International nuclear markets: Problems & prospects

Transcription

1 International nuclear markets: Problems & prospects by Robert Skjoeldebrand International nuclear trade is now of considerable importance for the energy balances of a number of countries. From the start, it has been regulated by bilateral or multilateral agreements, ones that always included conditions to obtain non-proliferation assurances with verification requirements, now based on IAEA safeguards. Nuclear trade indeed would have been impossible without the non-proliferation regime that has been developed. Recently, non-proliferation objectives and conditions have come to dominate discussions about international nuclear trade through restrictions introduced in the 90s as a result of developing national policies. The International Nuclear Fuel Cycle Evaluation (INFCE) 9-980, and most recently the Committee of Assurances of Supply (CAS) established by the IAEA Board of Governors in 980, have studied these matters in detail. It sometimes seems, however, that other and possibly more fundamental problems and limitations are given secondary importance. This article discusses some of these factors as regards international trade in nuclear plants and the fuel cycle, and looks at some prospects for the future. Background and Problem Areas Nuclear power plants. Nuclear plants are in operation or under construction in countries around the world. Of these, about 0 have industries to produce plants essentially from domestic resources while the remaining are or have been importers, a situation summarized in Table. It should be noted that this table depicts a situation that has been and still is under development. For example, France and the Federal Republic of Germany have been technology importers for the first pressurizedwater reactors, but are now self-sufficient and exporters. Japan has developed industrial self-sufficiency and could Mr Skjoeldebrand is Head, Reactor Engineering Section, in the Agency's Division of Nuclear Power. appear as an exporter, although it has not done so. The same can probably be said about, for instance, Czechoslovakia and Italy, and it will be the case in the future for more countries, including some developing ones, such as India, which is now almost self-sufficient in power plant production. Also interesting to note is that partnerships are being established in which the experience and capabilities of some of the more advanced developing countries could be brought to bear on export activities of traditional suppliers. Impetus for export interest In some countries, independence from imports has been a national policy objective, primarily for the fuel cycle but also for power plant supplies in the longer term. The engineering and industrial capability to attain entire or near self-sufficiency, however, will not necessarily mean that this is a national goal everywhere. Countries in a position to do so, and that can trust the availability of future supplies, also are likely to trust international market mechanisms and buy internationally major and specialized components, as well as whole systems, simply for reasons of good economy. In market economy countries, total nuclear power plant manufacturing capacity has been estimated to be some 0 gigawatts annually, geared to the rush of orders for new plants at the rate of 0 to 0 gigawatts annually during 9-. This high ordering rate, of course, was not sustained - and indeed could not have been - and the industry is now working at only about 0 to 0% of its overall capacity. In most supplier countries, domestic markets have dwindled and remain uncertain. It is thus natural that export markets are looked upon with increasing interest, as a possible way to avoid painful industry restructuring. It is notable that, in preparation for what could be a new export drive, several international co-operation and joint industrial ventures are emerging, also to improve financing possibilities. In contrast to the situation in market economy countries, nuclear power's introduction rate in countries IAEA BULLETIN, VOL., No.

2 Table. Nuclear power plant imports: World Profile* Reactors on-line or under construction Imported from Total Domestic USA Germany, Fed. Rep. Canada France Sweden UK USSR Industrialized and European centrally planned countries Belgium Bulgaria Canada Czechoslovakia Finland France German Dem. Rep. Germany, F.R. Hungary Italy Japan Netherlands Poland Romania South Africa Spain Sweden Switzerland UK USA USSR Yugoslavia Sub-total Developing countries Argentina Brazil China Cuba India Korea, Rep. of Mexico Pakistan Philippines Taiwan, China Sub-total World Total ' The table includes all reactors connected to the grid or under construction as of December 98. [Source: IAEA Power Reactor Information System (PRIS)] IAEA BULLETIN, VOL., No.

3 Table. Types of nuclear reactor imports* Reactors on-line or under construction Imported from Type Total Domestic USA Germany, Fed. Rep. Canada France Sweden UK USSR PHWR PHWR over 00 AGR GCR PWR PWR over 00 BWR BWR over 00 LWGR over 00 Prototypes Total * The table includes all reactors connected to the grid or under construction as of December 98, except those shut down by this date. Reactor types: PHWR - Pressurized heavy-water-moderated & cooled PWR Pressurized light-water-moderated & cooled AGR Advanced gas-cooled, graphite-moderated BWR Boiling light-water-cooled & moderated GCR Gas-cooled, graphite-moderated LWGR Light-water-cooled, graphite-moderated [Source: IAEA Power Reactor Information System (PRIS)] belonging to the Council for Mutual Economic Assistance (CMEA) seems to be limited mainly by industrial production capacities. Since these countries have a strong joint commitment to rapidly expand use of nuclear power, a major export drive outside CMEA would not seem likely. In industrialized market economy countries, all but of 9 nuclear power plants now under construction are of capacity higher than 800 megawatts. Of these, 9 are Candu and advanced gas-cooled reactors (AGR) and three are prototypes. Table shows the limited number of reactor types that have been exported. It should be noted that except for 0-megawatt pressurized-water reactors of Soviet origin exported within CMEA and Finland - no export contracts have been made for plants below 00 megawatts for more than 0 years. Standardized power plant designs now being pursued in several countries also are all above 900 megawatts. Activity in smaller reactors Capacities above 00 megawatts often are too high for grid sizes in developing countries. At least in part, this accounts for the revived interest in several "exporter" countries in small- and medium-size power reactors (SMPRs) between 00 and 00 megawatts. Wider availability of SMPRs in principle could make the introduction of nuclear power possible at an earlier date in some 0 to developing countries. SMPRs also could be used as heat sources for direct heating or desalination plants. Accordingly, the IAEA has promoted an information exchange on SMPRs for more than two decades. However, no export orders have materialized, due to uncertain economics and financing, limited availability of proven designs licensable in producer countries, and an apparent unwillingness among prospective buyers to agree on one design with a proven market substantial enough for a supplier. This situation may change. Reasons include the increasing interest of suppliers in the future export market, and a possible interest based on desires for better financial risk management for individual projects in slow load-demand growth situations in smaller plants in some industrialized countries. Domestic markets for smaller and probably highly standardized plants in industrialized countries if it develops - could, in this way, have a very significant impact on nuclear power introduction in developing countries. IAEA BULLETIN, VOL., No.

4 Infrastructures on which nuclear powe r programmes place particular demands Electric grid size and rigidity Availability of qualified manpower at all levels Organizational structures for planni ng, decision-making, project execution, operation and regulation Industrial support Financing However, it is still true that a small power plant will pose essentially the same requirements on a country's infrastructure as a big plant. Financing difficulties often have been quoted as the single most important obstacle for introduction of nuclear power in developing countries, and financing for such major projects perceived as particularly risky by financiers - has not been easy to find in the past decade. Still, it is notable that when financing would have been available, but other infrastructures were weak, nuclear power programmes have not been launched. Yet when infrastructures in general have been built up, financing problems have been overcome and viable nuclear power programmes now exist. This experience supports the approach taken in IAEA's programme namely, to strengthen infrastructures in developing countries and, in particular, to improve engineering capabilities as a necessary preparatory step to successful introduction of nuclear power and attainment of technology transfer. Uranium and fuel supply. Uranium has two unique characteristics. First, it is only useable on a large scale in power reactors, whose owners now do not have recourse to any alternative fuel, except marginally through plutonium recycle. Second, uranium deposits do not in themselves contribute to a country's energy balance because they depend on a highly demanding technology for use. The December 98 report, Uranium - Resources, Production and Demand,* states that additional resources (reasonably assured and probable) of. million tonnes of uranium are recoverable at a cost below US SI0 per kilogram in countries. Nuclear power plants were in operation or under construction in of those countries. The reported figures actually meant a reduction of resources in lower-cost categories, due to increases in production costs that had shifted some resources into higher cost categories. * A joint project, typically called the "Red Book," of the IAEA and Nuclear Energy Agency of the Organisation for Economic Co-operation and Development. Characteristically for the uranium market, the bulk of material is delivered under long-term contracts so the spot market has played a marginal role. Long-term contracts have had quite stable prices, but the spot market prices now very different - are a clear indication of the production industry's status and prospects. Cyclical changes in supply and demand In the past, the uranium market has gone through some serious cyclical changes. Prices were very low in the late 90s and early 90s, but a very steep price increase up to US S0- per pound of uranium oxide occurred on the spot market in 9 through a combination of circumstances, leading to demand hitting the production capacity ceiling. Steady decreases in nuclear power programmes of market economy countries now have led to a much smaller demand than foreseen only to 8 years ago. The result is considerable overcapacity for uranium production and a large build-up of inventories with some buyers through past long-term contracts. In 98, those inventories in industrialized countries are estimated to be at least some four times the actual annual demand to fuel power plants, but they also are very unevenly distributed among buyer countries. Naturally, this situation has led to a serious depression in the uranium production industry. Between 980-8, annual production decreased by % in WOCA.* In the United States, production in 98 dropped to less than half of 980 production. This is partly due to production cut-backs, but a significant part also stems from closings of mines and mills that were no longer competitive at prevalent costs. Such mines are not likely to be easy to re-open. Present prices do not permit prospection and large promising areas of the world remain unprospected. The lead-time to bring new resources into production is some 0 years - comparable to the time for launching new nuclear power projects. Thus, the two markets could be matched from this point of view as long as nuclear power programmes remain reasonably certain. Uranium production has been subject to national policies in several countries. Future production capacities do not appear certain now and may fall from levels currently projected. If present excess inventories are not redistributed among buyers, demand for new uranium may increase again above production capacity as early as the late 980s. In different scenarios, however, this situation may not be reached until beyond 99. The present oversupply situation will then be changed, but hopefully not through the kind of violent gyrations that have occurred in the past. * World Outside Centrally planned economies Area. IAEA BULLETIN, VOL., No.

5 ^0. - r- ^0 izu - - nn y\j~ E OU * e Exchange values Transaction values «^ «^^ «MW ^m m \\ ll -0-0) -0 I 'c '0* 8 AAa ou - * C o a -0 & M CO - -0 Figure. Historical exchange and 0 June 98 in uranium market (Data: courtesy of NUEXCO) Q Year - n A stable and predictable market situation would seem to be an important factor in assuring fuel supplies for power plants over their long lifetimes. To attain this, a better information exchange between suppliers and buyers seems needed. Also required, certainly, is a possibility to trust the predictability of external actions on the market. Enrichment services The other major supply function - enrichment services - also has been characterized by an oversupply and an increasing diversification of supply sources. There are now four major suppliers on the international market, and three additional countries have announced enrichment capability with at least pilot plants in operation. Supply capacities are stable or slowly increasing and should be adequate to meet demands well into the 990s. Other front-end services, not capital intensive, are presently characterized by overcapacity and, especially for fuel fabrication, a trend to establish plants to cover national needs is obvious in several countries. Even though the present situation for the front-end of the fuel cycle thus would not appear to give any cause for supply concerns, it still would seem desirable to watch developments in this sector carefully to avoid a repetition of sudden changes that have occurred in the past. Reprocessing and storage In the back-end of the fuel cycle, the situation, of course, is just the opposite. Reprocessing capacities, even in the 990s, will only be able to cope with a fraction of the spent fuel arisings, and plans for future reprocessing plants are being reassessed in a number of countries, making future planned capacities uncertain. Breeder programmes are being delayed, partly because of abundant availability of uranium to fuel thermal power plants and the high costs of breeder development. Besides the use of plutonium in breeders, two other main reasons have been given for reprocessing thermal reactor fuel: () easier disposal of the high-level wastes, and () recycling of plutonium in thermal reactors as a contribution to national energy security. The economics of thermal recycle seem very uncertain, however. A demonstration of high-level waste disposal still has not been made, although this is certainly of highest desirability to improve nuclear power's acceptance. Some countries - Sweden and Spain, for example - have announced policies to store spent fuel in intermediate storage for 0 to 0 years, keeping open the option of later disposal, as waste without reprocessing, in deep geological formations. Reasons given are that reprocessing costs are too high and that there is no market for recovered plutonium. It must be expected that this trend toward interim storage will become stronger in the second half of the 980s. IAEA BULLETIN, VOL., No.

6 At the same time, spent-fuel storages at many reactors are being filled and the storage problem will become acute in several countries in the late 980s. Away-from-reactor storage will be necessary and international facilities would seem to be a desirable option to pursue. The Soviet Union always has accepted the return of spent fuel from power plants it has exported. Recently, the People's Republic of China also has offered to receive spent reactor fuel in intermediate-term storage. Prospects For Growth: Many Factors During the past decade, high oil prices have caused a restructuring in final-use energy demand. Despite the recession, it has in colder climates been economically advantageous to install electric heaters in residential heating boilers, as electricity prices have been fairly stable. In Sweden, for example, this has led to a major change in demand from oil to electricity in that sector, although total electricity demand has had a fairly low rate of increase. If market economies now start to revive, we also can expect that industry will begin to invest in processes that will use less fossil fuel, which in most cases will mean a shift to electricity because of its higher efficiency in end use. When this situation materializes - and there are some strong indications it is already happening there will be a need for new generating capacity. Nuclear power is a proven economic alternative if some conditions are met: controllable construction times, predictable capital costs, and assurances of fuel supplies for power plants during their lifetimes. IAEA estimates that installed nuclear capacity in market economies will increase to 0 80 gigawatts in 000, up from 0 gigawatts in 98. Orders for new plants of 90 to 0 gigawatts would have to be placed in the next eight years. Only about % of the projected increase will come in developing countries. In industrialized countries, nuclear power plant orders should come back. However, it will not be purely competitive economics that will determine utility choices. A key factor will be the ability of utilities to manage economic risks for each project. Some suppliers now are ready for a new revival of orders with standardized plants (always in a size range above 900 megawatts) and well-tried contractual and project management arrangements. In countries where utilities are smaller, a case certainly can be made for standardized plants in a smaller size range (say, about 00 megawatts) under contractual arrangements that would minimize risk in individual projects. Such plants are likely to be based on past and present designs of well-proven nuclear steam supply systems. It is not likely that any new industrialized countries will launch nuclear power programmes. Those who have not done it so far have mostly made that choice for reasons of abundant domestic energy resources or assured imports. Several new developing countries, however, are studying nuclear programmes very carefully and with realistic concepts about requirements that the new technology will involve. IAEA estimates that 0 to 0 countries are involved in such studies and half of them may take a positive decision before the end of the century. In most cases, this will require major programmes for improving manpower availability and industrial support. To improve the uranium market situation, a better contact and information exchange between suppliers and buyers as a stabilizing factor is being achieved, notably by the Uranium Institute, an association based in London, UK. Buyers in a position to do so have tried to protect themselves against changes in supplier Government export policies by diversification of supply sources both for uranium and enrichment. However, this is not possible for small power programmes in developing countries, which have to depend on predictability in Governmental actions to obtain their assurances. An area that still needs major actions is the back-end of the fuel cycle, and international co-operation would seem to be highly desirable. A high-level waste disposal demonstration project is of greatest priority. However, it also would seem desirable to understand which institutional frameworks could be practical and acceptable for concrete co-operative projects in the back-end, beginning with international spent-fuel storages on which the IAEA already has done some groundwork. IAEA BULLETIN, VOL., No.