Nuclear Global and European Markets status

Nuclear Global and European Markets statusColette LewinerGlobal Leader Energy, Utilities & ChemicalsCapgemini

AgendaFukushima accident and first lessons learnedImpact on General Energy Outlook • Sustained development • Security of supply • Energy mix changes: LNG market changes Renewables Electricity generation costsImpact on Nuclear plants operations and development • Existing plants • New builds • Plant lifetime extensions/ DecommissioningImpact on Nuclear operators and vendorsConclusions | Energy, Utilities & Chemicals Global Sector 2

Fukushima accidentExceptional circumstances: 9.0-magnitude undersea earthquake offthe coast of Japan on March 11, 2011 triggering a tsunami that travelled Highest rating (level 7)up to 10 km inland. on the InternationalFukushima nuclear plant: with 6 boiling water reactors (BWR)maintained by TEPCO has been hit by the earthquake and tsunami: Nuclear Event Scale. Reactors 4, 5 and 6 were shut down prior to the earthquake for maintenance. Second level 7 rating Remaining reactors shut down automatically after the earthquake. Grid in history, following electricity supply for cooling purposes collapsed and then the tsunami flooded the plant, knocking out emergency generators. Tchernobyl. 20km radius evacuation around the plant from March 12 Source: http://www.jaif.or.jp/english/ | Energy, Utilities & Chemicals Global Sector 3

Fukushima accident first safety lessons learned Out of the 440 nuclear reactors in the world, 20% are situated in a zoneGlobal warming could trigger more with significant seismic activityfrequent exceptional events Need to design plant infrastructures for really exceptional earthquakes and Tsunamis Spent fuel pools containment building Simultaneous Natural Catastrophes have to be taken into account Emergency measures to be revisited Cooling systems redundancy to be re- assessed Spent fuel management policy to be rethought Radiological permanent assessment on the site and around Crisis communication to be re- designedMonths will be needed to have the full Source: www.guardian.co.uk details on the accident, urgency measures and site situation. This feedback will enrich lessons learned. | Energy, Utilities & Chemicals Global Sector 4

Strengthening nuclear safety regulationsRegulators and politicians are revisiting safetyregulations International Nuclear Events Scale (INES)• European regulators are defining stress tests to be applied to existing reactors and new builds• Politician are calling for international safety rules and safety body: • French President Nicolas Sarkozy wants to host a meeting in Paris of nuclear industry officials from the G20 nations in May, aimed at coming up with new global safety standards by year end • International Atomic Energy Agency (IAEA) director-general Yukiya Amano has called a major conference on nuclear safety to be held in Vienna from 20 to 24 June 2011. He wants the conference to provide an initial assessment of the Fukushima-Daiichi accident and its impact and consequences. He also wants to launch the process of strengthening nuclear safety and the response to nuclear accidents and emergencies. He declared on April 4 that “Rigorous adherence to the most robust international safety standards and full transparency, in good times and Will there be a new bad, are vital for restoring and maintaining public confidence in nuclear power.” international safety body? | Energy, Utilities & Chemicals Global Sector 5

Fukushima accident other lesson learnedMedia covered extensively the event with a dramaticand alarming biasPublic opinion• USA: According to a March 22 survey by the Civil Society Institute, the Fukushima disaster is having a major impact on U.S. views about further expanding the use of nuclear power in US: 53% of Americans would now support “a moratorium on new nuclear reactor construction in the United States, 67% now say they would oppose “the construction of a new nuclear reactor within 50 miles of their home.” 58% are now “less supportive of expanding nuclear power in the United States” than they were a month ago• Germany: 250,000 anti-nuclear protesters gathered in 4 German cities on March 26 Voters backed the anti-nuclear Greens party against Chancellor Angela Merkel’s coalition in the March 27 state elections in Baden-Wuerttemberg and Rhineland-PalatinatePolitical decisions • Usually politicians reacted by calling for safety assessment of existing and new reactors and deciding moratoriums on new projects in order to draw lesson learned from the accident • Only Germany has stopped for 3 months its 7 oldest reactors and has declared a moratorium on its 2010 plant lifetime extensions | Energy, Utilities & Chemicals Global Sector 6

Fukushima is triggering a debate on present and future Energy MixMedia and some anti-nuclear groups are asking for anuclear phase out. Before asking ourselves if it is feasible, Results of nuclear opinion survey inone needs to ask if it is desirable. An immediate nuclear France (March 2011)phase out is not possible while keeping the lights on. Are you in favor of stopping theA long term phase out is possible but needs to be electricity generation from nuclearassessed against the following criteria: power plants in France? • Sustained development: global warming and greenhouse gas emissions decrease 1% Fully in favor 12% 20% • Security of supply Rather in favor • Electricity generation costs Rather opposed 30% Fully opposed World electricity generation by type (New Policies Scenario) Dont know 37% Would you accept an increase in electricity tariffs so that the France can stop to generate electricity from nuclear power plants? 27% No Yes 72% Source: IEA: World Energy Outlook 2010 Source: L’express, SIA, Opinion Way, Published April 2011 | Energy, Utilities & Chemicals Global Sector 7

Sustained Development Consumption and CO2 emission evolutions Source: Eurostat, EEA, BP statistical report of world energy 2009, European Commission – Capgemini estimation, EEMO12 Primary Energy Consumption EU Energy efficiency objective In 2009, during the crisis, energy consumption and GHG emissions dropped In 2010 ETS sectors emissions projected to increase by 3,6% compared to 2009 (Deutsche Bank). Despite this increase the objective could be met. • However ETS markets are not predictable enough to stimulate long term CO2 free generation investments. This is why UK decided to set a carbon price floor. Starting in 2013 at £16 per tonne, the tax-inclusive carbon price in 2030 will be at £70 per tonne Energy savings objective will be difficult to meet. This is why EU Commission adopted the Energy Efficiency Plan 2011: • Focused on instruments to trigger renovation in buildings, to improve energy performance of the appliances and to foster EU Greenhouse gases emissions objective energy efficiency • For now only a strategy paper. Legislative proposals with concrete binding measures to follow.• Germany’s ETS emissions to strongly increase if reactors shutdown according to the Deutsche Bank: • If 7 oldest reactors permanently shut down while 10 others continue; Germany’s ETS emissions over 2011-20 would increase by 250Mt relative to the current forecasts. • If 7 oldest shut down and other 10 closed in line with the 2002 legislation, ETS emissions to increase by 370Mt.Phasing out nuclear will have a dramatic effect on CO2 emissions increase | Energy, Utilities & Chemicals Global Sector 9

Security of Supply Security of supply Gas imports through pipelines and pipelines projects (2009) Projects of pipelines Main countries of Main exporting countries capacity increase destination for newIt is risky to rely too much on imported Total amount of gas Projects of new pipelines pipelines 99 TWh exported (planned or underOil and Gas: Major gas flows construction) GALSI Interconnection projects financially supported by the European Energy Built segments of Recovery Plan (EERP) Arab spring: limiting oil exportations Projects of pipelines capacity increase pipelines under construction Russia gas dependency: in 2030, NO FI Russian gas should provide 50% of 96 bcm SE (i.e. 1,034 TWh) EU gas demand m RUSSIA strea Skanled EE 115 bcm (i.e. 1,245 TWh) Nord LV IE DK Baltic pipe LT UK 12 bcm BBL (i.e. 131 TWh) NL NL PL 50 bcm BE DE (i.e. 536 TWh) LU CZ FR SK CH AT HU SI RO W hite stream am PT s t re BG uth ES IT So TAP cco GALSI GR Nabu Medgaz TGI am ed nsm nstre Tra Gree ALGERIA 30 bcm (i.e. 324 TWh) LIBYA 9 bcm (i.e. 99 TWh) Source: The West.com.au Source: Eurogas, BP statistical review of world energy 2010 , companies web sites, GIE gte – Capgemini analysis, EEMO12 | Energy, Utilities & Chemicals Global Sector 10

Gas On the short term gas will increase its market shareSuccess in unconventional gas production atcheap cost has allowed the US to become nearlyself sufficientNew gas liquefaction trains have beencommissioned in 2009 and 2010These factors combined with the economiccrisis, have created a gas bubble and loweredgas pricesThe EU gas market is oversupplied and has anoverhang between 10-30 bcm to make up overthe next few yearsHowever • Fukushima accident will deprive Japan of at least 9.7 GW of nuclear capacity • This capacity should be replaced by gas fired plants. Gas would be imported by pipelines from Russia notably but also be provided Gas long term perspective has through LNG changed as IEA estimates now the • The range of additional LNG consumption from total gas reserves to 250 years. Japan is 5.4 bcm/y to 11.7 bcm/y and this will accelerate the EU market re-balance Gas should increase its market share also on the long term. | Energy, Utilities & Chemicals Global Sector 11

Will renewables increase their long term market share? EU Renewable energy objectiveThe RES growth is still behind what is neededto reach the 20% target in 2020Due to governments’ austerity plans,subsidies to renewable energies are being cutThe 2020 EU target will be difficult to meetChina is the biggest investor; in 2010 it spent30% more than in 2009 Investors ranking in 2009 (in $bn) Source: Eurostat, EEA, BP statistical report of world energy 2009, European Commission – Capgemini estimation, EEMO12 Will governments be able to reverse the trend and increase again their subsidies to renewables? | Energy, Utilities & Chemicals Global Sector 12

Costs Electricity generation costs Estimated costs of electricity in France: Regional ranges of levelised costs of electricity for nuclear, coal, gas and onshore wind power plants • Nuclear: 45 €/MWh • Gas fired plants: 50 to 60 €/MWh (with today relatively low gas prices) • Hydropower: >50 €/MWh but highly 5% Discount dependent on sites and construction Rate conditions • On-shore wind: 80 to 90 €/MWh • Off-shore wind 150 to 200 €/MWh (including grid connection) • Biomass: 130€/MWh but very variable according to production conditions. • Photovoltaic solar electricity from 300 €/MWh (farms) to 600 €/MWh (home roofs)Nuclear cost should increase after Fukushima accident as safety inspections will result in more Source: IEA: Projected Costs of Generating Electricity, 2010 Edition investments and in plants • Assumption: carbon price of USD 30/tCO2 availability decrease • Cost of CC(S) is still in the development stage (IEA study does not consider costs of transporting and storing the sequestered carbon in final deposits) | Energy, Utilities & Chemicals Global Sector 13

Safer Nuclear Energy development is still important to meet the future sustainability challengesWorldwide challenges: Tight global energy demand and supply balance Long term global energy security of supply Climate Change issues calling for carbon free energy sources World energy-related CO2 emissions abatement Source: IEA, World Energy Outlook 2009 Nuclear with hydropower are the only carbon-free schedulable energy source able to produce large volume of electricity | Energy, Utilities & Chemicals Global Sector 14

Existing plants: inspections and additionalIn Japan, operators of nuclear investmentspower plants have announced arange of immediate measures Distribution of reactors under operations by agebeing taken as protection againstthe possibility of their facilitiesbeing struck by a tsunami among 35 32 33which: 30 Num ber of Units 24 25 21 21 22 22• Ensuring emergency power sources (e.g. 20 18 19 16 14 13 14 14 using vehicle-mounted power generator). 15 1011 11 10 12 9• Diversifying and securing cooling function 10 6 6 6 6 7 7 5 4 5 4 4 3 4 5 4 5 5 2 3 2 2 3 1 1• Build a higher seawall to protect the plant 0 from tsunamis 1 3 5 7 9 11 13 15 17 19 21 23 25 27 29 31 33 35 37 39 41 43Restart of reactors stopped for Reactor Age (in years)maintenance are also postponedGermany announced the closure of Additional CAPEX and OPEX will pushits 7 oldest plants for 3 month. Nuclear electricity cost up.This temporary shutdown led to a By how much?5.7% spot electricity price increase Older plants will be especially scrutinized | Energy, Utilities & Chemicals Global Sector 16

Nuclear new build: Some programs will be cancelled other delayed Worldwide, 439 reactors are in operation, 62 under construction and 484 planned or proposed (April 2011, World Nuclear Association) Overview of existing nuclear plants and project capacities (as of February 2011)The IEA cut by half their November 2010 projection of additional 360GW of new nuclear generating capacity by 2035. Nuclear Association Source: World | Energy, Utilities & Chemicals Global Sector 17

Life time extensions will be scrutinized Overview of the nuclear plants lifetime extension in Europe before the accident FISE: Life extension and uprating for Oskarshamn 3 to 60years approved in 2010 and expected to be completed in2013. Planned life extension to 60 years of Oscarshamn 2. FI: Fortum: 20 year lifetime extension of original 30 years decided in mid 2007 for 2 units at Loviisa. Operating sinceBE: Agreement in Oct. 2009: 10 year life extension Source: World Nuclear Association, Capgemini Research 1977 and 1981 they will run until 2027 and 2030, subject toof the 3 oldest nuclear power reactors to 2025 to saf ety evaluations in 2015 and 2023.guard against energy shortages. NO TVO: Lif tetime xtension to 60 years of the two OlkiluotoIn 2008, government installed a nuclear producer tax reactors operating since 1979 and 1982; subject to safetyof 250M€ per year till end of lifetime. Additional NL: Only plant to be evaluations every 10 years. Closure in 2039 and 2042.proposed taxes following life extension, have not shut in 2034 after a SEpassed as a law due to the political crisis in Belgium. conditional EE DE: End 2010, government agreed to a two-tier lifetime extension in 2006. extension of the German nuclear plants. 17 nuclear LV reactors to run 8-14 years longer than the 2020 deadlineUK: Last 4 operating Magnox reactors to beIE shut DK set by a prior government: Lifetime extension of nucleardown by end 2012, af ter life extension s of 9 LT units built before 1980 by 8 years to 40 years and of newermonths to 2 years. units by 14 years to 46 years. Operators to pay a “fuel-5 year lifetime extension of the Advanced Gas UK element tax” totaling €2.3 bn/year f or 6 years and a “eco-Reactors (AGR) Heysham 1 and Hartlepool until NL tax” of about €15bn.2019. PLPlant Lifetime Extension (PLEX) program could BE DE CZ: CEZ started in 2009 its project to extendenable extended lifetimes for all UK’s AGR LU Dukovany plant lifetime by10 years to 40 years.plants by 5 years and Sizewell B by 20 years. CZ Further extension to 50 years under SK consideration.FR: In July 2009 the Nuclear Safety Authority FR(ASN) approved EDFs safety case f or 40 year CH AT HU SK: Upgrade program on Bohunice units 3 & 4,operation of the 34 existing 900 MWe SI operating since 1984 & 1985 is under way with aunits. Each unit is subject to inspection during CR RO 40-year lifetime extension in view (to 2025).their 30-year outage. The first, Tricastin-1, got10-year extension to 2020. ES PT IT SI/CR: Slovenia shares the NPP Krško 696 MW BG reactor with Croatia; connected to the network inES: Government granted a 4 year life extension for the HU: In 2005, 20 year lif etimeSanta Maria de Garona plant to 2013. Almarez 1&2 and extension for the 4 reactors of 1981 and designed to run f or 40 years. In 2009,Vandellos 2 granted 10 year extension. In February 2011, Paks nuclear plant, operating NPP Krško submitted an application for lif etimeSpain’s Congress ratified a law allowing the 8 operating since 1982-87. Reactors to run GR extension of 20 years (to 2043).nuclear units to run for longer than 40 years until 2032-2037. Germany decided to suspend 2010 lifetimeEnergy, Utilities & Chemicals Global Sector | extension decision. 18

More reactors could be closed following the Fukushima accident• After the accident Fukushima reactors will be closed (9,7GW)• Some reactors could be closed after the new safety inspections• Some more should be closed for political reasons (as in Germany)• A combination of political and regulatory pressures could also lead to closures European reactors threatened to be closed Incremental Global Gas Demand in 2020 from Lower Nuclear Power Generation Source: Les Echos, April 14, 2011 According to Eurelectric, if all nuclear plants older than 30 years would be closed in Europe, the EU 27 would lose 14% of its generation capacity. Gas demand will grow. | Energy, Utilities & Chemicals Global Sector 19

Political declarations Plant provisional New projects delayed or suspended: Safety inspections closure: of existing plants: China (assessment); Taiwan assessment, Italy (1 All countries Germany (7 year moratorium); Japan (review plans for newEmerging nuclear oldest reactors) projects); Switzerland (moratorium); UK (delayed)countries thathave the mostadvancedprograms:South America: Chile Uruguay Finland: 1Africa & Middle Russia: 10East: Egypt Canada: 2 Image Source: Le Figaro; IAEA Jordan Kuwait Morocco Nigeria France: 1 Slovakia: 2 Saudi Arabia Japan: 2 USA: 1 Tunisia Turkey Iran: 1 China: 27 South United Arab Korea: 5 Emirates Pakistan: 1 India: Taiwan: 2Europe: Belarus 5 Italy PolandAsia Bangladesh Indonesia Brazil: 1 Thailand Vietnam Number of reactors under Argentina: 1 construction | Energy, Utilities & Chemicals Global Sector 20

Reactors under construction AREVA: 4 EPR, Generation 3 (1,600MW): KEPCO (South Korea): APR-1400, (Generation • Olkiluoto (Finland): 2013 2, 1400 MW): • Flamanville (France): 2013 • South Korea: 2 reactors / 2013-2014 • Taishan (China / 2 reactors): 2013 & 2015 • Abu Dhabi :2 reactors /2017 for the firstPWR CGNPC (China): CPR-1000, Generation 2, MITSUBISHI HEAVY INDUSTRIES (Japan):(Pressurized (1,000 MW): PWR Generation 2:Water Reactor) • China: 18 reactors / 2011-2015 • Japan: 2 reactors / 2011 & 2014 ROSATOM (Russia): Generation 2 & 3 WESTINGHOUSE (US-Japan) AP 1000, • 20 VVER reactors from 400 to 1200 MW under (Generation 3, 1150 MW) construction around the world • China: 4 reactors / 2013-2015.BWR GENERAL ELECTRIC HITACHI (ABWR):(Boiling Water • Japan and Taiwan: 3 unitsReactor)Candu/PHWR • AECL: None of the next generation ACR-1000 reactor sold despite $434 Mio investment.(Pressurised Heavy • Hindustan Construction Company (India): 3 PHWR local technology reactors under construction.Water Reactor) Generation 3 safer reactors should increase their market share. However market size will decrease and China and India could favor their local vendors. | Energy, Utilities & Chemicals Global Sector 22

Conclusions Nuclear renaissance stopped or delayed by the Fukushima accident Existing plants will be safety tested Lifetime extensions will be scrutinized New programs delayed, some cancelled Safety regulations will become more international Debates on future energy policy are emergingDecision on nuclear future will not only be scientific, technical or economical but also political. | Energy, Utilities & Chemicals Global Sector 24

Nuclear Global and European Markets status

by Capgemini on Jun 02, 2011

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