Challenges on the Road to the 1 st National NPP A Countdown

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2 Zoran V. STOŠIĆ Director R&D Installed Base Engineering Director Sales & Marketing Ex Yugoslavia Peter SCHIMANN Installed Base Engineering VGB Projects Challenges on the Road to the 1 st National NPP A Countdown Invited Lecture at the International Conference POWER PLANTS Vrnjačka Banja, SERBIA, October 2010

3 Drivers of Nuclear Development Energy Demand Oil & Gas Availability GHG Emissions World energy demand (Gtoe / y) Oil and gas world energy supply (Gtoe / y) World GHG emissions (GtCO 2 eq / y) ~18 Increase of 50% by 2030 Declining Fossil Resources 74 Cut of 50% by 2050 ~ Business as usual scenario

4 Nuclear has Limited Dependency on Fuel and Carbon Prices Methodology The production cost (also called Levelised Cost Of Electricity) includes all the expenses related to the power plant from its construction to the operation and final decommissioning. It is the minimum electricity price beyond which a project is profitable The production cost is a common standard in the power industry. It is a relevant indicator to compare the cost of electricity and attractiveness between different technologies with different lifetimes and cost structures Typical breakdown of production costs Commissioning in 2020 base load operations Carbon value 30 /tco % Nuclear EPR Coal Gas -CCGT Carbon Fuel Capital & operations & o Source: AREVA analysis

5 5 Coal Resources & Electricity Outlook The lignite resources will be completely exhausted in just years if the electricity consumption increase is covered only by lignite fired TPPs The capacity deficit will grow to the equivalent of about 1,000 1,500 MWe in 2020 and 2,000 3,000 MWe by 2030 (based on 7,500 h/year) Source: Z. Stosic,, V. Stevanovic, Current Energy Status and Outlook for the Region, Workshop ENERGY MIX AND OUTLOOK OPTIONS FOR SERBIA A AND THE REGION, Belgrade, September 2010

6 Strategy to Reduce CO 2 Emissions With Nuclear Option EPS 1,000 MW NPP RWE EPS + Nuclear 1,000 MW NPP Data used are from RWE Strategy, May 2010 Source: D. Markovic,, D. Zivkovic,, A. Vlajcic, Current Status and New Investments of the Electric Power Industry y of Serbia, Workshop ENERGY MIX AND OUTLOOK OPTIONS FOR SERBIA A AND THE REGION, Belgrade, September

7 Nuclear State of Affairs in Europe In the EU there are 150 operating NPPs 10 4 in 15 EU member countries plus Switzerland, producing ~1/3 of all the electricity in the EU

8 The European Nuclear Revival UK 4 EPR planned by EDF EPR design pre selected by 2 JVs for their projects France Flamanville 3 (EPR ) under construction Penly: 2 nd EPR by 2017 Possible 3 rd EPR Netherlands Two projects announced Lithuania 2 new reactors planned Sweden Ban on Nuclear New Build lifted by the Parliament in July 2010 Finland Olkiluoto 3 (EPR ) under construction EPR design short-listed by both utilities with new build plans approved by the Government Poland 4 new reactors planned, the first one in operation by 2022 Switzerland At least 2 new units considered Czech Republic At least 2 new reactors planned Italy Target: 8 to 10 new reactors by 2030 (13 15 GWe) EDF Enel JV to build at least 4 EPR Slovenia 1 new reactor planned before 2025 Next? Slovakia 2 new reactors planned Hungary Up to 2 new units after 2020 Romania New capacity planned 8

9 Feasibility How is it possible to have a NPP in commercial operation in the 202X timeframe All necessary steps and procedures are looked at backwards Different project scenarios from vendor, regulator and utility are analysed under consideration of IAEA requirements Project time line, workforce planning and educational needs are also taken into account 9

10 Main Risk Factors for Investors in Power Generation PLANT RISK MARKET RISK REGULATORY RISK POLICY RISK Construction costs Fuel costs Market design Environmental standards Lead time Demand Regulation of competition CO 2 constraints Operational costs Competition Regulation of transmission Support for specific technologies (renewables, nuclear, carbon dioxide capture and storage) Availability / Performance Electricity price Licensing and approval Energy efficiency AREVA can help mitigate most of them to improve Serbia s energy supply and economy in a timely manner 10

11 Milestones of Development as Seen from the IAEA Nuclear power option included within national energy strategy MILESTONE 1 MILESTONE 2 MILESTONE 3 Ready to make a Ready to select Ready to commission knowledgeable commitment to a nuclear program industrial partners and operate the first NPP Source: : IAEA Nuclear Energy Series No. NG-G-3.1 Milestones in the Development of a National Infrastructure For Nuclear Power Infrastructure Development Program 1 st NPP Project PHASE 1 Considerations before a decision to launch a nuclear power program is taken Pre Project Project PHASE 2 Preparatory work for the construction of a NPP after a policy decision has been taken Project Decision Making PHASE 3 Activities to implement a first NPP Construction Feasibility Studies Selection of Partners Commissioning years Maintenance and continuous infrastructure improvement Operation/ Decommissioning 11

12 Regulatory Framework Regulators Regulators should balance their dual role of enabling investments and protecting public interest Transparency, independence, clarity and readability needed Regulatory efficiency Regulators operate independently from the interests of all stakeholders and have adequate resources and competencies to fulfil their mandates Country develops policy and regulatory approaches in the context of specific and unique national circumstances Government Government action is needed to reduce regulatory uncertainty clarify and simplify licensing, acceleration of the new unit approval Responsibility to balance interests should remain with governments rather than investors 12

13 Educational Needs Nuclear New Build is a Significant Endeavour Knowledge base Workforce Competition Surge in demand corresponding to hiring for plant operations Universities producing qualified engineers Research institutions maintaining (applied) nuclear science Regulatory body with clear vision and proper resources Electrical Utility with nuclear vision as investor Technical support organisations for solving serious issues Base entrant level to maintain competition in the workforce Base entrant level to support nuclear power and related industries Base entrant level to maintain nuclear power workforce Source: S.Scott, Int. Conf. on Human Resource Development for Introducing and Expanding Nuclear Power Programs,, March 2010, Abu Dhabi, UAE 13

14 Educational Needs AREVA has a Proven Track Record of Civil Nuclear Program Deployment Support Already today, AREVA can give international access to a network of Nuclear Academy initiatives which are under way in Europe such as the European Nuclear Academy (ENELA) with E.ON, ENEL VATTENFALL, URENCO, AXPO AREVA s experience can be leveraged to the advantage of Serbia 14

15 Road Map Serbia Governmental Resolution 10/2011 (Location including end/interim storage) International organizations Education contribute plan NSP 1 (e.g. IAEA) EIR 2 EPC 3 Local industry development plan (roads/train/water) Constant progress feedback between involved parties GOVERNMENTAL/ AUTHORITY LEVEL Regional ENergy COnsulting Feasibility Study 1 year Establish authority Requirements Experts Safety commission Research institutes/ University (external) Atomic law Regulatory body Necessary Infrastructure (Domestic Industry) Technical and economical evaluation of offer from main supplier Design evaluation Issue of nuclear license documentation Suppliers inspection and guarantee and QA supervision Technical operations specification Early preparatory projects (Offset financing potential) Reactor technology selection Management training incl. Safety Culture External experts Start of training of construction staff Safety reports Training for detailed nuclear know how Site pre paration First Nuclear Tests UTILITY LEVEL Mid/2011 /2011 Utility END of (Investors) Moratorium NPP type choice Contracts Environmental impact study Siting 201X Plant Contract First Concrete Deployed 202X Commissioning 1 NSP National Spatial Plan 2 EIR Environmental Impact Report 3 EPC Environmental Protection Consent NEW NPP PROJECT 15

16 Source: IAEA Nuclear Energy Series, No. NG-G-3.1, Milestones in the Development of a National Infrastructure for Nuclear Power: INSAG-22, Nuclear Safety Infrastructure for a National Nuclear Power Programme Supported by the IAEA Fundamental Safety Principles; ; 2008; IAEA Nuclear Energy Series, No. NG-T-3.2, Evaluation of the Status of National Nuclear Infrastructure Development. 16 NEPIO (Nuclear Energy Program Implementing Organisation) MILESTONE 1 Ready to make a knowledgeable commitment to a nuclear program MILESTONE 2 Ready to invite bids for the first NPP PHASE 1 PHASE 2 PHASE 3 Considerations before a decision to launch a nuclear power program is taken Preparatory work for the construction of a NPP after a policy decision has been taken Activities to implement a first NPP

17 Embarking in Nuclear Power in 25 Steps Very Simplified Primer Before Decision for Construction After Decision for Construction After Start of Construction Make a strategic political decision Establish research and educational base Train core people, future leaders and decision makers Prepare detailed legal requirements Define who are investors and who is operator Choose foreign partners Select the site Assess environmental impact Inspect manufacturers Inspect construction Update safety analysis Test systems, structures and components Regulator review and approval Prepare basic legal system Create framework of state authorities Create competent nuclear regulator Consult public Regulator review preliminary safety assessment Select supplier Prepare safety analysis report Regulator review and approval Trial operation Update safety analysis Regulator review and approval Start commercial operation PHASE 1 PHASE 2 PHASE 3 17

18 Project Timeline NEK 2 2 Example Decision making process Siting National Spatial Plan Process Studies analysis and evaluations Investment documentation Financial source assurance Construction license Assess. by Authority Engineering PHASE 1 The creation of sub-programs for NEP Green Book for National Energy NEP Accepted Program (NEP) Final proposal of NEP Investor Initiative Siting documents Siting Local Community Decision National Spatial Plan Acceptance and Environmental Investigation Agency (EIA) Preliminary investment report (PIZ) Supervisory Board Confirmation of PI and Investment realisation report Investment realisation report (SI) and Investment Program (PI) Basic Design PHASE 2 PHASE 3 Y 0 4 Y 0 3 Y 0 3 Y 0 2 Y 0 1 Y 0 Y 0 +1 Y 0 +2 Y 0 +3 Y 0 +4 Y 0 +5 Y 0 +6 Y 0 +7 Y 0 +8 Y 0 +9 Financial source assurance Generic PSAR Site Specific PSAR Detailed Design Final Site Specific SAR Operating License Bidding and Construction Manufacturing Bidding and Contract Order of Long Lead Materials Plant Contract Site Work Long Lead Materials Other Equipment Construction Commissioning COD Public Relations Public Relations 18

19 202X How Project Delivery Can Go Faster with AREVA Support and Knowledge Standard EPR Schedule Commercial Operation Date (COD) OL-3 Operating License NEK-2 by GEN COD NEK-2 by Regulator COD Road Map Serbia COD Long Lead Items Construction Time First Concrete Deployed (FCD) Plant Contract (PC) Financing Issues PC Public Discussion Start PC FCD PC Licensing Issues FCD PC Start Today Start 19

20 Good Project Delivery Requires Right Industrial Partnership & Industrial Scheme 1/3 AREVA has field experience in different delivery schemes OLKILUOTO 3 AREVA is the leader of the consortium and responsible for the NI (EPC) with Bouygues as subcontractor for the CW Nuclear Island (NI) Conventional Island (CI) NSSS BNI CW TI BCI CW BoP E P AREVA Siemens C I&C AREVA Project management AREVA Scope AREVA E Engineering and design P Procurement and delivery of equipment C Construction BNI Balance of NI BCI Balance of CI BoP Balance of Plant CW Civil Works I&C Instrumentation and Control NSSS Nuclear Steam Supply System 20

21 Good Project Delivery Requires Right Industrial Partnership & Industrial Scheme 2/3 FLAMANVILLE 3 AREVA provides the NSSS (EPC) and the I&C E P C I&C Project management NSSS AREVA Nuclear Island (NI) BNI Sofinel CW AREVA Conventional Island (CI) TI Alstom EDF BCI EDF CW Bouygues Bouygues BoP EDF Scope AREVA 21

22 Good Project Delivery Requires Right Industrial Partnership & Industrial Scheme 3/3 TAISHAN 1&2 AREVA is member of the consortium supplying the NI (EP) Nuclear Island (NI) Conventional Island (CI) NSSS BNI CW TI BCI CW BoP E P AREVA CNP EC Alstom CNPEC CNPEC C CNPEC CNPEC I&C AREVA Project management CNPEC Scope AREVA AREVA has experience in and has the flexibility and potential partners to adopt the most appropriate scheme for project execution 22

23 AREVA is Gathering Unique Construction Experience and Improving EPR Delivery Time Time between 1 st concrete and nuclear operation (# of months)* * Based on the first four units in the reactor series ** Source CGNPC OL3 86 FA TSN1&2** GEN MWe GEN 2 1,300 MWe GEN 2 N4 1,500 MWe Export 1,000 MWe (China) GEN 3+ EPR 1,650+ MWe Average (# of months)

24 In a Nutshell The coal reserves currently supplying the TPPs in Serbia will last at most for about 50 years Energy Minister Škundrić ( ) In 2025 Serbia will reach an electricity production deficit up to 2,400 MW and up to 3,000 MW in 2030 After dropping the Law on Banning nuclear energy, Serbia has to consider building NPPs to meet the increasing demand for electricity Energy Minister Škundrić ( ) Furthermore late in 2009 a cooperation of Serbia with the IAEA NEPIO department was already started With AREVA s support and know how, NPP project scenarios show it is possible to have a Serbian NPP in commercial operation in the 202X timeframe, but time is short All necessary early work measures and activities including education have to be approached in due time and every local and foreign supporting organisation should be taken into account seriously in order to keep the schedule The countdown for the 1 st Serbian NPP is already ticking today! 24

25 Any reproduction, alteration, transmission to any third party or publication in whole or in part of this document and/or its content is prohibited unless Company Name has provided its prior and written consent. This document and any information it contains shall not be used for any other purpose than the one for which they were provided. Legal action may be taken against any infringer and/or any person breaching the aforementioned obligations. Thank you for your attention! Zoran V. STOŠIĆ Director R&D Installed Base Engineering Director Sales & Marketing Ex Yugoslavia Peter SCHIMANN Installed Base Engineering VGB Projects Challenges on the Road to the 1 st National NPP A Countdown Invited Lecture at the International Conference POWER PLANTS Vrnjačka Banja, SERBIA, October 2010