HomeWorld RegionsAsiaOnwards and upwards: the modern nuclear industry

Onwards and upwards: the modern nuclear industry

As many as 60 countries are reported to be considering using nuclear power as part of their energy mix, and at least 20 are expected to have a domestic nuclear programme in place by 2030. But will the nuclear express be derailed by the global economic downturn, or will life extensions underwrite investment?

Chris Webb

The restoration of nuclear power would appear to be complete; hailed as it is in some circles as a provider of at least one of the essential à‚— and probably the most potent à‚— weapons in the armoury against climate change Armageddon. Today, there are almost 50 plants under construction around the world in 12 countries, principally China, India, Korea, and Russia. Despite the best of intentions, there are still none under construction in the United States, nor as yet in the UK, both countries considered to be the nuclear energy’s spiritual homes. Alarmingly, as an influential International Energy Agency (IEA) report warned earlier this year, new nuclear power projects could be “at risk” from the economic downturn, leaving many wondering if the frail global nuclear momentum can stay the course.

In 2000, Calvert Cliffs was the first nuclear plant in the US to receive an extension to its license à‚— an additional 20 years of operation Source: Constellation Energy
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An unprecedented number of countries are eager to embrace nuclear power, the vast majority in the name of energy security, diversity and the ultimate quest of reducing carbon and other greenhouse gas (GHG) emissions. An International Atomic Energy Agency (IAEA) report earlier this year said the organization expected to assist no fewer than 38 national and six regional nuclear programmes, a three-fold increase from the previous reported period.

Yury Sokolov, the agency’s deputy director general of nuclear energy, was opening a workshop dedicated to IAEA tools developed to help member states with their energy planning assessments when he told delegates the good news, but warned of the need to have a robust plan. He stressed it was important that countries had a “holistic approach and a long-term commitment” while designing national nuclear power programmes. “A national energy policy should involve a proper assessment of a country’s energy needs. Based on this analysis, nuclear’s role can be defined.”

But there are mixed messages permeating the corridors of the nuclear power industry. The IEA report warns that the global economic downturn could lead to delays or cancellations of new nuclear power plant projects. Prepared under the direction of the IEA’s chief economist Fatih Birol, the report says the financial and economic crisis could dilute the nuclear generating capacity likely to be commissioned between 2015 and 2020, with devastating results for an industry that has lain in the doldrums for decades.

“Certain financial models, which might have underwritten new nuclear plant development are likely to be unavailable for some time, depending on the speed of recovery.” Birol adds: “Only a few electricity utilities are big enough to finance nuclear plants from their balance sheets, and that number has diminished in the current crisis.”

In Europe (excluding Russia) there are already 165 nuclear reactors producing power, with a further six under construction and others planned. There is, however, a significant divergence in individual countries’ approach to nuclear power. Some, such as Germany and Spain, have harboured a reticence towards the technology, or been erstwhile committed to phasing out nuclear power altogether, while others, like the UK and Italy, have recently committed themselves to building a raft of new power plants; more still, including Ukraine and Finland, already are showing a lead.

Japan set nuclear energy as a national strategic priority as long ago as 1973 at the height of one of the worst energy crises in memory. Heavily dependent on fuel imports accounting for 61 per cent of energy production, it is easy to see why. Last year, following the opening of no fewer than eight new nuclear plants (two on the Island of Hokkaido, three on Honsh, and one each on Kyushu, Shikoku, and Tanagashima) Japan became the second largest nuclear power user in the world with 63 nuclear reactors. Together they supply more than a third (34.5 per cent) of the country’s electricity.

Returning to Europe, there are six nuclear plants under construction and others planned. Here the appetite for nuclear power is characterized by a conservatism whose genesis can be traced back three decades to the Three Mile Island accident in the US (1979), and more recently to Chernobyl in the Ukraine (1986). But it was probably Germany’s Greens who most starkly polarized public opinion against nuclear power. The German government’s decision to exit nuclear power sent shock waves across Europe.

Vattenfall: $1.4 billion on plant improvements

Remarkably, that may now be about to change. The events of the last few weeks, where a new coalition government could see even Germany reverse its position on nuclear power, look set to echo the rebounds in Sweden and Italy, where there is now an apparent readiness to reconsider new nuclear plant construction.

Take, for example, Vattenfall, the Swedish state-owned power company and one of the leading energy producers in Northern Europe, which already produces around 28 per cent of its electricity from nuclear energy from two plants in Sweden (at Forsmark and Ringhals) and at a further two in Germany.

Vattenfall is again a keen advocate of nuclear power and is seen as something of a pacemaker in the bid to renew existing capacity. Since 2003 the company has, together with other owners, invested some $1.4 billion in a major, long-term investment programme of improvements at its Swedish facilities. The programme covers measures for improving the level of safety, extending the plants’ useful lives, and increasing capacity. The goal is to maintain world class nuclear safety and generation. A further $7 billion is earmarked for investment in its Swedish nuclear power plants to 2030.

Brunsbàƒ¼ttel nuclear plant in Germany, where a new coalition government could be set to reverse the country’s position on nuclear energy Source: Vattenfall
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But growing pains can be hard and it has not been plain sailing for Vattenfall which, in Germany, operates the Brunsbàƒ¼ttel and Kràƒ¼mmel nuclear power plants. These two plants have suffered on-off problems since the summer of 2007. The Swedish Radiation Safety Authority has also placed its Ringhals plant, located south of the city of Gothenburg in southwest Sweden, under special investigation after a number of reported failings at the plant.

Vattenfall, which is Germany’s fourth-largest power supplier, admitted the incidents had been ‘a blow to the company’ as the country debates the future of nuclear power. The latest shutdowns were “a bitter setback for all the efforts we made with regards to our safety culture over the last two years,” Tuomo Hatakka, who heads Vattenfall in Central Europe, said. “We are aware that we have lost trust again. We’ll have to earn it anew.”

The 25-year-old Kràƒ¼mmel reactor tripped in July following a short circuit in one of its two transformers. Then suspected faulty fuel rods prompted Vattenfall to announce and carry-out further checks. All 80 000 rods at the plant were to be examined. Kràƒ¼mmel, one of the oldest of Germany’s 17 nuclear power stations, was expected to be offline for at least nine months. Not surprisingly, the situation at the stricken plant attracted significant media attention before Germany’s general elections in September, as nuclear power has proved to be a thorny and divisive issue between the parties in recent years.

As Vattenfall worked to restore operations, nuclear opinion in Germany remained split between the conservatives, who want to extend the lifespan of reactors, and the Social Democrats, who may still seek to close plants ahead of schedule. Angela Merkel’s Christian Democrats found themselves on the defensive.

Yet the conservatives and the Free Demoncratic Party have consistently argued that it would be irresponsible to rush into a phase-out of nuclear energy before it is clear that other sources can make-up the deficit. It would be impossible to replace nuclear with low-cost renewables in such a short time.

Germany, which produces around a quarter of its electricity from nuclear sources, has pledged to reduce its carbon emissions by nearly 40 per cent over 1990 levels by 2020, but a nuclear shutdown would render this goal much harder to reach. Moreover, closing down nuclear plants would mean using more fossil fuels. Under current legislation, a complete nuclear phase-out is planned for 2021, but eight of the country’s 17 reactors are currently due for decommissioning in 2018.

And Germany is not alone in its change of heart. Belgium’s government also has decided to postpone the first phase of a planned national phase-out of nuclear energy by ten years. The federal minister for energy and climate Paul Magnette announced the decision last month.

Under a law passed in 2003, the closure of Belgium’s nuclear power plants was scheduled to take place between 2015 and 2025. The law also prohibited the building of new nuclear units and limited the operational period of the existing nuclear power plants to 40 years.

The decision to retain operations at nuclear facilities has heartened the likes of ABB and a host of others known for their skills in refitting ageing plant. It was, for example, a happier story for another Vattenfall-owned facility, at Forsmark, Sweden, where ABB secured earlier this year an order worth $45 million to expand output and extend the lifespan of the plant. The company was contracted to provide engineering expertise and supply power products in a project involving electrical system studies, design, engineering, installation and commissioning.

Gross output will see an increase from 1200 MW to 1360 MW at Forsmark 3 in a project that is due for completion in 2014. Forsmark accounts for one-sixth of electricity consumption in the country.

For Peter Leupp, head of ABB’s Power Systems division, the project represents just the kind of work which may be up for grabs in greater quantities as Europe struggles to emerge from a long-lasting recession, but has still to grapple with legally binding commitments on GHG emissions reductions.

Among a number of measures the work will involve the installation of high efficiency generator step-up transformers, resulting in significant energy savings, along with the supply of a range of other power products, two auxiliary transformers and an excitation transformer.

In Sweden there was little surprise and much celebration when the four parties of the country’s centre-right governing alliance said they had reached an agreement to reverse a decision to phase out ten nuclear reactors. The ban in the nuclear technology law on new construction is also to be abolished. “Authorizations can be granted to successively replace the existing reactors once they reach the end of their economic life spans,” the government said in a statement. The country had planned to wind down its nuclear energy capacity, ending it when the installations came to the end of their lives, a process which began in 1999 with the closure of two of its 12 nuclear reactors.

Vattenfall says the financial benefits of extending the life of its nuclear power plants will be substantial and will be passed on to its consumers. The programme involves analyzing how components age and determining how they could be used to ensure they are able to accommodate a extended operating life, safety and at an acceptable cost.

Hoping for a windfall

Elsewhere in Europe, France, Finland, and the UK have announced plans for additional nuclear power plants. Britain opened the world’s first commercial nuclear station in 1956 but its industry has undergone a painful restructuring in recent years. It is now likely that Centrica, jointly with EDF, will develop the first of a new generation of plants in the UK. The European lead has been left largely to France and Finland, where plants are already under construction.

After a public debate in 2003 on future energy policy, and in response to what state utility EDF group described as a ‘strong demand from the French people,’ plans were approved for a new European Pressurised Reactor (EPR), or improved third generation plant at Flamanville in Normandy. The project, which is intended as a prototype for up to 40 others of a similar design, is expected to be completed in late 2012.

EDF is another European operator hoping to secure a multi-billion euro windfall by extending the lifecycle of its nuclear power stations. The move, according to many economic analysts, could prove crucial to maintaining its top grade credit rating as it invests billions in acquisitions and plant renewal.

Recent reports have emerged in which the energy group has set out in detail the costs and expected gains from the planned investment in its 58 nuclear power stations that could enable it to run reactors for up to 60 years, against the current life-cycle of 40 years.

It estimates that for an investment of roughly €400 million ($507 million) per reactor, it can add value of €1.2 billion by deferring the €4 billion cost of building a new plant and maintaining the reactor’s cashflow. But the biggest potential gains could come from the writeback of provisions on decommissioning.

“Each time we can push back the construction of a new reactor there is a colossal financial positive for the company,” a senior EDF executive has been reported as saying. He insisted, however, that the extensions had not been factored into the group’s financial forecasts and that it would be able to maintain its AA-minus credit rating despite hefty obligations over the next decade. Nonetheless, analysts said that the extra financial cushion could be crucial, especially amid fears that the French government could cut regulated tariffs in a bid to boost consumer spending.

The start of construction of the EPR at Flamanville in 2006 saw a decisive stage in preparing for the replacement of EDF’s ageing nuclear power plants; the oldest could be decommissioned in around 2020. Due to be commissioned in 2012, the EPR will set the scene for a new generation of reactors.

The plant’s construction, expected to take just 54 months, brings together players from all sectors of the French nuclear industry, in particular Bouygues, Areva and Alstom. The EPR is a third generation nuclear reactor with a capacity of 1650 MW.

In the US, fortunes are also on the upturn. And again, it is the perceived importance of reducing GHG emissions that is to be given much of the credit. In a recent update to its 2003 paper on nuclear power, the respected Massachusetts Institute of Technology (MIT) notes the central premise of that study on the future of nuclear power was the need to mitigate global warming. It has recently updated it, re-evaluating the role of nuclear power in the country’s energy future.

The 2003 study identified the challenges to greater deployment and argued that the key need was to design, build and operate a few first-of-a-kind nuclear plants with government assistance, to demonstrate to the public, political leaders and investors the technical performance, cost, and environmental acceptability of the technology.

Crucially, more than five years later, no new plants are yet under construction in the US and MIT maintains that insufficient progress has been made on waste management. The current assistance programme put into place by the Energy Policy Act of 2005 has not yet been effective and needs to be improved. The sober warning is that if more is not done, nuclear power will diminish as a practical and timely option for deployment at a scale that would constitute a material contribution to climate change risk mitigation.

In the US, nuclear reactors typically have initial operating licenses from the Nuclear Regulatory Commission (NRC) for 40 years. The earlier trend to obtain license extensions to operate existing nuclear reactors an additional 20 years à‚— representing a total of 60 years à‚— has continued with the expectation that almost all reactors will have license extensions. By mid-2009 the NRC had granted 51 license extensions with 19 such renewals granted between January 2003 and February 2008. Furthermore, modest power uprates have been granted in that period, adding about 1.5 GW to the licensed capacity.

Nuclear meeting future demand

The pro-nuclear lobby globally is never short of rhetoric on the need for safe and secure nuclear power; and there appears to be a growing weight of opinion nuclear power should form a central element of efforts for a sustainable global economy and the future of the planet. This was indeed the tenet of a key speech made earlier this year by the Organization for Economic Co-operation and Development (OECD) secretary general Angel Gurria at a ministerial conference in China, one of the world’s biggest pollutors.

His words were made more apposite since China has currently the most ambitious programmes in the world with plans to have over 70 GW (five per cent) of installed capacity by 2020, and a further increase to more than 250 GW (16 per cent) by 2030. There are also plans to develop a domestic programme to become self-sufficient in reactor design and construction, as well as other parts of the fuel cycle, though China currently operates using uranium imports. In 2008, Westinghouse Electric, designer of the AP1000, announced that China wants to have 100 nuclear reactors in operation or under construction by 2020.

“Nuclear energy has the potential to meet a significant part of future demand while reducing tensions on hydrocarbon markets and alleviating the risk of global climate change,” said Gurria. “The necessary uranium resources are available to fuel this expansion, mechanisms are in place to ensure safety, and radioactive waste management solutions exist and are beginning to take form in several OECD/Nuclear Energy Agency (NEA) countries,” he said.

Overall, according to NEA figures quoted in its latest ‘Outlook,’ nuclear energy capacity is set to increase by between 55 per cent à‚— and probably by as much as 375 per cent between now and the middle of the century. In order to achieve this vast expansion, a growing number of reactors will need to be built from now until 2030, followed by an average of 23 to 54 1000 MW reactors every year between 2030 and 2050. Yet, the NEA notes, these construction rates are fully compatible with the historical building experience of the 1970s and 1980s.

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