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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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