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Presentation by Edward Kee at the 2012 NEI Nuclear Energy Assembly in Charlotte, NC.
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Thanks to:
• Chair [Clarence Ray of Shaw] for your kind introduction
• NEI [Marv Fertel, Richard Myers, Lisa Steward] for inviting me to join this panel
• And all of you for attending
Next page: Before I start a word from the lawyers:
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Next page: I am going to cover three topics . . .
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Next page: First, the league tables
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Notes:
• A lot of nuclear projects in the world
• Some designs leading the pack
• A lot of opportunities for vendors – the second bar shows projects where the vendor/design is not yet selected
Next page: This data can also be sorted by country . . .
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Notes:
• Government programs (e.g. China) are a very large part of global nuclear activity
• Hope to add Vogtle and Summer to the “under construction” category soon!
• Each country on this list has different energy resource options and needs
• This simple chart hides the detailed and complex story behind each country and each project
Next page: In my effort to understand the common factors across these countries and projects, I see several factors that drive nuclear development
Notes:
• All three factors must be in alignment
• Each is important, but any one may not be sufficient
• Politics and public opinion
• Electricity fundamentals (what are options for generating electricity, cost, availability, constraints, etc.)
• Industry and business model (merchant, regulated and government) is the most important factor
Next page: The merchant nuclear model
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Notes:
• In regions or countries with reformed, restructured electricity industry and markets (e.g., UK, much of US)
• Many US COL applications are related to merchant projects – and are on hold
• UK carbon reduction commitments depend on nuclear, and new nuclear is merchant -this is going to be difficult for them
• Project financing difficulty means that developer must provide most capital prior to COD and a lot of equity after COD
Next page: Merchant approach is even harder with new reactor designs
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Notes:
• nuclear product life cycle – costs are highest for FOAK unit
• Costs decline as more units are built
• Merchant nuclear may be more feasible in mature phase, when nuclear power project cost, time to complete and risk are lower
Next page: The regulated business model
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Notes:
• This is the approach in the parts of the US that did not reform the electricity industry (e.g., Southeast) and a few other countries (e.g., Japan)
• Most people in this room understand this, even though the details vary from state to state in the US and across countries
• Regulation outside US is different – there may not as much experience, litigation, and precedents as the US (e.g., no Hope Natural Gas case)
Next page: government approach
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Notes:
• Apologies to DOE, but in US we are usually skeptical of government-led projects
• However, governments can get large infrastructure projects right
• Governments have money and can move quickly
• This can be good if decisions help the project
• Not so good if the decisions do not help the project (e.g., Germany, Japan)
• Non-power objectives more important
• Estimating value of non-power objectives is not easy
• Utilities do not usually have the expertise to evaluate this
• Implementation to capture value is also difficult
Next page: Example of government nuclear is France
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This is a great example. But consider who got the orders for these nuclear plants –French nuclear companies
Next page: Government nuclear programs are about more than just buying nuclear plants:
Notes:
• Based on France, Korea, China . . .
• Countries with large nuclear fleet plans also want to enter the nuclear business
Next page: and that product life cycle chart that made merchant nuclear difficult?
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Notes:
• Government nuclear fleet build can
• Directly capture the benefits of learning
• Spread the investment in learning and capability (during early stages) over the entire fleet
Next page: The term “State Capitalism” is sometimes applied to the government approach
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Notes:
• Opened my eyes when I read it
• Not about the nuclear power industry, but it could be
• I strongly recommend that you read this book
• Also a special feature in the Economist in Jan 2012 on the topic, with a key quote: “Governments are good at infrastructure, but not so good with consumer products”
Next page – now for some insights
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Some selected insights on the topics I covered today
Next page – I went through these slides pretty fast – if you have questions please get in touch
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