Bushehr nuclear power plant
Post-Fukushima, says Axpo director Stephan Dohler, safety must be in the mindset of every worker — such as this engineer at Bushehr nuclear power plant

The events at Fukushima a year ago have pushed the world’s nuclear power players down different paths. PEi examines the state of the industry in Europe today.

Kelvin Ross, Deputy Editor

What state is the nuclear power industry in as of April 2012? Better, worse — or the same as it was a year earlier?

The answer depends on geography.

Ask the question in the Czech Republic, Poland or Finland, and the answer is: It’s a reliable form of low-carbon energy, and we’d like a lot of it, thank you very much; ask the same question in Germany, Italy, Switzerland and Japan, and the answer will be the opposite.

The reason for difference of opinion is, of course, Fukushima. The disaster in Japan just over a year ago threw the nuclear industry under the glare of the global media and put the dangers of atomic power in the forefront of the public’s imagination.

Elmo Collins of the US Nuclear Regulatory Commission says that watching the events unfold on television “felt like it happened in our own backyard”.

One year later, the statistics might lead one to believe that not much has changed in the nuclear landscape — for example, on the day before the Japanese earthquake last year, there were 442 operational reactors in 30 countries, 65 in the process of being built and another 158 in the pipeline.

As of the beginning of March 2012, there were 436 reactors operating in the same 30 countries, and a further 65 are still in construction.

What has changed is that there is a far more measured approach to nuclear, with a greater-than-ever emphasis on safety.

Yukiya Amano, director general of the International Atomic Energy Agency (IAEA), says that Fukushima was “an important wake-up call” that had triggered a “nuclear safety renaissance”.

Amano adds that the disaster exposed weaknesses in Japan’s nuclear industry, including inadequate preparation and responses to an emergency: weaknesses that could be traced back to a domestic nuclear regulatory body that “was not fully independent from the promotional side”.

Now safety — and the need to be seen to be taking every precaution possible — is in the mindset of the industry’s players.

Laurent Stricker, chairman of the World Association of Nuclear Operators (WANO), says 2011 was “an extraordinary year for both WANO and for the wider industry”.

He says that following Fukushima, WANO “endeavoured to maintain ‘business as usual’ while also offering additional support to our members during an extremely trying time.”

Looking into 2012, Stricker adds: “I believe the changes taking place in WANO are fundamentally important for the global nuclear industry. We will not only focus on how to prevent an accident, but also on how to mitigate the effects of one should the unthinkable occur.

“This shift in WANO’s focus is vital in the ongoing pursuit of excellence in nuclear safety.”

Stephan Dohler, director of atomic energy at Axpo, Switzerland’s largest utility and operator of Beznau, the oldest operating commercial nuclear plant in the world, says: “Safety culture is not a status quo: it needs permanent development. Safety culture must be in the mindset — from the boardroom to every engineer and worker.”

He adds: “Maintenance is not just the exchange of technology and spare parts — it is also about behaviour and culture.”

David Powell, vice-president of nuclear power plant sales in Europe for GE Hitachi, adds that post-Fukushima, “the attention has moved away from climate change towards energy costs and security”.

Stress tests

Following Fukushima, countries around the world initiated stress tests on their nuclear fleets, and the results so far have all been positive.

Energy analysts at business information company GlobalData say that anti-nuclear sentiment has been calmed by the stress tests.

IAEA director general Yukiya Amano
IAEA director general Yukiya Amano at the Fukushima site in the days after the disaster last year. Sourse: IAEA

In particular, it believes widespread positive results will provide encouragement for developing countries, “which will overlook marginal risks to meet increasing power demands and gain independence from expensive fossil fuels”.

“The success of recent stress tests conducted by technologically advanced countries is likely to encourage emerging countries to develop their nuclear power,” says GlobalData.

“India, in particular, urgently needs to balance increasing energy production with carbon emission controls. Following the Fukushima disaster, widespread protests against nuclear power delayed the construction of the Kudankulam nuclear power plant in Tamil Nadu, but stress tests conducted since have proved that Indian nuclear reactors are able to withstand natural disasters.”

Jennifer Santos, head consultant for energy at GlobalData, says the results of the stress tests “are a step in the right direction in overcoming public mistrust of nuclear power generation”.

She adds: “In a time of rising power consumption and demand for cleaner fuel sources, nuclear power’s importance cannot be ignored. The endorsement of stress results by a number of country governments and regulators will bring nuclear power back into the playing field.”

The EU initiated voluntary stress tests on all of its 143 reactors, and those tests are now in, or entering, the peer review stage.

Fukushima
Fukushima has pushed safety — and the need to be seen practising it — to the top of the nuclear agenda
Source: WANO

Yet according to Phillip Lowe, director general of the European Commission’s energy directorate, every operational power plant in Europe need not be visited as part of the peer review process.

He explains that, so far, peer review teams have carried out inspections at 43 of the 143 operational nuclear plants in Europe. “Do they have to go to all the plants to carry out rigorous stress tests?” he asks. “Personally, I don’t think so.”

Lowe states that if some plants have “the same technical characteristics”, there was no need for them all to be visited.

However, he adds that explaining this to the public at the time of the conclusion of the tests — due in June — would present “a communications challenge”.

Lowe adds that, post-Fukushima, it is essential that the public be reassured that every nuclear site had been the subject of scrupulous examination.

This is all the more important, he stresses, as he remains “pessimistic about the ability of NGOs [non-government organisations] to handle the information in a responsible way”.

The need to reassure the public is reinforced by WANO’s Laurent Stricker, who says: “We have to win the trust of the public, because we cannot move forward without public acceptance.”

Public opinion

Yet public opinion has swung from pro-nuclear to anti-nuclear, and almost back again, in many countries.

In the months following Fukushima, a poll found that the countries with the highest anti-atomic sentiment were Japan (unsurprisingly), Germany and, perhaps surprisingly, France. An interesting caveat to the French appearing so high in the poll is provided by Piet Sellke, sociologist and political scientist at Stuttgart University, who states that while opposition to nuclear is “much the same” in France as in Germany, crucially, the French have greater trust in the risk management of their nuclear sector.

Nuclear was a hot topic in the run-up to the general election in France. Former president Nicholas Sarkozy talked of extending the life span of the country’s fleet, while his opponent — and eventual winner Francois Hollande — made the opposite noises. Now it remains to be seen what action Hollande will take on the country’s nuclear reactors.

David Simpson, partner at KPMG, says: “I think it’s always hard to tell pre-election what people will actually do post-election, but it is hard to imagine France cutting back on its nuclear industry… but it was hard to imagine that Japan would only have one operating nuclear reactor. Anything is possible, but there is still appetite in certain Western markets for nuclear.”

Subsequent polls have found that public opinion against nuclear in Germany is now less pronounced, a result of the knock-on costs of the country’s withdrawal becoming more apparent.

Meanwhile, pro-nuclear feeling has held up in just two countries — the UK and the US. Indeed, it has grown in Britain. Why should this be? David Simpson has some ideas.

“Some of it is due to the accident history — we haven’t had a major incident, a Chernobyl or a Fukushima,” he says. “Secondly, the government is very sensibly suggesting that new nuclear is sited next to old nuclear, so you have communities that are very pro-nuclear.

“Thirdly, there is an increasing understanding of the costs of large- scale renewables, particularly offshore wind, among the public. So I think that the relative attraction of nuclear remains pretty high.”

However, he cautions that “the public hasn’t seen any real specifics on any of the facts yet because no planning applications have been approved yet, so its all a bit academic as it sits at the moment.”

WASTE DISPOSAL

On the issue of waste, Ewoud Verhoef, deputy director of COVRA, the radioactive waste agency in the Netherlands, believes it is a topic that does — and must — transcend national borders. And yet he states that currently, it is the only part of the nuclear fuel cycle that is dealt with nationally, while mining, enrichment, electricity production and reprocessing all comprise international involvement.

IAEA's nuclear pools
Storing up trouble for the long term? One of the IAEA’s nuclear pools, a supposedly ‘safe’ container for spent nuclear fuel. Source: IAEA

“This need not be so,” he says. “Multinational solutions can be complimentary to national solutions.”

Indeed, he states, if looking at long-term life spans for waste solutions — and in some cases we are talking hundreds of years — it makes no sense to address the problem within national borders, as these borders will change, as has been evidenced in Europe over the past three decades.

He says that countries must certainly develop a national strategy for waste disposal, but that strategy must factor in international co-operation, and suggests that a multi-national repository could be a solution for Europe, Southeast Asia, and Central and South America.

“Developing a multinational repository is about defining a common need, co-ordinating research, finding a host site and getting the support from local and international stakeholders.”

As something of a ‘teaser’ coming out of left field, he puts forward the idea of a European multinational repository located under the North Sea, serving the UK, Germany, the Nordic states and the Netherlands.

Small modular reactors

Small (300 MW and under) and medium (300–700 MW) reactors are being developed apace in many countries, including Argentina, Brazil, China, India and South Africa.

Currently, there are 131 small modular reactors (SMRs) in 26 countries, and another 14 under construction. The current generating capacity of the existing reactors is 58.9 GW.

The companies involved in those SMRs due for immediate or near-term deployment include Westinghouse, Toshiba, NPCIL of India and Babcock & Wilcox.

The attraction of SMRs is obvious: given their size, they have lower upfront capital costs, a readily available supply chain of off-the-shelf components, they can be built in a shorter construction schedule, and they are simpler to operate and maintain than their larger counterparts.

SMRs are particularly appealing to countries that are nuclear newcomers and that do not have the grid and infrastructure development to opt for a larger nuclear facility.

John Kyun Park, director of the International Atomic Energy Agency’s nuclear power division, believes the SMR market will flourish in the coming years, as steps forward in technology — including a hybrid renewables SMR — make them the best option for developing nations.

Financing

Unsurprisingly, the key to the future of nuclear is financing. KPMG’s David Simpson says: “If we are going to go for a lower-carbon future, we are going to need much more power plant. That implies very, very large sums of investment. It’s a big number in Germany, and it’s a big number in the UK.”

He explains: “The highest-leveraged sector in the world is the utilities sector right now, because it became leveraged when people thought it represented a stable source of future cash flows.

“In order to make this happen, more capital has to come into this industry, and the returns are going to have to be high enough to bring this capital in. That capital might come from existing shreholders or —and we are seeing increasing evidence of this — new capital coming in from the outside. We are already seeing, and are predicting much more, capital coming from Asia.”

Nuclear in the UK: the not-so-simple truth

The UK is one of the most interesting nuclear markets. The previous Labour administration decided to kick-start the country’s nuclear fleet with a new range of reactors, which was then picked up by the Conservative/Liberal Democrat coalition in May 2010. Post-Fukushima, the country’s nuclear regulator duly carried out the obligatory stress tests, and all was pronounced well.

Eight new reactors were scheduled, backed by a joint venture between German companies RWE and E.ON, Horizon and another teaming Centrica with EDF. But last month, RWE and E.ON said they were walking away from the project because of financial constraints on firms in their home country.

Two days before, RWE npower chief executive Volker Beckers said “the whole UK sector needs reform” due to its “layer upon layer” of regulations. He said: “The British approach is regulation with a veneer of competition,” but “if the Energy Bill is unworkable, investment potential in the UK will be diminished. There will be better places to invest — that is the simple truth.”

Some 48 hours later, that ‘simple truth’ came to pass when UK energy minister Charles Hendry said the decision was not made because of “any doubts about the role of nuclear in UK’s energy future”. Many believe this was a reflection on the UK’s ability to offer ‘clarity and certainty’ to potential power-generation investors.

The Coalition has talked about establishing these c-words via its Energy Bill and Electricity Market Reform (EMR), but lack of details over a carbon price floor, long-term contracts, emissions performance standards and capacity mechanism have made energy companies jittery about future investments.

Peter Kiss, sector leader for global power and utilities at KPMG, told PEi that the UK’s EMR was proving a big grey area. “If a country has decided to go for nuclear, the big question is what will be the underlying market mechanism prior to a company making a final financial commitment. It is very important to put the rules on the table; otherwise the private money is just not coming.”

So who will fill Horizon’s shoes? With RWE and E.ON, the UK was in business with two trusted companies from its ‘Big Six’ energy providers. Of the remaining four, two are committed to renewable-focused paths: SSE and Iberdrola’s Scottish Power. That leaves Centrica (British Gas) and EDF, who together plan to build two reactors at Sizewell and another two at Hinkley Point.

After RWE/E.ON’s decision, EDF chief executive Henri Proglio said the plans were still on track. But ratings agency Moody’s has said if the Centrica/EDF partnership goes ahead, both could suffer a downgrade because the huge costs of nuclear and uncertainty over future power prices would dent their share price.

The RWE/E.ON exit has opened the door to deep-pocketed companies from China or Russia’s state-owned Rosatom.

Rosatom communications director Sergey Novikov said: “The UK is potentially attractive for us, and Rosatom can guarantee that the construction of a nuclear power plant in the UK will meet all International Atomic Energy Agency standards and requirements.”

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