This report is an annual review of trends and developments around the globe. The science fiction writer Bruce Sterling once wrote that “the future is history that hasn’t happened yet.” While I don’t posses a crystal ball, there are some plausible scenarios as well as economic and technical factors in motion that deserve being mentioned here.

There are lots of possible changes in the nuclear energy industry landscape. This article looks at a few of them that seem more significant that others. Readers are welcome to nominate  their own views of the future in the comments section.

Trends

Nuclear Energy, climate change, and SMRs

The need for carbon emission free sources of baseload power will point more countries and their electric utilities toward nuclear energy. Wanting nuclear energy, and being able to afford it, will drive more demand for small modular reactors (SMRs). However, the market will be slow to develop until at least one vendor gets a design licensed and builds one within a reasonable range of its original cost estimate.

Former US Secretary of Energy Steven Chu told the Guardian newspaper in November that building multiple instances of the same reactor design should result in a 40% reduction in cost from the first of a kind to the 10th unit. And SMR vendors want order books with sufficient ink on the pages to justify building factories to turn out SMRs with those cost savings.

Taking the risks to build the first nine units is a serious business for any utility facing the prudent investor requirements of the uniform commercial code or its regulatory equivalent in other countries.

The lack of near-term orders is what caused B&W to lay off almost all of its mPower (180 MW)  SMR team in Lynchburg, VA, and for Westinghouse to close down its SMR development work on a 225 MW design  last February.

Only NuScale, with cost sharing money from the Department of Energy, is proceeding with a drive towards design certification with the NRC in 2016, and support through UAMPS, its customer for the first units, a COL likely in 2017. A site has not been formally selected though NuScale has looked at Idaho among other locations. The plan is to develop 12 of the 50 MW units over a period of time with revenue from the first units supporting later construction.

TVA is working on an early site permit for an SMR to be built at Clinch River in the post 2020 time frame after it completes one of the 1200 MW Bellefonte units. No vendor has been selected by TVA for its SMR effort.

Damn climate change, full speed ahead on coal with a natural gas chaser

Germany’s decision to cut its nuclear reactor fleet in half has resulted in a roaring comeback for its coal mining industry including lignite which has the lowest energy density of any coal product.

Coal is profitable. Just ask India which has huge coal reserves, and a robust mining industry to exploit it. India has told western nations it will not sacrifice development goals to meet climate change objectives.

In the US record low prices for natural gas are giving utilities, which operate new gas fired plants, and aging nuclear reactors, reasons to consider shuttering the reactors rather than invest in expensive long term support for plants beyond their first 20 year license extension.

Country-by-Country Updates

Japan will restart at least half of its 48 nuclear reactors by the end of 2015. So far four have been cleared by the newly independent Nuclear Regulatory Agency and are awaiting local government endorsements. However, at least seven units , tagged as members of the 40 plus club because of their age, are likely to be put on a list for decommissioning. The Japanese government will work to compensate utilities for these costs and for at least some of the lost revenue.

China will approve more coastal units and authorize the first instances of  construction of its indigenous design, the ACP1000. Chinese nuclear firms will continue to seek equity deals in other countries plus provide engineering services.

Two such examples are reactor development efforts in Romania and Argentina. Significantly, both countries are seeking new Candu-6 units (700 MW). This may be a boon for Canada’s SNC Lavalin or it may be an opening for China to try to convince these countries to be among the first to write orders for export versions of the ACP1000.

China will continue work to complete the four Westinghouse units (AP1000s) it has under construction and likely ink deals for more of them. However, Chinese firms will seek an increasing share of the business of providing components for the new build. American firms who are involved in the first four units may not see as much sales growth over time as expected due to this trend.

China faces two key institutional challenges in its breath taking commitment to building dozens of new nuclear reactors. The first will be to develop an independent, credible, and effective nuclear regulatory and safety oversight agency with sufficient trained staff to keep up with the rapid development of the nation’s nuclear fleet. The second is to insure that China’s nuclear industry is not infected with the same perverse influences of corruption and shoddy construction that resulted in a deadly crash of one of its high speed rail trains.

India’s nuclear program will remain more-or-less stalled due to its intransigent stance on its draconian nuclear liability law. PM Nodi’s latest proposal for a nuclear liability fund will not prove to be feasible. The cost of the premiums, presented to US vendors, will be included in the price of the bids for delivery of new reactors resulting in state-owned NPCIL paying for the fund in the form of the passed along costs. That agency will balk at the plan and so will Indian heavy industry firms who will plead for exemptions from the premiums on the grounds that they are already covered by Indian insurance.

President Obama will return from his January 2015 trip to India with some trade agreements but no major progress allowing U.S. firms to enter India’s nuclear market.

Rosatom’s spectacular claim of a plan to delivery 20 new nuclear reactors will result in at least two new units at Kudankulam. They will be built as extensions of the pre-existing contract which apparently pre-dates the liability law and which resulted in the successful commissioning this year of two 1000 MW VVERs.

The Czech Republic will revive its tender for two-to-four new reactors, two at Temelin and two at other locations, in an effort to become a preferred supplier of electricity to Germany. The government will finally agree to rate guarantees for CEZ, the state-owned electric utility, that will have the dual roles of owning and operating the reactors and wheeling the power to customers. This move will bring equity investors to the table including the possibility of participation by Chinese nuclear firms.

Areva, which was rudely excluded from the last round of bidding, may have a second chance to present its case for getting the business. However, a high profile record of cost overruns and delays at EPRs under construction in Finland and France will weigh against it.  Westinghouse, with its growing global market share, will be able to present an attractive case for its technology.

The UK nuclear new build will continue to grow with progress at the Hinkley and Moorside sites. The UK has more-or-less committed itself to three reactor designs – the Areva 1600 MW EPR, the Westinghouse 1150MW AP1000, and the GE-Hitachi 1350 MW ABWR.

If GE-Hitachi submits its new 1530 MW ESBWR design, which has successfully completed its design review at the NRC in the US, the sites slated for the ABWR may see an power boost by the time they are ready to break ground.

Turkey will announce a third site for its nuclear power program most likely on the west coast of the Black Sea. In addition to generating power for the country’s growing economy, it will also position the nation to become a regional supplier of electricity to bordering countries.

Turkey will break ground and pour first concrete for its first nuclear power station at Akkuyu in Mersin on the Mediterranean coast. Rosatom is building four 1000 MW VVERs at that site financing all of them for the first 15 years and with a plan to then offer the units to equity investors.

Turkey’s second nuclear site is still in the planning stage and is to be located at Sinop on the Black Sea. There a consortium led by Mitsubishi and GDF Suez have plans to build four Atmea-1 1100 MW reactors which are scaled down Areva EPRs.

South Africa will continue its dance between the political ambitions of President Zuma, who favors a deal with Rosatom for 9.6 GW of nuclear power, and the appearance of an orderly procurement process open to all bidders. Without 100% financing locked in place, almost everyone involved is surely wasting their time.

Eskom, the state-owned electric utility, is broke due to years of being held hostage in terms of throttled rate increases that have also hobbled grid infrastructure improvements.

Rosatom has tried to sweeten their offer by pricing its reactors at $5000K/Kw, but South Africa’s Energy Agency, having surveyed costs globally, thinks a more realistic price is $6500/Kw.

In the U.S. the benefits of building new nuclear reactors in regulated markets will become a two-edged sword with critics using the rate setting process to attack the inevitable cost increases that arise from building first-of-a-kind units.

A Republican led Congress, with majorities in the House and Senate, will nominally be more receptive to nuclear power, but that isn’t likely to result in significant increases in funding for nuclear R&D for advanced reactors.

The reason is that in the competition for “science” money, the biological sciences, including genomics and other disease fighting disciplines, will make a more persuasive case for a share of the declining federal budget. It is more politically sustainable for a fiscal conservative to support these life-saving priorities than energy technologies with payoffs decades in the future.

Yucca Mountain will not arise from the dead despite Nevada Sen. Harry Reid’s demotion, due to the election, to Senate minority leader. The NRC’s waste confidence rule allowing spent fuel to be stored at reactors for the next 50 or so years postpones any real management or technology initiatives well into the future.

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