Nuclear Global and European Markets status

Colette Lewiner

Global Leader Energy, Utilities & Chemicals Capgemini

Nuclear Global and European Markets status

| Energy, Utilities & Chemicals Global Sector

Agenda

� Fukushima accident and first lessons learned

� Impact on General Energy Outlook

• Sustained development

• Security of supply

• Energy mix changes:

� LNG market changes

� Renewables

� Electricity generation costs

� Impact on Nuclear plants operations and development• Existing plants

• New builds

• Plant lifetime extensions/ Decommissioning

� Impact on Nuclear operators and vendors

� Conclusions

2


Fukushima accident

� Exceptional circumstances: 9.0-magnitude undersea e arthquake off the coast of Japan on March 11, 2011 triggering a tsunami that travelled up to 10 km inland.

� Fukushima nuclear plant: with 6 boiling water react ors (BWR) maintained by TEPCO has been hit by the earthquake and tsunami:� Reactors 4, 5 and 6 were shut down prior to the earthquake for maintenance. � Remaining reactors shut down automatically after the earthquake. Grid

electricity supply for cooling purposes collapsed and then the tsunami flooded the plant , knocking out emergency generators.

� 20km radius evacuation around the plant from March 12

3

Highest rating (level 7) on the International Nuclear Event Scale. Second level 7 rating in history, following

Tchernobyl.

Source: http://www.jaif.or.jp/english/


Source: www.guardian.co.uk

Fukushima accident first safety lessons learned

Global warming could trigger more frequent exceptional events � Need to design plant infrastructures

for really exceptional earthquakes and Tsunamis

� Spent fuel pools containment building� Simultaneous Natural Catastrophes

have to be taken into account� Emergency measures to be revisited� Cooling systems redundancy to be re-

assessed � Spent fuel management policy to be

rethought� Radiological permanent assessment

on the site and around� Crisis communication to be re-

designed

4

Out of the 440 nuclear reactors in the world, 20% a re situated in a zone with significant seismic activity

Months will be needed to have the full details on the accident, urgency

measures and site situation. This feedback will enrich lessons learned.


Strengthening nuclear safety regulations

Regulators and politicians are revisiting safety regulations• European regulators are defining stress tests to

be applied to existing reactors and new builds• Politician are calling for international safety rules

and safety body:• French President Nicolas Sarkozy wants to host a

meeting in Paris of nuclear industry officials from the G20 nations in May, aimed at coming up with new global safety standards by year end

• International Atomic Energy Agency (IAEA) director-general Yukiya Amano has called a major conference on nuclear safety to be held in Vienna from 20 to 24 June 2011. He wants the conference to provide an initial assessment of the Fukushima-Daiichi accident and its impact and consequences. He also wants to launch the process of strengthening nuclear safety and the response to nuclear accidents and emergencies. He declared on April 4 that “Rigorous adherence to the most robust international safety standards and full transparency, in good times and bad, are vital for restoring and maintaining public confidence in nuclear power.”

5

Will there be a new international safety body?

International Nuclear Events Scale (INES)


Fukushima accident other lesson learned

� Media covered extensively the event with a dramatic and alarming bias

� Public opinion• USA: According to a March 22 survey by the Civil Society

Institute, the Fukushima disaster is having a major impact on U.S. views about further expanding the use of nuclear power in US:� 53% of Americans would now support “a moratorium on new nuclear

reactor construction in the United States,� 67% now say they would oppose “the construction of a new nuclear

reactor within 50 miles of their home.” � 58% are now “less supportive of expanding nuclear power in the United

States” than they were a month ago • Germany : � 250,000 anti-nuclear protesters gathered in 4 German cities on March 26� Voters backed the anti-nuclear Greens party against Chancellor Angela

Merkel’s coalition in the March 27 state elections in Baden-Wuerttemberg and Rhineland-Palatinate

� Political decisions• Usually politicians reacted by calling for safety assessment of existing

and new reactors and deciding moratoriums on new projects in order to draw lesson learned from the accident

• Only Germany has stopped for 3 months its 7 oldest reactors and has declared a moratorium on its 2010 plant lifetime extensions

6


Fukushima is triggering a debate on present and

future Energy Mix� Media and some anti-nuclear groups are asking for a

nuclear phase out. Before asking ourselves if it is feasible, one needs to ask if it is desirable. An immediate nuclear phase out is not possible while keeping the lights on.

� A long term phase out is possible but needs to be assessed against the following criteria:

• Sustained development: global warming and greenhouse gas emissions decrease

• Security of supply• Electricity generation costs

7

World electricity generation by type (New Policies Scenario)

Source: IEA: World Energy Outlook 2010

20%

37%

30%

12%1%

Are you in favor of stopping the electricity generation from nuclear

power plants in France?

Fully in favor

Rather in favor

Rather opposed

Fully opposed

Don't know

Results of nuclear opinion survey in France (March 2011)

Source: L’express, SIA, Opinion Way, Published April 2011

72%

27%

Would you accept an increase in electricity tariffs so that the France

can stop to generate electricity from nuclear power plants?

No

Yes


Agenda







� Renewables



• New builds



� Conclusions

8


Consumption and CO2 emission evolutions

� In 2009, during the crisis, energy consumption and GHG emissions dropped

� In 2010 ETS sectors emissions projected to increase by 3,6% compared to 2009 (Deutsche Bank). Despite this increase the objective could be met.• However ETS markets are not predictable enough to

stimulate long term CO2 free generation investments. This is why UK decided to set a carbon price floor . Starting in 2013 at £16 per tonne, the tax-inclusive carbon price in 2030 will be at £70 per tonne

� Energy savings objective will be difficult to meet. This is why EU Commission adopted the EnergyEfficiency Plan 2011 : • Focused on instruments to trigger renovation in buildings, to

improve energy performance of the appliances and to foster energy efficiency

• For now only a strategy paper. Legislative proposals with concrete binding measures to follow.

• Germany’s ETS emissions to strongly increase if reactors shutdown according to the Deutsche Bank: • If 7 oldest reactors permanently shut down while 10 others

continue; Germany’s ETS emissions over 2011-20 would increase by 250Mt relative to the current forecasts.

• If 7 oldest shut down and other 10 closed in line with the 2002 legislation, ETS emissions to increase by 370Mt.

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Primary Energy Consumption

Sustained Development

Phasing out nuclear will have a dramatic effect on CO2 emissions increase

EU Greenhouse gases emissions objective

Sou

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Eur

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2009

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12

EU Energy efficiency objective


Security of supply

It is risky to rely too much on imported Oil and Gas:

� Arab spring: limiting oil exportations

� Russia gas dependency: in 2030, Russian gas should provide 50% of EU gas demand

10

Gas imports through pipelines and pipelines project s (2009)

UK12 bcm

(i.e. 131 TWh)

NO96 bcm

(i.e. 1,034 TWh)

DK

LIBYA9 bcm (i.e. 99 TWh)

FR

PTES

GR

IT

RO

BG

PL

SK

CZ

AT HU

SI

DE

LU

CH

FI

EE

LT

LVIE

BENL

50 bcm(i.e. 536 TWh)

RUSSIA115 bcm

(i.e. 1,245 TWh)

Nabucco

Southstream

Nor

dstr

eam

Whitestream

MedgazGALSI

Baltic pipe

Skanled

SE

TAP

Gr e

enst

ream

TGI

Transmed

BBL

ALGERIA30 bcm

(i.e. 324 TWh)

NL

Source: Eurogas, BP statistical review of world energy 2010 , companies web sites, GIE gte – Capgemini analysis, EEMO12

Main exporting countries

Total amount of gas exported

Major gas flows

Projects of pipelines capacity increase

99 TWh

Projects of pipelines capacity increase

Projects of new pipelines (planned or under construction)

Built segments of pipelines under construction

Main countries of destination for new pipelines

Interconnection projects financially supported by the European Energy Recovery Plan (EERP)

GALSI

Source: The West.com.au

Security of Supply


On the short term gas will increase its market share

� Success in unconventional gas production at cheap cost has allowed the US to become nearly self sufficient

� New gas liquefaction trains have been commissioned in 2009 and 2010

� These factors combined with the economic crisis, have created a gas bubble and lowered gas prices

� The EU gas market is oversupplied and has an overhang between 10-30 bcm to make up over the next few years

� However• Fukushima accident will deprive Japan of at

least 9.7 GW of nuclear capacity• This capacity should be replaced by gas fired

plants. Gas would be imported by pipelines from Russia notably but also be provided through LNG

• The range of additional LNG consumption from Japan is 5.4 bcm/y to 11.7 bcm/y and this will accelerate the EU market re-balance

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Gas

Gas long term perspective has changed as IEA estimates now the

total gas reserves to 250 years.Gas should increase its market share

also on the long term.


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Will renewables increase their long term market

share?

� The RES growth is still behind what is needed to reach the 20% target in 2020

� Due to governments’ austerity plans, subsidies to renewable energies are being cut

� The 2020 EU target will be difficult to meet� China is the biggest investor; in 2010 it spent

30% more than in 2009

EU Renewable energy objective

Source: Eurostat, EEA, BP statistical report of world energy 2009, European Commission – Capgemini estimation, EEMO12

Will governments be able to reverse the trend and increase again their

subsidies to renewables?

Investors ranking in 2009 (in $bn)


Electricity generation costs

Estimated costs of electricity in France:• Nuclear: 45 €/MWh

• Gas fired plants: 50 to 60 €/MWh (with today relatively low gas prices)

• Hydropower: >50 €/MWh but highly dependent on sites and construction conditions

• On-shore wind: 80 to 90 €/MWh

• Off-shore wind 150 to 200 €/MWh(including grid connection)

• Biomass: 130€/MWh but very variable according to production conditions.

• Photovoltaic solar electricity from 300 €/MWh (farms) to 600 €/MWh (home roofs)

13

Regional ranges of levelised costs of electricity fo r nuclear, coal, gas and onshore wind power plants

• Assumption: carbon price of USD 30/tCO2• Cost of CC(S) is still in the development stage (IEA study does not consider

costs of transporting and storing the sequestered carbon in final deposits)

5% Discount Rate

Source: IEA: Projected Costs of Generating Electricity, 2010 Edition

Nuclear cost should increase after Fukushima accident as safety inspections will result in more

investments and in plants availability decrease

Costs


Safer Nuclear Energy development is still important

to meet the future sustainability challengesWorldwide challenges:

� Tight global energy demand and supply balance

� Long term global energy security of supply

� Climate Change issues calling for carbon free energy sources

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Nuclear with hydropower are the only carbon-free sc hedulable energy source able to produce large volume of electricity

World energy-related CO2 emissions abatement

Source: IEA, World Energy Outlook 2009


Agenda







� Renewables



• New builds



� Conclusions

15


Existing plants: inspections and additional

investments� In Japan, operators of nuclear

power plants have announced a range of immediate measures being taken as protection against the possibility of their facilities being struck by a tsunami among which:• Ensuring emergency power sources (e.g.

using vehicle-mounted power generator).

• Diversifying and securing cooling function

• Build a higher seawall to protect the plant from tsunamis

� Restart of reactors stopped for maintenance are also postponed

� Germany announced the closure of its 7 oldest plants for 3 month. This temporary shutdown led to a 5.7% spot electricity price increase

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52 3 2

4 52

63

64 4 3

64 5

96

4

101114

2124

2118

2219

7

131416

11

22

14

1012

57

1 1

3332

0

5

10

15

20

25

30

35

1 3 5 7 9 11 13 15 17 19 21 23 25 27 29 31 33 35 37 39 41 43

Reactor Age (in years)

Num

ber

of U

nits

Distribution of reactors under operations by age

Additional CAPEX and OPEX will push Nuclear electricity cost up.

By how much?Older plants will be especially

scrutinized


Nuclear new build:

Some programs will be cancelled other delayed

17

� Worldwide, 439 reactors are in operation , 62 under construction and 484 planned or proposed(April 2011, World Nuclear Association)

Source: World Nuclear Association

The IEA cut by half their November 2010 projection of additional 360GW of new nuclear generating capacity by 2035.

Overview of existing nuclear plants and project cap acities (as of February 2011)


IE

CH

SE

DK

NO

FI

EE

LT

LV

PL

SK

ROSI

UK

PTES

IT

GR

FR

BE

HU

DE

AT

BG

CZLU

NL

BE: Agreement in Oct. 2009: 10 year life extension of the 3 oldest nuclear power reactors to 2025 to guard against energy shortages. In 2008, government installed a nuclear producer tax of 250M€ per year till end of lifetime. Additional proposed taxes following life extension, have not passed as a law due to the political crisis in Belgium.

CZ: CEZ started in 2009 its project to extendDukovany plant lifetime by10 years to 40 years. Further extension to 50 years under consideration.

FI: Fortum: 20 year lifetime extension of original 30 years decided in mid 2007 for 2 units at Loviisa. Operating since 1977 and 1981 they will run until 2027 and 2030, subject to safety evaluations in 2015 and 2023.TVO: Lif tetime xtension to 60 years of the two Olkiluotoreactors operating since 1979 and 1982; subject to safety evaluations every 10 years. Closure in 2039 and 2042.

FR: In July 2009 the Nuclear Safety Authority (ASN) approved EDF's safety case for 40 year operation of the 34 existing 900 MWeunits. Each unit is subject to inspection during their 30-year outage. The first, Tricastin-1, got 10-year extension to 2020.

HU: In 2005, 20 year lifetime extension for the 4 reactors of Paks nuclear plant, operating since 1982-87. Reactors to run until 2032-2037.

NL: Only plant to be shut in 2034 after a conditional extension in 2006.

SK: Upgrade program on Bohunice units 3 & 4, operating since 1984 & 1985 is under way with a 40-year lifetime extension in view (to 2025).

ES: Government granted a 4 year life extension for the Santa Maria de Garona plant to 2013. Almarez 1&2 and Vandellos 2 granted 10 year extension. In February 2011, Spain’s Congress ratified a law allowing the 8 operating nuclear units to run for longer than 40 years

SE: Life extension and uprating for Oskarshamn 3 to 60 years approved in 2010 and expected to be completed in 2013. Planned life extension to 60 years of Oscarshamn 2.

CR

SI/CR: Slovenia shares the NPP Krško 696 MW reactor with Croatia; connected to the network in 1981 and designed to run for 40 years. In 2009, NPP Krško submitted an application for lifetime extension of 20 years (to 2043).

UK: Last 4 operating Magnox reactors to be shut down by end 2012, af ter life extension s of 9 months to 2 years.5 year lifetime extension of the Advanced Gas Reactors (AGR) Heysham 1 and Hartlepool until 2019. Plant Lifetime Extension (PLEX) program could enable extended lifetimes for all UK’s AGR plants by 5 years and Sizewell B by 20 years.

DE: End 2010, government agreed to a two-tier lifetime extension of the German nuclear plants. 17 nuclear reactors to run 8-14 years longer than the 2020 deadline set by a prior government: Lifetime extension of nuclear units built before 1980 by 8 years to 40 years and of newer units by 14 years to 46 years. Operators to pay a “fuel-element tax” totaling €2.3 bn/year for 6 years and a “eco-tax” of about €15bn.

Life time extensions will be scrutinized

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Overview of the nuclear plants lifetime extension i n Europe before the accident

So

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orl

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ucl

ear A

sso

ciat

ion

, Cap

gem

ini R

esea

rch

Germany decided to suspend 2010 lifetime extension decision.


More reactors could be closed following the Fukushima

accident

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• After the accident Fukushima reactors will be closed (9,7GW)• Some reactors could be closed after the new safety inspections• Some more should be closed for political reasons (as in Germany)• A combination of political and regulatory pressures could also lead to closures

According to Eurelectric, if all nuclear plants old er than 30 years would be closed in Europe, the EU 27 would lose 14% of its generation capacity. Gas demand will grow.

European reactors threatened to be closed

Source: Les Echos, April 14, 2011

Incremental Global Gas Demand in 2020 from Lower Nuclear Power Generation


Political declarations

Emerging nuclear countries that have the most advanced programs:

South America:� Chile� UruguayAfrica & Middle East:� Egypt� Jordan� Kuwait� Morocco� Nigeria� Saudi Arabia� Tunisia� Turkey� United Arab

EmiratesEurope:� Belarus� Italy� PolandAsia� Bangladesh� Indonesia� Thailand� Vietnam

China: 27

Number of reactors under construction

Russia: 10

India: 5

South Korea: 5

Slovakia: 2

Taiwan: 2

Canada: 2

Japan: 2

Iran: 1

Argentina: 1

Brazil: 1

Pakistan: 1

Finland: 1

France: 1

USA: 1

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Plant provisional closure:

Germany (7 oldest reactors)

New projects delayed or suspended:China (assessment); Taiwan assessment, Italy (1

year moratorium); Japan (review plans for new projects); Switzerland (moratorium); UK (delayed)

Safety inspections of existing plants:

All countries

Image S

ource: Le Figaro; IA

EA


Agenda







� Renewables



• New builds



� Conclusions

21


Reactors under construction

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Generation 3 safer reactors should increase their m arket share. However market size will decrease and China and Ind ia could

favor their local vendors.

PWR (Pressurized Water Reactor)

BWR (Boiling Water Reactor)

Candu/PHWR (Pressurised HeavyWater Reactor)

AREVA: 4 EPR, Generation 3 (1,600MW): • Olkiluoto (Finland): 2013• Flamanville (France): 2013• Taishan (China / 2 reactors): 2013 & 2015

CGNPC (China): CPR-1000, Generation 2, (1,000 MW):• China: 18 reactors / 2011-2015

KEPCO (South Korea): APR-1400, (Generation 2, 1400 MW):• South Korea: 2 reactors / 2013-2014• Abu Dhabi :2 reactors /2017 for the first

MITSUBISHI HEAVY INDUSTRIES (Japan): PWR Generation 2:• Japan: 2 reactors / 2011 & 2014

ROSATOM (Russia): Generation 2 & 3• 20 VVER reactors from 400 to 1200 MW under

construction around the world

WESTINGHOUSE (US-Japan) AP 1000, (Generation 3, 1150 MW)• China: 4 reactors / 2013-2015.

GENERAL ELECTRIC HITACHI (ABWR): • Japan and Taiwan: 3 units

• AECL : None of the next generation ACR-1000 reactor sold despite $434 Mio investment.• Hindustan Construction Company (India) : 3 PHWR local technology reactors under construction.


Agenda







� Renewables



• New builds



� Conclusions

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Conclusions

� Nuclear renaissance stopped or delayed by the Fukushima accident

� Existing plants will be safety tested� Lifetime extensions will be scrutinized� New programs delayed, some cancelled� Safety regulations will become more international� Debates on future energy policy are emerging

24

Decision on nuclear future will not only be scienti fic, technical or economical but also political.

Nuclear Global and European Markets status

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