Category Archives: Russia

2012 ~ The year that was in nuclear energy

Plus a few pointers to what’s in store for 2013

By Dan Yurman

Former NRC Chairman Gregory Jackzo

On a global scale the nuclear industry had its share of pluses and minuses in 2012. Japan’s Fukushima crisis continues to dominate any list of the top ten nuclear energy issues for the year. (See more below on Japan’s mighty mission at Fukushima.)

In the United States, while the first new nuclear reactor licenses in three decades were issued to four reactors, the regulatory agency that approved them had a management meltdown that resulted in the noisy departure of Gregory Jazcko, its presidentially appointed chairman. His erratic tenure at the Nuclear Regulatory Commission cast doubt on its effectiveness and tarnished its reputation as one of the best places to work in the federal government.

Iran continues its uranium enrichment efforts

The year also started with another bang, and not the good kind, as new attacks on nuclear scientists in Iran brought death by car bombs. In July, western powers enacted new sanctions on Iran over its uranium enrichment program. Since 2011, economic sanctions have reduced Iran’s oil exports by 40 percent, according to the U.S. Energy Information Administration.

In late November, the U.S. Senate approved a measure expanding the economic sanctions that have reduced Iran’s export earnings from oil production. Despite the renewed effort to convince Iran to stop its uranium enrichment effort, the country is pressing ahead with it. Talks between Iran and the United States and western European nations have not made any progress.

Nukes on Mars

NASA’s Mars Curiosity Rover is a scientific and engineering triumph.

Peaceful uses of the atom were highlighted by NASA’s Mars Curiosity Rover, which executed a flawless landing on the red planet in August with a nuclear heartbeat to power its science mission. Data sent to Earth from its travels across the red planet will help determine whether or not Mars ever had conditions that would support life.

SMRs are us

The U.S. government dangled an opportunity for funding of innovative small modular reactors, e.g., with electrical power ratings of less than 300 MW. Despite vigorous competition, only one vendor, B&W, was successful in grabbing a brass ring worth up to $452 million over five years.

The firm immediately demonstrated the economic value of the government cost-sharing partnership by placing an order for long lead time components. Lehigh Heavy Forge and B&W plan to jointly participate in the fabrication and qualification of large forgings for nuclear reactor components that are intended to be used in the manufacture of B&W mPower SMRs.

Lehigh Forge at work

The Department of Energy said that it might offer a second round funding challenge, but given the federal government’s overall dire financial condition, the agency may have problems even meeting its commitments in the first round.

As of December 1, negotiations between the White House and Congress over the so-called “fiscal cliff” were deadlocked. Congress created this mess, so one would expect that they could fix it.

The Congressional Budget Office has warned that if Congress doesn’t avert the fiscal cliff, the economy might slip into recession next year and boost the unemployment rate to 9.1 percent in the fourth quarter of 2013, compared with 7.9 percent now. Even record low natural gas prices and a boom in oil production won’t make much of a difference if there is no agreement by January 1, 2013.

Japan’s mighty mission at Fukushima

Japan’s major challenges are unprecedented for a democratically elected government. It must decontaminate and decommission the Fukushima site, home to six nuclear reactors, four of which suffered catastrophic internal and external damage from a giant tsunami and record shattering earthquake. The technical challenges of cleanup are daunting and the price tag, already in the range of tens of billions of dollars, keeps rising with a completion date now at least several decades in the future.

Map of radiation releases from Fukushima reported in April 2011

  • Japan is mobilizing a new nuclear regulatory agency that has the responsibility to say whether the rest of Japan’s nuclear fleet can be restarted safely. While the government appointed highly regarded technical specialists to lead the effort, about 400 staff came over from the old Nuclear Industry Safety Agency that was found to be deficient as a deeply compromised oversight body. The new agency will struggle to prove itself an independent and effective regulator of nuclear safety.
  •  Japan has restarted two reactors and approved continued construction work at several more that are partially complete. Local politics will weigh heavily on the outlook for each power station with the “pro” forces emphasizing jobs and tax base and the anti-nuclear factions encouraged by widespread public distrust of the government and of the nation’s nuclear utilities.
  • Despite calls for a phase out of all nuclear reactors in Japan, the country will continue to generate electric power from them for at least the next 30–40 years.
  • Like the United States, Japan has no deep geologic site for spent fuel. Unlike the United States, Japan has been attempting to build and operate a spent fuel reprocessing facility. Plagued by technical missteps and rising costs, Japan may consider offers from the United Kingdom and France to reprocess its spent fuel and with such a program relieve itself of the plutonium in it.

U.S. nuclear renaissance stops at six

The pretty picture of a favorable future for the nuclear fuel cycle in 2007 turned to hard reality in 2012.

In 2007, the combined value of more than two dozen license applications for new nuclear reactors weighed in with an estimated value of over $120 billion. By 2012, just six reactors were under construction. Few will follow soon in their footsteps due to record low prices of natural gas and the hard effects of one of the nation’s deepest and longest economic recessions.

The NRC approved licenses for two new reactors at Southern’s Vogtle site in Georgia and two more at Scana’s V.C. Summer Station in South Carolina. Both utilities chose the Westinghouse AP1000 design and will benefit from lessons learned by the vendor that is building four of them in China. In late November, Southern’s contractors, which are building the plants, said that both of the reactors would enter revenue service a year late. For its part, Southern said that it hasn’t agreed to a new schedule.

The Tennessee Valley Authority recalibrated its efforts to complete Watts Bar II, adding a three-year delay and over $2 billion in cost escalation. TVA’s board told the utility’s executives that construction work to complete Unit 1 at the Bellefonte site cannot begin until fuel is loaded in Watts Bar.

The huge increase in the supply of natural gas, resulting in record low prices for it in the United States, led Exelon Chairman John Rowe to state that it would be “inconceivable” for a nuclear utility in a deregulated state to build new reactors.

Four reactors in dire straights

In January, Southern California Edison (SCE) safety shut down two 1100-MW reactors at its San Onofre Nuclear Generating Station (SONGS) due to excessive wear found in the nearly new steam generators at both reactors.

SCE submitted a restart plan to the NRC for Unit 2 in November. The review, according to the agency, could take months. SCE removed the fuel from Unit 3 last August, a signal that the restart of that reactor will be farther in the future owing to the greater extent of the damage to the tubes its steam generator.

The NRC said that a key cause of the damage to the tubes was a faulty computer program used by Mitsubishi, the steam generator vendor, in its design of the units. The rate of steam, pressure, and water content were key factors along with the design and placement of brackets to hold the tubes in place.

Flood waters surround Ft. Calhoun NPP June 2011

Elsewhere, in Nebraska the flood stricken Ft. Calhoun reactor owned and operated by the Omaha Public Power District (OPPD), postponed its restart to sometime in 2013.

It shut down in April 2011 for a scheduled fuel outage. Rising flood waters along the Missouri River in June damaged in the plant site though the reactor and switch yard remained dry.

The Ft. Calhoun plant must fulfill a long list of safety requirements before the NRC will let it power back up. To speed things along, OPPD hired Exelon to operate the plant. In February 2012, OPPD cancelled plans for a power uprate, also citing the multiple safety issues facing the plant.

In Florida, the newly merged Duke and Progress Energy firm wrestled with a big decision about what to do with the shutdown Crystal River reactor. Repairing the damaged containment structure could cost half again as much as an entirely new reactor. With license renewal coming up in 2016, Florida’s Public Counsel thinks that Duke will decommission the unit and replace it with a combined cycle natural gas plant. Separately, Duke Chairman Jim Rogers said that he will resign at the end of 2013.

China restarts nuclear construction

After a long reconsideration (following the Fukushima crisis) of its aggressive plans to build new nuclear reactors, China’s top level government officials agreed to allow new construction starts, but only with Gen III+ designs.

China has about two dozen Gen II reactors under construction. It will be 40–60 years before the older technology is off the grid. China also reduced its outlook for completed reactors from an estimate of 80 GWe by 2020 to about 55–60 GWe. Plans for a massive $26-billion nuclear energy IPO (initial public offering) still have not made it to the Shanghai Stock Exchange.  No reason has been made public about the delay.

India advances at Kudanlulam

India loaded fuel at Kudankulam where two Russian built 1000-MW VVER reactors are ready for revenue service. The Indian government overcame widespread political protests in its southern state of Tamil Nadu. India’s Prime Minister Singh blamed the protests on international NGOs (non-governmental organizations).

One of the key factors that helped the government overcome the political opposition is that Nuclear Power Corporation of India Limited told the provincial government that it could allocate half of all the electricity generated by the plants to local rate payers. Officials in Tamil Nadu will decide who gets power. India suffered two massive electrical blackouts in 2012, the second of which stranded over 600 million people without electricity for up to a week.

Also, India said that it would proceed with construction of two 1600-MW Areva EPRs at Jaitapur on its west coast south of Mumbai and launched efforts for construction of up to 20 GWe of domestic reactors.

India’s draconian supplier liability law continues to be an effective firewall in keeping American firms out of its nuclear market.

UK has new builder at Horizon

The United Kingdom suffered a setback in its nuclear new build as two German utilities backed out of the construction of up to 6 Gwe of new reactors at two sites. Japan’s Hitachi successfully bid to take over the project. A plan for a Chinese state-owned firm to bid on the Horizon project in collaboration with Areva never materialized.

Also in the UK, General Electric pursued an encouraging dialog with the Nuclear Decommissioning Authority to build two of its 300-MW PRISM fast reactors to burn off surplus plutonium stocks at Sellafield. The PRISM design benefits from the technical legacy of the Integral Fast Reactor developed at Argonne West in Idaho.

You can’t make this stuff up

In July, three anti-war activitists breached multiple high-tech security barriers at the National Nuclear Security Administration’s Y-12 highly enriched uranium facility in Tennessee. The elderly trio, two men on the dark side of 55 and a woman in her 80s, were equipped with ordinary wire cutters and flashlights.

Y-12 Signs state the obvious

The intruders roamed the site undetected for several hours in the darkness of the early morning and spray painted political slogans on the side of one of the buildings. They were looking for new artistic venues when a lone security guard finally stopped their travels through the plant.

The government said that the unprecedented security breach was no laughing matter, firing the guards on duty at the time and the contractor they worked for. Several civil servants “retired.” The activists, if convicted, face serious jail time.

None of the HEU stored at the site was compromised, but subsequent investigations by the Department of Energy found a lack of security awareness, broken equipment, and an unsettling version of the “it can’t happen here” attitude by the guards that initially mistook the intruders for construction workers.

The protest effort brought publicity to the activists’ cause far beyond their wildest dreams and produced the predictable uproar in Congress. The DOE’s civilian fig leaf covering the nation’s nuclear weapons program was once again in tatters.

So long Chu

Given the incident at Y-12, Energy Secretary Steven Chu, who came to government from the quiet life of scientific inquiry, must have asked himself once again why he ever accepted the job in Washington in the first place.

DOE Energy Secretary Steven Chu

Chu is expected to leave Washington. That he’s lasted this long is something of a miracle since the Obama White House tried to give him the heave ho this time last year after the Solyndra loan guarantee debacle, in which charges of political influence peddling by White House aides colored a half a billion dollar default on a DOE loan by a California solar energy company.

The predictable upswing in rumors of who might be appointed to replace him oozed into energy trade press and political saloons of the nation’s capital.

Leading candidates are former members of Congress, former governors, or just  about anyone with the experience and political know how to take on the job of running one of the federal government’s biggest cabinet agencies. It’s a short list of people who really can do the job and a long list of wannabes. With shale gas and oil production on the rise, having a background in fossil fuels will likely help prospective candidates.

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Dan Yurman published the nuclear energy blog Idaho Samizdat from 2007–2012.

Carving up Turkey’s nuclear energy market

The question is how big is the bird and will any of the proposed deals fly?

By Dan Yurman

Competition for Turkey’s second and third nuclear power stations has heated up, but it isn’t clear whether any deals will be signed soon. China, South Korea, Japan, Canada, and Russia all want to supply the plants, which are expected to be about three-to-five GWe each depending on how many reactors are built at each site.

Turkey’s goal in pursuing a nuclear energy strategy is to gain energy independence from imported oil and natural gas and to boost export earnings through sales of electricity to other countries in the region.

The second plant is slated to be built at Sinop on Turkey’s Black Sea coast. The third plant would be placed north of the Bosporus channel along the Black Sea coast, but within spitting distance, as the crow flies, of Bulgaria’s border with Turkey.

Russia’s contract at Akkuyu

In May 2010, Turkey signed a contract with Rosatom to build Turkey’s first nuclear power site—4.8 Gwe of nuclear-powered electrical generating capacity at Akkuyu in Mersin on the country’s Mediterranean coast. The deal hinged on Russia’s financing and building four 1,200-MW VVER type reactors and operating them for 15 years, after which Rosatom expects to cash out to Turkish investors. The reactors are slated to be completed in 2019.

Rosatom was the sole bidder on the Akkuyu project after three western consortiums withdrew from responding to the tender over roller coaster disputes about protection of intellectual property and guaranteed rates. For its part, after a long-tangled process, Turkey agreed to guarantee rates to the Russian plant.

Now the Russians want to build the second and third nuclear power stations, but they have competition. There is another reason why Rosatom is not a slam dunk for the second and third power stations. The price has gone up on the first one.

On July 12, Interfax, a Russian wire service, reported that Vladimir Ivanovskiy, Russia’s ambassador to Ankara, said that the Akkuyu nuclear power plant might cost Turkey more than planned.

“Inititally its cost was estimated at $20 billion, but I think it will be much more—about $25 billion,” he told Russian journalists in Moscow. That’s not going to make the Turkish government willing to give the Russians an unconditional green light for either of the next two projects.

South Korea pulls out of Sinop

South Korea, which inked a $20-billion contract with the United Arab Emirates (UAE) in December 2009 to build four 1,400-MW reactors, is still interested in doing business with Turkey. Despite two rounds of negotiations, however, the two side still hadn’t come close to signing a contract, as in late 2010, South Korea and Turkey were at loggerheads over whether the Turkish government would guarantee financing from South Korea.

The South Korean government, which is already deeply committed to the UAE deal, may have looked at its books and decided it didn’t have the ability to do another project of that size. Since then, South Korea has been exploring international financing without much success.

Playing the China card

China also has shown interest in the Turkish deal, and clearly has the money to pay to play. China, however, does not have a reactor design of its own to offer for export and no experience in financing reactor deals in global markets.

These drawbacks didn’t stop Turkey’s Deputy Prime Minister Ali Babacan from leading a trade mission to China in February 2012 to talk nuts and bolts about a nuclear energy deal.

Babacan reportedly told the Chinese that the second nuclear power station at Sinop on the southern Black Sea coast was pretty much a toss-up between Russia and Japan. He added, however, that the third site, near Turkey’s border with Bulgaria, was fair game. China has not asked for financial guarantees for a nuclear power station, which has been a sticking point with South Korea.

By the time Turkey is ready to build that plant, probably around 2015, China is expected to have its own 1,400-MW version of the Westinghouse AP1000 ready for export. China’s state-owned nuclear power firms—China National Nuclear Corporation and China Guangdong Nuclear Power Corporation—have growing ambitions to play in the global nuclear export markets especially for nations like Turkey.

The February 2012 trade mission was followed by an official state visit to Beijing in April by Turkey’s prime minister, Recep Tayyip Erdogan. He signed a memorandum of understanding for cooperation on nuclear energy with his Chinese counterpart, Wen Jiabao.

In a change from the February meeting, Erdogan noted that plans for Turkey’s second power station, originally slated to be built by Japan or South Korea, were in flux.

Japan tries to re-enter the market

Japan originally proposed a team composed of Toshiba and the Tokyo Electric Power Company. With the collapse of TEPCO’s finances due to the Fukushima crisis, however, that consortium pulled out of the Turkey venture.

In October 2011, Mitsubishi said that it would explore bidding on the contract for the Synop project in cooperation with Japanese utility Kansai Electric Power Company. Construction would be handled by GDF Suez, a French multinational construction company. Japan’s government has also supported Hitachi’s plans to build nuclear reactors in Vietnam. It isn’t clear, however, whether or not Japan has put forward a solid proposal to Turkey.

Can Canada succeed with Candu?

Meanwhile, SNC Lavalin, a Canada-based company and owner of the reactor division of Atomic Energy of Canada Limited, approached Turkey in April 2012 with a proposal to build 3 Gwe, the equivalent of four Candu-6 pressurized heavy-water reactors, at Sinop. At an energy conference held in Istanbul, Turkey’s energy minister Taner Yildiz said that SNC-Lavalin had six months to prepare a feasibility study as part of its proposal.

What’s interesting about this deal is that SNC Lavalin vice president Ala Alizadeh told the Anatolia News Agency, a Turkish wire service, on April 20 that financing would be provided by Chinese investors, which means state-owned nuclear firms.

The future is still unknown

Turkey has a history of mercurial negotiations with reactor vendors. It doesn’t have the capital to finance the units, which is why the Russian and Chinese offers look promising right now.

Russia’s cost increase at Akkuyu, however, and the lack of a market-ready reactor for export from China, complicate what appears to be a choice of one or the other that could be made solely on available capital.

Japan’s bid seems like a long shot because it isn’t offering financing as part of its proposal.

An option by a Chinese state-owned nuclear organization to finance Candu-6 reactors could be the wild card in the Turkey nuclear market.

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Dan Yurman publishes Idaho Samizdat, a blog about nuclear energy and is a frequent contributor to ANS Nuclear Cafe.

Kudankulam hot start within reach

Tamil Nadu provincial government support pulls rug out from under protest groups

By Dan Yurman

Tamil Nadu map

The long running controversy over the start of NPCIL’s Russian-built twin 1,000-MW VVER reactors at Kudankulam, in India, may be coming to an end.

The provincial government of Tamil Nadu, India’s southern-most state, said on March 20 that it was dropping its opposition to hot start and also withdrawing support from local anti-nuclear protests.  The decision follows more than six months of fence sitting despite pleas for support from the protest groups and counter pressure from the central government.

In return for supporting the nuclear plant, Tamil Nadu Chief Minister J. Jayalalitha wants political air cover, and she named as her price the control of distribution of 100 percent of the electrical power from the plant. She’s not likely to get all of it and she knows it.

Jayalalitha’s demand carries political weight with the locals, however. It helps  preserve her position that is newly energized as a purveyor of political patronage in the form of access to electricity.  The region is ravaged by electricity shortages, so having some to allocate puts the Tamil Nadu government in a much more influential position than hanging with the protest groups.

Work resumes at reactor

What has happened as a result of the new-found support in Tamil Nadu is that work has resumed at the plant that is 95-percent complete. More than 1,000 local Indian workers and about 100 Russian technical staff re-entered the plant. The combined action of restart of work at the plant and the provincial government’s acceptance of a hot start date to take place in about two months generated spontaneous protest demonstrations of about 500 people on March 23, of which several hundred were arrested by police.  The protests then fizzled out, however.

The central Indian government had said in February that the protests were coming from non-governmental organizations (NGOs) funded by supporters in the United States. The BBC reported on March 23, however, that among those arrested was the leader of a Tamil nationalist political party.

While it may be that separatist political groups had seized upon the reactor issue as a way to mobilize support for their causes, there is no way to assess how much of an influence they really have. In the world of politics, however, even the appearance of influence can have consequences.

The central government’s crackdown on the protest started within a few weeks of an official notice by the Russians that they were not happy with the delay of the start of the Kudankulam plants. Success there is the key to new deals and the credibility generally of Rosatom’s export program.

Handing out the juice

The transition of the Tamil Nadu central government from a position of neutrality regarding the protests to becoming a supporter of the reactors may have as much to do with political self-preservation as it does with political reality.

As it turns out, Tamil Nadu, like many other places, suffers from severe power shortages with frequent blackouts, with some areas having no electrical power. Nationwide, about 40 percent of the Indian population has no access to it, which is why the Indian government is committed to building about 20 Gwe of new nuclear power generating capacity over the next 15–20 years.

Having control over who gets the new electricity from the plant is a huge source of leverage relative to keeping political allies in line and is an effective method for demonstrating the lack of political power of the protesters and any separatist movement. This light bulb appears to be the one that lit up in the minds of the provincial government leadership, which is why they climbed down off their “neutral” position and endorsed the reactors over the protests of many of their constituents.

The Indian government’s Union Minister of State for Power K.C. Venugopal said on April 2 that a policy with regard to sharing of power from nuclear energy was in place and that the agency would not change it.

The minister’s response came as a result of media questions over Tamil Nadu Chief Minister J. Jayalalitha’s staking claim to the entire projected generation of 2,000 MW power from Kudankulam nuclear plant.

Venugopal said that there is a policy in which 50 percent of power from these plants would go to the home state where it is located. These norms have not been changed so far, he said.

As it turns out, NPCIL has already allocated 925 MW of power from the two reactors to Tamil Nadu. In the meantime, the central government has continued its crackdown on leaders of the anti-nuclear groups. The intensification of the government’s action came as the protests themselves were winding down and life was returning to normal.

Protests over but crackdown continues

The Indian government is furious with the delays of the hot start of the two reactors. NPCIL told the Hindustan Times on March 12 that the fact that the two units were postponed from hot start last August has cost the government US$50,000/day in lost revenue from new rate payers. While this may not seem like a lot of money to American eyes, in a developing nation like India, $50,000 a day in losses is more than enough to give government officials high blood pressure. It also sends them looking for someone to blame.

On April 2, the home ministry in the national government demanded that one of the leading organizers of the Tamil Nadu protests surrender his passport. S.P. Udayakumar, of the People’s Movement Against Nuclear Energy (PMANE), told the Times of India that he will not do so despite the government’s assertion that there are charges pending against him and his organization for misappropriation of NGO funds to pay for the anti-nuclear protests.

The home ministry also raided two more NGOs alleged to have diverted funds from education and rural development programs to fuel the protests over the past six months. Subsequently, the government dropped charges against 178 people, while opposing bail for another 30 of those arrested. The government still has not revealed the names of the U.S. NGOs alleged to have provided funds to the protest groups.

Confidence building for India’s nuclear markets

As these developments were unfolding the government announced, perhaps buoyed with new confidence at having “defeated” the protests, that it planned to ink a deal with the Russians for two more 1000-MW reactors at Kudankulam. Overall, India plans to add 64 Gwe of power to its grid by 2032 to reduce the gap in rural electrification.

The United States remains locked out of the market by a supplier liability law that is orbiting in a kind of political limbo. The law is in the books, but the central government has so far not issued implementing regulations to give it operational status.

The Indian nuclear reactor market is said to be worth $150 billion. So far, the only firms making inroads are the Russians with projects at Kudankulam and the French with two planned reactors at Jaitapur, south of Mumbai on the country’s west coast.

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Yurman

Dan Yurman publishes Idaho Samizdat, a blog about nuclear energy, and is a frequent contributor to ANS Nuclear Cafe.

Czechs temper expectations at Temelin

Europe’s biggest nuclear project is chopped down from five reactors to two

By Dan Yurman

An ambitious plan to build five nuclear reactors in the Czech Republic worth an estimated $28 billion has been scaled back to just two units. The Czech Republic won’t build the other three anytime soon, even though Germany and Poland may have been counting on those units to supply electricity. Germany has closed eight of its oldest nuclear reactors and will close another nine by 2022.

In an unrelated move, Poland just delayed the start date of a new nuclear power station by five years to 2025 three years after Germany has closed its last reactor.

Power that Europe thought it could buy from Czech state-owned utility CEZ has evaporated before it lifted off  the drawing board. The real winner in the short term will be Russia’s natural gas supplier Gazprom.

Newly installed Czech Industry & Trade Minister Martin Kuba down shifted CEZ’s ambitious plans calling the five-reactor plan “unrealistic,” but he did not say what energy mix would be used in its place to meet growing demand for electricity in central Europe. The primary problem likely is how to finance the combination of two new units at Temelin, one at Dukovany, and two more at the Jaslovske Bohunice site in Solvakia.

The Czech government proposed that reactor vendors provide a complete turnkey solution, including up to nine fuel reloads for the new units. As part of the financing, the Czech government would guarantee rates and provide loan guarantees to CEZ as lures to investors.

What may be “unrealistic” is the expectation that investors and reactor vendors would be willing to pump $28 billion into a nuclear power project spread across five new units at three sites.

However, a plan for two reactors worth $10 billion at one site, Temelin, seems more likely to fly, especially since the United States just last week licensed two new reactors planned for the Vogtle site in Georgia said to cost $14 billion.

The Czech energy plan under Kuba’s predecessor, Martin Kocourek, called for up to 80 percent of the nation’s electricity coming from nuclear reactors by 2060 and being a net exporter of electricity to Germany. Kocourek, however, quit in a financial scandal unrelated to his government job. While Kocourek was a stalwart supporter of the five reactor plan, he got into legal trouble in a complicated divorce proceeding in which he hid assets sought by his now former wife in the settlement agreement.  It’s not clear where the money came from. This revelation in his private life made it impossible to continue in a role of public trust.

What’s realistic now?

Now at the helm so to speak, Kuba believes it is realistic to build the next two reactors at Temelin where power transmission infrastructure is already in place. It has approximately 2000 MW at a site near the Austrian border.

Also, Kuba wants to extend the life the reactors at Dukovany, which are four Russian-built VVER designs of about 470 MW each. They were completed in the mid-1980s. The two units at Temelin that are currently in service are also Russian-built VVERs at 963 MW each. These reactors are relatively new, having been completed in 2000 and 2003.

So, where will the money come from for even just two new reactors? CEZ chief financial officer Martin Novak thinks that some form of shared risk with investors will draw them in. Although Novak claims that CEZ is solvent enough to build two units in the range of 1000 MW each out of cash flow, he’d like to leverage other people’s money for about half of the costs.

At a hypothetical cost of $4,000/Kw, the two units would require $8 billion for which CEZ would have to come up with half and then offer the other half to investors. Leveraging support from investors for the nuclear plants will allow CEZ to build other power plants including natural gas.

Another sweetener would be for the government to offer CEZ guaranteed rates of return for the plants. CEZ chief executive officer Daniel Benes said that the way the model would work is that the government would step in with payments if the market price of electricity dropped below a certain level. On the other hand, if the rates increased on their own, the utility might wind up paying the government the difference. In effect, the government would subsidize the rate of return without directly impacting rate payers.

There isn’t agreement on any of these ideas across the government. Some ministers are opposed to any financial support for new nuclear plants.

And here’s a few more ideas

Vaclav Bartuska, the man in charge of the Czech government’s drive to see the plants built, said that having guarantees for power prices in turnkey projects is the only way such massive investments are possible.

Neither CEZ nor the government have explained in detail the extent to which loan guarantees would also be part of the financial package, though Bartuska has mentioned them. If the government offers loan guarantees, it would make the two Temelin reactors more attractive.

Given the shadow of sovereign default that has spread across Europe, however, a government loan guarantee is no longer a punched ticket to financial success. There still would be a risk premium based on how solvent the Czech government is or how well it can convince investor and rating agencies that it is solvent.

And Bartuska isn’t done with ideas about how to get the other three reactors built. His latest brainstorm is to use decommissioned military bases as sites because the government still owns them. He added that the government could use the sites also as interim storage locations for spent nuclear fuel. In any case, the government is worried about a public backlash if it starts demolishing privately held sites for new reactors.

It may get a backlash anyway with its idea for using decommissioned military bases. Now some of the abandoned sites have reverted to the status of de facto nature preserves with wildlife. Green groups are said to want to protect them. However, the military reservations are also contaminated with chemicals and unexploded ordinance. Contracts to clean up the sites are being offered for bid.

Meanwhile, the bidders for the now downsized Temelin project are going ahead with their proposals, which are due next July. These three short-listed bidders are Westinghouse, Areva, and Atomstroyexport. CEZ hasn’t changed the date for the award of the contract, which is early 2013.

All three vendors are inking memorandums of understanding with local manufacturing firms to improve their localization scores with the selection board. CEZ has said that local manufacturing content, and the jobs that come with it, will be an important element of the evaluation regardless of the size of the project.

Poland pushes back plant start dates

Polish state-controlled energy group PGE announced last week that it will delay by five years completion of the first of two new nuclear plants to 2025. The utility did not state a reason for the change in schedule, which was announced as part of the rollout of a larger energy strategy plan. A second unit would come online in 2029. PGE is reported to be aiming at 3000 MW for each site. Each power station could be composed of two to three reactors.

The sites for the reactors tentatively selected include Choczewo, Gaski, and Zarnowiec. Local support for any of the sites may be thin as the country has considerable anti-nuclear sentiment stemming from the Chernobyl accident.

Later this year, Poland will issue a request for proposals for the first unit. So far, GE-Hitachi and Westinghouse have been gearing up their supply chains as part of their planned response. PGE is looking for equity investors in the plants and plans to hold a 51-percent share for each of them.

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Dan Yurman publishes Idaho Samizdat, a blog about nuclear energy and is a frequent contributor to ANS Nuclear Cafe.

Covert bombing kills another Iranian nuclear scientist

It is the latest in a series of deadly attacks

By Dan Yurman

Mahmoud Ahmadinejad, President of Iran, inspects uranium enrichment centrifuges

Mahmoud Ahmadinejad, President of Iran, inspects uranium enrichment centrifuges

An Iranian nuclear scientist was killed in Tehran on January 11 by a bomb that was magnetically attached to his car. A driver, who doubles as a body guard, was also killed in the blast.

The scientist was identified as Mostafa Ahmadi Roshan, age 32, who was a departmental manager at the Natanz uranium enrichment plant.

According to media reports, a motorcycle rider and a passenger attached the bomb to the car in heavy morning commuter traffic. The attack occurred at 8:20 AM Tehran time. It is the fifth such attack in the past two years.

The attack came one day after it was reported that that Iran had launched uranium enrichment production at its underground facility at Fordow near the city of Qum. It is reported to be enriching the uranium to 20-percent U235, which is the boundary between commercial use and weapons use. Iran has been making 20-percent enriched uranium at Natanz, about 400 km south of Tehran (250 miles), since February 2010.

In a related development, the Wall Street Journal reported that two days later on January 13 that Iran agreed to allow a high-level team of International Atomic Energy Agency nuclear inspectors enter the country on January 28. The delegation will be headed by the agency’s chief weapons inspector, Herman Nackaerts.

It is not clear whether the Iranian government will let the inspectors visit is nuclear sites, underground uranium enrichment facilities, and interview officials that the United Nations agency believes may head a nuclear-weapons program.

The combination of three events occurring within a few days of each other indicates the intensity of the issues surrounding Iran’s nuclear programs.

U.S. denies involvement in blast

In Iran, government officials repeated their accusations that the United States and Israel are responsible for this and prior bombings. Top-level Iranian officials called for revenge.

The Obama administration rejected the accusation and also condemned the murder. In Israel, government officials were said to have hinted at covert campaigns against Iran, but did not say that the nation was directly involved in the most recent attack.

Pattern of prior attacks

Model of uranium hexafluoride (UF6)

The explosion in Tehran this week resembles four others, including two in 2010. It comes on the third anniversary to the day of the killing of another Iranian nuclear scientist, Massoud Ali Mohammandi, who also worked on uranium enrichment.

Several of those targeted have been high ranking officials. In a November 2010 attack, two separate car bombs killed Majid Shahriari and wounded Fereydoun Abbasi, the head of the Atomic Energy Organization of Iran. Shahriari was a member of the nuclear engineering faculty at Shah Behesti University and did work for the Atomic Energy Organization.

Roshan, who died in the explosion this week, was described as a mid-rank manager in charge of procurement of materials and services for Iran’s uranium enrichment program.

In July 2011, Dariush Rezaeinejad was shot dead by persons unknown.  He worked at K. N. Toosi University of Technology in electrical engineering as well as the Atomic Energy Organization. These are conflicting reports about his connections to Iran’s nuclear energy programs.

The sophistication of these attacks indicates that whomever is carrying them out has an organization chart of key personnel in Iran’s nuclear programs and has tracked specific individuals in terms of where they will be on particular dates.

For instance, Roshan worked on procurement at Natanz, but was killed on his way to an office in Tehran. The attack suggests a long period of undetected intelligence gathering and surveillance of potential targets. It suggests that future bomb attacks may take place.

Other covert attacks on Iran that have delayed its nuclear programs include the Stuxnet worm, which resulted extensive mechanical failures of uranium centrifuges in 2009 and 2010. There are significant clues that point to the likelihood that Israel had involvement in the development of the Stuxnet computer worm.

A devastating explosion on November 12 at the Bid Kaneh missile R&D center killed a high ranking military official in charge of rocket development. Some analysts  have suggested that the explosion at the missile site resulted from an attack by an unmanned aerial vehicle (UAV).  Iran has since displayed what it says is a U.S. surveillance UAV that it claims it captured after it crashed inside Iran’s borders.

Damaged Iranian missile site. Image: ISIS 11/12/2011

More information from ISIS about this image is available at its home page.

The explosion occurred shortly after Iran reported success with a test of the missile technology. It is seen as a big setback for Iran in terms of its ability to put a nuclear weapon payload on a medium range missile. A rocket with a range of 800 miles would be able to target many major cities in the Middle East.

What’s really going on?

Patrick Clawson, a national security expert at the Washington Institute for Near East Policy, told the New York Times on January 11 that the covert attacks on Iran’s nuclear scientists appear to have two objectives.

First, they have a chilling effect on the nuclear workforce and they don’t provoke a nationalist reaction in Iran. A military attack from the United States or Israel would surely create one.

Second, Clawson said, “it allows Iran to climb down if it decides the cost of pursuing a nuclear weapon is too high.”

An unmanned aerial vehicle (UAV)

Gary Sick, a specialist on Iran at Columbia University, told the newspaper, however, that he does not believe the covert campaign will be effective in stopping Iran from its pursuit of a nuclear weapon. Sick said that he thinks “Iran will double down” in its efforts because it enhances their feelings of being under attack by the West.

Charles D. Ferguson of the Federation of American Scientists (FAS) told Reuters on January 17 that “such acts of terrorism” are unlikely to significantly delay or deter Tehran’s nuclear work.

“The resulting climate of insecurity feeds ammunition to hardliners in Tehran demanding reprisals,” he said.

U.S. government officials declined to discuss what security measures they will be taking to detect and deter possible retaliatory attacks by Iran on U.S. nuclear scientists. The U.S. Department of Energy is the largest employer of nuclear scientists in the United States, located at dozens of facilities across the country.

In Houston, Tex., this week, Gelareh Bagherzadeh, 30, a medical student who has a long history of speaking out on human rights issues in Iran, was shot dead under mysterious circumstances. Her purse and cell phone were still in her car, which had crashed into a building near her home.

Iran is continuing its threats to block the Straights of Hormuz in the Persian Gulf, adding a security premium to the price of oil. This move increases revenue for Iran and imposes costs on the U.S. economy. It is unclear whether or not Iran will actually take any military action, but even a single attack on an oil tanker could send oil prices skyrocketing.

Can Iran make a bomb?

It is also unclear whether Iran has the other capabilities to make a nuclear weapon including the metallurgy, trigger mechanisms, and delivery systems, e.g., missiles with a compact working warhead capable of hitting a specific target 800 miles away.

Diagram of a nuclear weapon using highly enriched uranium

To develop a conventional uranium-based atomic bomb, Iran would have to produce output of about 90-percent U235. Weapons experts say that if Iran wants to produce weapons grade at that level, there is little to stop them, technically speaking, from doing so.

Experts believe that Iran will eventually be able to produce enough weapons grade material to build four or five atomic bombs.  However, at this time, while Iran is enriching uranium to 20%, it isn’t clear that it has moved beyond that point to actually build a bomb.  On Jan 19 the Washington Post reported that the former head of the Israeli intelligence agency said Iran has “the resources and components” to build one.

“If the Iranians get together tonight and decide to secretly develop a bomb, then they have all the resources and components to do so,” Amos Yadlin was quoted Thursday as telling the Maariv daily.

The newspaper added that it was not clear whether Yadlin, who retired in November 2010, was referring to the mechanical elements of a bomb, or that the Iranians have weapons-grade uranium, that is, enriched to 90% U235.

Limited political options

Iran’s political objectives remain unshaken by the bombings of its nuclear scientists. Its clerical leadership is driven by a warped and paranoid world view that is bent on getting the West to recognize its role as a regional power. Unfortunately for Iran, its neighbors in the Middle East are as alarmed about Iran’s nuclear ambitions as the United States and western Europe.

There is no workable roadmap at this time to convince Iran to stop its drive to produce a weapon. Ray Takeyh, a senior analyst at the Council of Foreign Relations, wrote in the Washington Post on December 9 that one of the reasons is that Iran’s defiance of Western powers plays well in terms of domestic politics despite the activity of opposition parties. He wrote:

Ray Takeyh, CFR

“A clerical oligarchy trapped in a mind-set conditioned by conspiracies and violent xenophobia paradoxically views both American entreaties and sanctions as an affirmation of its perspective.

Offers of diplomatic dialogue made in respectful terms are seen as indications of Western weakness and embolden the regime to sustain its intransigence.

Conversely, coercive measures are viewed as American plots to not just disarm the Islamic Republic, but also to undermine its rule. Armed with the ultimate weapon, the Islamists think, they may yet compel the West to concede to Iran’s regional aggrandizement.”

While the U.N. Security Council has imposed four rounds of economic sanctions against Iran for enrichment work, its members are divided on next steps. There is general agreement that enrichment to 20 percent exceeds the country’s civilian needs, since Russia is providing the fuel for Iran’s Bushehr commercial nuclear reactor.

Finding a path to bring Iran back into predictable diplomatic relations and to stand down from its pursuit of a weapons program remains a major challenge.

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Yurman

Dan Yurman publishes Idaho Samizdat, a blog about nuclear energy and is a frequent contributor to ANS Nuclear Cafe.

Protests delay India’s nuclear renaissance

Projects in Koodankulam and Jaitapur will be set back

By Dan Yurman

Protest at Jaitapur over planned construction of two new nuclear reactors.

A series of protests that began in October have delayed the hot start of two Russian 1000- MW VVER reactors in the Tamil Nadu state on India’s southernmost coastline. Additional protests, some of them violent, have set back the start of construction of two French 1650-MW EPR reactors in the Maharashtra state on India’s west coast some 400 km (250 miles) south of Mumbai.

In Koodankulam in Tamil Nadu, the provincial governor has supported protests by local villagers over perceived safety issues following the Fukushima crisis in Japan and also focused on the hot water discharge from the plant into shoreline fishing waters. In Jaitapur, area villagers have complained about what they say is inadequate compensation for land to be taken for the plant and displacement of their farms without having a new way to make a living.

In both locations, minority political parties have made common cause with the protesting villagers. The national government, however, has charged that anti-nuclear organizers from Greenpeace have been seen in Tamil Nadu.

Hot start-up stopped

The net effect of the protests is that all work has stopped on hot startup of the two Russian VVERs. Both reactors were to have entered revenue service in December 2011. Now the Nuclear Power Corp. of India Ltd. (NPCIL) says that the startup will be postponed to March 2012. At Jaitapur, the commissioning date for the first of two Areva EPRs has been set back by at least a year, to 2019.

A.P.J. Abdul Kalam, who is the Indian government spokesman for dealing with protests over construction of new nuclear reactors at Koondankulam.

The national government has been caught by surprise by the protests. In early November, it engaged former President A.P.J. Abdul Kalam, who is from Tamil Nadu and is a former defense official, to meet with the provincial governor and representatives of protest groups. Kalam toured the Russian built plant site and pronounced it safe, much to the disappointment of the protest groups.

The chairman of India’s Atomic Energy Commission, Srikumar Banerjee, said that the local protests would not be resolved with scientific facts. He said that one-on-one contacts between nuclear officials and the villagers were needed to calm everyone down.

Whatever gains might have been derived from the confidence building effort from Kalam’s public relations tour were dashed, however, when India’s Atomic Energy Regulatory Board called for additional safety measures for the two reactors.

The agency head, Shri S.S. Bajaj, said that based on review of events that took place at Fukushima last March, the board wants the two VVERs to have a better system to deal with loss of external electrical power and a larger supply of fresh water for emergency cooling.

A typical emergency diesel generator at a nuclear power plant.

While this announcement might have provided new political fuel for the protests, the NPCIL plant project manager, Kashinath Balaji, said that it was a no brainer to acquire more emergency diesel generators and to arrange for more fresh water supplies.

Meanwhile, the lead Russian engineer at the plant said that the protests would require some of the commissioning work to be redone. Kvasa Alexander told NDTV (video) on November 13 that the water in the core was now stagnant and would have to be replaced and that all the electrical circuits and pipe valves would have to be checked to make sure that they are in the right configuration. Also, he complained that Indian technicians who were working on the plant had gone home and refused to return until the protests ended.  Update 11/17/11:  Mr. Kvasa clarifies some of the media coverage in a comment below.

What we have here is a failure to communicate

Another element that has roiled protestors in Tamil Nadu is an evacuation drill that was perceived as a real emergency. The Indian Express newspaper reported on October 29 that the drill produced panic among the locals because they heard sirens and saw plant personnel streaming out of the site. Apparently, it never occurred to the Russians to consult with local authorities before running the drill.

German nationals participating in anti-nuclear protests at Koondankulam.

NPCIL Chief S.K. Jain said that the uproar on October 29 was made worse by foreign nationals who were stirring up trouble. He told the Indian Express newspaper that “greens from the U.S., Finland, France, Australia, and Germany are backing the local protests.”

And in Jaitapur, a senior provincial government official, Prithviraj Chevan, told the newspaper that “foreign powers,” including people from Greenpeace in Finland, were working with local protest groups. For their part, the protest groups at both Jaitapur and Kudankalm denied the allegations.

Pro-and-con views of India’s nuclear future

The former chief of India’s Bhabha Atomic Research Center (BARC), Anil Kalodkar, said on November 13 that the government and the media “were reading too much into the situation at Koodankulam.”

He went on to observe that the Russian reactors are safe and are a victim of “hysteria” related to Fukushima.

And there’s more commentary from India’s nuclear establishment. Annaswamy Prasad, the former head of BARC, told the blog of the science journal Nature on October 6 that India should halt all imports of foreign reactor technology and build out 60 GWe of electrical generating capacity with an indigenous design, a 700-MW PHWR based on AECL’s CANDU design.

Schematic of a proposed Russian-designed sodium cooled fast breeder reactor for India.

He also called for speeding up development of fast breeder reactors to make nuclear fuel and to convert thorium into U-233.

This development, he said, would eliminate the need for India to be dependent on world supplies of uranium.  Russia is working with India to develop a fast reactor that uses the thorium fuel cycle.

This provoked a response from Subhas Sukhatme, the former chairman of the Atomic Energy Regulatory Board, that this vision, and a parallel call for more investment in renewable energy, was an unrealistic path.

In the end it is likely that both the Russian reactors at Koodankulam and the French units at Jaitapur will be built. C. Uday Bhaskar, a New Dehli energy security expert, told the Bloomberg wire service that while some delays “are inevitable” due to the protests, “India cannot afford to abandon its nuclear energy program.”

He added that “neither can it afford to ignore the public mood.”

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Yurman

Dan Yurman publishes Idaho Samizdat, a blog about nuclear energy and is a frequent contributor to ANS Nuclear Cafe

Japan’s search for nuclear export deals

The hunt is on in Vietnam, Turkey, and elsewhere

By Dan Yurman

Yoshihiko Noda, new prime minister of Japan (Photo: Wikipedia)

The Japanese government, in close cooperation with some of the nation’s largest heavy industrial manufacturers, is seeking to export Japan’s nuclear technologies, products, and services despite the loss of six reactors on March 11 to a combination of a record earthquake and massive tsunami. The replacement of Prime Minister Naoto Kan with 54-year-old Yoshihiko Noda, a career politician and the current finance minister, may play a key role in achieving success.

Prime Minister Kan ended his term with a strong call for the nation to retreat from dependence on nuclear energy. At one point he also tried to shut down efforts to continue exports even though he had played a leading role inking a deal with Vietnam in October 2010 for two reactors.

When this policy tilt became apparent on August 5, Japanese Foreign Minister Takeaki Matsumoto and Chief Cabinet Secretary Yukio Edano prevailed on Kan to back off. The country’s industrial exports are needed to pay for its lack of agricultural self sufficiency, and it depends on high value deals like new reactors. According to the Wall Street Journal, Japan produces only 40 percent of the food it needs to feed its population. Basic economics demands that the country sell finished goods abroad to pay for food imports at home.

The problem of supplying the baseload power for manufacturing at home remains a major issue. Platts reported that as of September 1, 2011, only 11 (10 GWe) of Japan’s 54 (49 GWe) reactors were operating. The rest were closed for maintenance and safety checks. While some have completed those tasks, provincial officials are adamant about not letting them restart without assurances that they are safe. Politics, not technology, is pushing the country’s electric utilities into plans for rolling brownouts and possible blackouts.

Noda has said that the stable supply of electricity is the lifeblood of the economy.  A combination of arm twisting and economic incentives may convince provincial officials to relent.  Jobs associated with nuclear exports may be one of the tools in Noda’s hands.   As a result, it appears that in addition to getting the reactors back online, the government is also focused on the multi-billion yen needed to build new reactors overseas.

For now, a key factor in Japan’s favor is that Japan Steel Works (JSW) is one of the world’s few companies capable of producing large forgings for new nuclear reactor pressure vessels.  However, the multi-year backlog of orders has made the work an attractive target.

Mitsubishi plans to build its own large forgings plant so that it won’t have to wait in line at JSW. International competition comes from South Korea and Russia. The United Kingdom is said to be planning a large forgings plant, as is India.  Both countries should be able to produce them within the next five years if their respective governments provide the necessary financial support.

Vietnam deal back on the front burner

Prior to the March 11 events, Japan had inked a deal with Vietnam to build two of its planned eight 1000-MW reactors. Japan has been training Vietnamese nuclear engineers for years in preparation for the project. Japan, however, is in second place in Vietnam when it comes to nuclear deals. Russia is building the first two plants and will provide all of the fuel for them as well as taking back the spent fuel at the end of each cycle.

Talks with Vietnam to execute the provisions of the deal and begin construction will restart this month. Government officials from both countries are scheduled to meet September 8 and 9 in Tokyo to layout project plans.

For its part, Vietnam pronounced itself happy the deal is back on the table. Vietnam’s ambassador to Japan Nguyen Phu Binh told the Manichi News on August 31 that he wants to see construction get underway in his country’s southern province of Ninh Thuan. He told the Manichi News, “I believe Japan will use the [Fukushima] crisis to learn important lessons and develop great technology.”

Turkey swaps negotiating tables, but keeps talking

Japan has been involved in off-and-on negotiations with Turkey to build that nation’s second nuclear power station at Sinop, some 440 miles east of Istanbul on the Black Sea coast. Paradoxically, Turkey’s first nuclear power station, a 4.8 GWe monster, is being built by the Russians at Mersin, about 600 miles southeast of Istanbul on the country’s Mediterranean coast. The Sinop site will be a similar size in terms of power generation capacity.

One would have thought that in terms of delivery of large components by sea, Turkey would put the Russians on the Black Sea and the Japanese on the Mediterranean, but that’s not how it worked out. The Japanese were never in the running for the first tender, which went to the Russians as the sole bidder.

Toshiba was involved in the first round of negotiations for the second site with Turkey last December, with TEPCO as its partner. Since March 11, that bid team has had to withdraw. Mitsubishi Heavy Industries is now taking a crack at closing a deal by teaming up with Kansai Electric. It turns out that Turkey wants pressurized water technology, which makes Kansai a competent competitor due to its operational experience with this type of reactor in Japan.

The Toshiba/TEPCO team also withdrew from the South Texas Project in the United States, forcing NRG to stop all work on the development of twin 1350-MW ABWR reactors at a site south of Houston, Tex.

Lithuania looms in the future

Meanwhile, Hitachi, another industrial giant, is negotiating to build new reactors in Lithuania. Last July, Hitachi President Hiroaki Nakanishi said while traveling to promote the sale that his view is that the demand for new reactors will remain steady in foreign markets over the long-term. He noted that winning deals requires help from the government. There are opportunities for new reactors, fuel, operations and maintenance, and reprocessing of spent fuel.

The Russians view Lithuania as their provincial backyard and may put up a stiff fight to win the project. A similar battle is expected over the Czech Republic’s five-reactor Temelin new build, where Toshiba is competing against the Russians and Areva.

Middle East opportunities?

An interesting development is that Hitachi told Kyodo News in July that the company will keep to its goals for developing new nuclear reactor business in Asia and the Middle East, despite fears that the Fukushima crisis might deter some nations from going in this direction.

The business plan was drawn up prior to the March 11 earthquake and tsunami. The company says it sees no reason to change it.

Tatsuro Ishizuka, Hitachi vice president for business development, told the news service on July 20 that the company hopes to get orders for 20 new reactors in Asia and the Middle East.

“We will give priorities to negotiations with India, Vietnam, the U.S., and other countries with growing energy demand,” he said.

In the Middle East, Saudi Arabia is reported to be planning to build 16 nuclear reactors by 2030, with the first two operational by 2021. According to wire service reports, it plans to have 20 percent of its electricity come from nuclear reactors.

Forgoing uranium enrichment to fuel them would help tamp down the Middle East’s volatile politics by preventing the massive nuclear new build from setting off an arms race with other countries.

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Yurman

Dan Yurman publishes Idaho Samizdat, a blog about nuclear energy, and is a frequent contributor to ANS Nuclear Cafe.

# # #

Are India’s nuclear deals going south?

Domestic liability laws and international issues may put limits on the country’s ambitious plans to build new reactors

By Dan Yurman

U.S. Sec. of State Hillary Clinton meets with India Foreign Minister S.M. Krishna on July 26, 2011.

Secretary of State Hillary Rodham Clinton is in India this week to pressure India to open its nuclear energy markets by changing its domestic supplier liability laws.

If she is successful, it would give American vendors hunting licenses to bid for massive nuclear reactor contracts said to be worth $150 billion over the next several decades.

In a joint news conference July 20 with Indian Foreign Minister S.M. Krishna, Clinton said that differences over trade and nuclear legislation must be resolved if the benefits of U.S. support for India’s civilian nuclear program three years ago is to accrue to U.S. companies.

Under then President George W. Bush, the United States successfully pushed the Nuclear Suppliers Group to allow India to buy uranium for its civil nuclear program. In return, India pledged in return to open its markets to U.S. vendors.

Political opposition forces in the Indian parliament, however, saw an opportunity to give Prime Minister Monahan Singh a black eye and imposed a draconian supplier liability law on nuclear energy projects. The parliament has locked out American firms, but not French and Russian state-owned nuclear agencies that now have significant commitments for the bulk of foreign supplied reactors.

Clinton was characteristically straightforward in her remarks. She said, “We need to resolve those issues that still remain so that we can reap the rewards of the extraordinary work that both of our governments have done.”

Enter the Nuclear Suppliers Group

Since then, the United States has been working to bring pressure on India through the Nuclear Suppliers Group (NSG). While neither nation will openly admit it, the United States may be seeking leverage to get India to reconsider its liability law by squeezing in another area.

The Nuclear Suppliers Group supports non-proliferation of nuclear weapons through the implementation of Guidelines for nuclear exports and nuclear related exports.

In June 2011, the NSG adopted new rules that ban the sales of key technologies and equipment that have primarily civilian applications, but are considered “dual use,” e.g., also can be used to make nuclear weapons.

In the meantime, the U.S. relationship with India with regard to nuclear energy matters is in a downward spiral. Ashley Tellis, an expert on U.S.–India relations at the Carnegie Endowment, told the Christian Science Monitor (CSM) on July 19 that, “The Americans have reasons to be peeved about how [the NSG agreement] has worked out.”

Others accuse the United States of using the NSG as leverage to open India’s markets to U.S. firms. This is one of those obvious moments that illuminate the gamesmanship involved in the high stakes outcomes.

Bharat Karnad, a foreign policy expert in New Dehli, also told the CSM that the “NSG is being used by the U.S. as a tool to advance reactor sales.”

India is a nuclear state, but has refused to sign the nuclear nonproliferation agreement. Its stance kept it from accessing world markets for uranium for more than three decades. The Bush administration helped push the NSG to make a special exception for India. The new rules, however—also supported by Russian and France—address uranium enrichment and used fuel reprocessing technologies.

The intent is to prevent the proliferation of technologies that can be used to make highly enriched uranium or extract plutonium from used fuel. Instead, the United States, Russia, France, and other nations are offering access to international fuel banks. These programs would essentially lease nuclear fuel to other countries and retrograde the used fuel back to the fuel bank. This way, nations could be assured of reliable fuel services without having to build their own fuel cycle facilities.

Will India blacklist suppliers?

Nirupama Rao, India’s Foreign Secretary

India isn’t buying it and, what’s more, is officially annoyed at these latest developments. Indian Foreign Secretary Nirupama Rao implied that India would blacklist any nation that supported the new rules by denying them new nuclear contracts.

“We will defend ourselves to the hilt,” she said, but added diplomatically, “I think the latest NSG decision is not the end of the road.”

A move to “blacklist” American firms would be more or less pointless and ineffective since the liability law already does this. The French and the Russians, however, have significant skin in the game and are much more vulnerable to this kind of pressure.

France has contracts with India to build two 1600-MW EPR reactors, and Russia has built two and is completing two more 1000-MW VVER reactors, with options to build as many as eight more 1000-MW units and six 1200-MW units.

In a preemptive move, the Russians said in early June that they had dealt with the liability law by simply adding insurance for the future costs of compensation to the delivered price of the two new units at Kudankulam. In effect, the Nuclear Power Corporation of India Ltd. will be paying a risk premium for its country’s liability law.

Japan exports at risk?

Life is getting more complicated for India since it plans to also have a civil nuclear agreement with Japan. That nation’s nuclear exports are very significant and also represent a major piece of its domestic steel industry. Key firms including Toshiba, Hitachi, and Mistubishi all want the two countries to sign off on the agreement.

The banana peel on the negotiating room floor is a statement by Japan Prime Minister Naoto Kan, who said that as part of Japan’s retreat from nuclear energy, it would also suspend its exports to India, Brazil, and several other countries.

This statement set off howls of protest from the business sector. The Japan Times quoted business think tanks as estimating a half a million people could lose their jobs. Kan has subsequently backed off, claiming that he meant the nation would reduce its nuclear sector “eventually,” but not right away.

The key issue is that Japan Steel Works provides the large forgings for reactor pressure vessels. If Japan stops exporting these components, the whole global nuclear industry is facing a significant delay.

India and the United Kingdom have plans to build new forging plants, but production is years away. South Korea has a contract with the United Arab Emirates, which would take priority for its output from Doosan.

All of the Japanese nuclear firms that export their reactors also sell components, including turbines, steam systems, and generators. The Japanese prime minister’s comments may be the stuff of political opportunism of the moment, but the rock he threw in the pond made waves that washed up on India’s shore.

If India decides to “blacklist” Russian, French, and U.S. firms over NSG policies in terms of sales of nuclear components, it needs to think carefully about where it will get reactors for its ambitious nuclear energy program.

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Dan Yurman publishes Idaho Samizdat, a blog about nuclear energy, and is a frequent contributor to ANS Nuclear Cafe

Post Fukushima, Germany and Italy lead retreat from nuclear energy

Russia and Turkey say not so fast

By Dan Yurman

German Chancellor Angela Merkel is under attack by the Green Party for her nuclear energy policies

German Chancellor Angela Merkel may be forced to abandon her plan to save the nation’s 17 nuclear reactors from early retirement following a surge in voter support for the anti-nuclear Green Party. Last year Merkel issued a policy directive extending the operational lifetime of the reactors by eight-to-twelve years.

On March 14, just three days after the Fukushima earthquake and tsunami, she imposed a 90-day moratorium on life extension for seven of the oldest reactors. Her political opponents among the Social Democrats want to permanently close them.

Italy seeks to avoid repeating an emotional response

In Italy the government on March 23 approved a moratorium of at least one year in its plans to build as many as five nuclear reactors. The country stopped development of new reactors in 1988 and decommissioned the four units that were in service. The nation has since come to regret the decision, having some of the highest electricity rates in Europe.

Italy’s minister of economic development, Paolo Romani, told Italian wire services that the 12-month hiatus will give the country the opportunity to make “calm informed” decisions about nuclear energy and not get swept up in the “emotions of the moment” over Fukushima.

Italy had been making progress developing its nuclear energy program with an eye on achieving a greater degree of security for electricity. The previous economic development minister, however, lost his job over an unrelated real estate scandal. The program was already losing momentum under the current government prior to the March 11 Fukushima event. It is likely that a new election with a new prime minister could lead to a renewed commitment to nuclear energy.

Russian reactor development will not be hindered

Dimitry Medvedev, Russian president

Russian President Dmitry Medvedev took the opposite view. In a statement released on April 15, he said that the nuclear crisis in Japan should not be used as an excuse to hinder the development of nuclear energy.

He called for international safety standards and quicker international response mechanisms in the event of an emergency. This last statement was seen as an implied criticism of Japan, which some say waited too long to ask for help from other nations as the crisis snowballed at the six-reactor Fukushima site.

“Catastrophes should not stop human progress, but they should be used to make proper conclusions,” Medvedev said.

Sergei Kiriyenko, the head of Russia’s state-owned nuclear agency Rosatom, said that he would continue to seek customers for export of Russia’s VVER LWR reactor design. In recent years, Rosatom has signed contracts with Vietnam, India, and Turkey.

Turkey announces third reactor site

On April 6, Turkey announced that despite the international uproar over the Fukushima crisis, it would build its third nuclear power plant 12 miles from the Bulgarian border. This seacoast site is seen as a reach by Turkey to become a regional exporter of electricity to Bulgaria.

Russia has a previous agreement to build four 1000-MW VVER reactors at the Akkuky site on the Mediterranean coast. A second plant is planned for a site at Sinop on Turkey’s Black Sea coastline. Tenders for that plant are still out with Japan, Russia, and Areva seeking to win the work.

It isn’t clear who would be in line to build the new reactor(s) at the third site. Turkey has a pattern of mercurial behavior when it comes to awarding contracts of this size, and it has been unwilling to step up to assume some of the financial risks.

South Korea walked away from negotiations over the Sinop site when Turkey refused to guarantee electricity sales at profitable rates for the first 15 years of operations and to allow sale of the reactor at the 15-year mark to Turkish investors. The Russians sought and got both of these elements in their deal for the Akkuky site, which involves four reactors.

Siemens having second thoughts about its nuclear future

Back in Germany, engineering giant Siemens is reported to be having second thoughts about becoming a significant vendor to the global nuclear industry. The firm’s chief financial officer, Joe Kaeser, told a German newspaper on April 15 that the firm is doing some soul searching, but he declined to say what action the firm might take as a result.

Siemens has already pulled out of its joint venture with Areva, in part due to disputes regarding liability for cost overruns at a reactor under construction in Finland. Siemens had been reported to be interested in developing a new relationship to supply turbines and other plant equipment to Russia’s Rosatom.

Since then, Siemens completed its sale of its 34-percent stake in Areva’s nuclear business for a payment of (euro) 1.62 billion (about U.S.$2.31 billion).

The company’s nuclear future may be in doubt as Germany is appearing to quickly exit the nuclear energy field. Also, Siemens is reportedly restructuring itself to focus on wind turbines, solar power plants, and smart grids. These “green investments” are seen as being in conflict with nascent plans to lash up with Russia on new reactor projects.

Smart grid needed for renewables strategy

Germany has indicated that it will ramp up investment in alternative energy sources, but a key problem that remains unresolved is that opposition to new power lines and wind parks is almost as tenacious to them as it is to life extension for the reactors.

Another problem that Germany faces is a gap in electricity supply, since the new solar and wind power projects will also need new natural gas plants and imports of coal-fired power from other countries to keep the existing power lines humming. The shift away from nuclear power could cost German ratepayers up to two billion euros/year until new baseload supplies of electricity can be brought on line.

Longer term, Germany may become another “colonial” nuclear power, buying it from the Temelin project in the Czech Republic. There, Czech utility CEZ plans to build up to five reactors at two sites, with Germany’s “power gap” being a primary market driver for the $25-billion project.

The result of this scenario is that while the German Greens and the Social Democrats will be satisfied with having closed the nation’s nuclear power plants, other unintended consequences may cause German voters to have second thoughts about abandoning their reactors too quickly.

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Yurman

Dan Yurman publishes Idaho Samizdat, a blog about nuclear energy, and is a frequent contributor to ANS Nuclear Cafe

What future for nuclear energy in Eastern Europe?

Delays seen for new reactor projects in the Czech Republic and Romania

By Dan Yurman

Prague, a city influenced by Mozart, beer, and nuclear energy

The $25-billion five-reactor new build at Temelin by state-owned Czech utility CEZ has been pushed back by another five years, according to English language media reports in Prague.

In Bucharest, Romania, wire service reports indicate that the start of work on a $5.5-billion two-reactor project could be delayed past 2017, but that first the government must find new investors willing to take on funding a 49-percent share of the project.

Temelin delayed by another five years

Last October, the Czech government said in an official announcement that detailed bid documents with technical specifications for up to five new reactors at two sites would not be released as planned in December 2010. On February 21, 2011, the government changed its mind saying now that the release of technical bid documents would be postponed to the end of this year. The three firms expected to submit bids would have most of 2012 to respond, with a winner announced sometime in 2013. The firms are Westinghouse (Toshiba/Japan), Areva (France), and Atomstroyexport (Russia).

Lower electricity demand in the Czech Republic–and Germany’s decision to keep its 17 nuclear reactors operating instead of closing them down–are the key reasons for a delay to as late as 2025 for completion at Temelin and one other site.

U.S. interest in the project is indicated by a joint declaration signed last December by U.S. Secretary of Commerce Gary Locke and by Martin Kocourek, Czech Ministers of Industry & Trade. The declaration calls for opening up commercial opportunities for U.S. firms to sell nuclear components to the Temelin project. Locke estimated the potential value of the agreement at $12.5 billion over five years, presumably after construction starts on the first two reactors.

German electricity market changes

CEZ's ambitions to be Germany's electricity supplier from Temelin are postponed as Chancellor Merkel decided to keep the nation's 17 reactors running for at least another decade.

CEZ claimed last October that the postponement in the proposal schedule is being made to accommodate the bidders. Martin Roman, CEZ chief executive officer, told a Czech legislative committee on February 23, 2011, however, that a severe drop in electricity demand is the real reason the utility is pushing back the start of construction and the date that the first two of five planned reactors will enter revenue service.

According to English language media reports in Prague, Bower said that power consumption in Germany, expected to be a key market for electricity from the Temelin reactors, has dropped precipitously to levels last seen in 1992. Also, Germany is keeping its 17 reactors, with some slated to remain in service for another 20 years. The Czech Republic had visions of capturing Germany’s need for electricity if the latter country’s delusional Green Party had succeeded in shutting down the reactors.

Power lines and precision lathes in short supply

Two other factors may play into CEZ’s decision to delay the project. The first is the need for better transmission and distribution infrastructure to deliver electricity from the reactors to customers. For instance, a new 110 km (69 mile) line would be needed, which would require the state to buy out private land owners to provide for the right-of-way.

CEZ CEO Martin also said that the supply chain for manufacturing of components for the first two new reactors wasn’t in place. This is sort of a chicken-and-egg issue, since suppliers will not invest in new production capacity until they see the near-term likelihood of orders for new plants.

A key provision in the tender for the new reactors is “localization,” which means that the winner will commit to buying a significant percentage of reactor components from Czech firms. Russia is already wooing them with promises of orders for components for two new 1000-MW VVER reactors that Atomstroyexport is committed to build in Vietnam.

The Czech Republic currently has two operating nuclear reactors at Dukovany and Temelin, with a total of six Russian-built reactors supplying just under one-third of all the electricity used in the country.

Managing high-level waste

If Areva or Atomstroyexprot win the bid for Temelin, they will likely ink deals that involve taking back used fuel for reprocessing. While this will reduce the burden of managing nuclear waste in the Czech Republic, it will still have to dispose of some highly radioactive material. Last December, the Czech Republic’s Radioactive Waste Repository Authority formed a working group to start a site selection process for deep geologic disposal.

The group plans to take its time. It said that dry interim storage of high level waste would continue until mid-century, at which time construction of the repository could start. The first waste would be placed in it by 2065.

Romania suffers setbacks at Cernavoda

Aleš Buršic blends power plant features with the environment through the use of earth coverings. A hybrid cooling tower is sunken to reduce its visual impact and the 'green barrier' also helps in protection from external hazards. ~ Image source: World Nuclear News

Romania was until very recently thought to be the place where a really innovative new start on nuclear energy would take place. While not necessarily following a futuristic vision, the country has the advantage of having completed construction of a Candu 6 in 2007.

The start of construction of two planned new reactors (Cernavoda-3 & -4) at Romania’s Black Sea site of Cernavoda could be delayed by at least six years. The reason is because three major European firms, slated to invest in building them, pulled out after Czech utility CEZ sold its nine percent stake in the project in December. Germany’s RWE, Spain’s Iberrdrola, and French GDF Suez all withdrew from the project in January 2011.

The three firms said in a joint statement that economic and market uncertainties “related to the current economic crisis are not reconcilable with the capital requirements of a new nuclear project.”

In other words, they could not lay off some of the risk of investing in it. Romania must now find new investors or take on a much larger share of the cost on its own. Romania has a 51 percent stake in the project. The new reactor power station is expected to cost $5.5 billion.

Two other firms—Italy’s Enel, and a Romanian company ArcelorMittal—have retained their position for the project. It isn’t clear whether or not they would be interested in an option to increase their stake in it.

Are other investors interested?

Other Romanian state-owned firms, such as a hydropower utility, may take a look at it. Romania is also in the odd position of having lost some of its investors, but still having letters of intent and qualification statements from engineering firms that want to build the two new reactors.

Romania currently has two Candu 6 reactors generating 655 MW each. The first one came online in 1996 and the second in 2007. Interestingly, one of the construction firms that wants to build the new units is Canadian-based SNC Lavalin, which is now the leading bidder to buy the commercial arm of AECL. The Romanian deal isn’t critical to SNC Lavalin’s plans for AECL. Mostly, SNC Lavalin wants AECL for its reactor refurbishment business.

From a competitive point of view, Romania has two Candu 6 reactors, one built in 1996 and the other completed in 2007. If AECL can emerge whole from the current efforts by the Canadian government to sell its commercial division to investors, it could be a strong competitor for the deal.

This scenario assumes the Canadian government doesn’t do something else that pulls the rug out from under AECL’s capability to export reactor technology.

Also, AECL would be wise to offer another Candu 6 package to Romania rather than ask the financially strapped former Soviet-bloc country to build a first-of-a-kind ACR 1000.

Finally, it is worth noting that the three utilities that pulled out of the project as investors are keeping their options open. They said that their decision on financial grounds “was not a reflection of the technical quality of the project.”

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Dan Yurman publishes Idaho Samizdat, a blog on nuclear energy. He is a contributing reporter for Fuel Cycle Week and a frequent contributor to ANS Nuclear Cafe.

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Vietnam’s nuclear ambitions are quickly realized

Russia and Japan will build the first four of 16 planned reactors

By Dan Yurman

Map of Vietnam

Flying under the radar of global market intelligence reports, Vietnam has quietly inked deals with Russia and Japan to build 4 GWe of nuclear power generating capacity. The first power station, composed of twin Russian 1000-MW VVER reactors, will enter revenue service in 2020. The second, composed of two Japanese-built reactors, will follow a few years later.

Russia signed the deal in December 2009 to build the first two reactors. The Japanese deal, a first for the nation’s newly-formed nuclear export program, was inked last October.

Projections are that total demand for electricity in Vietnam is estimated to increase rapidly from 65 GWe in 2020 to 92 GWe in 2025. Of that amount, the country hopes to deploy the first 4 GWe of a planned 16 GWe of nuclear generating capacity by the 2025 date. It plans to double its nuclear energy commitment to 8 GWe by 2030. A total of eight sites in five provinces are being considered for the new power stations.

There are two drivers for rapidly rising demand for electricity. The first is  that Vietnam is now a major global center for high tech manufacturing. Intel is building a $1 billion computer chip factory there, the world’s largest. Also, Vietnam has substantial bauxite ore reserves and wants to develop a finished goods aluminum manufacturing industry. Smelter operations are huge consumers of electric power.

Vietnam’s rapid build-out of nuclear reactors also faces some stiff challenges, including the need for trained personnel and an effective, fully funded nuclear regulatory infrastructure. For now, the country is importing nuclear engineering expertise, along with technology, while sending its citizens to Japan and Russia for technical training.

Russia are first movers for new nuclear power stations

VVER conceptual design. Graphic: Nuclear Tourist

The Russian-built nuclear power station, Ninh Thuan-1, will be a turn-key operation with financing through Atomstroyexport. Rosatom, Atomstroyexport’s parent firm, has committed to supply the fuel and retrograde the used fuel back to Russia. The two reactors are estimated to cost $11 billion, with most of the money coming from Rosatom. The Vietnam Electricity organization (EVN) will be the operator of the reactors.

Like Russia, Japan has committed to providing export credits for construction of two reactors up to 85 percent of the cost. A consortium of Japanese firms will build the two reactors for about $11 billion. Several Japanese government ministries, and quasi-government organizations, will coordinate contract details with the government of Vietnam, including Japan’s Ministry of Economy, Trade, and Industry.

The Vietnamese government has said that it is not interested in building a uranium enrichment capability due to the political sensitivities of China. Also, since the Russians and Japanese have signed identical agreements to provide reliable fuel services, and take back used fuel, Vietnam can avoid the expense of building its own enrichment and used fuel facilities.

Regulatory agency still a work in progress

According to the Vietnam News Agency, the lack of an independent regulatory framework for the country’s rapidly developing nuclear program is a significant challenge. The Vietnam Agency for Radiation and Nuclear Safety was upgraded in March 2008 with 11 new laws passed by the National Assembly. In January 2009, the agency issued regulations for licensing nuclear power stations and to certify the qualifications of workers assigned to the reactors.

Phan Minh Tuan, a Vietnamese utility executive at EVN, which will operate the new Russian reactors, told an international nuclear conference in January thst the government is allocating funds to pay for development and implementation of the nuclear energy regulatory framework. There are, however, no indigenous nuclear engineering schools, so new workers are being sent overseas for training. A delegation of Vietnamese engineers participated in a recent tour of the U.S. Nuclear Regulatory Commission under the sponsorship of the International Atomic Energy Agency.

Recruiting technical workers for nuclear plants will be a challenge as more than 50 percent of the nation’s workforce is involved in agriculture, much of it at a subsistence level. Only 15 percent of work force is employed in manufacturing or other professions requiring more than an elementary education. These workers are filling slots in factories such as the ones being built by Intel and other multi-nationals.

The Vietnamese government is faced with another challenge, and that is to meet the IAEA’s requirements for transparency and openness in its nuclear regulatory system. Vietnam’s socialist state allows only one political party—Communists—to participate in elections. Elections for the unicameral national assembly are held every five years. Nongovernmental organizations that advocate for democracy are not recognized by the government. It is unclear how the public or any citizens groups will engage with the nuclear regulatory process.

According to the CIA Work Fact Book, Vietnam is a densely populated developing country that in the past 30 years has had to recover from the ravages of war, the loss of financial support from the old Soviet Bloc, and the rigidities of a centrally planned economy.

Vietnamese authorities have reaffirmed their commitment to economic liberalization and international integration. This change has drawn industry to the country for its low labor rates. Developing enough electricity to meet demand is the key success factor for continued growth.

Prospects for U.S. firms

Uranium ore can yield 4 to 15 pounds U3O8 per ton

No U.S. firms are in line for deals to build nuclear energy projects in Vietnam. The U.S. State Department is still negotiating a 1-2-3 agreement with the Vietnamese government, which could include provisions related to uranium enrichment programs. Vietnam has a reported uranium reserve of 8000 tU in Quang Nam province, but no mining is underway there at this time.

Westinghouse and G.E. Hitachi have shown an interest in pursuing contracts for future reactors. Until U.S. diplomats sort out the nonproliferation issues in a 1-2-3 agreement, however, the companies’ hands are tied.

The United States and Vietnam established formal diplomatic relations in 1990. The war in Vietnam killed 58 000 U.S. soldiers and more than 3 million Vietnamese. The country remains influenced by its long-term relationship with Russia, despite sharing its northern border with China.

Yurman

Dan Yurman publishes Idaho Samizdat, a blog on nuclear energy. He is a contributing reporter for Fuel Cycle Week and a frequent contributor to ANS Nuclear Cafe.

U.K. depends on France for the nuclear renaissance

But first EdF and Areva have to get organized at home

By Dan Yurman

The bulldog is a symbol of determination for the U.K.The United Kingdom currently has 19 nuclear reactors producing just under 20 percent of the nation’s electricity. All but one of the reactors has to be replaced by 2023. Development of new coal-fired power stations isn’t an option, given the challenges of global warming and the finite limitations of North Sea natural gas supplies. The U.K. government is committed to a plan for seven new reactor sites supporting a new build of 19 GWe of nuclear power.

As many as nine 1600-MW Areva EPRs could be built in the U.K. by Electricite de France (EdF) on four of the sites. Two more sites are wide open in terms of selecting a reactor design. Although Westinghouse is likely to take some market share with its AP1000, the larger Areva reactor has an advantage because fewer units will be needed for power stations ranging from 3000 to 5000 MW each.

Potholes ahead on the road to the nuclear renaissance

To deliver this awesome capability, EdF and Areva, which are both owned by the French government, must find new ways to work together. The road to success is full of potholes, however, caused by confusion at the highest levels of France’s government on how this is supposed to take place. Areva is seen by its own government and by investors as being undercapitalized for the projects ahead and overcommitted financially for reactor projects that are way behind schedule in France and Finland.

In late 2010, Areva raised $900 million in new capital from government sources as part of a projected need for new capital of $4 billion. At the same time, the French government is still dithering over whether or not to list yet more of Areva’s shares for acquisition by non-governmental investors.

Opening state-owned firms to investor equity shares—and the demands for profitable results—rubs socialists the wrong way. It is likely that the government will intervene in the future, and possibly against Areva’s interests relative to building market share, due to political considerations.

For instance, Siemens, which makes giant turbines needed by nuclear power stations, owns a 34-percent stake in Areva as a result of French-German relations. Siemens now wants to have its shares bought out, at the expense of Areva’s capital requirements, so it can fund a competing reactor venture with Rosatom, Russia’s nuclear energy export firm. The cost of the buy out could be in the range of $2.5 billion.

Siemens is lobbying for the multi-billion-dollar buyout through German Chancellor Angela Merkel, turning what ordinarily might be a corporate battle for capital into a bilateral diplomatic dust up. French President Nicolas Sarkozy has to balance the need to grow Areva’s market share—and acquiring the capital to fuel that growth—against the demands of a powerful neighbor that has lots of other fish to fry with the French, in addition to the Siemens deal.

Tow trucks may take you to the wrong garage

Is help on the way? The answer may be “yes,” but it falls into the category of “be careful what you wish for.”

As part of its continuing interventionist strategy in Areva’s commercial future, the French government is developing a high-level nuclear council to reorganize its state-owned nuclear corporations. A key objective is said to be getting EdF and Areva to work closely on new international projects. The council has only a few months to complete its work. A report is expected by June 2011.

A driver behind this objective is the failure of the two firms to win a $40 billion, four reactor project in the United Arab Emirates in 2009. The loss of the project to a highly competitive bid from South Korea occurred despite the personal salesmanship of French President Nicolas Sarkozy. It unleashed a stormy round of finger pointing and blame, some of which settled unfairly on the shoulders of Areva’s chief executive officer, Anne Lauvergeon.

Because Areva and EdF are both owned by the French government, it makes building new reactors in the U.K. such a complex undertaking. The struggle for control of the French nuclear export market has pitted EdF CEO Henri Proglio against Lauvergeon. After the UAE debacle, Proglio asked for Lauvergeon’s head, metaphorically speaking, by calling for Areva to be broken up and for EdF to be put in charge of all future new international projects.

Areva CEO seeks second term

Areva CEO Anne Lauvergeon

For her part, CEO Anne Lauvergeon has so far staved off these demands, though her contract with Areva is up for renewal in June 2011. The problem for Sarkozy is that if he lets her go, who does he get as a replacement who can do better, given the uncertain political environment?  Even so, he’s chartered a search committee and the government has leaked the names of three leading candidates for the CEO’s job.

Meanwhile, Lauvergeon is taking her case to the greater French business community. In an Op Ed published on February 2 in the Le Monde newspaper in Paris, she wrote:

“In my mind, with more than 80% of its capital held by the public sector, AREVA is a little piece of France. Everyone owns it, and its guidance, its strategy and its leaders cannot be chosen under cloak of darkness. It’s no secret that I’m a candidate for a new term at the head of this group. And I’m ready to discuss what needs to be done for the French nuclear industry, because at the same time I want to make my own contribution to its renewal.”

The Wall Street Journal reported on February 2 that Lauvergeon made it official that she wants to stand for a second term as CEO of Areva.

“I would like to step forward for a new mandate at the head of this group,” Lauvergeon said in her column published in Le Monde.

The CEO added that she was keen to contribute to the rebirth of the French nuclear industry.

The decline of French industry, and particularly its nuclear industry, can be avoided “with determination, shared ambition, and sound choices,” Lauvergeon said.

Cooling off period needed

Is there anyone with some commercial sense in the mix? French Energy Minister Eric Besson came out in mid-January with a request to Areva and EdF to have a cooling off period. Besson said that the months of public criticism by both firms has hurt the prospects for future French nuclear exports, leaving money on the table for foreign state-owned enterprises like Russia’s Rosatom.

For instance, Areva has booked new reactor deals in China and India. Rosatom, however, is building 12 1000-MW VVER reactors for India, with prospects to build six more 1200-MW VVERs. Bascially, the Russians are building reactors for India the rapidity of the Music Man selling trombones in River City. By comparison, Areva has contracts for just two 1600-MW EPRs for India, although prospects exist to build four more.

Also, Besson said that the issue of leadership succession at Areva needed to be decoupled from the issue of how Areva and EdF will compete as partners for new projects. This is good advice.

Will the new build roll out as scheduled?

The issue could not be more neatly framed for the U.K.’s new nuclear build. With the certainty that its aging fleet of reactors must be replaced in the next 10–15 years, the U.K. government has committed to having the first round of new reactors—twin Areva EPRs at the Hinkley Point site—in revenue service by 2018. EdF is the lead firm to manage the project.

Hinkley will be followed by two new EPRs at the Sizewell site, also led by EdF, with revenue service dates of 2020 and 2022 for the new units there.

The EPRs are in competition with Westinghouse AP1000s for a combined total of 8.4 GWE of new reactors at the Gloustershire and Wylfa sites. Horizon, a commercial consortium composed of two German utilities (RWE and E.On), is watching the two-phase generic design assessment in the U.K. to see which reactor will be most cost effective to build and also will have the fastest time to market. A decision on the equivalent of reactor design certification is due from the U.K. Health & Safety Executive in June 2011.

To compete in this race, Areva must have the additional capital and organizational security to execute freely as a commercial entity. Its relationship with EdF must be firmed up. Whoever is named as CEO must have the confidence not only of the French government, but also of investors that now include Japan’s Mitsubishi and the sovereign wealth fund of Kuwait. (This inclusion of investors occurred in late 2010, when the French government offered 15 percent of Areva to outside investors.)

Interestingly, the sovereign wealth fund of Qatar also wanted to make an investment in Areva, but only for Areva’s uranium mining unit. The French government vetoed that request, saying that all new investment must be for the reactor business.

French Economy Minister Christine Legarde will make the final decisions, based on recommendations from France’s nuclear policy group. Market pressures are growing, which suggest that setting a direction soon would be a smart move. All of England is depending on it.

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Dan Yurman publishes Idaho Samizdat, a blog about nuclear energy. He is a reporter for Fuel Cycle Week and frequent contributor to ANS Nuclear Cafe.

The Russians are coming to India and so are the French

The U.S. is being left behind in the race for market share

By Dan Yurman

To see where India’s drive is headed to build 20 GWe of new nuclear powered electric generation capacity in the next 10 years, look at its aluminum and steel industries. As India relaxes its government rules that limit private sector participation in new reactors, two huge heavy industrial firms are preparing bids to invest in new reactors dedicated to supplying power to India’s plants.

State-run National Aluminum Co. Ltd (NALCO) is making plans to acquire a nuclear power station in Gujarat, in India. The Steel Authority of India Ltd. (SAIL) is also planning to acquire a dedicated reactor at the Gujarat site. Both companies will take minority stakes, up to 49 percent, in the reactors.

NALCO said that it will fund the new power stations from existing cash reserves. The Nuclear Power Corporation of India Ltd. (NPCIL) is reported to have estimated the delivered cost of the new reactors at $1600/kw. The planned 1400 MWe of power needed by NALCO would cost $2.3 billion. Whether NPCIL can actually deliver the reactors at these costs won’t be known for a few years.

What is known is that India has the second most ambitious program on the planet to build new nuclear reactors, worth an estimated $150 billion. (Map of India’s nuclear infrastructure.) With plans to build 20 GWe in the next 10 years, it is overshadowed only by China’s recently announced plans to build two-to-four times that amount in the same decade. China is aiming to build new 1000-MW reactors in less than five years and at a lower cost. (See ANS Nuclear CafeChina’s Ambitious Nuclear Program–December 2, 2010.)

Total investments in nuclear energy by India could boost its contribution to as much as 8 percent of electricity by 2020. India’s transmission and distribution infrastructure needs massive investment, however, and the theft of electricity by consumers and industries is a national pastime.

A key factor in acquiring new reactors is India’s reliance on Russian technology and, to a smaller degree, on similar offerings from France. U.S. firms simply aren’t in the running due to a harsh supplier liability law that was enacted by India’s parliament in 2010. Though India has signed an international convention on supplier liability at the International Atomic Energy Agency, ratification must pass through the same hostile gauntlet in parliament that enacted the liability law.

India, which once touted its “nonaligned status” in world politics, is now aligning itself with Russia on the east and France on the west to acquire nuclear reactor technologies.

The Russians are coming

Russia’s state-owned nuclear energy export agency is building four new 1000-MW VVER design reactors at Kudamlulan, located on the tip of India’s southern coast. The first two are expected to enter revenue service in 2011 and 2012, respectively. Another six Russian reactors are planned for a site in Haripur in West Bengal. These reactors are scheduled to come online by 2017. The Russians are concerned about the future of the West Bengal project because Maoist political parties in the region have mounted strong political protests against the proposed plant.

Following a late December visit to India by Russian President Dimitri Medvedev, the two nations announced India could be expected to buy up to 18 new reactors from Rosatom. The first group of reactors will be 1000-MW units, but later power stations are expected to use 1200-MW designs.

India has told the Russians, and other current and potential vendors, that a significant percentage of new reactors must be based on local production of components. While the Russians make their own reactor pressure vessels, they are in talks with Larsen & Toubro (L&T), one of India’s largest manufacturers, to develop a joint venture to make pumps and parts for the VVERs. Russia will also supply its own turbines for power stations that it builds in India. It is possible that the turbines will come from Siemens in Germany, which has a joint venture agreement with Rosatom.

Separately, NPCIL is working to establish a forge big enough to produce the components for reactor pressure vessels. L&T announced a joint venture in February 2010 with G.E.-Hitachi to build a facility at Gujarat in India. G.E. Hitachi also hopes to build a nuclear power station there. The future of that project will depend on how India manages its policy on nuclear liability.

According to The Hindu, one of India’s largest newspapers, L&T’s forging unit will have a dedicated plant producing ingots weighing up to 600 tonnes each, and a heavy forge equipped with a press that will be among the largest in the world.

It could take several years to plan and build the facility, and up to 10 years to reliably produce four or more reactor pressure vessels a year. Until that facility is built, India will have to rely on Japan Steel Works for its 700-MW indigenous reactors. The Russians and the French have their own forges.

Russians concerned about liability

While multiple deals between Russia and India paint a rosy future for nuclear energy there, a dark shadow hangs over the scene. India’s Civil Nuclear Liability Act makes a supplier of a nuclear reactor, or its components, liable in case of an accident even after NPCIL has accepted it and is running the operation. In other words, years after components are installed, the supplier could be held liable in if there is an accident.

While the Russians enjoy sovereign immunity from litigation, they are balking at signing on to the provisions of the liability law in their contracts. Gregory O. Kumani, vice president at Atomstroyexport, went public in December with his reservations.

Kumani told The Hindu newspaper that the export agency doesn’t want the liability law as a clause in its Indian contracts. He predicted that if the India government presses the case for the liability law, the Russians will include a risk premium in the delivered cost of every reactor they build.

American firms also won’t enter India’s market without removal of these provisions. Despite strenuous efforts by American diplomats to get India to make changes, President Obama came home empty handed from his November visit to New Delhi.

None of the expected $10 billion in new reactor deals were announced while Obama was there. GE-Hitachi and Westinghouse have agreements only in principle on paper while the Russians and French move full steam ahead in breaking ground for new power stations.

Not all of the impacts of the liability law are on suppliers selling into India’s $150 billion new build from abroad. India’s big push for “localization” of production could be delayed by the same law.

The former head of India’s Atomic Energy Commission, Anil Kakodkar, said in early December that the language in the legislation hits Indian suppliers with the same liability risks. He noted that the lack of insurance means that Indian suppliers, like L&T, would have to stash cash in liability bonds that would limit their ability to expand production facilities to supply components to new reactors. One such facility would be the new forge.

France gets a foothold

French President Nicolas Sarkozy meets Indian Prime Minister Manmohan Singh

In late November, French President Nicholas Sarkozy signed an agreement in New Delhi to supply two, and as many as six, 1600-MW European Pressurized Reactors at the Jaitapur plant in the Maharashtra state. The first two reactors will supply electricity to Mumbai, which is about 500 km (300 miles) north of the site.

The new reactors will cost an estimated four-to-six billion euros ($5-8 billion) and include turbines, generators, and upgrades to transmission and distribution infrastructure. Areva has also agreed to supply fuel for the plants for the first 25 years of operation.

The technical and financial documents were signed by NPCIL Chairman S.K. Jain and Areva CEO Anne Lauvergeon. Like the Russians, the French state-owned reactor supplier has reservations about India’s liability law. CNN reported that Lauvergeon said that France “wants more clarity” about the effect of the liability law, but also said it “would not be a deal breaker.”

An unexpected development is that protests have broken out in Jaitapur in India from farmers who will be displaced by the clearance of the reactor site. Some of the protests have turned violent. India’s Environment Minister Jairam Ramesh has vigorous defended the project and pointed out that the protests are organized by opposition parties.

Independent of the reactor deals, Areva is also offering NPCIL a minor share in its Georges Besse II uranium enrichment plant in France. This investment profile is similar to arrangements Areva has made with South Korean and Japanese nuclear utilities. India also inked deals to acquire uranium from Areva’s mining business unit.

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Dan Yurman publishes Idaho Samizdat, a blog about nuclear energy. He is a reporter for Fuel Cycle Week and a frequent contributor to ANS Nuclear Cafe.