For Official Use NEA/NDC(2008)3
Organisation de Coopération et de Développement Economiques Organisation for Economic Co-operation and Development 04-Feb-2008 ______English - Or. English NUCLEAR ENERGY AGENCY COMMITTEE FOR TECHNICAL AND ECONOMIC STUDIES ON NUCLEAR ENERGY Use For Official NEA/NDC(2008)3 DEVELOPMENT AND FUEL CYCLE
NDC - IEA Energy Review of National Energy Policies for Finland, Switzerland and the United States
12-13 February 2008
NEA Headquarters, Issy-les-Moulineaux, France
The information contained in this document will be presented at the 54th Meeting of the NDC. This document is a compilation of documents or parts of documents issued for the meetings of the IEA Standing Committee on Long-Term Co-operation in March, October and December 2007.
Mr. Stan Gordelier Tel: +33 (0)1 45 24 10 60 English - Or. English - Or. English E-mail: [email protected]
JT03239745
Document complet disponible sur OLIS dans son format d'origine Complete document available on OLIS in its original format
NEA/NDC(2008)3
COMMITTEE FOR TECHNICAL AND ECONOMIC STUDIES ON NUCLEAR ENERGY DEVELOPMENT AND THE FUEL CYCLE (NDC)
54TH MEETING 12-13 FEBRUARY 2008
IEA ENERGY REVIEW OF NATIONAL ENERGY POLICIES FOR FINLAND, SWITZERLAND AND THE UNITED STATES
This document is the compilation of IEA documents or parts of documents issued for two meetings of the Standing Committee on Long-Term Co-operation in October and December 2007.
SECTION 1
– IEA/SLT/CERT(2007)14 Major Issues of the Energy Policies of Switzerland...... 4 – IEA/SLT/CERT(2007)18 Major Issues of the Energy Policies of Finland ...... 6 – IEA/SLT/CERT(2007)20 Major Issues of the Energy Policies of the United States ...... 9
SECTION 2
– IEA/SLT/CERT(2007)13 Draft Report of Switzerland ...... 12 Nuclear chapter ...... 15
SECTION 3
– IEA/SLT/CERT(2007)17 Draft Report of Finland ...... 20 Nuclear chapter ...... 25
SECTION 4
– IEA/SLT/CERT(2007)19 Draft Report of the United States ...... 31 Nuclear chapter ...... 35
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NOTE BY THE SECRETARIAT
This document is a compilation of documents or parts of documents issued for two meetings of the IEA Standing Group on Long-Term Co-operation (SLT) held in October 2007 for the Energy Policy review of Switzerland and in December 2007 for the Energy Policy Reviews of Finland and the United States.
The first section of this report contains the major issues identified for discussion at the SLT in the documents IEA/SLT/CERT(2007)14 for Switzerland, IEA/SLT/CERT(2007)18 for Finland and IEA/SLT/CERT(2007)20 for the United States. Many NDC members will find this sufficient for their needs.
Each full IEA document contains several chapters on various aspects of the review. Those selected for incorporation here are:
1. Executive Summary and Recommendations 2. Nuclear power
Section 2 of this document contains these items for Switzerland [IEA/SLT/CERT(2007)13], Section 3 for Finland [IEA/SLT/CERT(2007)17] and Section 4 for the United States [IEA/SLT/CERT(2007)19]. For the NDC members who may wish to read more about the Energy reviews, all three documents are available on OLIS.
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SECTION 1 STANDING GROUP ON LONG-TERM CO-OPERATION COMMITTEE FOR ENERGY RESEARCH AND TECHNOLOGY
IEA/SLT/CERT(2007)14 - MAJOR ISSUES OF THE ENERGY POLICIES OF SWITZERLAND (Note by the IEA Secretariat)
1. The SLT will discuss the in-depth review of the energy policies of Switzerland on 2 October 2007. Selected issues covered in the review and suggested for discussion by the SLT are set out below.
Adequacy of future electricity capacity 2. Switzerland has traditionally been a net exporter of electricity, but for the past two years, imports have exceeded exports. Electricity demand is growing faster than generation, and plans for new large-scale capacity are few. According to the recently published energy scenarios, a supply gap will start widening in the late 2010s, when long-term imports contracts with France expire, and widen further in the early 2020s, when a third of the country’s nuclear capacity reaches the end of its operational life. Renewable energy and energy efficiency are projected to bridge only part of this gap. The government wants to avoid dependency on imports, so the options left for Switzerland are building more nuclear and/or gas-fired capacity.
3. The process to construct new nuclear power would take long, about 16 to 18 years from submitting the proposal for a general license to generating power, and the project would likely face a referendum. The government has plans to streamline the licensing procedure without having to amend the Nuclear Energy Law. Regardless of whether new nuclear plants are built, also the issue of nuclear waste management will need to be solved.
4. Constructing gas-fired power faces challenges under current CO2 regime. Emissions reductions at home are expected to cost some ten times more than those realised abroad. Switzerland has allocated its quota of emissions reductions from the Kyoto mechanisms unevenly across sectors, strongly favouring use of transport fuels at the expense of electricity generation and industry.
How to set more favourable conditions for investing in electricity generation?
What are the main reasons for wanting to avoid growing dependency on electricity imports?
How could the allocation of rights to purchase international emissions reduction credits be better balanced across sectors?
Reducing CO2 emissions from energy use 5. As in most developed countries, transport is a challenge for energy and climate policy also in Switzerland. This is particularly so for curbing the rising CO2 emissions from private cars. The trend is unsustainable and the voluntary system in place, the climate cent, is not providing enough incentives to change it. In the long term, continuing on the current basis is not an option. Therefore, it is encouraging that the government is planning to introduce a bonus-malus (feebate) system to promote energy-efficient new cars at the expense of inefficient ones. It is also considering supplementary measures to enforce a cap on CO2 emission per kilometre for new cars. Excise taxes on biofuels will be abolished and those on gas-based fuels lowered, whereas taxes on gasoline will be raised, improving also diesel’s competitiveness to gasoline.
6. Energy efficiency has long been a priority for the government. Good results have been achieved in many sectors. For example, the voluntary Minergie building standards are of a very high level, and the
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cantons are now harmonising their building codes towards these levels. In a welcome development, the ministry responsible for energy published in early September 2007 draft action plans to increase energy efficiency and use of renewable energy in Switzerland.
How to effectively tackle the CO2 emissions from passenger cars? What are the most effective plans to increase energy efficiency in transport, buildings and industry?
Consistent energy policy in the short, medium and long term 7. Post-Kyoto goals need to be defined and supported by effective policies and measures. To ensure compatibility with the climate strategy, the role of energy efficiency in reaching Switzerland’s climate policy targets should be clearly defined and quantified. Another compatibility issue concerns energy R&D. By the end of this century, Switzerland is striving towards a 2 000 Watt society, i.e. more than halving energy needs per capita from today’s levels. Energy challenges are daunting, so ambitious goals are certainly needed. These goals, in turn, need to be supported by strong policies and measures. Here, reconciling the shorter-term energy scenarios and the longer-term R&D scenarios is crucial. Switzerland’s strength in energy R&D provides a solid basis for these efforts.
How to ensure compatibility and consistency between the short- and medium-term goals for energy efficiency and climate policy and the long-term goals for energy R&D?
Market reform 8. Reforming the Swiss electricity market has been long in the making, and now, with the recently approved Law on Electricity Supply, it will turn into a reality. The law contains the necessary elements for effective market liberalisation: an independent regulator, an independent transmission system operator, regulated third-party grid access, and freedom to choose the supplier. The law comes into force in two phases during 2008, and it is set to open the Swiss electricity market in full by 2013. The government also has plans to start reforming the gas market.
Is the Law on Electricity Supply sufficient for market liberalisation? Could the reform be made even more effective already before 2013?
What are the plans for gas market reform?
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IEA/SLT/CERT(2007)18 - MAJOR ISSUES OF THE ENERGY POLICIES OF FINLAND (Note by the IEA Secretariat)
1. The SLT will discuss the in-depth review of the energy policies of Finland on 4 December 2007. Selected issues covered in the review and suggested for discussion by the SLT are set out below.
2. This review is a thematic one. While all of the traditional subjects received coverage in the report, energy efficiency and energy R&D were highlighted in the report, and are also highlighted in this paper.
Security of supply 3. Security of supply is a priority issue in Finland for many reasons, most notably its relative isolation, its general lack of domestic fossil fuels and its heavy reliance on imports from Russia. The country addresses this challenge largely by having a very diverse fuel mix, relying on nuclear, hydro, biomass and peat as domestic energy sources. With respect to natural gas, supply security is based on alternative fuels and, when necessary, an air propane tank when alternative fuels are not possible. The country holds more than its required 90 days of net oil imports and is considering additional emergency measures for the gas sector. To further enhance security of supply, in the electricity sector the country relies heavily on combined heat and, gaining security from its efficiency benefits. As a member of Nord Pool and the Nordic electricity market, Finland enhances its own security of electricity supply by enlarging the relevant market size. The country is well connected to its neighbours and gains in both energy security and economic efficiency through the benefits of trade and competition.
4. Despite these actions to enhance security, more is being considered, particularly with respect to fossil fuel import sources. Currently, the primary focus is a natural gas pipeline from the Baltics. Not only would this provide another import route, but it will also link Finland’s gas network with the pan- European network, allowing the country to draw on more diverse supplies of natural gas and also to rely on natural gas storage. Furthermore there are other opportunities for small-scale liquefied natural gas (LNG) imports.
5. Perhaps the most concrete action being taken to enhance supply security is the construction of Olkiluoto 3, a nuclear power plant that is scheduled to come online in 2011. The new 1 600-MW plant will be the first nuclear plant built in Europe in eight years and the first nuclear plant built in the context of a liberalised market. Its financing structure does not rely on Finnish government subsidies, but rather long-term supply contracts that allow it to rely more heavily on cheaper debt financing.
What more, if anything, should the government do to ensure long-term supply security?
Finland’s gas market is relatively small and isolated. What are the relative benefits and risks of enhanced interconnection with continental Europe?
What aspects of the financing structure at Olkiluoto 3 can be applied to other liberalised electricity markets? What aspects cannot?
Can the demand side of the market be better harnessed to enhance supply security?
Do LNG imports make good sense for the country? Should more be done to encourage them?
Energy efficiency 6. While Finland has relatively high energy intensity compared to other European countries, this stems primarily from its higher levels of heavy industry. In fact, Finland has an active energy efficiency
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policy, with voluntary agreements with many sectors (industry, public transport, electricity, buildings, etc.) covering 60% of Finland’s total energy consumption. In parallel with these voluntary agreements, the country has an active energy audit programme, and also offers financial support for energy investments.
7. Finland’s building codes are some of the strictest in the world, and ordinances that entered into force in 2003 are estimated to further reduced the energy demands associated with space heating by 20 to 30%. The country regulates building efficiency through minimum component values. While quite stringent compared to other countries, Finland’s building efficiency standards are below that of its neighbour, Sweden, indicating room for improvement. One means of improving efficiency without sacrificing builder flexibility is to add a building envelope or building performance standard to the requirements. In Sweden, the overall building performance standard is more stringent than the sum of the component standards, allowing builders to choose the most desirable means of achieving the target, but still pushing advancements in particular components by having minimum requirements.
8. Finland has recently taken a big step forward in its transport policy. On 1 November the government announced that its car and annual vehicle taxes will be based on carbon dioxide emissions. It is expected that the new rules will go into effect on 1 January 2008. The tax system is designed to encourage both a movement to more fuel-efficiency cars and faster turn-over of the existing stock of less fuel-efficiency vehicles. At the same time, funds for public transportation in major urban centres will increase.
Finland relies heavily on voluntary agreements. Should these be seen as an interim measure until a more comprehensive approach – such as broader emissions trading – is introduced?
What can be done to improve the effectiveness of voluntary agreements, particularly with respect to the goal-setting process?
How far should building standards go? Should governments legislate towards so-called passive houses? What lessons can be learned from other countries with respect to using a building performance or building envelope standard?
Energy R&D 9. Though a small country, Finland has built a world-class energy R&D system. Compared to most countries, the country’s energy R&D funding as a share of GDP is amongst the highest of all IEA countries, including higher than the U.S. and Japan. Three key entities drive government energy R&D funding, Tekes, VTT and the Academy of Finland. These entities have relatively independent authority to direct energy R&D spending towards research priorities, but there is still good overall direction from government policy. Nevertheless, greater efforts could be made to enhance the linkages between overall energy policies and energy R&D funding priorities.
10. Perhaps the most important aspect of Finland’s energy R&D programme is the commitment to public-private partnership. With relatively limited funds to spend, the government understands the importance of teaming up with the private sector to fund energy R&D. In fact, nearly no government spending takes place without private-sector matching requirements. Not only does this encourage greater overall R&D spending, but it also helps to ensure that the country is spending a significant share of its R&D budget on projects and programmes that are also considered promising by the private sector. In short, it limits the downside of government efforts to pick winners in energy R&D.
One activity that might benefit Finland’s energy R&D programme is to undertake a roadmapping exercise, allowing for better linking of energy policy and R&D priorities. What steps are critical for a successful roadmapping process?
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Finland makes consistent use of matching funds from industry. What are the lessons to be learned for other countries to improve private-sector involvement? What more can Finland do to improve its own process?
Finland has been quite successful attracting the private sector to participate in R&D activities, with high priority on the market attractiveness of R&D investments. Are there other models that might be followed to create incentives for less marketable (in the near term) energy technologies?
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IEA/SLT/CERT(2007)20 - MAJOR ISSUES OF THE ENERGY POLICIES OF THE UNITED STATES (Note by the IEA Secretariat)
1. The SLT will discuss the in-depth review of the energy policies of the US on 5 December 2007. Selected issues covered in the review and suggested for discussion by the SLT are set out below. The US IDR 2007 is a thematic review with a focus on energy R&D and energy efficiency.
2. The US energy system is based primarily on fossil fuel use. It is dependent on imports, primarily of oil, and to some extent of gas and refined products.
Energy and Climate Change 3. US climate policy is focussing on reducing emissions intensity, and not on reducing absolute emissions. This goal has been achieved, and emissions intensity has declined significantly in the last ten years, while absolute emissions have increased, compared to 1990. At the same time, significant structural shifts have taken place, which have reinforced increased efficiency, but not to the extent that emissions increases could have been avoided.
4. The key issue in the US climate policy is the absence of an explicit price for CO2 emissions, and generally low energy prices, compared to other IEA member countries. There is an implicit price, set by the production tax credit for wind and nuclear power, but this is only effective in electricity. To address CO2 emissions effectively, the US will have to introduce some form of a pricing mechanism on the national level.
5. The rejection of introducing a CO2 pricing mechanism has knock-on effects in all sectors of the US energy markets. It slows the development of energy efficiency and renewables. It favours low- efficiency coal over gas or high-efficiency coal in power generation. It removes the incentive for vehicle owners to move towards more efficient vehicles. It reduces the incentive for home owners to purchase most efficient goods or to invest in the efficiency of the building fabric. On the R&D side, it removes the incentive to bring forward promising new low-carbon technologies.
What are the chances for a CO2 pricing system covering the whole US? Assuming a system were to be introduced, what would be the preferred mechanism? Trading, taxes, or something else?
What is the likely cost to industry and consumers of such a system?
Has an assessment of the impact of the absence of a CO2 price been undertaken?
Energy efficiency 6. Energy efficiency has considerably improved in the US since 1995, measured against the growth of GDP. Nevertheless, there are great potentials left in power generation and transport energy efficiency, as well, while changing settlement patterns make buildings a major driver for energy use. The key challenges for the US government are efficiency in the transport sector, and in power generation, which are the major emitters of CO2. Increasing US energy efficiency will be the most important way of dealing with increasing import and fossil-fuel dependency of the economy in a cost-effective manner.
7. The work on upgrading vehicle fuel standards has only begun again in 2003, and is lagging behind the approaches in other regions and countries such as Europe or China. Switching the light truck fleet to diesel could help efficiency to improve, but is facing barriers in the US market.
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8. In power generation, the US has seen the construction of significant capacity of CCGT, but this has had little impact on the CO2 emissions of power generation, due to low running hours of these plants. Much of the additional electricity demand developing over the last 12 years has been covered by increasing the running hours of coal plants instead. At the same time, US coal plants tend to be of low efficiency, sub-critical pulverised coal variety.
9. The Energy Policy Act of 2005 contained numerous energy efficiency-related sections. Many of these had relatively short sunset clauses limiting their duration to just two years. This is a problem in energy efficiency policy, which is usually a policy that is most effective if pursued over the long term, as e.g. in Denmark.
What is the key stumbling block to increasing energy efficiency in the US?
What is the measurable effect of the government energy efficiency policies and programmes in the US?
Are there mechanisms for sharing experiences within the US, e.g. on building codes, to allow states to learn from each other and implement best practice?
What is the realistic chance for quick wins such as switching the light truck fleets to diesel?
What are the realistic chances to moving to higher efficiency power generation given current market conditions for electricity and environmental markets in the US?
What is the likelihood of EPAct 2005 initiatives being extended beyond their sunset dates?
Energy research and development 10. The US Government is the largest funding entity for energy R&D in the world, and US energy R&D has historically played an important role in developing new technologies in all fields of energy, including nuclear, fossil fuels, renewables, and end-use technologies. A vibrant network of research institutions and wide-ranging international collaboration are supporting energy R&D in the US.
11. The public R&D investment has increased slightly since the last review reflecting new US technology initiatives. The main trends are increased investments in key renewable technologies (in particular solar and second generation biofuels), increases in clean coal (in particular carbon capture and storage), and a surge in the nuclear energy budget. Nevertheless there has been a dramatic decline in public R&D funding since the early 1980s with only a stabilization and slight upward trend in recent years. A decline in private sector investments in longer term R&D can also be observed.
12. The DOE has the leadership in energy research, development, and demonstration and its strategy is founded on innovation through science-driven development of new technologies. Given the wide number of technologies and the many actors involved (national labs, universities, other federal agencies, states, private sector) coordination, portfolio management, transparent priority setting, and involvement of stakeholders becomes crucial – and difficult. A longer term energy plan with a clear technology R&D component seems to be lacking.
13. The US Government is a leader in international technology collaboration engaging international partners through a wide range of approaches. Nevertheless, there is a risk in creating new initiatives outside established frameworks of stretching the capacity of potential partners. Consideration should be given to use established frameworks of co-operation before creating new initiatives, to harness the existing structures for international research collaboration.
How can public funding levels be increased in line with the objectives and ambitions articulated in EPAct 2005, and what is implemented to induce private sector investment in clean energy technology R&D?
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How can sustained and stable funding for long term energy R&D be ensured and stop-go funding packages and earmarks be reduced?
How can a coherent long-term strategy for public RD&D investments be developed and used based on a transparent process involving academia, national labs and industry?
How can the US ensure that R&D results from the national laboratories are deployed in the market place?
How can US expand its leadership in international energy technology collaboration, focussing on co- operating through existing arrangements and institutions?
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SECTION 2 - DRAFT REPORT OF SWITZERLAND
Extract from IEA/SLT/CERT(2007)13
STANDING GROUP ON LONG-TERM CO-OPERATION COMMITTEE FOR ENERGY RESEARCH AND TECHNOLOGY
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EXECUTIVE SUMMARY AND KEY RECOMMENDATIONS
EXECUTIVE SUMMARY
1. Since the previous review in 2003, Switzerland has continued to perform well in most areas of energy policy. The electricity sector will be reformed from 2008, supply of oil and gas has been secure and energy efficiency and renewable energy are receiving increased attention. Yet, as in all countries, challenges also remain. The biggest ones concern electricity generation and climate change.
2. Oil and gas supply continues to be secure. Oil supply is well diversified, both by country of origin and by import route. Natural gas, too, is supplied from several countries through various routes. Switzerland is consistently holding emergency stocks much in excess of those required by the IEA. Oil stocks are also part of gas security. As Switzerland does not possess large-scale gas storage, dual-fired users are obliged to hold large stocks of fuel oil. Switzerland’s energy security policy is fundamentally sound, which is a necessity for a landlocked country with no domestic production of fossil fuels.
3. Security of electricity supply is a question of wider international interest, as Switzerland is a major player in the European electricity markets, and, traditionally, a net exporter of electricity. Reforming the Swiss electricity market has been long in the making, and now, with the recently approved Law on Electricity Supply, it will turn into a reality. The law contains the necessary elements for effective market liberalisation: an independent regulator, an independent transmission system operator, regulated third-party grid access, and freedom to choose the supplier. The law comes into force in two phases during 2008, and it is set to open the Swiss electricity market in full by 2013. The IEA commends Switzerland for this development and encourages it to proceed now to reform the gas market.
4. Future generation capacity is one of the major energy issues in Switzerland. The country has traditionally been a net exporter of electricity, but for the past two years, imports have exceeded exports. Electricity demand is growing faster than generation, and plans for new large-scale capacity are few. According to the recently published energy scenarios, a supply gap will start widening in the late 2010s and early 2020s, when long-term imports contracts with France expire and when the oldest nuclear power plants – one third of the nuclear capacity – reach the end of their operational life. Renewable energy and energy efficiency are projected to bridge only part of this gap. The government wants to avoid dependency on imports, so the options left for Switzerland are building more nuclear and/or gas-fired capacity.
5. The process to construct new nuclear power would take long, about 16 to 18 years from submitting the proposal for a general license to generating power, but the project would still likely face a referendum. The government has plans to streamline the licensing procedure without having to amend the Nuclear Energy Law. Regardless of whether new nuclear plants are built, the issue of nuclear waste management will need to be solved. On that issue, the government is making commendable progress.
6. Constructing gas-fired power faces challenges under current CO2 regime. Emissions reductions at home are expected to cost some ten times more than those realised abroad. Switzerland has allocated its quota of emissions reductions from the Kyoto mechanisms unevenly across sectors, strongly favouring use of transport fuels at the expense of electricity generation and industry.
7. As in most developed countries, transport is a challenge for energy and climate policy also in Switzerland. In freight transport, the plan is to shift from road to rail in the transalpine routes. Major projects are now underway to improve rail infrastructure. They will still take years to finalise, but will also guarantee a more sustainable transport system.
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8. Curbing the rising CO2 emissions from private cars is proving trickier. The trend is unsustainable and the voluntary system in place, the climate cent, is not providing enough incentives for change. For the long term, continuing on the current basis is not an option. Therefore, it is encouraging that the government is planning to introduce a bonus-malus (feebate) system to promote energy-efficient new cars at the expense of inefficient ones. It is also considering supplementary measures to enforce a cap on CO2 emission per kilometre for new cars. Excise taxes on biofuels will be abolished and those on gas-based fuels lowered, whereas taxes on gasoline will be raised, improving also diesel’s competitiveness to gasoline.
9. Energy efficiency has long been a priority for the government. Good results have been achieved in many sectors. For example, the voluntary Minergie building standards are of a very high level, and the cantons are now harmonising their building codes towards these levels. In a welcome development, the ministry responsible for energy published in early September 2007 draft action plans to increase energy efficiency (especially a best-practice strategy for household equipment and electric motors) and use of renewable energy in Switzerland. The draft plan on energy efficiency is broadly in line with the IEA’s G8 recommendations, which were endorsed by the IEA energy ministers in May 2007. The political debate will continue during the autumn.
10. Post-Kyoto goals need to be defined and supported by effective policies and measures. To ensure compatibility with the climate strategy, the role of energy efficiency in reaching Switzerland’s climate policy targets should be clearly defined and quantified. Another compatibility issue concerns energy R&D. By the end of this century, Switzerland is striving towards a 2 000 Watt society, i.e. more than halving energy needs per capita from today’s levels. Energy challenges are daunting, so ambitious goals are certainly needed. These goals, in turn, need to be supported by strong policies and measures. Here, reconciling the short-term energy scenarios and the long-term R&D scenarios is crucial. Switzerland’s strength in energy R&D provides a solid basis for these efforts.
KEY RECOMMENDATIONS
• Increase adequacy of future electricity capacity by creating stronger incentives for energy efficiency and setting more favourable conditions for investing in generation.
• Ensure compatibility and consistency between the short- and medium-term goals for energy efficiency and climate policy and the long-term goals for energy R&D.
• Implement swiftly the Law on Electricity Supply and consider initiating reforms in the gas market.
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NUCLEAR
OVERVIEW
220. Switzerland has five nuclear power plants (NPPs), with a total capacity of 3 220 MWe. Three of the NPPs are pressurised water reactors and two are boiling water reactors. The NPPs are located at four sites (see table 18).
221. The first nuclear power plant in Switzerland (Beznau 1) began commercial operation in 1969 and the last one built (Leibstadt) in 1984. Due to the increasing opposition to nuclear power since the 1970s, two other nuclear projects for which sites had already been approved were not built.
222. The Swiss nuclear fleet currently provides about 40% of the country’s electrical generation. This figure can reach 45% in winter, when hydropower production is lowest and electricity demand greatest. In 2006, Swiss NPPs generated some 26 TWh of electricity (net), 42% of the total in the country. Over the course of operations, the Swiss nuclear reactor fleet has generated 650 TWh of CO2-free base load electricity. Beznau and Gösgen NPPs supply also district heat in addition to electricity.
223. The Swiss nuclear fleet has one of the highest capacity factors in the world. Average lifetime capacity factor is more than 85%, and in 2006, at 93.93%, Switzerland topped the list of capacity factor by nation22. All Swiss NPPs have had power uprates, in total adding about 500 MWe (gross) of generating capacity. In the near term, additional uprates are likely to be small and result from applying advanced fuel technologies.
Table 18. Nuclear Power Plants in Operation in Switzerland, 2007 Name Type Net capacity Commissioning Electricity generation
(MWe) date in 2006 (TWh) Beznau 1 PWR 365 1969 2.95 Beznau 2 PWR 365 1971 3.07 Mühleberg BWR 355 1972 2.88 Gösgen PWR 970 1979 8.10 Leibstadt BWR 1 165 1984 9.37 Total 3 220 26.37 Source: International Atomic Energy Agency Power Reactor Information System.
224. Swiss NPPs are generally licensed to operate as long as safe operation is demonstrated. However, the practical lifetime of each reactor is expected to amount to no more than 50 to 55 years. As a result, the decommissioning of the three oldest facilities (Beznau 1&2 and Mühleberg) is expected to begin around 2020. These three reactors represent combined capacity of 1 085 MWe; 35% of existing nuclear capacity and about 6% of the total Swiss generating capacity.
225. Swiss NPPs are owned by a mix of public and private partners. Beznau and Mühleberg are owned and operated by public utilities, whereas Gösgen and Leibstadt are owned by several electric utilities and public service companies. Significant stakes are owned by large companies, such as Atel, Axpo Holding,
22 Platts Nucleonics Week, February 15, 2007. The top five capacity factors by nation were Switzerland - 93.93%; Finland - 93.12%; South Korea - 92.51%; Mexico - 91.88%; and Romania - 91.06%.
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BKW and EOS (see table 19). Consolidation is ongoing (a merger between the Atel Group and EOS was announced in 2006) and partnerships, as well as other forms of co-operation between the larger players, have been established. Some public shareholders, e.g. the canton of Berne, are actively planning to sell or have already sold stakes in electricity companies.
Table 19. Ownership of the Swiss Nuclear Power Plants, 2007
NPP Shareholders Share, % Mühleberg BKW 100 Beznau 1 and 2 NOK* 100 Gösgen Atel 40 CKW* 12.5 Energie Wasser Bern (EWB) 7.5 NOK* 25 City of Zurich (EWZ) 15
Leibstadt Atel 27.4 AEW Energie* 5.4 BKW 9.5 CKW* 13.6 EGL* 16.3 EOS 5 NOK* 22.8 * Owned by Axpo Holding. Source: Country submission.
226. Switzerland has no domestic nuclear fuel-cycle industry and the operators of Swiss NPPs source nuclear fuel and services outside the country. The safe handling and disposal of all radioactive wastes are the responsibility of the waste producers. Spent fuel is either stored in pools at reactor sites or at a centralized interim waste storage facility located on the site of the Paul Scherrer Institute in Würenlingen. Some used fuel has been sent to France and the UK for reprocessing.
LEGAL FRAMEWORK
227. In 1990, the Swiss population voted in favour of the further operation of the existing NPPs but imposed a ten-year moratorium on licensing new NPPs and other nuclear facilities. In May 2003, two popular initiatives were rejected in a national vote: 58.4% of voters opposed extending the moratorium on the licensing of new NPPs that lapsed in 2000 (Moratorium Plus initiative) and 66.3% of voters opposed phasing out nuclear altogether (Electricity Without Nuclear initiative).
228. After two years of parliamentary debate, a new Nuclear Energy Law (NEL) was adopted in March 2003 and entered into force in February 2005, along with a new main Nuclear Energy Ordinance (NEO). The NEL keeps the nuclear energy option open, addresses key issues related to radioactive waste management, including a ten-year moratorium on reprocessing spent fuel as of 1 July 2006, and empowers DETEC to authorize construction, operation and decommissioning of NPPs.
229. The permitting procedure for new NPPs set out in the NEL is estimated to take about 16 to 18 years from receiving a proposal to build to the end of construction. This process requires three licenses. First, the federal government issues a general license that determines the site and the main features of a nuclear facility, i.e., the reactor system, output category, and main cooling system, and any changes in their purpose or scope of activities. After this, DETEC issues technical licenses for the construction and
16 NEA/NDC(2008)3 operation of nuclear facilities. The general license shall be the subject of a national referendum. The technical licenses are potentially subject to court appeal.
NUCLEAR SAFETY
230. Protecting individuals, society and the environment against radiological and other nuclear safety hazards is subject to the Swiss legislation on radiation protection and nuclear energy. Compliance with the legal requirements is verified and enforced by regulatory bodies, principally the Swiss Federal Nuclear Safety Inspectorate (HSK/DSN). Part of SFOE, HSK/DSN supervises reactor and radiation safety in Swiss nuclear installations, including NPPs, research reactors and intermediate radioactive waste storage facilities. HSK/DSN approves safety-relevant changes to nuclear installations, supervises the transport of nuclear materials and assesses the safety of proposed geological nuclear waste repositories. In June 2007, the parliament adopted a law which will enable HSK/DSN to become a fully independent federal agency in January 2009.
231. No serious incidents were recorded in any of the five NPPs in Switzerland in 2006. HSK/DSN found that nuclear safety, in terms of design and operation of facilities, was good throughout 2006: nine incidents were registered, but all were classified as Level 0 on the International Nuclear Safety Event Scale, indicating that they had no safety significance. Moreover, releases of radioactivity to the environment through wastewater and air were considerably less than the limits specified in the operating licenses.
232. Conclusions in the 2006 assessment are generally applicable to the last several years of operating history. In all reviews since 1999, the annual collective doses for personnel in all NPPs were low and the release of radioactive material into the environment has been significantly below the limits established by regulators. The number of reportable incidents is generally low and none are considered to have represented a radiological hazard to workers or the environment. The number of reactor SCRAMS (unplanned shutdowns) has also been low.
233. The second Swiss Report to the Joint Convention on the Safety of Spent Fuel Management and on the Safety of Radioactive Waste Management concludes that the safety of spent fuel management and radioactive waste management in Switzerland is in compliance with the obligations of the Convention. The Joint Convention, among other things, includes the obligation to establish and maintain a legislative and regulatory framework to govern the safety of spent fuel and radioactive waste management. It also includes the obligation to ensure that individuals, society and the environment are adequately protected against radiological and other hazards by appropriate siting, design and construction of facilities and by making provisions for ensuring the safety of facilities both during their operation and after their closure.
WASTE DISPOSAL AND DECOMMISSIONING
234. The key organisation in the field of nuclear waste disposal is the National Co-operative for the Disposal of Radioactive Waste (NAGRA). It was formed in 1972 by the nuclear power plant operators and the federal government to prepare and implement solutions for the management of radioactive waste from nuclear activities in medicine, industry and research.
235. In 2002, NAGRA completed a feasibility project for the disposal of high-level radioactive waste (Project Opalinous Clay). This study was reviewed by national nuclear regulatory authorities and the NEA and approved by the federal government in 2006. Approval of NAGRA’s feasibility study verifies the concept of a nuclear waste repository in Switzerland, one of the requirements that must be met prior to the licensing of replacement or new NPPs, as stipulated in the NEL.
236. In a response to a request from the Minister of Energy and Environment, NAGRA published a report in 2005 on alternative options for siting a high-level waste repository. In addition, NAGRA is preparing a
17 NEA/NDC(2008)3 new programme in support of the site selection process for a low- and intermediate-level waste repository. The programme will be submitted to the government for approval in 2007.
237. Nuclear legislation foresees several steps for the realisation of waste repositories: a site selection process will be defined based on the Law on Spatial Planning. Once approved, the process to identify at least two sites can begin. This step, which includes obtaining government approval and addressing objections raised, could take up to nine years. This would then lead to the second step, a phased licensing process, that begins with the issuance of a general license, which would take four years and likely be subject to a national referendum. Successive licensing for underground investigations, construction and operation would then follow, each taking a number of years to realize. Current estimates place the completion of these steps and the opening of the repositories in the 2030 (low- and intermediate-level waste) to 2040 (high-level waste) time frame.
238. In accordance with the polluter-pays-principle, waste producers are required to fund the safe disposal of all nuclear waste. The costs, e.g., for reprocessing until 1 July 2006, NAGRA activities investigations, and interim storage facilities, are covered by waste producers. The surcharges are deposited into a decommissioning and a waste management fund. By 2005, the decommissioning fund stood at CHF 1.252 billion of the total estimated decommissioning cost for the five NPPs of CHF 1.9 billion. The waste management fund totaled CHF 2.762 billion of the estimated total waste disposal cost of CHF 12.1 billion.
CRITIQUE
239. Much has been accomplished since the 2003 in-depth review. Two national referenda that would have seen Switzerland turn its back on the nuclear option were defeated in 2003. In 2005, after two years of consultation, the NEL and Nuclear Energy Ordinance came into force. In 2006, the federal government approved a feasibility project for the disposal of high-level radioactive waste. Through these actions, Switzerland has retained the nuclear option and the federal government has set the stage for the construction of replacement and new NPPs.
240. In addition to this, the federal government is also developing a site selection process for low- and intermediate- and high-level radioactive waste repositories. New legislation that will come into force at the beginning of 2009 will establish an independent federal nuclear regulator. Each one of these steps alone represents a major improvement in the political and regulatory environment for nuclear power generation in Switzerland.
241. However, more work remains if new NPPs are to be built. The process set out for the approval and licensing of new NPPs in the NEL is exceptionally long and uncertain. It is estimated that it will take 16 to 18 years from the submission of the proposal to power generation. Over this time, a national referendum is likely to be held and court challenges are possible. Investors may be reluctant to commit the large amount of capital required to build an NPP, when many years must pass before returns are realised, if at all.
242. In addition to the challenges presented during the approval and licensing of NPPs, the process envisioned for realising the high-level radioactive waste disposal initiative is also very lengthy (almost 35 years). It may also be delayed by requirements to address repeated opportunities for objections and it, too, will likely be the subject of a national referendum. Despite the best efforts of the federal government to legally separate the two issues, it can be expected that the issue of a high-level nuclear waste repository will be raised during the approval and licensing process for new or replacement NPPs.
243. Political resolve over the long term will be necessary to move high-level radioactive waste disposal initiative forward. The issues of NPP construction and waste disposal are intertwined in other countries and will no doubt be so in Switzerland, at least at the political level. Demonstrable progress on nuclear waste disposal will be vital to building public confidence in the construction of new NPPs.
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244. Nuclear power is controversial in many countries. Building public confidence in the nuclear option will require clearer messages and more information on the impacts of all aspects of the nuclear fuel cycle and the generation of electricity in NPPs.
RECOMMENDATIONS
245. The government of Switzerland should
• Work within the framework of the NEL to ensure that the approval and licensing process for the construction of replacement and new NPPs proceeds efficiently without unnecessary process delays.
• Maximise the flexibility available to hold a referendum on the prospect of replacement or new NPPs as early in the approval and licensing process as possible.
• Continue to show leadership in the siting and establishment of a high-level nuclear waste repository, including ensuring that the process proceeds efficiently without unnecessary process delays.
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SECTION 3 - DRAFT REPORT OF FINLAND
Extract from IEA/SLT/CERT(2007)17
STANDING GROUP ON LONG-TERM CO-OPERATION COMMITTEE FOR ENERGY RESEARCH AND TECHNOLOGY
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EXECUTIVE SUMMARY AND RECOMMENDATIONS
EXECUTIVE SUMMARY
1. A small, somewhat isolated country, Finland takes a balanced view of its energy policy, taking advantage of its situation wherever possible. Where it can leverage its location and small size it does so. For example, it makes straightforward use of European Union directives and policies, without adding too many additional layers of regulations that could undermine the effectiveness of continent-wide policies. A small electricity market by itself, the country makes extensive use of gains from trade with its neighbours, not only as part of the well-functioning Nordic electricity market, but also with connections to Russia and the Baltics.
2. Its small size and isolation bring challenges as well, and the government works to address them in a balanced and cost-effective manner. The greatest of these challenges may be energy security, and its very high import dependence in general, and high reliance on one import source in particular. To balance the lack of import diversity, the country has high domestic diversity, drawing its supply from many different sources, including a variety of domestic sources – nuclear, biomass and hydro. Finland also faces the challenge faced by most IEA countries, rising greenhouse gas emissions. It is much above its Kyoto Protocol target for the coming compliance period, and will struggle to meet its commitment. Here, again, the country has taken a pragmatic approach. It has taken as much advantage of domestic and international trading as possible, allowing it to lower its own cost of compliance, as well as driving international development of a market for carbon emissions. This helps sets the foundation for a global price for carbon and a cost-effective and comprehensive means for addressing climate change.
3. While Finland’s energy policies are generally advanced, balanced and sound, scope exists for further improvement – as in all countries. Three areas can be given particular attention. The first is supply security. Continued government policies are needed to address this challenge, and we urge a somewhat more diverse and long-term approach. The remaining two key areas are energy efficiency and R&D, the two themes of this report – arenas where longer-term policies can benefit the country’s energy situation. Overall, the main theme of the recommendations of this report is that while the government generally has a balanced perspective and balanced policies in place, a more long-term perspective would be beneficial, bringing sustainable gains in energy policy. While the report addresses energy policies comprehensively, the following sections highlight these three topics.
Security of supply
4. Finland’s vulnerability from its heavy reliance on imports from a narrow set of sources is well understood. The government is working on all fronts to reduce this vulnerability. With respect to natural gas, supply security is based on alternative fuels. Large natural gas users are required to ready access to an alternative source, usually fuel oil, and domestic customers without the ability to fuel switch have their supply secured by an air-propane production plant. This is a sound first-order security measure.
5. The market is currently considering alternative supply sources and routes, in particular a natural gas pipeline from the Baltics that, in addition to linking Finland to the pan-European gas network, would also give Finland access to storage. Furthermore, small-scale liquefied natural gas import options exist. We urge the government to continue to investigate these, and other, possibilities. The government should ensure that there are no undue domestic regulatory barriers to developing cost-effective gas import options.
6. Another means of reducing supply vulnerabilities is to enhance domestic sources of energy. The government is actively working to do this. Most notably, a new nuclear unit is under construction at Olkiluoto, scheduled to come online in 2011 – the first new nuclear plant in Europe in eight years and the
21 NEA/NDC(2008)3 first one ever built in a liberalised market. The plant has been built without distortionary Finnish government subsidies and will greatly enhance supply security. Its financing can also be a model for projects in other countries, especially those countries with large energy-intensive industries. Further enhancing the framework for nuclear power in Finland is that the government has already has made a decision on a high-level radioactive waste repository – a unique and very positive situation. The long-term planning and commitment to keeping to the government-approved plan are commendable, underpinning long-term support for nuclear power in the country. Finland was able to reach this conclusion through a transparent process that involved consulting with and involving the public and other stakeholders, and then took a clear decision and carried it through.
7. One are of concern with respect to the new nuclear plant is the stopgap peak power supply arrangement in place until 2011. While we understand the concern about delays at Olkiluoto negatively impacting electricity supply security – as well as the difficulty developing a comprehensive market-based measure within Nord Pool – the measure in place may undermine security for the long-term as it will discourage stable investment by the private sector.
8. Finland’s biomass resources contribute significantly to Finland’s supply security in a cost-effective manner, particularly as they are typically used in the context of very efficient combined heat and power (CHP). Enhanced demands for biomass raw material will place pressure on this industry; the government should continue to maintain a balanced and realistic vision for the country’s biomass resources. Biomass has traditionally been the focus of Finland’s renewable energy portfolio. New research suggests that greater scope exists for cost-effective deployment of other renewables such as wind power. We urge the country to develop cost-effective, market-based means to ensure that these technologies can make a sustainable contribution to Finland’s energy supply mix and energy security.
9. Turning to another domestic resource, the new premium tariff provided to peat raises concerns. While peat does diversify the country’s domestic supply, it works at cross-purposes with another of the country’s goals, environmental sustainability. In fact, the premium tariff is designed to directly counter the effect of the European Unions’ emissions trading scheme (EU-ETS), a policy designed to create a price signal for carbon. The premium tariff removes the incentive to move away from carbon-intensive fuels. Given the negative consequences of the tariff, we are pleased to see that it is only a temporary measure and urge the government to ensure that it is not extended past its scheduled end date.
10. The next two sections discuss energy efficiency and R&D, and investments and policy enhancements in both of these areas helps to improve energy security as well. While they are discussed in separate sections, these topics should all be viewed as intertwined and integrated parts of sound energy policy.
Energy efficiency
11. While supply-side measures are often the first-order response to supply vulnerabilities, energy efficiency provides more sustainable and less costly supply security by eliminating the demand itself. Furthermore, it has the added benefit of having no greenhouse gas emissions, enhancing environmental protection. Finland already has many positive attributes with respect to energy efficiency, and the government has put in place many sound policies. For example, in addition to making good use of combined heat and power (CHP) – a very efficient energy technology – voluntary agreements are in place to further improve the already good efficiency levels Finland’s industry, and other sectors of Finland’s economy. Nonetheless, there are measures Finland can take to enhance energy efficiency that will enhance its commitment to the three Es of good energy policy, energy security, environmental sustainability and economic efficiency.
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12. The primary area where large gains in efficiency can be made is the building sector. Finland’s building codes are already quite high compared to other IEA countries, but there is further room for improvement. Not only can the standards be raised, the building code mechanism can be enhanced, creating room for higher standards, but also greater flexibility for builders. Finland should look to Sweden, where, as in Finland, component requirements are in place, but where the country has also put in place a building performance standard. This performance standard sets an absolute maximum for a building’s energy consumption, but leaves it up to the market how to achieve the standard. In the longer term, efforts to move the market towards passive houses should be considered as they have energy requirements 50% to 70% below those of traditional houses.
13. The transport sector also provides an opportunity for sustainable reductions in energy demand. While the European Union is currently developing a comprehensive approach to transport efficiency, Finland can also undertake enhanced domestic policies, particularly as the average carbon dioxide emissions of Finland’s transport fleet are higher than Europe’s average. The government should implement policies that encourage mode shifting, more efficient driving behaviour and more fuel-efficient vehicles. Some policies to consider are differentiated vehicle taxes or fees based on fuel economy, road pricing that raises the price of private passenger vehicle transport, congestion charges that discourage private vehicles during peak travel time, higher parking charges and other fiscal incentives.
14. While it takes longer to see the benefits of policies in the transport and building sectors than other actions to reduce CO2 emission and improve efficiency – not to mention that the results are more complex to achieve and harder to monitor because of the diverse set of actors involved in the process – the significant and sustainable benefits they provide are worth the long-term commitment.
Energy R&D
15. Though a small country, Finland is a world leader in energy R&D, leveraging its small size as it does in other energy arenas. The country has stable funding for R&D, strong national and regional funding organisations – particularly Tekes, VTT and the Academy of Finland – and strong collaboration with industry. Perhaps most critical is its high levels of funding overall on a GDP basis. When nuclear R&D is excluded, Finland’s government R&D spending is higher than that of Japan and the United States on a per GDP basis. Because of its small funding portfolio, the country rarely invests in research without matching funds from the private sector. It also places greater attention on late-stage development in order to avoid the valley of death that makes it difficult to bring technologies the last step – to market. Finally, the government makes ample use of international collaboration, one of the best means of increasing the value of smaller levels of research funding.
16. Opportunity exists for marginal improvements in Finland’s R&D, the most important of which is to provide clearer guidance to the R&D community about its priorities. Generally the government gives the R&D community large scope to determine the energy R&D agenda. This is a good approach in practice and over the short term. Instead, the government should provide clearer top-down guidance – in a general manner – for long-term research priorities that are explicitly linked to overall energy priorities. This would be a good complement to the research priorities of the private sector, which are those technologies that are likely to develop more quickly and be competitive in the market.
17. We also urge continued action to maintain expertise in the nuclear industry. As nuclear power has stalled recently in some neighbouring countries, expertise has diminished. Finland should build on its new construction of Olkiluoto, collaborating with universities and the education field to maintain comprehensive education and training in the field. Finland is already a leader in biomass research; the government should keep focus on maintaining this expertise, particularly for Finland-specific research areas, in light of the growing international focus.
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RECOMMENDATIONS
18. The government of Finland should:
• Continue to address energy security concerns in a comprehensive and sustainable manner, placing focus not only import security, but also on domestic supply diversity, new renewables and energy efficiency.
• Enhance longer-term policies to encourage energy efficiency, particularly in the building and transport sectors.
• Give more top-down, strategic guidance to the energy R&D community on long-term energy policy priorities.
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NUCLEAR
242. Finland has a well-developed nuclear industry, and is expanding its nuclear sector with the construction of Olkiluoto 3, the first new nuclear power plant in Europe in eight years. Nuclear power makes up about a quarter of total electricity generation, and this will grow with the addition of the new plant, likely in 2011, taking into account existing delays. The country is also considering an additional sixth nuclear plant. Finland is unique among most IEA countries in have already taken a decision-in-principle regarding disposal of high-level radioactive waste, and is currently building an underground rock characterisation facility.
OVERVIEW
243. The nuclear share of electricity production in Finland was about 25% in 2006, with a total amount of electricity produced of 22.0 TWh (net). As detailed in Table 16, the four nuclear power plant units in operation in Finland are two boiling water reactors (BWRs) on the west coast of Finland at Olkiluoto, and two pressurised water reactors (PWRs) on the south coast at Loviisa.
Table 16: Operating Nuclear Power Plants in Finland
Construction Installed capacity Operator Site Plant Type Grid connection year start MWe Loviisa Loviisa-1 WWER 440 (PWR) 1971 1977 488 Fortum
Loviisa-2 WWER 440 (PWR) 1972 1980 488 Fortum
Olkiluoto Olkiluoto-1 BWR 700 1974 1978 860 TVO
Olkiluoto-2 BWR 700 1975 1980 860 TVO
Source: IAEA PRIS database.
244. All four units have shown high availability factors, 88.6% to 96.9% in 2006, and are planned to be in operation for at least two additional decades. The total installed nuclear capacity is 2 696 MW. For the Loviisa reactors on the south coast, a new 20-year operation license application has already been filed that would, if granted, extend the lifetime of these two units to 50 years (until 2027 and 2030).
245. On 8 January 2004, TVO submitted to the government an application for a construction licence for Olkiluoto 3. The reactor is an Areva EPR 1600 with thermal power of 4 300 MW, electrical output about 1 600 MW and a technical operating lifetime of 60 years. The granting of the construction licence took place on 17 February 2005. The construction is well under way, though with some delays, and TVO is planning to file the application for the operating licence in mid-2008. The commissioning of the plant could take place in 2010, with commercial operation beginning in 2011. The financing structure of the plant, which is owned mainly by a private-sector consortium, is innovative (see box). After completion of Olkiluoto 3, the nuclear share could be one-third of the electricity consumption in Finland.
246. The planning for a sixth reactor is under way and related work on the environmental impact assessment has begun by the utilities.
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Financing structure of Olkiluoto 3
In December 2003, Teollisuuden Voima Oy (TVO) decided to build a new 1 600 MW nuclear unit, the first nuclear power plant built in a liberalised market. Construction commenced in 2004 at the site of two other TVO nuclear units, Olkiluoto 1 and 2. The new unit is a third-generation European pressurised water reactor (EPR) and is being delivered as a turnkey project by a consortium of Areva and Siemens. These vendors carry, to a large extent, the risks of project delays and budget overruns. Total project costs are estimated to be around USD 3.5 billion. Olkiluoto 3 was initially scheduled to be commissioned in 2009, but is now delayed in construction to 2011.
TVO is owned by several Finnish companies. Pohjolan Voima Oy (PVO) is the largest shareholder with 60.2% of the Olkiluoto 3 shares. A majority of PVO is, in turn, owned by various companies in the Finnish pulp and paper industry; the remaining shares are owned by municipalities and municipally owned local utilities. Fortum, a partly (51.7%) state-owned utility, owns 25% of the Olkiluoto 3 shares in TVO. Another 8.1% of Olkiluoto 3 shares are owned by Oy Mankala AB, a fully owned subsidiary of Helsinki Energy (a utility owned by the city of Helsinki). The remaining Olkiluoto 3 shares are with EPV (6.6%), a regional energy procurement company owned by 21 local utilities, which are mainly municipally owned. EPV also owns 8% of PVO. All in all, a majority of TVO-Olkiluoto 3 is privately owned, with a large share of state and municipal ownership, through a unique ownership structure. The project is financed on the balance sheet of TVO, which implies that recourse on loans is not limited to the Olkiluoto 3 project but tied to TVO as a company. This has allowed for 75% debt financing of the project. TVO shareholders injected subordinated debt and equity corresponding to 25% of the finance requirement.
TVO sells its output at cost to its shareholders. This innovative sales structure – which was also used by TVO for Olkiluoto 1 and 2 – is the key to allowing for the high level of lower-cost debt financing. The Olkiluoto 3 project is covered by long-term contracts that effectively pass all risks on to the shareholders. Thus, risks are spread across the underlying meshed ownership structures. This does not eliminate the real risks. The large consumers and utilities receive generated electricity at cost. If these costs cannot compete with the wholesale price of electricity in the Nordic market, the project shareholders will incur a loss compared to the alternative of buying electricity in the market or producing electricity with a more competitive technology. But the Nordic market also offers a relatively liquid financial market, which creates an opportunity for the final owners of Olkiluoto 3 to manage remaining risks – at least to a certain extent.
Source: Tackling Investment Challenges in Power Generation in IEA Countries, IEA/OECD Paris, 2007.
POLICY AND FRAMEWORK
247. A stable majority of the Finnish population supports nuclear energy in general. A series of surveys has been made by the industry, beginning in 1983, and the 2006 figures show 50% in favour and 20% against nuclear power. However, in many other surveys, a majority of the population is against a sixth nuclear power plant to meet future electricity demands. The government is not ruling out a further expansion in nuclear energy.
248. The magnitude of all nuclear research activities is about EUR 30 million per year. National (state- funded research) is about EUR 6 million per year and the rest is utility-funded research activities.
249. Nuclear energy activities are governed by the 1972 Nuclear Liability Act and the 1987 Nuclear Energy Act. The latter will be modified in 2007/08, but no major changes in basic principles are foreseen.
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250. The Radiation and Nuclear Safety Authority (STUK) is a regulatory authority, research institution and expert organisation, whose mission is to protect people, society, environment and future generations from harmful effects of radiation. STUK monitors the operation of nuclear plants in Finland to ensure that the licensees conduct their operation in a safe way. STUK is also involved in licensing procedures for building and operating nuclear power plants. For major nuclear facilities, the nuclear legislation defines a three-step licensing procedure (see Figure 15):
• 1) Decision-in-principle, where the government makes the licensing decision, but subsequent approvals by the host municipality and the parliament are still required.
• 2) Construction licence, which is issued by the government.
• 3) Operating licence, which is issued by the government.
251. STUK conducts the safety-related review in each of these licensing processes and the Ministry of Trade and Industry (MTI) prepares the licensing decisions. Minor licences for waste management operations are granted by STUK.
Figure 15: Licensing of Nuclear Facilities in Finland
Parliament Host Municipality
Acceptance/rejection of decision-in-principle
Info. Public Opinions Government Other Ministry of Trade and authorities Industry Statements Standing Info. Application/ committees decision Expert Statement bodies Reports Applicant STUK Review Source: Nuclear Energy Agency, OECD, Paris.
FUEL CYCLE AND RADIOACTIVE WASTE MANAGEMENT
252. Finland has no front-end fuel cycle industry. It buys fuel from international vendors.
253. Finland is unique in having a parliamentary decision on the site and system for a high-level waste repository. The site for the disposal facility, which is intended to hold all high-level waste in Finland, is at Olkiluoto on the west coast. The ongoing step in the project is the construction of an underground research laboratory, ONKALO, which is intended to be a part of the final disposal facility. The planned depth for the repository is 500 metres and the fuel is planned to be placed in copper canisters surrounded by bentonite clay and bedrock. The disposal of the spent fuel should start in 2020, according to the 1983 decision-in-principle by the government. The waste programme cost estimate is 5-10% of all costs of
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Finnish nuclear electricity (around EUR 2.5 billion for the spent fuel disposal for five plants and about EUR 5 billion for waste handling, including the decommissioning of the facilities).
254. The State Nuclear Waste Management Fund is special-purpose fund, segregated from the state budget, under the administration of the Ministry of Trade and Industry. It collects, holds and invests the assets of the fund. The capital of the fund is composed of annual payments by the parties the Ministry of Trade and Industry has deemed liable for nuclear waste management. At the end of 2006, the fund held around EUR 1 500 million, which covers the entire liability for the management of spent fuel and radioactive waste generated so far and the future decommissioning of the nuclear power plants.
CRITIQUE
255. Finland’s approach to nuclear energy, with transparency given the highest priority, is commendable. The extensive responsibilities of the utilities as expressed in Finnish law are met in an impressive way. Operation and waste disposal, as well as initiatives for construction of new nuclear units, are all carried out in a timely and effective way, and in an atmosphere of extensive international co-operation. Safe operations of generation and waste treatment facilities are given appropriate attention. The financing structure of Olkiluoto 3 can be used as a model for other countries.
256. The nuclear share of electricity production in Finland is about 25%, and the four existing nuclear power units have exhibited very high availability factors. The new reactor under construction, Olkiluoto 3, has been delayed by 18 months compared with the original time schedule. The substantial share of electricity supply to be provided by the new Olkiluoto 3 facility requires that the Finnish government closely follow the progress of the Olkiluoto 3 project.
257. The long-term planning of the use of nuclear energy in Finland after 2020 seems to be somewhat unclear. As part of its long-term strategies to 2050 and 2100, the government should clarify its vision to facilitate discussions on the R&D efforts needed, the maintenance of necessary education and training capabilities, as well as to promote a discussion on different relevant energy mix scenarios. In line with its very transparent and sound approach, the government should continue to ensure that the effects of using different nuclear shares in the energy mix are well understood by the public, including the safety, social, environmental, economic and security of supply effects.
258. Finland is unique in having a parliamentary decision on the site and system for a high-level radioactive waste repository. The long-term planning and commitment to keeping to this plan are commendable, underpinning long-term support for nuclear power in the country – and a model for other countries. Finland was able to reach this conclusion through a transparent process that involved consulting with and involving the public and other stakeholders, and then took a clear decision and carried it through. Support for nuclear power rests in part on having a stable and clear mechanism for high-level nuclear waste disposal. As Finland is well on its way to establishing a final disposal site, this will help ensure long- term acceptance for nuclear power in Finland. Finland’s successful experience with site selection and other aspects of high-level radioactive waste disposal should be used as an instructive guide for other countries.
259. The financing structure of Olkiluoto 3, the first new nuclear power plant built in a liberalised market, is unique and innovative. With high shares of industrial electricity demand, the project is able to sell the output of the plant at cost under long-term contracts to the shareholders of the plant. As 100% of the output is pre-sold at cost, this allows for a higher level of cheaper debt financing as the risk is shared across many actors. Such a model has been used in other sectors with high capital costs – in natural gas markets in the United States, utilities often underwrote new pipeline construction through long-term gas contracts – and can be a model for the construction of new nuclear power plants in liberalised markets, particularly those with high industrial electricity loads.
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260. Planning for a sixth reactor is under way and the utilities have started to perform environmental impact assessments. The authorities should, as soon as possible, start to prepare for coming applications by making careful analyses of all aspects of the decision procedure of Olkiluoto 3.
RECOMMENDATIONS
261. The government of Finland should:
• Continue to conduct long-term quantitative studies assessing the effects of different shares of nuclear energy in Finland’s future energy portfolio to facilitate discussions on levels and funding of related energy R&D, as well as general energy policy measures.
• Continue to ensure that the results of these quantitative studies inform the public on the safety, social, environmental, economic and security of supply effects of using different nuclear shares in the Finnish energy mix.
• Continue to closely monitor the progress of the construction of the Olkiluoto 3 unit, in view of its importance to the national security of electricity supply.
• Make a detailed analysis of all relevant aspects of the actual decision-making and implementation process for the Olkiluoto 3 unit in order to identify critical issues and areas for improvement, helping prepare for possible future applications.
• Continue international collaboration in the field of nuclear energy, for its own benefit and so that lessons learned can be disseminated to others.
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SECTION 4 - DRAFT REPORT OF THE UNITED STATES
Extract from IEA/SLT/CERT(2007)19
STANDING GROUP ON LONG-TERM CO-OPERATION COMMITTEE FOR ENERGY RESEARCH AND TECHNOLOGY
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EXECUTIVE SUMMARY AND KEY RECOMMENDATIONS
EXECUTIVE SUMMARY
1. During the past five years, important developments have taken place in and affecting United States energy policy. A new Energy Policy Act, EPAct 2005, is the first comprehensive energy policy act since 1992 and has set important new directions in the area of clean energy use. There is increasing public concern about global warming caused by anthropogenic CO2 emissions. New and expanded RD&D programmes have been implemented to support the development and deployment of clean energy technologies such as coal-fired power stations with Carbon Capture and Storage (CCS), solar photovoltaics, and next-generation nuclear plants. Nevertheless, important challenges remain for United States energy policy makers to address.
2. There are two key challenges now affecting all debates on the future energy supply of the United States. One is how to increase energy security by reducing the currently growing dependence on imported supplies. The other is how to address growing emissions of greenhouse gases (GHGs), notably whether and how to introduce a consistent value on CO2 emissions. These two challenges are closely connected. The United States is the only major IEA member country where the share of fossil fuel consumption in total energy supply is expected to increase and one of the few without a policy designed to internalise the external cost of CO2 emissions.
3. At present, the United States is moving to address these two challenges in large part through the development and deployment of cleaner energy technologies. In the area of energy R&D, the United States is a world leader in many technologies, and has contributed greatly to the development of new and advanced energy technology. It is today the largest provider of funds for research into new technologies in the world, and it is driving the development of technologies relating to CCS, second-generation (such as cellulose-derived) biofuels, and fourth-generation nuclear power stations. It also has substantial R&D efforts underway to improve the fuel efficiency of vehicles and lower the costs of renewable power sources such as wind and photovoltaics, and substantial financial support is available on the federal and/or state level for the deployment of some of these technologies. The potential medium-term global impact of programmes such as FutureGen or the Hydrogen Initiative is very high, and the United States government has done well in taking a lead in these and other technology projects. Of particular interest is the well- funded Climate Change Technology Program, authorised by EPAct and guided by a recently released visionary strategic plan. The multi-agency nature of this programme, by its design, should help to integrate research on technology across agency boundaries.
4. But thus far, no comprehensive federal government action is planned to place a value on CO2 emissions, leaving industry facing uncertainty about project development decisions that may be affected by the introduction of such a policy. Individual states such as Colorado have already moved ahead, applying a shadow price for CO2 in project appraisals, while others are considering developing different regulatory mechanisms to value CO2 emissions. The view expressed now by a number of stakeholders in the energy sector in the United States is that an explicit pricing mechanism for CO2 is a question of ‘when, not if’, and that it will be required to bring forward clean technology investment. The uncertainty generated by this expectation is holding back investments into new technologies and projects that are urgently required by the United States economy, such as refineries and power stations. While the established United States policy of decreasing greenhouse gas emissions intensity in relation to GDP has been successful, the time may now have come for the government to pursue more aggressive policies regarding greenhouse gas emissions reductions.
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5. A further source of uncertainty is the lack of close co-operation on this question between the government institutions in Washington, most importantly the Administration and the Congress, and between the federal government and the states. In Washington, the different policy agendas and the approval procedures for energy R&D funding are hampering the smooth long-term development of solutions to the energy challenges in the United States. For example, the periodic lapse of the wind power production tax credit has led to sharp fluctuations in investment. In some regions, difficulties in coordinating federal and state roles have led to delays in developing important infrastructure, such as LNG terminals, in opening up new areas of the outer continental shelf (OCS) for exploration and production, and in developing new unconventional resources of oil and gas in the Rocky Mountain States. It will be of high importance for the development of these technologies, projects and resources that closer coordination between the federal and state governments will develop to help ensure that regulatory oversight is streamlined, while still recognising the state concerns that only sound, cost-effective projects should go forward, in an environmentally sustainable manner.
6. One such area where the country could benefit from federal guidance is in renewables, where 25 states and the District of Columbia have now established renewable portfolio standards (RPS), using differing design principles and goals. These policies, together with the federal wind production tax credit, have helped the United States renewables industry to grow considerably, in particular in the area of wind power generation, but the different standards are also imposing a cost on the economy through their lack of consistency. The federal government has stated that it has no intention to introduce a RPS for electricity, and has only outlined relatively modest goals for the contribution of renewables to future electricity supply, a policy different from that in vehicle fuels, where a federal standard has been established with EPAct 2005. The federal government’s concern is that establishing a uniform federal power standard may not be appropriate due to the significant geographical variations in renewable resource endowments in the United States. On the other hand trading green certificates across state borders, to the extent that transmission capacity permits, would help to overcome this perceived barrier, as has been seen in other IEA member countries. The federal government should therefore consider the establishment of a federal electricity RPS covering the whole of the United States, to mirror the policy in the transport fuels sector. As a minimum, it would be useful to establish at least a common basis for the design of RPSs across the country, to ensure their compatibility, and to establish a federal registry for RPS credits, to enable them to be traded nationally.
7. There is a major policy gap with respect to the promotion of energy efficiency, even though there are strong federal programs to boost the energy efficiency of buildings and appliances as well as industry, which have had some effect. More could however be done to encourage greater efficiency in electricity generation, and very significant room remains for speeding the introduction of efficiency improvements in transport, which would immediately contribute to energy and environmental security. Addressing the gaps on the demand side is one of the most important challenges faced by United States energy policy overall, not just efficiency policy.
8. In the transport sector, reducing fuel demand through increased efficiency will increase security of supply by reducing import dependence, and reduce CO2 and other emissions. Ramping up the fuel efficiency standards to levels more in line with other countries would significantly reduce oil demand growth and thereby help energy security, achieve CO2 emissions reductions, and relieve the tightness in international oil markets. The current proposals for an increase in the vehicle fuel standards will eventually boost fuel efficiency substantially. However, they will take effect gradually, leaving United States consumers with vehicles that are far below the fuel efficiency standards in other IEA member countries and even important non-member countries such as China and India. At the same time the current proposals, compared to the impact of bolder action, will increase the cost of achieving the ambitious goals for the switch of a significant amount of traditional gasoline consumption to biomass-derived gasoline.
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9. EPAct 2005 contains a commendable range of supply measures to stimulate the exploration for and production of oil and gas, both from conventional resources offshore and unconventional resources, as well as to stimulate investment in refining. Due to difficulties in aligning federal interests and a diversity of state interests, little progress has been made in opening further areas of the outer continental shelf (OCS), which are expected to contain significant amounts of recoverable resources. It will be an important contribution to the future security of supply in the United States to find the compromises required to open these areas to environmentally sustainable exploration and production.
10. The introduction by the Environmental Protection Agency (EPA) of the Clean Air Interstate Rule and the Clean Air Mercury Rule are commendable moves in the absence of legislative action. Nevertheless, creating a firm legislative basis for the introduction of a more stringent air pollution framework is an important task for the Administration and Congress.
11. Natural gas use is rapidly growing in the United States, in particular in power generation, where it has now overtaken nuclear to become the second-most important generation source. The growing use of gas, however, has placed increasing demands on constrained domestic supply, driving natural gas prices to historically high levels, to an extent that market pressures are now driving down demand for this clean fossil fuel. The growing demand has also started to change the dynamics of the United States gas market, exposing it to international competition and pricing. Increasing imports from diverse sources may nevertheless be an option to bring down prices in the longer term, and a number of new liquefied natural gas (LNG) terminals, both in the United States and in close proximity to its borders, have been opened or licensed, but further diversification of import routes for gas is desired. FERC’s 2002 Hackberry decision was a most important and commendable decision in enabling this investment to go ahead. Investment in LNG terminals should also keep geographic diversification in mind, by trying to locate as many terminals as possible outside the Gulf of Mexico region. Such diversification is a development which can only happen when regional or local interests are balanced with national interests. Strong local opposition in many regions hampers diversification, and needs to be addressed in a constructive manner.
12. Coal is an important fuel in the United States, contributing half of the nation’s electricity generation, and contributing in particular to the economies of the western states. In order to ensure a continued role for the fuel even in a time of more stringent environmental requirements, it will become necessary to move towards more clean and advanced technology for coal combustion. While gasification is one possibility, important efficiency increases can be realised by the more wide-spread use of ultra-super-critical pulverized coal technology, which is well-proven in other IEA member countries. This would reduce emissions from coal generators by up to 20%, compared to pulverised coal technology, without requiring a step-change towards unproven technology. Coal in the past has also benefited from up to USD 2 billion per year government subsidy through the Synfuel tax credit, which is now commendably being abolished. The government should consider using this money to support low- and zero-emission coal technologies, to allow the fuel to compete in its own right against alternative fuels such as natural gas, renewables, and nuclear.
13. With the increasing use of electricity in all sectors of the economy, it is vital to take steps conducive to greater generating efficiency and reduced power sector carbon emissions. In recent years, despite a doubling of highly efficient gas-fired generating capacity, there has been more intensive use of coal-fired capacity, due largely to fuel cost differentials as gas prices have increased sharply and a carbon value on fossil fuels has not been imposed. More aggressive steps need to be taken to encourage more efficient use of fossil plants in the generating mix and the use of best available technology for new coal plants going forward. The lack of a meaningful increase in the efficiency of power generation is contributing to a continued high ratio of emissions to GDP in the United States, and is in the medium-to-long term threatening the goal of the United States government to reduce emissions intensity.
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14. The United States has traditionally played an important leadership role in the world in the area of competition. Nevertheless, its electricity markets have experienced a retreat from market reform in recent years. In order to ensure that consumers are paying competitive rates for electricity in the future, FERC and the federal government should continue to push state regulators to further open up markets. In the area of transmission investment, the 2003 blackout clearly showed the weaknesses of the transmission systems. The establishment of a reliability organisation and mandatory reliability standards in response to this event is very commendable. Encouraging adequate transmission investment in competitive markets is an important and continued challenge for the industry and the regulator, not just to increase system reliability, but also to enable these markets to work effectively and to allow the most cost-effective investments in electricity generation to go ahead.
15. A nuclear renaissance in the United States is now not only possible, but likely. This is very welcome. Nevertheless, the first new plants will not enter service until at least 2015, and then only in small numbers. There is competition by a number of consortia to gain from the provisions of EPAct 2005 supporting new nuclear construction. It will be important for United States energy supply to follow through on this significant interest, by developing a framework that will allow the market-driven construction of new nuclear plant beyond the first few units of capacity for which generous support mechanisms were included in EPAct 2005.
Key Recommendations
16. The United States government should:
• Reduce fossil-fuel dependency and GHG emissions by pursuing more aggressive demand-side and clean energy policies. In particular, introduce policies that go beyond those currently proposed to increase the efficiency of the power, transport and buildings sectors.
• Consider the introduction of a consistent value for CO2 and other GHG emissions to speed the more rapid introduction of clean energy technology projects and reduce investor risks.
• Pursue closer co-ordination between Congress, Administration, and State governments, as well as between executive and legislative branches of the Federal government, t to ensure that energy policy challenges facing the country are addressed in a consistent manner.
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NUCLEAR
Overview
348. The United States has the world’s largest fleet of nuclear power plants (NPPs), which provided 19.4% of the country’s electricity in 2006. With the recent re-start of one unit after a 22 year shut-down, there are now 104 operating units on 65 sites spread across 31 states, with a combined capacity of around 100 GWe. The 2006 output of 787.2 TWh was the second highest on record, surpassed only in 2004 with 788.5 TWh.
349. The overall performance of NPPs has improved markedly over the years, contributing significantly to record generation levels. The average capacity factor, which rarely exceeded 60% in the 1980s, has risen from around 70% in the early 1990s to remain steady at around 90% in recent years. In addition many NPPs have had capacity uprates, adding some 4 400 MWe to total capacity since 1992, with a further 2 500 MWe expected over the next 5 years. Nuclear generation has thus been rising, holding its share of total generation steady at ca. 19–20% between 1990 and 2006.
350. Since the last IEA review the process for extending the licences of existing plants beyond the original 40 years has become well established. The Nuclear Regulatory Commission (NRC) has so far granted 20-year extensions to 48 units, with a further 10 under review and 27 more applications expected in the next few years. Eventually, most if not all existing plants are expected to be granted extensions.
351. The Tennessee Valley Authority (TVA), a large federally owned utility, announced in August 2007 that it will complete construction of unit 2 at its Watts Bar plant in eastern Tennessee, which was suspended in 1988 when it was about 60% complete. If the 1 180 MWe plant enters operation as now planned in 2013, it will be the first new nuclear capacity in the United States since Watts Bar unit 1 began operation in 1996.
Industry Structure
352. Consolidation of NPP ownership has been a continuing trend, both as a result of mergers and acquisitions in the utility sector and through purchases of existing nuclear plants by large nuclear utilities from smaller operators. This has been a major factor in improving performance, as the larger utilities have been able to use their greater experience and resources to operate the plants more efficiently. The total number of utilities owning nuclear capacity fell from 87 in 1999 to 27 in 2005, with the largest 10 owning about 70% of the total capacity.
Investment and Licensing
Investment
353. Although the existing nuclear plants are now expected to produce more power for a longer period of time than seemed possible even a few years ago, to maintain the share of nuclear energy in power production it will be necessary to begin investing in new plants within the next few years. EPAct 2005 contains several measures intended to encourage nuclear investment. As noted in the textbox in Chapter 2 General Energy Policy, production tax credits will be available for the first 6 000 MWe of new nuclear capacity (to be shared pro-rata between plants which start construction before 2014), federal risk insurance (known as standby support) will provide up to USD 500 million of cover for regulatory and litigation delays during construction of the first six NPPs, and loan guarantees should also be available for up to 80%
35 NEA/NDC(2008)3 of the eligible project cost of some new plants. EPAct also extended the Price-Anderson Act, which limits nuclear liabilities, to 2025.
354. Of these measures, loan guarantees are potentially the most significant in encouraging new orders, particularly in regions with deregulated electricity markets. The DOE issued rules and procedures to implement the legislation on loan guarantees with respect to new NPPs in October 2007. The actual provision of loan guarantees will however require further legislative approval, and Congress is likely to place limits on the total amount of loans which can be covered.
355. Some Public Utility Commissions have also indicated their support for investment in new nuclear plants. In some cases, they have agreed in principle to include such investment in the rate-base in stages as the project progresses, rather than including it all on completion of the plant. This will allow utilities to recover some of their investment before the new plant enters operation, thus considerably reducing financing costs and risk.
Licensing
356. The Nuclear Regulatory Commission (NRC) is an independent federal agency responsible for the licensing and regulation of all civilian nuclear activities, including nuclear power stations and fuel cycle facilities. Since the last IEA review, the NRC has implemented significant reforms in the licensing process for new nuclear power plants. In addition, the DOE has been working with several electric utilities and the nuclear industry since 2002 on Nuclear Power 2010, a cost-sharing programme to address siting, reactor design and licensing issues. This includes financial support for some early licence applications under the NRC’s revised procedure.
357. The main licensing step is now an application for a Combined Construction Permit/Operating License (COL). This is intended to reduce licensing risk for investors by avoiding the need to obtain a separate operating licence once construction is complete, with the risk that operation will be delayed or even that an operating licence will be denied. In addition, the COL process can be simplified and potentially shortened by using one or both of two preliminary licensing steps: early site permitting and reactor design certification. The former allows potential sites to be licensed as generically suitable for NPP construction, while the latter (applied for by the NPP designer/vendor) is a non-site-specific generic design approval. The first ESPs were granted in 2007, while at the time of writing four NPP designs had been certified with a further six under consideration by the NRC.
358. In response to the changed licensing process and the incentives for new nuclear plants contained in EPAct 2005, utilities and other investors have announced preliminary plans for more than 30 new nuclear units, mostly in the south-eastern states and Texas. The NRC is confident that it can process all the expected applications in a timely manner. However, the COL process remains untested, and estimates are that it will take at least 3 to 4 years from application to issue of a licence. This means the first COLs will not be granted until 2010 or 2011 at the earliest. In the best-case scenario, if the licensing process does proceed according to this schedule, and assuming there are no significant construction delays, the first one or two new NPPs could enter operation before the end of 2015. It is likely to take at least a few years longer for a larger number of new plants to be completed, given the limited construction capability.
359. In September 2007, NRG Energy became the first company to apply for a COL, and more than 10 further applications are expected by the end of 2008. Table 30 below gives some detail on applications known to be under consideration at the time of writing. These include several different reactor designs, namely the ABWR and ESBWR of General Electric (GE) and Hitachi, Westinghouse’s AP1000, Areva’s EPR, and the APWR of Mitsubishi Heavy Industries.
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Table 30 Status of Potential New Nuclear Power Plant Projects in the United States Predicted COL Design, No. Early Site Application Company Site(s) of Units Permit (ESP) Submission Alternate Energy Bruneau, ID EPR - FY23 2009 Holdings Amarillo Power Vicinity of EPR - FY 2009 Amarillo, TX AmerenUE Callaway, MO EPR - FY 2008 Constellation Calvert Cliffs, MD EPR (3) Will go to COL First submission - (UniStar) plus two other sites but submit siting FY 2008 information early Detroit Edison Fermi, MI Not yet Not yet FY 2008 determined determined Dominion North Anna, VA ESBWR (1) Under review, FY 2008 approval expected 2007 Duke William States AP1000 (2) - FY 2008 Lee, Cherokee County, SC Duke Davie County, NC Not yet Under Not yet determined determined consideration Duke Oconee County, Not yet Under Not yet determined SC determined consideration Entergy River Bend, LA ESBWR (1) - FY 2008 Entergy (NuStart ) Grand Gulf, MS ESBWR (1) Approved April FY 2008 2007 Exelon Clinton, IL Not yet Approved March Not yet determined determined 2007 Exelon Matagorda and Not yet - FY 2009 Victoria County, determined TX Florida Power & Turkey Point, FL Not yet Not yet FY 2009 Light determined determined (2) NRG Energy / Bay City, TX ABWR (2) - Under Review STPNOC PPL Corp. Susquehanna, PA Not yet Not yet Not yet determined determined determined
23 FY indicates the US fiscal year, which runs from 1 October of the previous year to 30 September.
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Progress Energy Harris, NC; Levy AP1000 (2); - Harris - FY 2008; County, FL AP1000 (2) Levy County, FL - FY 2008 South Carolina Summer, SC AP1000 (2) - FY 2008 Electric & Gas Southern Company Vogtle, GA AP1000 (2) Under review, FY 2008 approval expected early 2009 Texas Utilities Comanche Peak, APWR (2) - FY 2008 TX TVA (NuStart) Bellefonte, AL AP1000 (2) - FY 2008 Source: Nuclear Energy Institute
Research and Development
360. The network of National Laboratories in the United States includes some of the world’s leading nuclear R&D facilities and expertise, and the United States government continues to support a range of nuclear power related R&D activities. Some of these, such as the Advanced Fuel Cycle Initiative, are expected to become part of GNEP (see Textbox). In addition, the United States is a major contributor to the Generation IV programme to develop advanced nuclear plants and fuel cycles in cooperation with other countries. The Next Generation Nuclear Plant project aims to demonstrate one such advanced design by funding construction of a prototype in the United States.
Nuclear Fuel and Radioactive Waste Management
Fuel Production
361. The United States has a large and diverse nuclear fuel industry which encompasses all stages of the front end of the fuel cycle. It is also a major participant in international markets for uranium and nuclear fuel services, being a net importer in most sectors.
362. The United States benefits from significant uranium resources, concentrated in Wyoming and New Mexico. Production of uranium concentrate was around 1 600 tonnes in 2006, more than double the low point reached in 2002, and is set to increase further in the coming years. However, with annual requirements running at around 19 000 tonnes, most uranium will continue to be imported. The major supplier countries are Australia, Canada and Russia.
363. However, much of the material supplied from Russia is derived from former military material under an agreement which expires in 2013. Uranium supplies from Russia are thus expected to fall sharply after that date. The Russian material is delivered to the United States Enrichment Corporation (USEC) in the form of low-enriched uranium, and thus presently also accounts for around 40% of United States annual enrichment requirements. It is displacing a large proportion of USEC’s own enrichment capacity at the Paducah gaseous diffusion plant in Kentucky. Other imports of enrichment services from Russia into the United States are not permitted, but the two countries are presently negotiating over access to the United States market for Russian enrichment suppliers post-2013, after the agreement on former military material expires.
364. Meanwhile, USEC is developing a new enrichment facility using centrifuge technology (which is more efficient and lower cost than gaseous diffusion) at Piketon in Ohio, and plans to close Paducah once
38 NEA/NDC(2008)3 the new facility is in operation. A subsidiary of the British-Dutch-German enrichment company Urenco is also constructing a centrifuge enrichment facility in New Mexico. The combined capacity of the two new centrifuge plants in 2013 is expected to be around 50% of annual United States requirements. In addition, GE is actively developing laser enrichment technology which it hopes to begin deploying commercially at its Wilmington, North Carolina site by 2012, and Areva of France is seeking a US site for a further centrifuge plant which it hopes to have in operation by 2014.
365. One of the largest UF6 conversion facilities worldwide is operated by ConverDyn at Metropolis, Illinois, and is capable of covering well over half of domestic demand. Most fuel for United States reactors is fabricated at one of four domestic facilities operated by the three main NPP vendors. Areva NP (jointly owned by Areva and Siemens) operates plants at Lynchburg, Virginia, and Richland, Washington; GE’s joint venture with Hitachi and Toshiba, Global Nuclear Fuel, operates a plant at Wilmington, North Carolina; and Westinghouse (majority owned by Toshiba) produces fuel at Columbia, South Carolina. There is thus a competitive market for fuel fabrication services for most reactor designs.
Nuclear Waste
366. The NPPs in operation in the United States produce about 2 000 tonnes of used fuel annually, which is presently stored on-site in water-filled pools or in dry storage flasks. The Nuclear Waste Policy Act of 1982 gives the federal government responsibility for the disposal of used fuel and high-level waste (HLW), funded by a fee of one-tenth of a cent per kWh of nuclear electricity generated.
367. In 2002 the selection of the Yucca Mountain site in Nevada for construction of an underground repository was confirmed by Congress and the President. The DOE is preparing to apply for a construction licence for the repository in 2008, with the aim of beginning construction in 2011. However, opposition to the project remains strong and the DOE has stated that the repository is unlikely to open before 2020. This is a significant delay compared to the plans at the time of the last IEA review. The timetable for the DOE taking delivery of used fuel from sites around the country therefore remains to be decided, with discussion continuing as to whether a system of interim storage should be implemented, at Yucca Mountain or elsewhere, to enable used fuel to be moved from some reactor sites before the repository enters operation. For the longer term, in the absence of large-scale recycling as envisaged in the GNEP programme (see textbox), the currently planned capacity of Yucca Mountain will be insufficient for all the additional used fuel from life-time extensions of existing power stations, and from newly built ones. In such a case, either an extension of capacity at Yucca or a second repository will eventually be required.
Textbox: The Global Nuclear Energy Partnership The Global Nuclear Energy Partnership (GNEP) was launched by President Bush in 2004. It aims to develop policies and technologies to allow the deployment of nuclear power more widely round the world while avoiding proliferation of sensitive technologies and materials. A key element is the development and demonstration of advanced fuel cycles which include the recycling of used nuclear fuel while avoiding the separation of plutonium. Another important aim is to reduce the amount of high-level radioactive waste for repository disposal.
A framework for international cooperation to achieve these aims is being developed. In September 2007 the United States and 15 other countries signed a GNEP statement of principles, and several other countries are also considering joining GNEP. The DOE is also working with the international nuclear industry to develop plans for demonstration fuel cycle facilities. However, many details of GNEP remain under discussion both domestically and with other governments. In addition, sustained funding for GNEP- related programmes will be required if the aims of the programme are to be achieved, which will require approval by Congress.
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Critique
368. The United States government and Congress have recognised the importance for the long term energy security of the United States of maintaining a significant nuclear component in the nation’s energy supply. They have taken a number of steps to ensure the continued successful operation of the existing fleet of nuclear plants, to encourage investment in a new generation of plants to expand nuclear capacity in the 2015 to 2020 timeframe, and also to support research, development and demonstration of advanced nuclear plants and fuel cycles for the longer term. In particular, substantial incentives for investment in new NPPs were included in EPAct. All these moves are highly commendable.
369. These appear to have had the desired effect, with plans being prepared for over 30 new nuclear units and 13 licence applications expected by the end of 2008. However, it is only after a licence is granted that a final decision will be made by a utility and its investors on going ahead with construction. Although some appear confident of starting construction immediately upon a licence being granted, others are proceeding more cautiously. They are investing a limited amount in planning and licensing work in order to make the nuclear option available to them, but have not yet committed to go ahead with construction.
370. Given the direct costs which the EPAct incentives will entail for the federal budget, they are necessarily limited to the first few new reactor orders. To ensure that a nuclear renaissance is not limited to just a handful of plants, the government should therefore consider how the longer term policy framework can encourage continuing investment in nuclear capacity, preferably by introducing support measures based on market principles, and which do not burden the federal budget. The viability of some of the projects now being considered, particularly those which are not among the first few and which will thus not benefit from the EPAct incentives, may depend on such longer term measures.
371. The economics of new NPPs are likely to be affected by measures to limit carbon dioxide emissions which are widely expected to be introduced at state, regional or federal level in the next few years. Given nuclear power’s very low CO2 emissions and security of supply benefits, future support could therefore be provided by including it in the scope of a potential CO2 trading scheme or a clean energy portfolio standard. 372. In particular, the longer term expansion of nuclear power will require an established system for used fuel management. Compared to the plans presented at the last IDR in 2001, the current plans are a significant delay, and it is uncertain if even this schedule is achievable given continued and strong objections made by the state of Nevada. The United States government should make every effort to ensure that a final waste disposal site for HLW is in operation by 2020, and should consider additional options beyond those currently envisaged to ensure that an effective system for used fuel management does become available.
Recommendations
373. The United States government should:
• Maintain the pace in implementing the measures in the Energy Policy Act of 2005 to encourage investment in new nuclear power plants, with the aim of meeting the stated milestones for licensing and construction of new plants.
• Consider if further measures may be necessary to encourage continued nuclear investments beyond the initial units supported by the EPAct measures, within the broader framework of energy and environmental policy.
• Continue to pursue the licensing and construction of a final repository for used fuel and high level radioactive waste, in accordance with decisions already taken by the government and Congress, and consider interim arrangements for the storage of used nuclear fuel.
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