Toshiba’s Nuclear Projects Falling Like a Row of Dominos

  • dominosThe Japanese conglomerate is expected to announce Feb 14 that it will pull out of projects in the UK (3 AP1000s) and India (6 AP1000s) due to its deep financial difficulties.
  • Westinghouse may be sold off for its technology and services lines of business, but new investors will be needed for the projects in the UK and India.

A sense of panic is emerging globally as Toshiba, troubled by extensive losses and fake financial reports, heads toward a complete exit from the commercial nuclear energy industry. The two countries that will be hardest hit by the expected actions will be the UK and India.

Unlike the situation following the Fukushima crisis, in which the Japanese government in effect nationalized TEPCO, no bailout of Toshiba is expected to come to its rescue. Financial wire service reports indicate that the firm will sell off its stake in Westinghouse, which is worth about $250M.

After nine years of writing about the global nuclear industry, these development make for an unusually grim outlook. It’s a very big rock hitting the pond. Toshiba’s self-inflicted wounds will result in long lasting challenges to the future of the global nuclear energy industry.

Worse, it comes on top of the French government having to restructure and recapitalize Areva, its state-owned nuclear power corporation, so that it can complete two 1650 MW EPR reactors that are under construction in Europe and to begin work on the Hinkley project the UK.

Are these enough financial resources, and management capabilities, for the nuclear energy industry to make good on its commitment to have an impact on global climate change?

NuGen Project Faces Investor Uncertainty

Toshiba will likely end its planned commitment for a 60% equity stake in the NuGen Consortium at the UK Moorside project located in Cumbria. An effort to build three 1150 MW Westinghouse AP1000 nuclear reactors will now need new investors or a new reactor vendor or both.

In the UK backers of the NuGen project are looking to see if the government will directly fund the effort with Westinghouse acting as a technology vendor uncoupled from its parent’s convoluted corporate structure. That might be possible if Toshiba can find a buyer for the firm. The government might wind up being the investor of last resort and also have the role of setting the rates for the electricity generated by the reactors.

Another potential investor in the NuGen project could be South Korea which has had success in bringing in the first of four 1400 MW reactors for the UAE as part of a $20 billion project.

The question is whether South Korea would want to take on another major project while it is still completing the other three units in the UAE plus it has domestic reactors that have capital requirements. The risk of being overextended in terms of money and management capability is one the firm will likely weigh relative to its interest in entering the UK nuclear market.

It is also less likely that Chinese state owned nuclear firms will have an appetite for further investments in the UK’s new nuclear build. They already have a full plate.

Two firms have combined to take a 33% stake in the massive Hinkley Point C project. Also, they have also committed to enter the costly and lengthy Generic Design Assessment effort for the Hualong One reactor.

Two reference units of the the Hualong One, units 3 & 4, are now under construction at Fangchenggang site in in the south of China’s Guangxi Zhuang Region. They are expected to be completed by 2020.

The two firms building the units at Fangchenggang hope to export the Hualong One to the UK for the Bradwell site once the Hinkley project is complete sometime in the mid-2020s. The firms have plans for a majority equity stake in the Bradwell project which could cost $10 billion. That’s a lot to take on and the prospect of being overextended is very real.

NPCIL Sees Andhra Pradesh as Now Being “Impossible”

Efforts by Westinghouse to close a deal to build six AP1000s for NPCIL at a coastal site in the southern state of Andhra Pradesh will go by the boards. The Indian government has not make any official statement about Toshiba’s problems. However, Reuters reported that it was told it now looks to be “impossible” for the six unit project to move ahead.

The Indian utility had been seeking U.S. Export Import Bank loan guarantees for the project which has cost estimates of at least $15 billion. Congress throttled the bank’s loan powers in 2015 and is unlikely to loosen the restraints for a project sponsored by Toshiba, at least in its current financially distressed state.

What Future for Westinghouse?

The risks that Westinghouse faces even if the reactor division is able to establish itself as an independent vendor to EPC firms and investors include keeping its work force intact during what could be a lengthy transition.  Layoffs and cost cutting could reduce the core competencies of the firm and its ability to meet the service needs of existing customers much less be a vendor of nuclear technologies for new projects.

China has plans to rely on the experience and skills of Westinghouse engineers as it completes the first of four AP1000s now under construction in that country.  The same risk is posed for the four units being built in the US.

Westinghouse is mired in protracted and complex contractual disputes with its nuclear components supplier for the U.S. reactor projects. Westinghouse and CB&I disagree on cost figures included in the acquisition of that firm. The claims and counter claims total hundreds of millions.

Wire service reports indicate there is a possibility Westinghouse will sell its nuclear fuel business to cover these costs, but this is not confirmed.

In any case, investors will likely wait to bid on the fuel unit until settlement of the dispute  between CB&I and Westinghouse

In the US Duke Energy recently received NRC licenses to build two AP1000 reactors at the Lee site in South Carolina. However, the utility has postponed a decision to build them to the indefinite future. 

In May 2016 Florida Power & Light postponed development efforts for two AP1000s at its Turkey Point site near Miami for at least four years.

For both utilities, the transition of Westinghouse from being a wholly-owned firm by Toshiba, which invests in nuclear power projects, to being  just a reactor vendor could be well on its way to completion, or done, by the time they decide to move ahead with these projects.

Because rate payers are covering the costs of the four AP1000 reactors as they are being built in the U.S, there is no risk of Toshibas pulling out as investor. EPC firms manage the day-to-day construction work. However, all four units are over budget and behind schedule which makes for contentious rate case hearings as the utilities in Georgia and South Carolina seek to recover their costs.

If projects in the UK and India do not get new investor, the answers to questions of where electricity will come from will be fossil fuels. That’s not good for the planet or our place on it.

Turkey’s first nuclear power plant Akkuyu to be operational by 2023

(Daily Sabah) Energy and Natural Resources Minister Berat Albayrak announced last week the first of four Rosatom 1200 MW VVER nuclear reactors will be operational at the Akkuyu site located on Turkey’s Mediterranean coast by 2023.

The nuclear plant in the southern province of Mersin is the first of three nuclear power plants Turkey currently plans to build to reduce its dependence on imported energy from exporters.

A second plant will be built by a French-Japanese consortium in the northern city of Sinop near the Black Sea. It is expected to include four Mitsubishi/Areva ATMEA 1100 MW reactors. The site has not yet broken ground.

Last October the government announced that the country’s third nuclear power plant will be built in the Igneada district in the northwestern province of Kirklareli. There have been reports Chinese state owned nuclear firms will bid the CAP1400, which is based on the AP1000.

Oak Ridge Lab Verifies Performance Of Transatomic Advanced Reactor

(NucNet) The US Department of Energy’s Oak Ridge National Laboratory (ORNL) has released a technical memorandum independently verifying the performance of an advanced nuclear power reactor being developed by Massachusetts-based Transatomic Power Corporation.

Transatomic said scientists at ORNL have verified the viability of reducing nuclear waste production with the company’s technology. The laboratory’s conclusions represent an important milestone for the nascent advanced nuclear industry and help position advanced nuclear technology as a key player in the country’s future energy mix.

Transatomic has designed a nuclear reactor that uses a molten fluoride salt to carry its fuel, meaning it cannot melt down and possesses improved, inherent safety features over current nuclear technology.

Additionally, ORNL’s results “conclusively show” that the Transatomic reactor can operate for decades using the commercially available 5% low-enriched uranium supply chain. The company expects to build a demonstration reactor by the mid-2020s.

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3 Responses to Toshiba’s Nuclear Projects Falling Like a Row of Dominos

  1. Pingback: Toshiba’s Nuclear Projects Falling Like a Row of Dominos - Neutron Bytes - Pro-Nuclear Power Blogs - Nuclear Street - Nuclear Power Plant News, Jobs, and Careers

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  3. Paul Kirwan says:

    Your assertion that:
    “If projects in the UK and India do not get new investor, the answers to questions of where electricity will come from will be fossil fuels. That’s not good for the planet or our place on it.”
    is rather narrow in its outlook.

    Try this instead:
    ” If projects in the UK and India do not get new investors, the answers to questions of where electricity will come from will be from other sources. Given the rapid cost reductions of off shore wind coupled with the advent of commercial level storage capacities, renewable supplies will commercially outperform new nuclear before any of these would-be projects or their replacements come to fruition, leading to a rapid decline in the opportunities for new build nuclear power stations in the future”.

    There you go, fixed that for you….
    The economic decline of EDF and Toshiba is not just a blip, it is the consequence of years of dodgy financial reporting and fiddling of safety certificates of critical components – also for economic reasons. All showing additional (hidden) costs of civilian nuclear power.

    Like

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