2. Nuclear Energy Outlook in 2014:
Strong Growth in a More Global Sector
www.nuclearenergyinsider.com
It is so easy to believe that the nuclear industry has reached its peak: The continuing
fallout at Fukushima will remain an on-going reminder of the high risks associated with
past and current nuclear technologies. New discoveries and technologies in oil and gas
have further extended the reserve base and helped keep energy prices at reasonable
levels. Renewable energy generation is still heavily expanding across the globe and
volume has helped drive down cost to allow reduction of subsidies and the ever increas-
ing bill for the decommissioning of legacy nuclear power plants.
So why should nuclear be seen as an attractive market for talent, suppliers, or investors?
In the coming year we expect attractive opportunities for sustainable growth in all three
subsectors: new build, operations, and decommissioning.
3. Nuclear Energy Outlook in 2014:
Strong Growth in a More Global Sector
www.nuclearenergyinsider.com
Country Specifics
Although the outlook for nuclear power in some OECD countries seems weaker than
pre-Fukushima, the International Energy Agency (IEA) still expects global nuclear capac-
ity to rise - in their central“new policies scenario”- by 60 percent to 2035. Over 60 reactors
are currently being constructed in 13 countries, mostly in Asia and Russia, leading to a
new reactor starting around every 25 days in the upcoming years, and that doesn’t cover
the predicted acceleration in energy demand in Asia, Africa, or South America. Even
oil-rich United Arab Emirates has awarded a $20.4 billion contract to a South Korean
consortium to build the country’s first reactors by 2020. Especially with the growing
demand for “clean” energy, nuclear appears to remain a viable alternative to fossil fuels
as a strong base load companion to renewables - maybe not in all Western countries, but
certainly on a global scale.
Even though countries like Germany have recently decided to opt out of nuclear and
others, such as the United States, have put a hold or a more critical review on lifetime
extensions, it is not unlikely that in times of increasing budget pressure, some will follow
the Swedish pattern. In Sweden a public referendum following the Three Mile Island
accident in 1979 led to a decision to phase-out nuclear by 2010; but the demand for
affordable base load power and investments in improving security standards have more
than doubled the share of nuclear in the energy mix since then. A 2010 Parliament
decision allowed new construction at existing sites to replace the present 10 units.
Accepting life-time expansion of existing nuclear plants as a means of preserving employ-
ment or to prevent industries migrating to countries where low energy costs are seen
as a prime way of attracting investment should not be ruled out. Even in anti-nuclear
democracies the majority of taxpayers might opt back into nuclear over time - particu-
larly in times of tight budgets and ever increasing taxes - to mitigate huge upfront spend
in renewables plus required infrastructure. In countries with largely unresolved decom-
missioning, on-plant site storage without utilization of the fuels cash generation poten-
tial could soon be “black-marked” as a waste of taxpayers’ money - especially when new
nuclear is being built just a few kilometers away across the border.
The third nuclear subsector, decommissioning and waste management, is also on the
edge of an impressive “growth” agenda through a number of drivers: the dismantling,
treatment, transport, and storage of material from a growing fleet of retired plants; a
more progressive drive to minimize low, medium, and high level waste in the first place
(in line with the waste hierarchy); and an increasing demand for improvement to state-of-
the art operations and risk management, leading even to the “decommissioning” of old
decommissioning sites.
But the biggest challenge and opportunity, in our opinion, is a substantial cultural change
towards developing stronger leadership and increased transparency and communica-
tion in managing the complex problems that surface in this highly regulated industry
with an increasingly diverse arena of stakeholders.
4. Nuclear Energy Outlook in 2014:
Strong Growth in a More Global Sector
www.nuclearenergyinsider.com
In many countries nuclear decommissioning has become
the Achilles’ heel for the future of the whole sector, which
can’t be protected simply by fences or excellence in
engineering anymore. Therefore, “state-of-the-art opera-
tions” will not only need further privatization, but also a
new breed of leader and manager who can inject lessons
learned and best practices from other industries around the
globe.
Aside from the current country-specific standing of the
nuclear segment, Pcubed sees three major trends continu-
ing to shape the overall agenda of nuclear regulators,
suppliers, and operators in 2014 and beyond.
Further Globalization of the Nuclear Supply Chain,
Operations, and Regulation
After more than 50 years of operation the time has come
to further accelerate the standardization of reactor design
and the harmonization of regulatory standards. Historic
national diversity is not only a cost driver, but also comes
with a higher operational risk for humanity if best practic-
es in safety aren’t continuously explored and implement-
ed across the globe. A nuclear accident anywhere is an
accident everywhere.
In this respect, watch for on-going global consolidation of major industry players as well
as cross-national co-investments. An example: The recent announcement in the United
Kingdom about a consortium of participants from France, China, Japan, the United States,
and (possibly) Russia and Finland working hand in hand. This practice will not only help
reduce investor risk but will also contribute to safety in nuclear construction and opera-
tions, especially in countries that are just beginning to introduce nuclear power.
With its approach to new build and also the privatization of the management of decommis-
sioning sites to international consortia, the United Kingdom has become a test bed watched
worldwide, where a more standardized and sustainable future of nuclear power may evolve.
Pair this with a drive for a stable, harmonized international regulatory framework as we have
recently seen it with the EU stress test and the growing respect for the Western European
Regulators Association (WENRA) and the European Nuclear Safety Regulators group.
Together, these shifts in practice could have the power to attract more direct investment
from infrastructure funds and increase public acceptance of nuclear energy.
Upgrading of the IT landscape To Improve Safety and Security
IT is playing an ever more important role in nuclear plant operation and decommission-
ing, driven by the needs to further improve safety and adapt to on-going regulatory
5. Nuclear Energy Outlook in 2014:
Strong Growth in a More Global Sector
www.nuclearenergyinsider.com
changes. In the space sector we’d expect always to find the latest technology. However,
the long planning period and life span of space missions often leads to massive delays in
deployment of state-of-the-art technology in operations. Changes to core systems accel-
erate the risk of mission failure and loss of massive investments.
In a similar way, any changes to core operating systems of a nuclear power plant or
decommissioning site requires balancing the risks from the perceived improvements
delivered by new tech. But technologies are becoming essential enablers of improved
health, safety, and environment (HSE) and security. Getting technical license renewal
these days requires the replacement of outdated systems and upgrades to effective low
risk, full scope systems for plant/site operation and automated emergency measures,
simulation and operator training or structural health and seismic warning. Even more, the
strategic integration of newer technology should be viewed as an opportunity to regain
wider public acceptance of current nuclear technology.
Although seen as less critical in the shadow of massive spends on core energy systems,
the deployment and use of state-of-the-art systems for document and enterprise project
management are important tools to support another major trend, the improvement of
project and program management (PPM) standards.
Improvement of PPM Standards
PPM enables the organization to deliver new investment projects on time and on budget
and drive cultural change more effectively. Finnish utility TVO and its two primary
contractors for the Olkiluoto 3 reactor, AREVA and Siemens, are facing a major compen-
sation suit related to a potential seven-year completion delay as a result of deficiencies in
stakeholder and risk management.
New build investments and decommissioning programs and projects are facing increas-
ing pressure to provide better value for taxpayers. (For evidence read the latest report by
the UK National Audit Office on deficiencies in project delivery at the Sellafield reprocess-
ing site as a recent example.)
Wehavefoundthatastrongfocusonsecurityandengineeringhasledtostrongresistance
to change or transparency. Organizations in the nuclear segment risk a further decline in
nuclear acceptance if they don’t address the cultural aspects of change management and
substantially improve their PPM maturity, particularly in a world where social media and
citizen journalists are increasingly driving the conversation.
