Global nuclear industry faces similar challenges, including cost drivers

13th March 2015

By: Keith Campbell

Creamer Media Senior Deputy Editor

  

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Worldwide, the nuclear industry would benefit if it was possible to develop closer cooperation between national regulatory authorities and between them and the industry itself, as is the case with the aviation industry. This was affirmed by World Nuclear University (WNU) lecturer François Perchet at the WNU One-Day Course held recently at the University of Pretoria.

In aviation, a sector which demands the highest safety standards, certification of a new airliner by the European Aviation Safety Agency means that it is automatically certified in all European Union member States. Similarly, many countries automatically accept certification by the US Federal Aviation Administration. “We are far from this model in the nuclear industry, maybe because the size of the market is smaller,” he said.

In the nuclear sector, countries retain national regulatory and certification authorities, which operate separately and independently of each other. Thus, Areva’s latest reactor design, the European Pressurised Water Reactor (better know as the EPR), has had to be separately certified by the French, Chinese, Finnish and UK nuclear safety agencies.

Another important issue facing the industry around the world is skilled personnel. “There is a huge need for education and training,” he affirmed. “We have shortages of nuclear-skilled workforces all over the world, at this stage. “There are also shortages of regulators to consider new reactor programmes.”

However, the increasing optimism in the nuclear industry worldwide is attracting new and young workers into the sector. At the moment, 298 new nuclear power plants are planned around the world. Of these, 94 are in Organisation for Economic Cooperation and Development countries (this group includes most of the established developed countries), 106 in China and 40 in countries that used to be part of the Soviet Union.

From initial design to final decommissioning, a modern nuclear power plant programme could last as long as 100 years, and involve up to three generations of engineers. The scale of work involved (and thus the job creation potential) in building a third-generation nuclear power plant is substantial. It involves some 4 000 t of forgings, about 200 pumps, more than 5 000 valves, around 210 km of piping and more than 2 000 km of cabling. The conduction phase of a nuclear power plant can take seven to ten years.

Another widespread issue is cost. Uncertainty as to how much new nuclear power plant (NPP) programmes will cost, in countries where there have not been any recent such programmes, is driving up cost estimates by authorities and agencies fearful of underestimating these costs. This was noted by WNU lecturer Milt Caplan.

“In the US, the EIA [Energy Information Agency] estimated, in 2011, the cost of an AP1000 reactor [produced by Westinghouse Electric] at $5 339/kW,” he reported. “China estimated, also in 2011, that its first four AP1000 reactors would cost $2 600/kW, with the next units expected to be $2 000/kW. This is because the Chinese were building and building, and the West was not. So the Chinese had more confidence [in their cost estimates] and in the West there was less confidence and this pushed up the estimates. The Chinese are benefiting from having a continuous build programme, while the Americans are just restarting and so things cost more.”

For countries seeking to establish nuclear industries, the are certain fundamentals that must be met. “To have a local industry, you must have a local infrastructure. You must have a local regulator,” he cautioned.

No country has zero content in an NPP programme, and no country has 100% content in an NPP programme. Each country must decide how much localisation it is willing to trade off against risk. “The more things you localise, the more things you do for the first time, the more your risk goes up. You need a balance.”

The high costs of NPPs are “definitely an issue”. Nuclear has high investment costs and takes a long time to come into operation. But thereafter, it has low and stable operating and maintenance costs.

Financing is thus a key factor in NPP programmes. Long-term projects, like NPPs, need low interest (or discount) rate financing. “The discount rate or interest rate is really a measure of risk,” he observed. Unfortunately, financial institutions tend to see nuclear as a high-risk sector. This has given rise to suggestions in both the US and the UK that these governments should give financial guarantees for NPP, to keep the interest rates down and share risk. This is despite the fact that, Caplan highlighted, “[t]he existing nuclear power industry is one of the safest in the world”

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Edited by Martin Zhuwakinyu
Creamer Media Senior Deputy Editor

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