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Nuclear content p3

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  • 1. European Nuclear Supply Chain: Overview and Insight By Michael Vickery - Senior Industry Analyst Nuclear Energy Insider Report Overview: Part 1: Supply Chain Opportunities - New Build and Increased Capacity Part 2: Economic Impact of Hinkley Point C Part 3: Rosatom’s Fennovoima deal reshapes new nuclear Part 4: Nuclear decommissioning fostering technology breakthroughs © FC Business Intelligence Report produced by
  • 2. European Nuclear Supply Chain: Overview and Insight www.nuclearenergyinsider.com European Nuclear Supply Chain Conference (Brussels, 1-2 September) Strengthen your nuclear supply chain strategy to save costs, drive quality and ensure safety standards across all major nuclear projects www.nuclearenergyinsider.com/ nuclear-supply-chain-europe/ Introduction Despite a number of set-backs the nuclear supply chain still has a lot to look forward to. The International Energy Agency expects global nuclear capacity to rise by 60% to 2035 and with new build projects underway or being planned in the UK, France, Finland and across Eastern Europe the European supply chain must be ready to take advantage of the opportunities that will present themselves in the coming decades. With the industry approaching its 50th birthday it’s not only new build that will impact limited industry resources. Operations, maintenance, decommissioning and waste management will provide a further strain on industry resources whilst simultaneously delivering billions of euros worth of investment opportunities to those in the nuclear supply chain. To help you gain insight into supply chain opportunities Nuclear Energy Insider has put together a series of useful content pieces so you can streamline your supply chain strategy in the European market.
  • 3. European Nuclear Supply Chain: Overview and Insight www.nuclearenergyinsider.com Part 1: Supply Chain Opportunities – New Build and Increased Capacity European New Build Timeline Increased Capacity in Europe Source: WNA SLOVAKIAMochovce3,EO:2014 SLOVAKIAMochovce,EO:2014 SLOVAKIAMochovce,EO:2015 FRANCEFlamanville,EO:2016 FINLANDOlkiluoto3,EO:2016 BELARUSOstrovets1,EO:2019 ROMANIA Cernavoda3,EO:2019 BELARUSOstrovets2,EO:2020 ROMANIA Cernavoda4,EO:2020 FINLANDOlkiluoto4,EO:2020 BULGARIAKozloduy7,EO:2022 UKHinkleyPointC,EO:2023 UKMoorside,EO:2024 FINLANDFennovoimaHanhikivi1,EO:2024 UKWylfaNewydd,EO:2025 SLOVAKIABohuniceNew Block,EO:2025 SLOVAKIAKecerovce,EO:After2025 UKOldburyB,EO:late2020s UKSizewellC,EO:tbcv 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2025+ SWEDEN Sweden's utilities have uprated all three plants.The Ringhals plant was uprated by about 400 MWe over 2006-11, and plans will take it to 660 MWe uprate over 25 years. Oskarshamn-3 was uprated by 21% to 1450 MWe at a cost of EUR 313 million, and a 27% uprate of unit 2 is in progress. Forsmark 2 had a 120 MWe uprate (12%) to 2010. SPAIN Spain has had a program to add 810 MWe (11%) to its nuclear capacity through upgrading its nine reactors by up to 13%. Some 519 MWe of the increase is already in place. For instance, the Almarez nuclear plant was boosted by 7.4% at a cost of US$ 50 million. FINLAND Finland boosted the capacity of the original Olkiluoto plant by 29% to 1700 MWe.This plant started with two 660 MWe Swedish BWRs commissioned in 1978 and 1980.The Loviisa plant, with twoVVER-440 (PWR) reactors, has been uprated by 90 MWe (10%). SWITZERLAND Switzerland, the capacity of its five reactors has been increased by 13.4%
  • 4. European Nuclear Supply Chain: Overview and Insight www.nuclearenergyinsider.com European Nuclear Supply Chain Conference (Brussels, 1-2 September) Strengthen your nuclear supply chain strategy to save costs, drive quality and ensure safety standards across all major nuclear projects www.nuclearenergyinsider.com/ nuclear-supply-chain-europe/ Part 2: Economic Impact of Hinkley Point C Source: EDF Energy Once built, estimates show that Hinkley Point C will add £144m each year to the UK’s GDP, including £100m each year in the regional economy during the peak construction phase and then £40m annually during the 60 years that the plant will be operational Recently released figures from EDF Energy report that it hasagreed new contracts with over 300 UK companies supporting its plans for new, low carbon, nuclear worth in excess of £650m. A new build programme would therefore be a major boost for the UK economy Construction of Hinkley Point C will represent an investment in UK infrastructure similar in scale to the construction undertaken to support the London 2012 Olympic Games. The project will generate around 25,000 jobs during construction and 900 permanent ones once the new power station goes into operation.
  • 5. European Nuclear Supply Chain: Overview and Insight www.nuclearenergyinsider.com Part 3: Rosatom’s Fennovoima deal reshapes new nuclear We look to Finland to see how Rosatom could be aiming to consolidate its credentials as a safe pair of hands for new nuclear projects, not just in emerging markets, but also potentially among choosier buyers, such as EU nations, and with funding to boot. A deal signed last December with the Finnish nuclear consortium Fennovoima could have significant implications for Russian reactor builder Rosatom’s fortunes in Europe and elsewhere. The contract, for Rosatom to build and part-own a 1,200 MW, AES-2006 pressurised water reactor in Northern Finland, will showcase Russia’s nuclear new-build capabilities in a market where its main European competition is facing difficulty. At Olkiluoto, 470 kilometres south of the planned Russian reactor site at Hanhikivi, the European nuclear consortium Areva-Siemens is in a legal battle with Teollisuuden Voima Oyj, a Finnish utility, over delays and cost overruns with a project that began construction in 2005. The 1,600 MW Olkiluoto 3 European Pressurized Reactor (EPR) was supposed to have entered commercial production in 2010, with a price tag of €3bn ($4bn). Since then, costs have ballooned, topping €8.5bn ($11.7bn) by the end of 2012. A commissioning date, last cited as 2016, has now been left open pending an updated schedule. In contrast, Rosatom is looking to have its reactor up and running by 2024, with a build cost of €6 billion (USD$8.2bn). It remains to be seen whether the Russians can make good on this promise, but there are reasons for Fennovoima to have confidence in its choice.
  • 6. European Nuclear Supply Chain: Overview and Insight www.nuclearenergyinsider.com European Nuclear Supply Chain Conference (Brussels, 1-2 September) Strengthen your nuclear supply chain strategy to save costs, drive quality and ensure safety standards across all major nuclear projects www.nuclearenergyinsider.com/ nuclear-supply-chain-europe/ First EPR For a start, while Olkiluoto 3 was the world’s first EPR, and was therefore always potentially liable to suffer from first-of-a-kind construction glitches, the AES-2006 is based on an established Russian design, the VVER-440, which is already operational in Finland. This is an important consideration, particularly since subsequent EPR contracts have yet to prove the design can be built easily and cheaply. Areva’s second attempt, for the French state utility Electricite de France (EDF) in Flamanville, has also suffered delays and cost overruns. As of December 2012, the original bill of €3.3bn had escalated to €8.5bn, as at Olkiluoto. Areva has subsequently begun work on two further EPRs, in Taishan, China, for €4 billion apiece, in partnership with EDF. Last November EDF’s chief executive, Henri Proglio, said“Taishan is progressing well” despite the start date for commercial operation already having been put back a year, to 2015. No cost overruns have yet been reported on this project. However, the cost differential between EPRs and Russian-built reactors is evident in another project, Hinkley Point C. There, EDF’s UK subsidiary EDF Energy is planning to build two EPRs for GBP£8 billion (€9.55 billion) each, producing energy at GBP£92.50 (USD$155/€112) per megawatt- hour (MWh). That is more than twice the cost of the energy Fennovoima is hoping to get from its Hanhikivi plant. €50 per MWh In an interview this year with Energy Post, a European Union (EU) power sector newsletter, Pekka Ottavainen, chairman of Voimaosakeyhtiö, which owns Fennovoima, said the price“will not be higher than €50 per MWh. If it goes higher than that, there will be no deal.” Edward Kee, vice president of NERA Economic Consulting, points out that Rosatom has an advantage when it comes to costs because the business is effectively backed by the Russian state. “The Fennovoima deal involves some level of Rosatom ownership and a proven VVER reactor design,”he says.“It is similar to other deals where Rosatom bundled government-to-government loans or outright ownership and long-term fuel arrangements with a power plant. “Such deals are possible with Rosatom’s government and mandate, but would be difficult or not possible for a private nuclear power plant vendor.”
  • 7. European Nuclear Supply Chain: Overview and Insight www.nuclearenergyinsider.com The combination of government funding and an established reactor design has helped Russia win contracts in markets such as Bangladesh, Belarus, Hungary and Vietnam, says Kee. Groundbreaking deal Rosatom even became the first nuclear vendor to enter Turkey thanks to a groundbreaking deal that will see the Russian company build, own and operate a plant in Akkuyu, in the south of the country. “The Fennovoima deal is somewhat new,”Kee says,“in that it puts Rosatom into a market that is more developed than some other targets, with participation in the Nordpool electricity market when the plant is completed.” World Nuclear Association analyst Jeremy Gordon says it may not be entirely fair to view Hanhikivi and Olkiluoto as a contest between Rosatom and Areva, since every project is a unique combination of site and design, as well as a new challenge in terms of Finland’s meticulous regulation. Nevertheless, there is certainly a sense that Rosatom could be aiming to consolidate its credentials as a safe pair of hands for new nuclear projects, not just in emerging markets but also potentially among choosier buyers such as EU nations, and with funding to boot. “I think the Russians would really love to build in the European Union,”Gordon says: “They have got their own technology, their own supply chain, their own research and development, and full political backing. They are able to offer finance. That’s their key selling point.” Source: Nuclear Energy Insider
  • 8. European Nuclear Supply Chain: Overview and Insight www.nuclearenergyinsider.com European Nuclear Supply Chain Conference (Brussels, 1-2 September) Strengthen your nuclear supply chain strategy to save costs, drive quality and ensure safety standards across all major nuclear projects www.nuclearenergyinsider.com/ nuclear-supply-chain-europe/ Part 4: Nuclear decommissioning fostering technology breakthroughs The supply chain for the UK’s nuclear decontamination and decommissioning (D&D), is a complex myriad of projects that leads many businesses to adapt to the changing conditions around them fostering technology breakthroughs. Recently in the UK, the Nuclear Decommissioning Authority (NDA) awarded a five year contract to Nuclear Management Partners (NMP), which combines the expertise of URS, AMEC and AREVA, and is the parent company of Sellafield Ltd, to continue its management role of reprocessing and waste storage facilities at the Sellafield plant. There has been some criticism of NMP’s performance so far, but they believe they can deliver over the course of the new contract. A Sellafield spokesman explains:“A starting point for us is to gain a full understanding of the deliverability of the whole programme, understanding, for example, where we have a scarcity of resource, lack of trained people, logistics issues and so on.” “That helps us to understand what the risk priorities are, so we can programme our work in a way that gives us the maximum impact on risk and hazard reduction as quickly as we can.” “It’s about working closely with our supply chain to ensure that we’re operating in an integrated manner as effectively as possible. In that way, we can respond if certain issues occur, whether that’s around provision of trained labour or issues associated with plant or equipment.” “That means effectively planning our campaigns of work and understanding our ability, and the ability of the supply chain to deliver,”he adds.
  • 9. European Nuclear Supply Chain: Overview and Insight www.nuclearenergyinsider.com NDA’s D&D Supply Chain: a £1.6bn yearly business The NDA spends more than half of its budget on the D&D supply chain, a total of £1.6bn each year, spent through its site licence companies (SLCs). Additionally £80m to £100m is released annually on research and development, where the majority of this funding is spent through the SLCs, and the remaining amount distributed to work which is being directly funded. There are many research and development partners that NDA collaborate with alongside the Site Licences Companies, including central government, universities and research institutions, national nuclear laboratories, and regulators such as the Office for Nuclear Regulation. A considerable 3,500 companies are involved in the D&D supply chain, and the NDA has created a plethora of measures to ensure that the path for them is as smooth as possible, in particular targeting SME’s. This includes an established steering group for SME’s at a national and regional level, with an action plan for small businesses that aims to direct 20% of funding to them. For supply chain sub-contractors, the routes were simplified last year, as before the NDA’s‘flowdowns’were deemed to be far too complex. After a series of workshops with supply chain representatives, it was decided that the ceiling on‘flowdown’regulations for sub-contact work would be raised to over £150,000 from £50,000. There will also be a separation of which‘flowdowns’apply to lower tier projects, compared to the more substantial D&D operations. Supply Chain Charter In 2010 the NDA produced a supply chain charter, which is still largely adhered to, that is streamlined into three main sections of relationships, planning and performance. Trust, in addition to being open with information and having reliable and clear expectations from suppliers, is an integral theme of the relationships within the charter; where two-way constructive feedback is also encouraged. Entering into consultation with suppliers on pricing and specifications has been highlighted as a vital part of the planning process, where throughout the stages of procurement the information should be constantly updated, and all conflicts of interest identified as soon as is possible. Rigorous health and safety, security, and environmental standards, are to be applied to
  • 10. European Nuclear Supply Chain: Overview and Insight www.nuclearenergyinsider.com European Nuclear Supply Chain Conference (Brussels, 1-2 September) Strengthen your nuclear supply chain strategy to save costs, drive quality and ensure safety standards across all major nuclear projects www.nuclearenergyinsider.com/ nuclear-supply-chain-europe/ enhance performance, and specifications are to be made clear on industry standards, which ultimately can encourage an innovative environment in D&D. Energy Solutions, a US-based company dealing with decommissioning of nuclear plants, and all the hazardous material that accompanies this task, with have operations based in several countries. Currently their main decommissioning work consists of decommissioning the Magnox fleet in the UK, and winding down the Zion nuclear power station in the Chicago area. A spokesperson for the company outlines the issues they face:“The technology is there for decommissioning, and in the United States there is storage capacity for waste disposal.” “The question being asked right now is whether a plant should be put into safe store or begin decommissioning. If the decision is made to decommission now, there are certain variables which include cost certainty and disposal capacity that can be accurately projected providing D&D as an option to seriously consider.” Japan to unite meeting of the minds For all companies involved in the D&D supply chain, the complex pattern and the relative solutions will continue to evolve. This is certainly the case in Japan, where in recent weeks Japan announced that it is soliciting proposals from both domestic and overseas nuclear experts and firms for how best to decommission Fukushima’s damaged reactors. The International Research Institute for Nuclear Decommissioning will publicly seek ideas. While it is not presently putting the entire decommissioning process out to tender, the body’s move will be welcomed by the international community, which has long called for Japan to make better use of available expertise around the globe, according to Japan’s media sources. The institute, formed by nuclear-related firms and government-backed bodies in August to dismantle the broken reactors, will screen decommissioning proposals and take the results to the government, according to Japan an unnamed official. There will also be a website developed in English and Japanese to notify interested parties at home and abroad when decommissioning ideas are required. This international meeting of the minds per se will foster new technology and supply chain processes that will only benefit the entire nuclear industry, once lessons are learned and communicated to the wider industry.
  • 11. European Nuclear Supply Chain: Overview and Insight www.nuclearenergyinsider.com CONFERENCE HIGHLIGHTS STRENGTHEN YOUR NUCLEAR SUPPLY CHAIN STRATEGY TO SAVE COSTS, DRIVE QUALITY AND ENSURE SAFETY STANDARDS ACROSS ALL MAJOR NUCLEAR PROJECTS Hosted By: Endorsed by: > Understand how harmonisation of regulatory standards across Europe will affect the nuclear supply chain and learn how to follow best practice in operational safety > Gain insight into the largest European nuclear new build projects to help you counter the resourcing challenges posed by the latest wave of nuclear construction > Discover ground-breaking new procurement models being implemented by major European utilities so you too can streamline your procurement processes, manage physical plant ageing and create a full fleet lifetime plan > Review the adverse impact of obsolete equipment and counterfeit components on your operations and understand how to best work with your suppliers to avoid becoming non-compliant > Maximise the efficiency of both your global and local nuclear supply chains to guarantee fluid and streamlined operations throughout your supplier base EXPERT SPEAKER LINE-UP INCLUDES: UTILITY PERSPECTIVES: CONTRACTOR PERSPECTIVES FROM: EXPERT PERSPECTIVES FROM: EXHIBITORS: www.nuclearenergyinsider.com/nuclear-supply-chain-europe EUROPEAN NUCLEAR SUPPLY CHAIN CONFERENCE 1-2 SEPTEMBER, HOTEL BLOOM, BRUSSELS, BELGIUM REGISTER NOW AND SAVE €600 "This conference was a major success, especially considering it was a first of a kind! The topic is very relevant in today's market as utilities and suppliers work together to optimize plant operations over extended lifetime" Tom Williamson, Williams Industrial Group UTILITY CASE STUDIES: Gain exclusive insight from Europe’s leading utilities on their latest procurement models, new build plans and maintaining nuclear safety culture across all nuclear projects ON-SITE POLLING: From obsolescence management, to new safety initiatives take part in our exclusive interactive polling session LONG TERM FINANCING NNB PANEL: How will the surge of new build be funded – hear from leading experts from investment banks, financial services companies and independent consultants on how NNB projects will be financed going forward In association with:

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