials with the industry delegation at the USA: Atoms for Prosperity Exhibit.
Nov. 2014
U.S.-China Joint Announcement on Climate Change
Apr. 2015: US delegation with Amb. Baucus http://wwww.vfthis.net/blog.trade.gov/tag/civil-nuclear/
Shifting Leadership in Nuclear Power… Why, despite Fukushima, are nuclear plants being built ? What are the new drivers ?
UK DECC: “Regaining”… The power of international alliances
2013 Regaining
Redefining Leadership
2014
CSIS: “Restoring” “Maintaining”…
2013
2012
Restoring U.S. Leadership in Nuclear Energy
2013 REACTOR RACE: SOUTH KOREA’S EXPORT SUCCESSES & CHALLEN GES
Redefining Leadership in the Global Nuclear Market
Andrew Paterson Walter S. Howes
“No country is now self-sufficient in nuclear power.” http://www.keia.org/sites/default/files/publications/south_koreas_nuclear_export_successes_and_challenges.pdf
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Redefining Leadership in Nuclear Energy “When a nation decides to build reactors it represents a 100-year national commitment for starters. It takes 10-20 years to craft the regulatory and siting process, 5-10 years to build, 60 years to operate and 10 years or more for D&D and storage. This is a sovereign commitment not just a market decision." At World Nuclear Symposium (Sept. 2012), Jay Guiterrez, Morgan Lewis
20th Century, post-WWII
21st Century, post-Cold War
US leads in reactor construction (100 GWs built, 1960s – 80s)
Asia leads in reactor construction (50 GWs of 70 GWs globally); only 4-5 GWs in USA.
Rising demand in America, EU with growth of suburbs, expanding electrification.
Nearly no load growth in N.America and EU, as efficiencies take hold, population levels off.
US largely controls nuclear fuel and reactor technology; not dependent on foreign supply
US nuclear vendors now foreign owned:
P5 nations control nuclear fuel and weapons technology. Cold War persists until 1991.
P5 oligopoly is under strain. International partnerships elevated in importance.
Reactors built in “rate-base” territory, and for reliability with denser urban loads.
New reactors in Asia driven by energy demand for urbanization (Cities >1m).
GHG emissions not raised as a factor before 1990; world faced “Global Cooling” in 1970s.
Nuclear power will become more vital with wider use of electric vehicles, mass transit.
Westinghouse Nuclear is owned by Toshiba (as of 2006, from BNFL in 1999). Hitachi-GE in 2007.
Leadership means: Creating policy conditions and crafting international alliances for longer-term nuclear energy development and stewardship. No nation is self-sufficient in nuclear technology.
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“Redefining Leadership in the Global Nuclear Energy Market”
Report: National Nuclear Energy Strategies
Andrew Paterson Principal, EBI / Verdigris Capital 571-308-5845
[email protected]
Walter S. Howes Managing Partner
Verdigris Capital, LLC 202-342-5323
[email protected]
http://ebionline.org/updates/2320-nuclear-energy-remains-vital-to-urban-energy-reliability
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Historical Factors for Nuclear Leadership: SUPPLY Factors for competitiveness and leadership in nuclear energy can be looked at from both the Supply side for reactors, and the Demand side in terms urban and population growth.
Early on, Supply-side Policy, Operational excellence drove nuclear energy:
S1
$
SUPPLY SIDE FACTORS – “TECHNOLOGY PUSH” R&D Reactors, Univ. programs, Nat'l Labs; Tech innovation
S2
Military industrial base for nuclear navy
S3
High quality nuclear regulatory practices
S4
Nuclear fuel infrastructure and ore supply; spent fuel
S5
Nuclear engineering talent (university programs, firms)
S6
Access to low cost debt financing, capital (public or private)
S7
Current reactor operating base (privately operated in US)
S8
Engineering firms with recent construction experience
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Future Factors for Nuclear Leadership: DEMAND Factors for competitiveness and leadership in nuclear energy can be looked at from both the Supply side for reactors, and the Demand side in terms urban and population growth.
Market-driven, Demand-side factors are now fueling new construction: DEMAND SIDE FACTORS – “MARKET PULL” D1 Growing population overall (demographics) D2 Current dense, urban electric loads (large cities)
D3 Advanced industrial and manufacturing base D4 Rising per capita energy use (vs. OECD average) D5 Higher natural gas prices (nuclear competitiveness) vs portfolio D6 Significant air pollution (need for clean energy options)
D7 Future growth in urban load (urbanization rate) D8 Policies and regulations favoring reduced emissions
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Demand-side Factors are now driving nuclear strategies
Nuclear Leadership shift from Supply to Demand
Major shift from supply-side factors for new reactors to demand-side factors.
Restructuring
ADPaterson
Rollback
Renaissance
52
Countries: Supply vs Demand Factor Differences Supply Factors 0
5
10
15
Demand Factors 20
25
30
35
40
USA CAN UK
Supply driven countries
EU France Russia Japan S.Korea China India SEAsia MidEast
Demand driven countries Redefining Leadership in the Global Nuclear Energy Market www.atlanticcouncil.org/publications/reports/redefining-leadership-in-the-global-nuclear-energy-market
53
Insights from Supply vs. Demand Factors •
Demand side factors highlight benefits of nuclear power: reliable, no emissions, smaller footprint (land use constraints), economic gains
•
Satisfying urban demand requires attention to public engagement (typically public is not just “for” or “against”; can be both; regional)
•
Build reactors in regions where public favors benefits of nuclear, as is happening in US, UK, Canada, EU. Asian urban public wants reliability However, over-eagerness to build creates incentives to cut corners, dodge regulatory discipline… possibly accidents later. Quality matters. Expanding or new nuclear users are importing supply-side expertise.
•
Supply-side “excellence” cannot easily be rebuilt; must be maintained. UK let their capacity atrophy: A grand challenge for EU, USA to 2030. • BNFL was broken up (2006); EdF acquired British Energy (2008) • Toshiba now owns Westinghouse (2006); GE with Hitachi (2007)
• SMRs with discipline of quality manufacturing could enable quality control in construction and operation to highest quality specs • Adv. Reactors could become important where cooling water is limited 54
Nuclear Strategy: “Renaissance”, “Rollback”, “Restructuring” “Renaissance”: Countries building reactors, relicensing the ones they operate, and are addressing spent fuel issues with storage or reprocessing or recycling are fully engaged in the “nuclear renaissance” after a global hiatus. Some are pursuing next generation “small modular reactors” (SMRs; under 300 MWs each in capacity). Their societies value the reliable, low emission electricity from reactors, particularly for large urban loads, and have active safety programs in place. “Restructuring”: In some leading nuclear countries, including USA, some construction is underway, but not at a robust pace as seen in Asia. Liberal democracies (particularly those manifested as Entrepreneurial Market States) are more pluralistic, allowing more openings for interveners (e.g., anti-nuclear stakeholder groups). Spent fuel disposal is not resolved either. Financial incentives may be in flux, depending on political changes. Some merger or restructuring activity in the electric sector may be needed to bolster utility balance sheets.
“Rollback”: Some EU countries currently operating reactors are not relicensing them, or some are shutting down reactors early. With 185 reactors (162 GWe), just five countries account for 75% of EU capacity (France, Russia, Ukraine, Germany, UK). Nor are they pursuing alternative reactor technologies, such as SMRs, and are not reprocessing spent nuclear fuel, except UK and France, both P5 countries. From “Nuclear Power and National Sovereignty after Fukushima” by Andrew Paterson at World Nuclear Symposium, London 2012
55
ADPaterson
Supply / Demand Factors and National Strategies 21st Century, Post Cold War DEMAND-SIDE INTENSITY HIGH Nuclear navy Nat’l Labs Engineering Reactor operations Fuel cycle
• • • • •
Strong nuclear infrastructure Stagnant load growth Already “developed” (OECD) Low fossil fuel prices Fragmented utility sector
• • • • •
Population growth, “Developing” Rising consumer energy demand High fossil fuel prices, imports Large, burgeoning cities (urbanization) Significant Industrialization driving demand
Renaissance “Heavy”
Restructuring
• • • •
Declining (aging) population Energy use declining (EE) Anti-nuclear politics / policy Not investing in nuclear training, infrastructure
• • • • •
Population growth Renaissance Lower fossil prices “Light” Growing cities Need for desalination No nuclear infrastructure
ROLL BACK
LOW ADPaterson ADPaterson
HIGH
LOW DEMAND
Population growth Rising energy use Urbanization / Pollution
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ADPaterson
Part II: “Redefining Leadership in Nuclear Energy Markets”
Supply vs Demand Factors and National Strategies 21st Century, Post Cold War DEMAND-SIDE INTENSITY
EXPORTERS
[Import & Export]
*P5 HIGH
country Nuclear navy Nat’l Labs Engineering Reactor operations Fuel cycle
BOTH
France* Russia*
* China is the
S.Korea
USA* Restructuring
India
Japan
Canada
(2010, 2014)
UK*
only Demandside driven P5 country now
China*
Renaissance “Heavy”
Fukushima DPJ loses
Spain
Germany Belgium LOW ADPaterson
DECOMMISSION ADPaterson
Japan (2011)
ROLL BACK
Czech UAE Poland
Italy
Renaissance “Light”
Turkey S.Arabia Vietnam
HIGH
LOW
DEMAND
Indonesia IMPORTERS Population growth Rising energy use Urbanization / Pollution
http://ebionline.org/updates/2320-nuclear-energy-remains-vital-to-urban-energy-reliability
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A Tri-party Sovereign Investment Decision: UK, France, China… all P5 countries
P5
Britain: Nuclear restart…under France with China Declining North Sea production, climate goals, energy security, and “P5” status drive UK reactor restart (10-16GW).
Does UK have room for Adv. Reactors in next wave (16 GWe) ?
October 2013
Will EPR cost overruns trigger shift at HP-C ?
Declining North Sea oil and gas production since 2000
1980 http://www.ft.com/intl/cms/s/0/9fffdb6a-367c-11e3-aaf1-00144feab7de.html?siteedition=intl#axzz2lCUbpf9F
2000
58
International Partnerships balance risks / finance Global Partnerships for Nuclear Energy Investment: Assuring Growth, Safety and Progress The Global Nuclear Investment Initiative will provide a forum for formulating partnerships. It will include regional workshops, tentatively scheduled to be held in Washington, DC; Vienna, Austria and Seoul, South Korea (during the 2013 World Energy Conference). Participants will contribute to, exchange and discuss case studies, best practices, and innovative “Public-Private Partnership” financing approaches, and other key topics to be determined by the Advisory Board. The initiative will present a report on policy, principles and recommendations to a group of highest ranking government officials and industry leaders at a summit meeting in Abu Dhabi, UAE in 2014. Challenges on cost…
Georgia nuclear facilities progressing, but US nuclear revival is not By Kristi Swartz 2/24/2013 The Atlanta Journal- Constitution
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New construction of reactors is a Sovereign decision, more than mere economics.
New Reactors: Where’s the Growth?… Asia, MidEast Size of bubble = Reactor GWs now under construction Gov’t Gov’t Owned Owned ADPaterson
NOW
Sovereigns dominate new orders. USA and Japan built their fleets of reactors in smaller regional utilities, rather than in national enterprises.
Private Private Owned Owned Operating Capacity ADPaterson
60
Asia, MidEast continue to dominate new construction: N.Am, EU lag
Sovereign Nuclear Energy Landscape 2030 Size of bubble = Reactor GWs now under construction Gov’t Owned
2030 ADPaterson
Private Owned
USA Utilities
Operating Capacity ADPaterson
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ANSOFF Market Matrix
Low cost bidders
Best bidders
Adaptive bidders
Coop bidders / JVs
62
Key Players engaged in Renaissance Strategies
“LOW-COST” FABRICATORS
Higher
(Technology importers)
than electricity GenIV More • H2 Production Fab Reactors•• Industrial Spent Fuel burn up • Adv. Desalination
Market Penetration
?
Product Development
“INNOVATORS” (technology driven)
“NICHE-MAKERS”
USA*
(customer driven)
SMRs (LWRs) Desalination Coastal cities Floating reactors Remote installations
AP1000 EPR Gen III+
“ALLIANCESEEKERS” (Consolidation via JV / Teaming)
Lower
Differentiation
Market Development
Weak
COMPETITIVE POSITION
Strong 63
For only those countries significantly investing in Nuclear Energy
Key Players and Renaissance Strategies Higher
Existing Products
New Products
“LOW-COST” FABRICATORS
GenIV Reactors
(Technology importers)
Existing Markets
Market Penetration
?
India
?
Product Development
“INNOVATORS”
China*
? (Sodium-cooled)
(technology driven)
S.Korea
USA*
“NICHE-MAKERS” (customer driven)
New Markets
SMRs (LWRs) Russia* Desalination Coastal cities Floating reactors Remote installations
Canada Lower
UK*
France* MHI – AREVA
KEPCO-Doosan - Westinghouse
AP1000 EPR Gen III+
“ALLIANCESEEKERS” (Consolidation via JV / Teaming)
Japan (2010, 2014) Toshiba-Westinghouse Hitachi-General Electric MHI – AREVA
Differentiation
Market Development
Weak
More than electricity • H2 Production • Industrial Fab • Spent Fuel burn up • Adv. Desalination
COMPETITIVE POSITION
Strong 64
Renaissance Strategies: Evolving Questions USA • • •
Can replacements drive some US growth? Any incentive for reliability, emissions savings? Will USA invest in Innovation (GenIV)?
China • • • • •
Building most and importing technology How much investment in innovation ? What pace on SMR deployment ? Any incentive for emissions savings? Which alliances will endure ?
CANADA: What strategy? Market niches?
Russia
S.KOREA: Which alliances? Gulf export focus?
• • •
Marketing heavily, with fuel take back How much investment in innovation ? Will take lead in SMR deployment ?
France • •
Big cost overruns hinder marketing Whither federal rollback?
UK • • • •
N.gas production declining steeply Need nuclear to meet CO2 budget Building more new than USA by 2018 How harmed by French stumbles ?
Japan • •
How many restarts, how soon ? Which targets via which alliances? 65
Renaissance Strategies, Supply / Demand Factors Create the market Capture high value
Shape sub-sectors Adapt to customers
Diversify broadly Share risks, gains
Competete on cost Strive for market share
Examples
[USA; Russia?]
[USA?, Russia, France?]
[UK, Japan, S.Korea]
[China, India]
INNOVATORS
NICHE MAKERS
ALLIANCE SEEKERS
LOW-COST MFRS
Approach
"We are best value"
"What do YOU value?"
"Win-win ! "
"What is budget?"
Best bidder
Adaptive bidder
Coop bid
Low bidder
GOVT Leadership
Factor S1 S2 S3 S4 S5 S6 S7 S8
SUPPLY-SIDE R&D, Innovation Nuclear Navy, military Quality regulation Fuel infrastructure Engineering education Low cost financing Current reactor base Construction capacity
More R&D; Feed Labs Fund Demos
Joint / Tailored R&D
Less focus on R&D
Sustain Navy
Support Navy spinoffs
Defense alliances
No nuclear Navy
Differentiating value
Modify, streamline
Cooperate on regs
Standardized, simplified
Adapt technology
Assured fuel with plant
Joint ventures on fuel
Multiple suppliers
Bolster funding
Package training in sale Exchange programs
Expand Univ engineer
More incentives
Provide vendor finance
Export credit
Govt financing
Upgrade on Rebuild
Incremental updates
Joint ownership (foreign) Extend operations
Promote trade, invest
Build-Own-Operate
Teaming agreements
Supply excellence
D1 D2 D3 D4 D5 D6 D7 D8
DEMAND-SIDE Growing Population Dense urban loads Adv Manufacturing base Rising energy use (per) Higher N.gas prices Air pollution Future urbanization Policy on emissions
Demand oriented
Most Govt activity
Subsidized by Govt
Cost-driven
Fund education
Identify sub-groups
Family leave, incentives
Modular housing
Dispatch for reliability
Adapt product to niches
"Smart City" policies
Manufactured cities
Foster upgrades
Look for linkages
Joint ventures
Govt subsidies for Mfg
Build to support (not EE) Rank sub-sectors Tax fossil fuels
Technology cooperation Regional initiatives
Hybrid plants (co-prodn) Trade policy
Substitution and EE
Promote tech investment Rapid deployment
Best practices on Regs
Nat'l govt absorbs costs
Subsidize reliability
Upgrade features
Urban planning
Govt housing
Monetize beyond regs
Differentiated subsidies
Technology sharing
Moderate regulations
66
China and Russia will not wait for USA
GIF and Gen IV: Time to pick up the pace
AMERICAN BRAND? * Innovation * Security & Safety * Backed by US Govt * “It works !” * Public support * Features, choices - Better waste mgmt - Less water use - Industrial heat * Positive economics [Best value, not just cheapest product]
http://local.ans.org/trinity/files/kelly-130821.pdf
67
The Landscape has shifted for Nuclear Power… US Leadership is at risk; EU is sliding
Summary: Powering big cities; Pivot to Urban Asia
The nuclear renaissance is continuing in Asia, despite the Fukushima disaster Asian mega-cities are big demand driver (14 of largest 20 cities are in Asia). Cities cannot function without reliable electricity, resistant to severe weather. Another 2 billion people will move to cities by 2040, most in Asia.
Reactor orders in N.America, EU are not sufficient to fuel a nuclear industry today. Stagnant economies and low load growth jeopardize prospects and financing.
Replacement market in N.America (COAL + Nuclear): 100,000+ MWs after 2020.
Sovereignty for UNSC “P5” countries rides, in part, on nuclear technology.
Incentives for GHG savings could aid nuclear. Curbing urban air pollution is vital.
The supply chain has been globalized; no nation is self sufficient. Asia lacks fuel.
Industry success will be driven by global alliances; policies must be based on this new reality where “US leadership” means embracing strategic partnerships.
USA, with allies, must bolster security features which undergird a commercial nuclear industry, but different partners wield different capacities and commitments. This entails joint investment in Advanced Reactor (GenIV) deployments.
Given chronic constraints on public sector budgets, new approaches and joint ventures are critical to financing nuclear energy in a political economy. But, there is no path forward without federal “Sovereign” investment. Nuclear is different. 68
Nuclear is unique; undergirding our P5 status…
USS R.Reagan
RIMPAC Exercise 69
www.environmentalbusiness.org
QUESTIONS – DISCUSSION “The fact is that when it comes to nuclear power we have fallen behind in pioneering the next generation. We operate the current fleet very well, but there is no clear direction coming from the federal government (Administration or Congress). We will end up as a buyer rather than a builder. The leaders are China, Russia, France, Japan, South Korea and India.” Physics Nobel Laureate Dr. Burton Richter, 9 July 2013 – Senate Forum on Nuclear Power
Andrew Paterson Principal, EBI / Verdigris Capital 571-308-5845
[email protected]
Walter S. Howes Managing Partner
Verdigris Capital, LLC 202-342-5323
[email protected]
http://ebionline.org/updates/2320-nuclear-energy-remains-vital-to-urban-energy-reliability
70
IAEA Projection of Global Capacity (Sept 2015) IAEA projects global net growth by 2030 of negligible (385 GWs) to as much as 632 GWs.
www-pub.iaea.org/books/IAEABooks/10939/Energy-Electricity-and-Nuclear-Power-Estimates-for-the-Period-up-to-2050-2015-Edition
71
http://www.eia.gov/forecasts/aeo/er/pdf/electricity_generation.pdf
EIA: Cost comparison for Electricity by fuel (2013) Nuclear competitive, except with cheap gas.
N.Gas 90% is essential for large urban loads, versus the much lower capacity factors (
