The Importance of Commercial Nuclear Exports. to the U.S. Economy. Special Capitol Hill Briefing

Transcription

1 Special Capitol Hill Briefing The Importance of Commercial Nuclear Exports to the U.S. Economy 1 June 11, 2018 The Importance of Commercial Industry Nuclear Sponsored Exports Event to the U.S. Economy

2 Introduction Purpose of Briefing Safety Moment Agenda Facilitator Gary Wolski, Curtiss-Wright, Nuclear Division Keynote Address: Choosing to Compete in the Global Nuclear Market Ian Steff, U.S. Department of Commerce, International Trade Administration Understanding the Global Nuclear Energy Export Market Graham Cable, Westinghouse Electric Company The Export Potential of Small Modular Reactors (SMRs) David Blee, U.S. Nuclear Industry Council The Value of Commercial Nuclear Exports to the U.S. Economy Carol Berrigan, Nuclear Energy Institute Financing of Nuclear Energy Projects Edward Kee, Nuclear Economics Consulting Group Commercial Nuclear Exports as a Foreign Policy Tool Jack Edlow, Edlow International Corporation How Industry & Government Can Collaborate for Success Jeffrey Merrifield, Pillsbury Winthrop Shaw Pittman LLP Disclaimer Gary Wolski VP Market Development Curtiss-Wright, Nuclear Division gwolski@curtisswright.com 2 June 11, 2018 The Importance of Commercial Nuclear Exports to the U.S. Economy Gary Wolski

3 Keynote Address Choosing to Compete in the Global Nuclear Market Ian Steff Deputy Assistant Secretary for Manufacturing Performing the Non-Exclusive Functions and Duties of the Assistant Secretary for Global Markets and Director General of the U.S. & Foreign Commercial Service U.S. Department of Commerce, International Trade Administration 3 June 11, 2018 The Importance of Commercial Nuclear Exports to the U.S. Economy

4 Special Capitol Hill Briefing The Global Commercial Nuclear Market Graham Cable Vice President, Global Growth & Strategy Westinghouse Electric Company, LLC. (412) June 11, 2018 The Importance of Commercial Nuclear Exports to the U.S. Economy

5 Global Market Summary There are 448 commercial nuclear plants in operation globally providing 11% of the world s electricity 99 in the US provide almost 20% of the nation s electricity China and India represent the largest new nuclear plant markets today: - 25 of 59 new units under construction Regional and national dynamics drive other localized opportunities Government-to-government engagement is increasingly characteristic of new nuclear plant deals Scarce equity has delayed or suspended many new nuclear programs Geopolitics has opened some significant market opportunities for U.S. companies in fuel, components and services Significant opportunities for U.S. companies exist, despite a smaller new nuclear plant market today vs. 5 years ago 5 June 11, 2018 The Importance of Commercial Nuclear Exports to the U.S. Economy Graham Cable

6 Foreign state-backed entities in global market have changed the competitive dynamics of the nuclear industry Preferential foreign government financing is increasingly common 6 June 11, 2018 The Importance of Commercial Nuclear Exports to the U.S. Economy Graham Cable

7 U.S. Competitive Summary There are two commercial races today: Advanced reactors: lower capital and operating cost, smaller capacity increments, advanced safety features Large baseload capacity plants: large capitol investment, large, high reliability generation capacity, with advanced safety features U.S.-sourced commercial nuclear technology continues to be highly desired globally, however there are foreign alternatives and substitutes for both large and advanced plants. Commercial nuclear power is a subject of national strategic and foreign policy interest to our competitors, and internationally it is the domain of state-owned entities Using national assets to compete is our competitors level playing field U.S. competitors are commercial enterprises Competitive export financing is a key requirement in large deals A functioning U.S. Import-Export Bank is a necessity The U.S. must win both races. The alternative is loss of its technology and non-proliferation leadership. 7 June 11, 2018 The Importance of Commercial Nuclear Exports to the U.S. Economy Graham Cable

8 Special Capitol Hill Briefing The Export Potential of Small Modular Reactors (SMRs) David Blee President & CEO U.S. Nuclear Industry Council (202) June 11, 2018 The Importance of Commercial Nuclear Exports to the U.S. Economy

9 Mega Cities by 2030 Only Japan is losing population 9 June 11, 2018 The Importance of Commercial Nuclear Exports to the U.S. Economy David Blee

10 WRI: Global Water Stress and National Security Could Advanced Reactors bolster Desalination in large volumes for cities? WRI: Water stress is not just a Developing World problem. Western USA. WHO: Impact of urbanization -- By 2025, half of the world s population will be living in water-stressed areas. Could Nuclear boost fresh water supply? World Health Organization WRI (2017) 10 June 11, 2018 The Importance of Commercial Nuclear Exports to the U.S. Economy David Blee

11 EV Growth matches timeline for Advanced Nuclear Almost all the EV electricity sales will be in urban areas. FEB. 2016: Plug-in hybrids + Battery EVs Forecasts have shifted further out over time but battery costs are coming down; EVs might enter an S-curve as SMRs / GenIV are slated for commercial deployment. Electricity sales volume for charging vehicles rises 4x from 2030 to June 11, 2018 The Importance of Commercial Nuclear Exports to the U.S. Economy David Blee

12 Global SMR Market Potential UK NNL estimates the potential SMR market to be approximately GW by 2035; this is NuScale Power Modules or a $350B $550B market value Many of these potential countries for SMR exports do not have 123 Agreements with the United States Turkmenistan KEY Countries with 123 Agreements under review in Congress Countries without 123 Agreements Saudi Arabia Qatar Oman Jordan Bahrain New Caledonia Brunei Darussalam Source: UK National Nuclear Laboratory SMR Feasibility Study, December June 11, 2018 The Importance of Commercial Nuclear Exports to the U.S. Economy David Blee

13 Advanced Nuclear SMRs: A Game Changer Enhanced Economics lower capital & operating costs Factory Assembly transforms delivery & localization Versatility load following, industrial heat, desalinization, reduced footprint Advanced Safety & Security passive safety, reduced regulatory cost 13 June 11, 2018 The Importance of Commercial Nuclear Exports to the U.S. Economy David Blee

14 Special Capitol Hill Briefing The Value of Commercial Nuclear Exports to the U.S. Economy Carol L. Berrigan Senior Director, Supplier Policy and Programs Nuclear Energy Institute (202) June 11, 2018 The Importance of Commercial Nuclear Exports to the U.S. Economy

15 Domestic Nuclear Fleet SUPPORTS 475,000 JOBS CONTRIBUTES $10 BILLION IN FEDERAL AND $2.2 BILLION IN STATE TAXES EACH YEAR PREVENTS 315,000 SHORT TONS OF NOX AVOIDS MILLION METRIC TONS OF CARBON EMISSIONS EACH YEAR AND ADDS $60 BILLION TO THE COUNTRY S GDP 374,000 SHORT TONS OF SO2 EMISSIONS SAVES CONSUMERS AN AVERAGE OF 6% ON ELECTRICITY BILLS 3.7% SOLAR 17.7% WIND 21.4% HYDRO 1.1% GEOTHERMAL 56.1% NUCLEAR 2018 Nuclear Energy Institute 15 June 11, 2018 The Importance of Commercial Nuclear Exports to the U.S. Economy Carol Berrigan

16 Interdependence of Factors STRONG DOMESTIC INDUSTRY R&D AND INFRASTRUCTURE INVESTMENT GLOBAL EXPORTS 2018 Nuclear Energy Institute 16 June 11, 2018 The Importance of Commercial Nuclear Exports to the U.S. Economy Carol Berrigan

17 Nuclear Supply Chain Compiled by Energy Futures Initiative, July Nuclear Energy Institute 17 June 11, 2018 The Importance of Commercial Nuclear Exports to the U.S. Economy Carol Berrigan

18 Market Potential Examples CHINA 1 SAUDI ARABIA 2 MEXICO 3 $ billion < $36 billion < $2 billion 20k-45k/yr < 8k/yr < 10k 1 UxC Report 2015, UxC Report 2018, large reactors only Industry es?mate for new reactors 2018 Nuclear Energy Institute 18 June 11, 2018 The Importance of Commercial Nuclear Exports to the U.S. Economy Carol Berrigan

19 Special Capitol Hill Briefing Financing of Nuclear Energy Projects Edward Kee CEO Nuclear Economics Consulting Group (202) June 11, 2018 The Importance of Commercial Nuclear Exports to the U.S. Economy

20 Global Nuclear Competition Nuclear industry has multiple competitors that are stateowned entities (SOEs) SOE nuclear vendors Used to implement national policy objectives External relations with other countries Internal industrial development Profits may not be key driver U.S. shareholder-owned nuclear companies may find it difficult to meet SOE competition 20 June 11, 2018 The Importance of Commercial Nuclear Exports to the U.S. Economy Edward Kee

21 U.S. Nuclear Export Hurdles Financing new nuclear projects is ultimate test of viability SOE approach seems more likely to succeed Export of nuclear power plants SOE nuclear vendors may offer: Sovereign debt to buyer country linked to nuclear project Nuclear project debt with better terms than market Accept completion risk - lower risk & financing cost for buyer Other countries may offer Loans to support equity investment + more project ECA debt More favorable ECA debt terms Build-Own-Operate nuclear projects State-owned vendor is builder, owner & operator 21 June 11, 2018 The Importance of Commercial Nuclear Exports to the U.S. Economy Edward Kee

22 Sale of Nuclear Power Projects U.S. nuclear vendors disadvantaged in world market Completion Risk State-owned nuclear vendor may take completion risk, lowering risk for buyer and increasing buyer s financing options Project Debt State-owned nuclear vendor may offer Gov tbacked project debt to buyer at terms better than commercial market terms Sovereign Debt Gov t-to-gov t loan made to buying country and linked to purchase of nuclear power plant from state-owned nuclear vendor Export Credit ECA debt related to value of exports and part of total project; other countries may offer more ECA debt with more favorable terms Nuclear is part of larger objective State-owned nuclear vendor deals are the tip-of-the-spear for larger Gov t-to-gov t relationship, not standalone commercial deals 22 June 11, 2018 The Importance of Commercial Nuclear Exports to the U.S. Economy Edward Kee

23 Build-Own-Operate Nuclear Projects New approach that may not be successful; may not be feasible for U.S. nuclear vendors State-owned Vendor Owner (e.g., Russia) State-owned nuclear vendor builds, owns, and operates a nuclear power plant in host country, selling power to host country utilities or into host country electricity market State-supported Vendors (e.g., Japan) Vendor country helps vendor finance a BOO nuclear project (e.g., JBIC equity-like loans) 23 June 11, 2018 The Importance of Commercial Nuclear Exports to the U.S. Economy Edward Kee

24 What could help U.S. nuclear vendors? Help U.S. nuclear vendors compete with SOEs U.S. government as U.S. nuclear power champion Enable EXIM bank to help with nuclear projects Focus OPIC on nuclear project equity and insurance Allow USAID to fund nuclear feasibility studies and other activity Provide other government support (e.g., help in U.S. market for reference units; funding for labs, universities, int l regulatory cooperation) Align with U.S. nuclear industry to focus on target countries and projects 24 June 11, 2018 The Importance of Commercial Nuclear Exports to the U.S. Economy Edward Kee

25 Special Capitol Hill Briefing Commercial Nuclear Exports as a Foreign Policy Tool Jack Edlow President Edlow International Company (202) jedlow@edlow.com 25 June 11, 2018 The Importance of Commercial Nuclear Exports to the U.S. Economy

26 1950 s, 1960 s and 1970 s The United States aggressively courted countries around the world with investment and infrastructure development. We shared our Atoms for Peace nuclear technology and built nuclear research and power plants around the world. We built a dam in Ghana with Kaiser Aluminum as a public private partnership We built airports around the world to promote our airlines; Roberts field in Liberia We used our technology and finance to help the world develop 26 June 11, 2018 The Importance of Commercial Nuclear Exports to the U.S. Economy Jack Edlow

27 Who is doing what China has the one belt and one road international program to build infrastructure throughout the world, including nuclear power plants. Russia is building nuclear power plants in strategic countries including Turkey, Egypt and India and has proposed to build in South Africa and Saudi Arabia. They have signed agreements for nuclear cooperation with more than 30 developing countries around the world. The United States is not on the playing field at the moment. 27 June 11, 2018 The Importance of Commercial Nuclear Exports to the U.S. Economy Jack Edlow

28 Special Capitol Hill Briefing How Industry & Government Can Collaborate for Success The Honorable Jeffrey S. Merrifield Partner, Energy Section Leader Pillsbury Winthrop Shaw Pittman LLP (202) June 11, 2018 The Importance of Commercial Nuclear Exports to the U.S. Economy

29 Nuclear Power 2018 Snapshot 449 Nuclear Reactors Worldwide in 30 Countries 11% Total Electrical Production/ 35% World Carbon Free Gen 58 Reactors Under Construction in 17 Countries U.S. Remains Largest Operator with 99 Nuclear Units (2 Under Construction) China Largest Builder with 24 Units Under Construction 42 Planned India Currently 22 Units with 6 Under Construction - 15 Planned Russia Currently 37 Units with 6 Under Construction 25 Planned 29 June 11, 2018 The Importance of Commercial Nuclear Exports to the U.S. Economy Jeffrey Merrifield

30 The U.S. is Not a Dominant Player in Reactor Sales (Opportunities That Provide Strategic 100 Year Relationships) China 2 Units Argentina 1 Unit Brazil 2 Units Pakistan France 2 Units China 1 Unit Finland 2 Units UK Japan 2 Units UK Korea 2 Units UAE 2 Units UK Russia 1 Unit Armenia 2 Units Bangladesh 2 Units Belarus 2 Units China 2 Units Egypt 2 Units India USA 4 Units China And U.S. Imports 93% of uranium No domestically owned enrichment capability (Source World Nuclear Association) 30 June 11, 2018 The Importance of Commercial Nuclear Exports to the U.S. Economy Jeffrey Merrifield

31 But U.S. Has Lead in Light Water and Advanced Reactor Technologies Westinghouse AP1000 (Vogtle 3-4) Southern Company - Construction continues on worlds most advanced passive light water nuclear design Advanced Nuclear Reactors Third Way Over 50 Advanced Reactors designs being developed U.S. Congress - Appropriated $1.2 Billion in FY18, an increase of 19% for civilian nuclear programs NuScale Design Certification Review by the U.S. NRC with completion expected September June 11, 2018 The Importance of Commercial Nuclear Exports to the U.S. Economy Jeffrey Merrifield

32 What Should Congress and the Administration Do? Facilitate Expedited Process for Part 810 Export Applications Apply Reasonable Criteria and Promptly Conclude Section 123 Agreements Support Stable Funding and Staffing for Ex/Im Bank Encourage Streamlining of NRC Licensing Requirements Will Also Enable Advanced Reactor Exports Insist on Level Playing Field Internationally for Nuclear as Clean Energy Source Facilitate Domestic Supply of Uranium, Enrichment and Fuel Cycle Facilities Provide Sufficient Funding for New DOE Fast Flux Reactor Establish Domestic Capability for Hi-Assay Low- Enriched Uranium (up to 19.5%) 32 June 11, 2018 The Importance of Commercial Nuclear Exports to the U.S. Economy Jeffrey Merrifield

33 The State of the Nuclear World Significant Positive Activity Globally Nuclear is Moving Beyond Fukushima Created Downturn Nuclear Increasingly Recognized for Vital Carbon Free Generation Important Sales Point in the International Market U.S.A. Has Opportunity to Retake Lead in Advanced Reactor Technologies Countries Want U.S. Nuclear Technologies if Appropriate Deal Structure in Place The Future is Bright But if it is to Prosper, Nuclear Needs U.S. Government Partnership 33 June 11, 2018 The Importance of Commercial Nuclear Exports to the U.S. Economy Jeffrey Merrifield