Big Stories about China, Belefonte, and Belene

  • Russia inks a deal with China to build four 1200 MW VVERs and to supply MOX fuel for an advanced reactor. It’s the biggest nuclear energy deal ever between the two countries.
  • SNC Lavalin signs on to be the EPC to complete Bellefonte 1. Much depends on financing the project and finding a customer for its power.
  • Bulgaria’s parliament revives the Belene project, Unit 2, and to initiate a search for investors. By putting all the the risk in the hands of the investors, its faces a steep challenge to find them and an EPC.

xl sizeNot everyone, it turns out, wants to build small modular reactors (SMRs). This past week was full of announcements of plans to build full size nuclear reactors. The news comes in several  pieces and most of them are XXL size.

China has signed up to build two 1200 MW Russian supplied VVERs at Xudabao, a “greenfield” site, and two more at Tianwan, Units 6 & 7. Both are coastal sites. Rosatom will also supply MOX fuel for the CFR-600, a Chinese designed fast reactor and fuel and equipment for radioisotope thermoelectric generators (RTGs) for China’s space program.

SNC-Lavalin, which purchased AECL’s reactor division a few years ago, has signed a letter of agreement with a Tennessee firm, Nuclear Development LLC, to be the engineering, procurement, and construction lead (EPC) to complete construction of Bellefonte 1, which was designed to be a B&W 1200 MW PWR.  It is unlikely, for this reason, that it would be converted to a CANDU type unit, which is SNC Lavalin’s expertise.

After more almost a decade of indecision, the Bulgarian parliament has authorized the country’s energy ministry to search for investors to build a second unit at the Belene site. Work on plans for a 2nd unit were halted in 2012.

China’s Really Big Deal

The deal with Rosatom was made at the top levels of the Chinese government with involvement of China’s Atomic Energy Authority, the National Energy Administration, and the China National Nuclear Corp. (CNNC).

A deal of this magnitude was most likely also signed off on by Xi Jinping, the President of the Peoples Republic of China. At an estimated “overnight cost” in the range of $4000/Kw, +/- $500/KW, four 1200 MW units would come in at $19 billion more or less.

A report by the Bloomberg wire service offered a low ball estimate for all parts of the deal, including the MOX fuel, and the RTGs, at $15.5 billion.  However, the wire service is correct that it is the biggest nuclear deal ever agreed to by the two countries. Also, according to the wire service, China will be responsible for financing the construction of the reactors. This is significant because in many other Rosatom export deals, the Russian firm offers generous terms for financing to its customers.

An interesting element of the deal is that Russia will supply MOX fuel for an advanced reactor, the CFR600, a 600 MW  According to the IAEA, the CFR 600 will be designed to demonstrate the breeding ability of fast reactor. World Nuclear News noted that Fast neutron reactors (FNRs) are seen as the main reactor technology for China, and CNNC expects the FNR to become predominant by mid-century. CNNC reports that it poured first concrete for the project last January and has plans to complete building the reactor by 2023.

Mark Hibbs, a nuclear energy expert at the Carnegie Endowment for International Peace, writes in his new book about nuclear energy in China that China has limited experience using MOX and that it hasn’t done much in terms of  fabricating the U-238/U235/PU-239 mixed oxide fuel.

Also, as of last January, China was reported to still be in negotiations with Areva for a deal involving an 800 tonne/year MOX plant with an estimated price tag of $15 billion. It appears in dealing with the “make-v.-buy” equation, China has for the time being opted for “buy” when it comes to MOX.

At the Tiawan plant China is also building two Hualong One 1080 MW PWRs (Units 5 & 6). Ground was broken for the plants in December 2015 with completion scheduled for December 2020 for Unit 5 and October 2021 for Unit 6.

An side note about the greenfield Xudabao site, located along China’s northernmost coastline, is that the World Nuclear Association has a report that six Westinghouse AP1000 nuclear reactors are slated for that site to be build as CAP1000s, the Chinese version based on technology transfer from Westinghouse. WNA notes that China has swapped out plans for the first two CAP1000s for the Russian 1200 MW VVERs.

Will Bellefonte 1 Rise Again?

Franklin Haney, a Tennessee real estate developer, age 77, hopes to close on his purchase by auction of TVA’s Bellefonte site located in Scottsboro, Al, by this December.  The deal included two partially built B&W 1200 MW PWR type nuclear reactors, cooling towers, switch yards, roads, rail lines, and other infrastructure.

In anticipation of completing the deal, he’s signed a letter of agreement through his firm Nuclear Development LLC with SNC Lavalin to be the EPC to complete Bellefonte 1. The deal with SNC Lavalin will not go through if Haney does not close on his purchase of Bellefonte with TVA.

The whole thing is a risky proposition. Bellefonte is a “white elephant,” according to a December 2016 research paper by Chris Gadomski, an analyst for Bloomberg New Energy Finance.

“Skeptics would be justified in wondering how reviving 1960s-era nuclear reactors that have been questionably maintained for decades represents a viable economic opportunity.”

This blog is one of those “skeptics” laying out the challenges the project faces in an analysis posted here in November 2016.

Haney’s big problem is to find financing to complete Bellefontge 1 which would likely cost him at least $4 billion which is what TVA paid to complete Watts Bar II.  Bellefonte 1 is more complete than Bellefonte 2 which was stripped of many significant components when TVA abandoned the construction of both units in 1988.

Haney has been lobbying the Trump administration and congress for production tax credits and loan guarantees as incentives to bring investors to the table.  He donated $1 million to Trump’s Inauguration  Committee and over $100,000 to the Republican National Committee.

The Bloomberg wire service reported in 2017 that Haney told people close to him that he has dined with President Trump at least a dozen times since the election. Haney is also a member of Mar-a-Lago, Trump’s Florida club.

Haney’s efforts have brought him into communications with a wide assortment of people and organizations.  According to the magazine Mother Jones, he cast his eyes on sovereign wealth funds from the Middle East.

“At a meeting in Miami on April 5, 2018,  Franklin Haney, the owner of an inoperative nuclear power plant in Hollywood, Alabama, sought a major investment for his facility, according to two sources familiar with the gathering.

His target, the sources say, was Sheikh Ahmed bin Jassim bin Mohammed Al Thani, Qatar’s minister of economy and commerce and deputy chairman of the Qatar Investment Authority, the $300 billion sovereign wealth fund of the natural-gas-rich Persian Gulf state.

Also at the meeting, according to the sources, was Michael Cohen, President Donald Trump’s longtime personal lawyer and fixer. (Several days later, Cohen’s office and home would be raided by federal agents.)

Now, as the Trump scandal expands to include Cohen’s business deals and possible interactions between Trump associates and officials of Saudi Arabia and the United Arab Emirates, any relationship between Cohen and Qatar would likely be of interest to federal investigators.” 

Haney’s efforts to secure funding could be complicated by these investigations. His meetings with Al Thani and Cohen reportedly took place in Miami and may have overlapped in terms of timing one of his dinners with President Trump.

To be successful Haney must not only get NRC approval to complete construction, and operate the plant, he must also convince TVA to buy power from it.  The utility has stated in its most current Integrated Resource Plan that it has no plans to acquire new nuclear powered generation capacity.

TVA backed off of a deal with BWX to design and license twin 180 MW SMRs and instead is pursuing an Early Site Permit (ESP) which has no preferred reactor design in it. If issued by the NRC, the ESP would be good for 20 years.

Bulgaria to Begin Belene Again

According to World Nuclear News, citing the Bulgarian News Agency, enthusiasm about Parliament’s decision to authorize the energy ministry to seek investors for a 2nd unit at Belene should be taken with a grain or two of salt.

“We should not act prematurely, and we should not trumpet about restarting the project,” Nenkov said. “We are not restarting anything. We are giving a mandate for studies in the next five months to probe investors’ interest. If future investors have serious intentions and see considerable economic and financial potential, they will be inclined to take a greater risk as is stipulated in our conditions for the negotiations.”

Significantly, the project would be a straight commercial proposition with no government financial backing or rate guarantees. The investors would take on the risks of owning and operating the plant, hiring and managing the EPC and the eventual plant operator.

Russia regards Bulgaria’s nuclear energy plants as a captive market and has thwarted efforts by western firms to even bid on projects there.

A bit of history is need here. Prior to the 2012 decision to stop work, Bulgaria’s National Electric Company had in 2006 awarded a contract to Russia’ Atomstroyexport to build two 1000 MW VVERs at the Belene site which is located on the Danube River near the Romanian border.

In 2012 Westinghouse signed a contract to prepare a proposal for a third reactor at Bulgaria’s Kozloduy site. Efforts by the firm to take over construction of the plant came to an end when Russia said has no intention of sharing information with Westinghouse regarding a feasibility study. That project is designed to scope out the potential for a seventh unit at Bulgaria’s Kozloduy Nuclear Power Plant.

It’s unclear whether as part of its efforts to re-establish its nuclear reactor business that it Westinghouse would seek to bid on the Belene project. In 2010 Westinghouse reportedly told the US Embassy in Sofia that the 1st unit was “a lemon” according to a US State Department Cable as reported by the UK Guardian newspaper.

The embassy cable, dated February 17, 2009, also complained about endemic corruption in Bulgaria associated with the project.

“When Bulgarians talk about the Belene nuclear power plant, they increasingly do so in hushed tones. Issues of delays, financing woes, non-transparent horse-trading and side deals, Russian influence, middle-man rent seeking, and the interests of well-connected politicians and energy oligarchs inevitably come up.”

With the new search for investors, China’s CNNC has expressed interest in the project. The Reuters wire service reported last March that the firm was looking at the $12 billion project. It sent a letter of intent / interest to the Bulgarian Energy Ministry.

According to NucNet in May 2018 deputy prime minister Tomislav Donchev and energy minister Temenuzhka Petkova met representatives of the Chinese company in Sofia. Petkova was later asked by parliament to present by the end of June 2018 a number of  options for Belene. According to Bulgarian news media reports she said that a tendering procedure for Belene could begin by the end of 2018, if Bulgarian lawmakers would “give a mandate” for it.

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About djysrv

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