gridlines

9 12 19 22 Inside Ric Pérez guides the Vaclav Smil discusses Mission-critical controls Passing the baton AP1000 game changer the “epochal energy play a pivotal role without fumbles transition”

What’s next for nuclear power? Gridlines is PwC’s magazine devoted to infrastructure. Stories focus on four areas: emerging trends and technologies driving infrastructure transformation, ways to manage risks and seize opportunities, tactics that can help with day-to-day challenges, and interviews with experts at the heart of thought and action. Gridlines combines PwC’s analysis and insight with reporting on critical developments and directions.

Cover photo—Construction site of the Sanmen 1 nuclear power plant. www.pwc.com © 2011 PricewaterhouseCoopers LLP. All rights reserved. In this document, PwC refers to PricewaterhouseCoopers LLP, a Delaware limited liability partnership, which is a member firm of PricewaterhouseCoopers International Limited, each member firm of which is a separate legal entity. This document is for general information purposes only and should not be used as a substitute for consultation with professional advisors. outlook | summer 2011

World energy demand and nuclear power meet at a 21st-century crossroads

Rising global populations with the shift; lower energy density of Buzz Miller goes into the brass advanced needs make one fact replacement fuels; substantially tacks of building two new plants in certain—we are at a crossroads lower power density of renewable the US from his vantage point as when it comes to energy produc- energy extraction; intermittence Executive Vice President of Nuclear tion. On one hand, the world is of renewable flows; and uneven Development for Southern Nuclear. going to need more electricity than distribution of renewable energy ever before. A 75 percent leap in sources” as the factors. Few capital projects are as large and demand by 2035 is forecast by complicated to build as a nuclear the International Energy Agency’s Right now, though, we need to power plant. Delays in construction Richard Abadie (IEA’s) World Energy Outlook 2010. take a pragmatic look at the long- have been an expensive problem. Electricity generation is the fast- term plans and actions that will Gridlines focuses on two key areas Global capital projects be required to move the energy that can make a practical difference. and infrastructure leader. est growing of all infrastructure sectors, with more than half of transformation ahead. That’s where nuclear power continues to fit Mission-critical management the $33 trillion the IEA expects looks at creating comprehensive to be invested in energy-supply in, according to many scientists and policy makers. Nuclear faces controls during construction, infrastructure going to electricity. focusing on new quantitative risk On the other hand, environmental challenges, of course. How they are being met is the subject of this analysis tools that are being used considerations play a major part in at nuclear construction sites to help our choices. issue of Gridlines. Actions range everywhere from developing new contractors foresee and avoid risks. The question becomes: How designs and approaches to nuclear From build to “go” zeros in on do countries provide for mas- power to Germany’s decision the handoff of a nuclear power sive energy demands without to phase it out by 2022 and to plant from contractor to owner- adding to climate problems and accelerate the transition to other operator that can be a painfully navigate a shift to renewable renewable sources. slow exercise in data manage- energy sources that most agree will Vaclav Smil notes the challenges ment transfer. What’s useful for a take some time to put in place? contractor is often unnecessary for Despite dramatic events of the last but concludes “if you are practical, you cannot say you can do with- an operator. The article examines few months, with the tsunami and enterprise asset management, a accident in Japan and revolts in the out” nuclear in the long-term energy picture. new approach geared to ensure Mideast, world energy sources and asset configuration and facilitate markets will not transform easily Ric Pérez, President of Operations long-term, reliability-centered or quickly. at Westinghouse, explains the operations and maintenance. advances made by the AP1000 “There are five major reasons that I hope you enjoy this edition of the transformation from fossil to reactor. In China, these reactors now being built represent the Gridlines focusing on the epochal nonfossil fuel will be much more energy shift in front of us and the difficult than commonly realized1,” first wave trying to demonstrate nuclear’s resilience and reliability. role nuclear may play in it. Please says Vaclav Smil, an energy and contact me to discuss any of the environmental scientist with Mike Johnson, Director of the issues raised here. whom we spoke for this issue Office of New Reactors at the of Gridlines. Smil cites “scale of US Nuclear Regulatory Commis- Yours truly,

1 Vaclav Smil, Global Catastrophes and Trends: sion, discusses the regulatory and The Next Fifty Years, MIT Press, 2008, pg. 82. inspection challenges. Infrastructure IN TRANSFORMATION

2 | Gridlines | PwC Mission-critical controls pg 19 Passing the baton from build to “go” pg 22 Buzz Miller rolls up his sleeves at Vogtle pg 30

What’s next for nuclear power? An industry once poised to prove itself is put on hold as the world assesses whether it can do without it

By Mark Svenvold

As the world reevaluates the nuclear renais- Without question, the last few months have sance, the debate continues about nuclear had an impact upon the industry, but many energy’s role in global supply. China has, believe these effects will not nearly be as great indeed, temporarily suspended approval of as some have supposed. The reason? Mostly it’s new nuclear construction projects until it about the colossal scale of the fastest growing has concluded a safety inspection of current infrastructure sector in the world—electricity construction sites, but this has not slowed consumption. construction. China is still targeting 70 to 80 gigawatts of new nuclear capacity by the end Three sober realities of demand, supply, of the decade.1 and environmental concern underlie the debate about the future of nuclear power. And while resistance to construction of new Indeed, much of the media coverage after the power plants is stiffening in India, five reactors Fukushima accident has focused understandably are currently under construction there, another on current developments, but that has also par- 39 more are proposed, and the government tially obscured certain fundamental facts about is showing increasing resolve to build enough the global energy landscape. nuclear reactors to generate a quarter of the The first has to do with the tremendous scale country’s electricity supply by 2050.2 Germany of the energy already provided by the sector. has taken the most decisive action against Indeed, nuclear power’s current incumbency nuclear power, deciding in late May to phase plays an essential role in the world energy out all 17 of its nuclear plants by 2022.3 Other equation today—amounting to 14 percent of countries in Central Europe like the Czech the global baseload supply of electricity—and Republic, Latvia, Poland, and Hungary, are is projected to maintain that share, globally, drawing an entirely different lesson and may be gearing up, by means of increased nuclear 1 “China’s Nuclear Plans to Slow but Not Shrink,” Reuters, capacity, to help supply European Union April 13, 2011, http://www.reuters.com/article/2011/04/13/ us-china-nuclear-idUSTRE73C0X520110413. countries, some grown increasingly skittish 2 “A Widening Nuclear Divide,” Vikas Bajaj, New York Times, about relying on natural gas from Russia, April 15, 2011. with a steady, reliable source of nuclear- 3 “Germany, in Reversal, Will Close Nuclear Plants by 2022,” Judy Dempsey and Jack Ewing, New York Times, May 30, 2011, http:// generated electricity. www.nytimes.com/2011/05/31/world/europe/31germany.html Operation excavation–Plant Vogtle construction: units 3 and 4, with the outline of a Westinghouse AP1000.

PwC | Gridlines | 3 through 2035.4 Regionally, nuclear’s share of projected to do under the International Energy Currently China has 25 nuclear plants under capacity is projected to increase to 23 percent Agency (IEA’s) New Policies Scenario, which construction, with 38 more planned and by 2035 among member countries of the anticipates modest climate legislation among financed, and another 76 in the pipeline, Organisation for Economic Co-operation and other assumptions, renewables of all forms, according to the World Nuclear Associa- Development (OECD).5 The United States gets including hydropower, will still account for just tion.14 And while that may sound like a lot, for 20 percent of its power from nuclear generation. a third of total worldwide electricity supply, perspective it’s helpful to recall that China’s The 17 reactors that some in Germany would with wind and solar making up a paltry 10 nuclear buildout will most likely represent a tiny like to shutter supply the country with a little percent of supply by 2035.9 share—a mere 9 percent—of the total planned more than 22 percent of its electricity.6 Sweden generating capacity the country will need to gets almost half of its electricity from nuclear The second reality is about the scale of meet a whopping projected electricity demand power. Even Japan gets 30 percent of its projected demand for electricity globally, of 9,594 terawatt-hours in 2035—or 27 percent electricity from nuclear power. which will likely increase to a staggering degree. Despite recessionary declines and improved 4 “Figure 7.4 Share of nuclear and renewable energy in total electric- ity generation by region in the New Policies Scenario,” IEA, World That level of baseload supply, says Vaclav Smil, efficiencies, most observers think that electricity Energy Outlook 2010, pg 222. energy and environmental scientist and leading demand will return, post-recession, with a 5 Ibid, pg 222. macro-risk expert, “cannot be replaced either vengeance—demonstrating the so-called 6 “Panel Urges Germany to Close Nuclear Plants by 2021, Judy rapidly or cheaply by any other available option, demand rebound.10 The US Department of Dempsey, New York Times, May 12, 2011, http://www.nytimes. com/2011/05/12/business/energy-environment/12energy.html. making a substantial retreat from nuclear power Energy’s Energy Information Administration 7 Vaclav Smil, “Japan’s Crisis: Context and Outlook,” The almost impossible to contemplate and a failure (EIA) projects a 30 percent jump in the United American: Journal of the American Enterprise Institute, April States by 2035 under its business-as-usual 16, 2011, http://www.american.com/archive/2011/april/ to continue with planned nuclear growth one japan2019s-crisis-context-and-outlook. 7 reference scenario, which assumes no change fraught with major challenges.” In short, the 8 Vaclav Smil, Global Catastrophes and Trends: The Next Fifty Years, argument can be made to get rid of 20, 22, in energy policy.11 The MIT Press, 2008, pg 77. 30, or 50 percent of a nation’s baseload power 9 IEA, World Energy Outlook 2010, pg 321 and 279. now supplied by nuclear, but if that argument Globally, the demand rebound is also likely to 10 A growing body of evidence suggests that improvements in happen quickly and dramatically. According to energy efficiency actually have the effect of increasing energy is made successfully, then a new source of demand. “The Efficiency Dilemma,” The New Yorker, David Owen, baseload supply will be needed to quickly the IEA’s New Policies Scenario, which assumes December 20 and 27, 2010, pp 78-85, http://www.newyorker.com/ reporting/2010/12/20/101220fa_fact_owen. replace it. modest implementation of energy and carbon 11 “Electricity Demand,” Annual Energy Outlook 2010 with Projec- mitigation policies, world electricity demand is tions to 2035, pg 1, http:/www.eia.doe.gov/oiaf/aeo/electricity.html. But a quick transition to renewable energy projected to increase by an average annual rate 12 Non-OECD countries will account for 61 percent of world isn’t likely or easily doable, according to Smil, of 2.2 percent, or a total of nearly 60 percent electricity use in 2035. Nearly 72 percent of the world expansion in 12 installed nuclear power capacity is expected in non-OECD countries. whose 32 books including Global Catastrophes between 2008 and 2035. International Energy Outlook 2010, pg 13 and 77, http://www.eia.doe. and Trends: The Next Fifty Years, explore, among gov/oiaf/ieo/pdf/0484(2010).pdf. other things, the structural or systemic obstacles It’s the kind of demand that China has already 13 IEA, World Energy Outlook 2010, pg 217. See also “Dirty Coal, Clean Future,” James Fallows, The Atlantic, December to technological change. “The transition to anticipated. The IEA projects electricity demand 2010, http://www.theatlantic.com/magazine/archive/2010/12/ renewable energies,” Smil says, “will be a in China to triple between 2008 and 2035. The dirty-coal-clean-future/8307/. 8 country is preparing, by 2025, to accommodate 14 “Nuclear Power in China,” World Nuclear Association, updated protracted affair.” In many ways, the scale of November 18, 2010, http://www.world-nuclear.org/info/inf63.html. the transition required is just too big to proceed 350 million people in cities that don’t exist now, swiftly, he argues. Even if all forms of renewable requiring China to add in the next 15 years an electricity increased significantly, as they are electrical grid that is the equivalent of what the United States built over 120 years.13

“Everybody was talking about a nuclear renaissance, but nobody was really buying it. Until somebody broke the deadlock and actually bought [the AP1000], people were hesitant,” according to Stephen Thomas.

4 | Gridlines | PwC First-wave foundations—Sanmen 1 is expected to be operational in 2013.

15 of all the electricity generated on the planet. the southwestern United States; and mount- 15 Under the IEA’s New Policies Scenario, which takes into account And much of China’s—and the world’s—elec- ing water shortages in the continental United planned energy-security and climate policy commitments, world electricity generation is expected to grow to 35,336 terawatt-hours tricity will be from coal-fired generation. World States.20 Such projections suggest a future filled by 2035. China’s electricity generation is projected to grow from 3,495 terawatt-hours in 2008 to 9,594 terawatt-hours in 2035. electricity generated by coal remains intractable, with difficult decisions, chief among them how Nuclear’s share of that will rise from 2 percent (68 terawatts) to 9 with coal’s share of generation in non-OECD to satisfy global electricity demand without percent (895 terawatts). The IEA projects US generation to be 5,169 16 terawatt-hours by 2035, according to Marco Baroni, senior analyst at countries projected to double by 2035. James pumping more carbon into the atmosphere. the IEA. By comparison, the total electricity generation for the United Fallows recently quoted a Chinese energy expert States in 2009 was 3,949 terawatt-hours, according to the EIA. who observed, rhetorically: “Will you turn off Against this backdrop, nuclear power remains 16 IEA, World Energy Outlook 2010, pg 217. your refrigerator for 30 years while we work an alternative that answers questions about 17 “Dirty Coal, Clean Future,” James Fallows, The Atlantic, December 2010, http://www.theatlantic.com/magazine/archive/2010/12/ on renewables? Turn off the computer? Or ask current baseload supply, growing demand, dirty-coal-clean-future/8307/. people in China to do that? Unless you will, you and carbon emissions. “No rational long-range 18 IEA, World Energy Outlook 2010, pg 217. can’t get rid of coal for decades.”17 Indeed, coal energy plan of any major modern economy 19 “Carbon capture and storage (CCS) technology is expected to be should exclude the nuclear option,” says Smil. deployed on a limited scale in the New Policies Scenario, its share of and natural gas are projected to dominate elec- total generation rising from zero today to 1.5% in 2035,” IEA World tricity generation in any of the IEA’s projected “The debate should be about the best way to Energy Outlook 2010, pg 220. 21 scenarios to 2035, with coal still accounting for proceed, not about whether to proceed at all.” 20 There will still be ice in the Arctic, but a multiyear, carryover ice pack will have disappeared. FreshNor: The Freshwater Budget 32 percent of global electricity generation in of the Nordic Seas, Danish Meteorological Institute and Nordic 2035 and natural gas for 21 percent of global Such debate seems largely academic Council of Ministers, 2009, http://freshnor.dmi.dk/handout_freshnor. pdf. See also David Ljunggren, “Multiyear Arctic Ice Is Effectively 18 in remote Burke County, Georgia, about generation. The agency does not project Gone,” Reuters, October 29, 2009, http://www.reuters.com/article/ a half hour’s drive from Augusta, where the carbon capture and sequestration technology idUSTRE59S3LT20091029?sp=true. construction activity there resembles something to have much of an impact.19 Unless this some- The National Oceanic and Atmospheric Administration study from documentary films about giant utility proj- “Irreversible Climate Change to Carbon Dioxide Emissions,” which how changes, coal and gas will continue to projects dust bowl conditions for eight major regions in the world, ects like Hoover Dam. Forests of Georgia pine reinforces two earlier studies that focused on the southwestern move in the wrong environmental direction. United States: “Human-Induced Changes in the Hydrology of the are suddenly interrupted by a massive swath Western United States,” Tim P. Barnett et al, Science, 22, February of red clay. Scores of huge dump trucks with 2008, http://www.sciencemag.org/cgi/content/abstract/1152538, and This raises the third powerful reality “Model Projections of an Imminent Transition to a More Arid Climate in the global energy landscape, the scale of tires that seem as big as houses work at making in Southwestern North America,” Richard Seager et al, Science, a very big hole, 90 feet deep across 42 acres. May 25, 2007; http://www.ldeo.columbia.edu/cicar/documents/ which is as big as the earth itself—that is, the Sc_Express_Model_Predictionsv2.pdf. Engineers, tiny human figures in hard hats, looming climate crisis attributed to man-made A study commissioned by the Natural Resources Defense Council greenhouse gas emissions. Recent peer-reviewed stand in groups consulting blueprints, or bend (NRDC) analyzed 16 different climate model estimates of precipitation and temperature in the United States to the year 2050 and found studies have discovered threats to the carryover to put an eye to a surveyor’s scope, or clamber more than 1,100 US counties vulnerable to drought conditions, a ice pack in the Arctic; permanent dust-bowl over pipes and rebar, or signal to each other 14-fold increase in risk from previous estimates, according to the report “Climate Change, Water, and Risk,” NRDC, 2010, http://www. conditions in five global regions, including from towers and cranes above the general din. nrdc.org/globalwarming/watersustainability/files/WaterRisk.pdf. 21 Vaclav Smil, Energy Myths and Realities, AEI Press, 2010, pg 154.

PwC | Gridlines | 5 This is the site of Southern Company’s Vogtle development, is in charge of making sure the had arrived from South Korea and were being Units 3 and 4, which, when placed into service project passes every regulatory inspection offloaded in the Port of Savannah—the early as planned in 2016 and 2017, respectively, will required by the NRC, of handling every prob- shipments of 58 iron plates that will form a generate a total of 2,200 megawatts of power lem related to the plant’s intense construction massive bowl-shaped structure, the bottom half, from two Westinghouse AP1000 advanced pres- schedule, and of addressing every concern of or bottom-head, of a containment dome for the surized nuclear reactors. The lead contractor Georgia’s public power commission so that power plant. for the project, the Shaw Group, of Baton Vogtle 3 and 4 go online on time and on budget. Rouge, Louisiana, has a contingent of about While the plates are welded together 1,500 people working at the site at present When Gridlines caught up with Miller in to form the bottom-head, the lower floors of and expects a peak of about 3,000 in a few November, 2010, he was in the middle of doing a concrete building meant to house it will be years. The U.S. Nuclear Regulatory Commis- paperwork, and like all things nuclear, it was a constructed, saving time. When the bottom- sion (NRC), in an effort to streamline plant mighty piece of paperwork—the 18th revision head bowl is finished, all 800 tons of it will be construction, granted Southern a limited work of a 23-chapter application called the Design crawled over to the finished building on a slow- order to allow for the earth-moving operations. Control Document, a tome covering every safety moving track and then lifted into place. “We’ll Component parts to be delivered include steam system in the Westinghouse AP1000 reactor and have a lot of big lifts,” Miller said. generators manufactured in South Korea, all of the minutia—of its construction. heat exchangers from Italy, turbine generators The widespread use of modular assembly, Miller from Japan, 1,000-ton modular walls and Teams of engineers from Southern, Westing- explained, is a big change from how nuclear floors shipped from Louisiana, and an 800-ton house, and elsewhere had been working since plants were assembled 30 years ago, when the containment dome manufactured in Japan and 2005 preparing this document to submit to the last reactor was built in the United States. So- assembled by Chicago Bridge & Iron. NRC, which was due in a month’s time, in early called Generation III designs include the ESBWR December. That deadline was met successfully. (Economic Simplified Boiling-Water Reactor) The man at the center of all this is It was a critical step on the way to receiving from GE-Hitachi, the US-APWR (US Advanced Joseph “Buzz” Miller. Miller, Southern a combined operating license (COL), which Pressurized-Water Reactor) from Mitsubishi Company’s Executive Vice President of nuclear will allow construction to begin in earnest. Heavy Industries, and the EPR (European Pres- Already, modular pieces of the power plant

A look at the energy landscape: Renewables are the fastest growing, but coal will still fuel the largest share of the world’s electricity in 2035

Other renewables are the fastest-growing 15.02energy pathway but will be only 7% of 15 15.02 15 world generation in 2035.

12.90 12.90

11.19 11.19 10 9.83 9.83 108.83 8.83 7.92 7.92 6.85 6.43 6.85 5.76 6.43 5.42 4.96 5.03 5.76 5 4.60 4.51 5.42 4.17 4.17 4.20 4.96 5.03 3.86 3.69 5 3.94 4.60 4.51 3.59 4.17 4.17 4.20 3.00 3.08 3.86 3.69 3.94 2.59 3.59 2.30 2.55 3.00 3.08 2.03 2.59 1.65 2.30 2.55 1.27 2.03 0.94 0.86 0.82 0.78 0.77 1.65 0.83 0.46 1.27 World electricity generation (trillion kilowatt-hours) World 0.94 0.86 0.82 0.78 0.77 0.83 0 0.46 2007 2015 0 2020 2025 2030 2035 2007 2015 2020 2025 2030 2035 Liquids Other renewables Natural gas Nuclear Hydroelectricity Coal Liquids Other renewables Natural gas Source: EIA, International Energy Outlook 2010 Nuclear Hydroelectricity Coal

6 | Gridlines | PwC surized Reactor) from Areva. Westinghouse’s Corporation, SNPTC, selected Westinghouse’s vice president of finance. “We knew that China’s AP1000 is part of that next-generation-design AP1000 power plant to become the standard nuclear build-out would be very big,” says Gab- revolution. “Modular construction and a stan- nuclear reactor design for many of its projects. bianelli, who anticipated dozens of plants in dard plant approach,” said Miller, “have proven It was a technology transfer agreement that had the near term. “With a build-out on that scale, to be vastly superior to stick building.” some scratching their heads. The deal effectively China would need help. There’s no way they gave the blueprints for the AP1000 design to the would be able to do it alone. Westinghouse But none of this would happen until the Chinese, something that Areva had balked at. would continue to be in the picture for a very paperwork was done. That paperwork—seek- Why would Westinghouse give away the crown long time.” Indeed, within months, the technol- ing preapproval of almost 100 percent of the jewels, as it were? ogy transfer strategy seemed to be paying off AP1000 reactor design prior to construction, when China announced that it wanted to build another big improvement over the past—has The short answer, according to Stephen 100 more AP1000 reactors by 2020.22 become an abiding preoccupation. “We’re deep Thomas, professor of energy policy at the in the licensing process,” Miller said, dryly. University of Greenwich, England, is that West- Today, Westinghouse’s big bet is being tested on inghouse had in the AP1000 a revolutionary the only stage that matters: in real time, with It would not be an exaggeration to say a great design, but that design wasn’t going anywhere real concrete being poured, real steel stretching deal was riding on the success of Miller and unless someone bought and built it. “Everybody into the sky, and the real daily challenges of Vogtle. But success depends partly on events was talking about a nuclear renaissance, but a construction site. Much has been written happening thousands of miles away, in China, nobody was really buying it,” Thomas told about a nuclear renaissance, but in China, the where four AP1000 power plants, some of them Gridlines. “Until somebody broke the dead- contours of that abstract idea are taking shape nearly half finished, have a three-year head start lock and actually bought something, people on Buzz Miller’s construction schedule. 22 “China wants 100 Westinghouse reactors,” Bonnie Pfister, were hesitant. Companies like Westinghouse Pittsburgh Tribune-Review, June 28, 2008, http://www.pittsburghlive. wanted their new generation of power plants com/x/pittsburghtrib/s_575073.html. That figure has since been In China, real iron is in the ground. reduced by about half. China plans to build roughly 75 gigawatts demonstrated.” of new nuclear power by 2035, which is the equivalent of about 57 In the spring of 2007, after a fierce competi- nuclear plants of roughly 1,300 megawatts capacity, a significant por- tion between Westinghouse and French-owned tion of them of the AP1000 design—still an impressive target by any But there was a deeper strategy as well, accord- measure. “Figure H-5, World Installed Nuclear Generating Capacity, Areva, China’s State Nuclear Power Technology ing to Richard A. Gabbianelli, Westinghouse’s by Region and Country,” U.S. Energy Information Adminstration (EIA), http://www.eia.doe.gov/oiaf/ieo/ieoecg.html.

China’s share will skyrocket: World net electricity generation from nuclear power by region, 2007–2030 (trillion kilowatt-hours)

0.04 0.040.040.390.040.390.390.39 0.49 0.490.490.49 0.66 0.660.660.66 0.06 0.060.060.06 0.89 0.890.890.89 0.81 0.810.810.900.81 0.900.900.90 0.02 0.020.020.02 0.83 0.830.830.83 0.10 0.100.100.10 UnitedUnited StatesUnited StatesUnited States States 0.81 0.810.810.81 0.07 0.070.070.07 0.14 0.140.140.14 0.15 0.150.150.15 0.16 0.160.160.16 OECDOECD EuropOECD eEurOECDop Eure opEureope 0.20 0.200.200.20 0.20 0.200.200.20 China ChinaChinaChina 2007 200720072007 2015 201520152015 2025 202520252025 2035 203520352035 0.25 0.250.250.25 0.32 0.320.320.32 0.04 0.39 0.49 0.66 0.36 0.360.360.36 JapanJapanJapanJapan 0.06 0.89 0.81 0.90 0.02 0.83 0.10 0.31United0.31 States0.310.31 1.08 1.081.081.08 RussiaRussiaRussiaRussia 0.81 0.07 0.14 0.36 0.360.360.36 1.01 1.011.011.01 0.15 0.16 OECD Europe 0.94 0.940.940.94 0.42 0.420.420.42 India IndiaIndiaIndia 0.06 0.060.060.06 0.19 0.190.190.19 0.20 0.88 0.880.880.88 0.60 0.600.600.60 0.04 0.39 0.49 0.20 China 0.44 0.440.440.44 Other OtherAsiaOther AsiaOther Asia Asia 2007 0.06 2015 0.66 2025 0.81 0.90 2035 0.02 0.25 0.320.89 0.83 0.10 0.36 United States Japan Rest ofRest worldRest of worldRest of world of world 0.81 0.07 0.31 0.14 1.08 0.15 0.16 OECD Europe Russia 0.36 1.01 0.20 0.94 0.20 0.42 China India 0.04 0.39 0.062007 0.49 2015 0.66 2025 2035 0.06 0.88 0.19 0.89 0.81 0.90 0.02 0.25 0.83 0.10 0.32 0.44 United0.60 States Japan Other Asia China’s share of nuclear generation grows 0.07 0.14 0.36 0.81 0.31 1.08 900 percent from 2007 to 2035, reaching 0.15 0.16 OECD Europe Russia Rest of world 0.36 1.01 13.3 percent of world nuclear electricity 0.06 0.20 0.94 0.20 0.42 China India generation in 2035. 2007 0.88 2015 0.19 2025 2035 0.25 0.32 0.44 0.60 0.36 Source:Japan EIA, International EnergyOther Outlook Asia 2010 0.31 1.08 Russia Rest of world 0.36 1.01 0.06 0.94 0.42 India 0.88 0.19 0.44 0.60 Other Asia Rest of world

PwC | Gridlines | 7 in the skyline itself. Indeed, China has become dome at Haiyang 2, in the northeastern coastal the world’s de facto proving ground for any province of Shangong, has been installed. Those number of energy pathways, because China lessons in construction are being captured in is pushing hard in all of them, from advanced China and are expected to help develop—for coal with carbon capture and sequestration to the overall industry and the institutions that next-generation natural gas, to wind, solar, and finance construction—a baseline sense of how nuclear power. long it will take to build Generation III plants like the ones planned in Georgia and elsewhere “You can think of China as a huge laboratory in the world. for deploying technology,” a US government official who works in China said recently. “We Part of the compelling interest in have advanced ideas. They have the capability nuclear generation is the concern of to deploy it very quickly. That is where the part- countries in Western Europe and Central nership works.”23 The Vogtle projects illustrate Europe, over continuity of supply. Russia, this point. Southern Company has its engineers whose state-owned Gazprom supplies roughly in China and has brought Chinese engineers to a quarter of the European Union’s natural gas, Georgia. Westinghouse has had an engineering has been willing to enforce its price on coun- team, led by John Pierpont, observing construc- tries. For example, during a pricing dispute tion of the AP1000 bottom-head containment over natural gas, Gazprom simply turned off dome at the Sanmen project in the eastern its supply to Ukraine during the bitterly cold coastal province of Zhejiang, according to Ric winter and spring of 2008–09. “That event,” Pérez, Westinghouse’s president of operations. says Luis Echavarri, Director General of the Organisation for Economic Co-operation and When Sanmen’s bottom-head was finished, Development’s (OECD) Nuclear Energy Agency, Pierpont and his team were reassigned to “really drove home the need to have stable Vogtle, taking with them the lessons learned in and secure supplies.”24 And, as Westinghouse’s China. “Those lessons,” says Pérez, “hundreds Pérez notes, if Germany phases out its nuclear of them—how to dress the modules, how to fleet, something is going to have to make up make them easier to assemble at the site—these lessons were written into the Design Control Story continues on page 33 Document for the Vogtle plants in Georgia.” 23 “Dirty Coal, Clean Future,” James Fallows, The Atlantic, December This spring, other construction milestones have 2010, http://www.theatlantic.com/magazine/archive/2010/12/ been met—the reactor vessel at Sanmen 1 dirty-coal-clean-future/8307/. has been completed and is undergoing hydro- 24 “Nuclear Option Is Back on the Table,” Aude Lagorce, MarketWatch, May 20, 2010, http://www.marketwatch.com/story/ testing; the second ring of the containment the-nuclear-option-is-back-on-the-table-2010-05-20.

“[Current levels of nuclear generation] cannot be replaced either rapidly or cheaply by any other available option, making a substantial retreat from nuclear power almost impossible to contemplate and a failure to continue with planned nuclear growth one fraught with major challenges.” Vaclav Smil

8 | Gridlines | PwC Interview

A few words with with Ric Pérez …

President of Operations at Westinghouse, focusing on all facets of com- mercial nuclear energy production in Europe, Asia, and South America. Gridlines met Pérez at Westinghouse headquarters, outside Pittsburgh, where he had just returned from a quarterly meeting in China with the State Nuclear Power Technology Corporation (SNPTC). The SNPTC is funding the construction of two Westinghouse AP1000 reactors, Sanmen I and II, and runs another 17 reactors.

How has Fukushima affected the acknowledgment that the Genera- nuclear industry? tion III path is the right path to go for nuclear, because Generation I think it has fostered an appropri- III is defined, in a large measure, ate level of revalidation of safety by its emphasis on providing extra features and procedures for the margins of safety in the design of existing fleet and for the next the plant. For the AP1000 reactor, generation of new build. Both that means a million gallons of US and EU regulations, post- water are already positioned inside 9/11, required some assumptions the containment building; passive relative to external events—the cooling systems that operate auto- so-called LOLA, or Loss of Large matically with air-powered valves Area requirements. Under these and do not depend on outside LOLA requirements you have to power; battery and diesel gen- assume that for whatever reason erator backup power supply; two there’s an external event—a plane separate methods for mitigating strike, for instance—that takes a hydrogen gas; and hardened spent large area of the plant out. The fuel pools with a dozen different NRC just revalidated those require- redundant systems to insure that ments to the 104 operating plants, water stays in those pools. required them to validate that all those systems and coping mecha- Have the events in Japan affected nisms were valid, asked them to construction of the first two AP1000 drill and train on them again, and reactors in China—the reactor at so those were all done. We expect Sanmen 1, and Haiyang 2—or a report out in a few months from construction at Plant Vogtle in the NRC that will, in part, address Georgia? new plant design as well. But I can We have not stopped anything at tell you—and obviously we want Haiyang or Sanmen. In fact, we to get this right—that our own ini- just achieved two of the of the key tial assessment is that our design milestones we had planned for this features really provide a safety net year at Haiyang this past week. for the Fukushima-type event. In On April 6, we finished the CA01, short, we’re seeing in this process which forms the refueling canal, a validation of the AP1000 design. steam generator compartments, If you’re asking me, five weeks and the pressurizer compartment. Unit 1 cover ring, Haiyang, China. after the event, what are the And we set the second ring on the fundamental takeaways? I’d say containment vessel on April 28th. one of them is that there’s been an As far as Sanmen 1 is concerned,

PwC | Gridlines | 9 the reactor vessel is finished and is pumps are all continuing to be the pour to ensure full penetra- We’ve essentially adopted the being hydro-tested at the factory fabricated. In fact, I just saw a tion of the modules. That sort model of the Japanese. The cost in Korea. It will be shipped soon bunch of them the other day of thing. We’re seeing what can of construction labor in Japan is and will arrive at Sanmen in May. when I visited our facility that be done, and in how much time. what really drove them out of the That’s a big milestone—it’s the is manufacturing the pumps. Sanmen 1 will meet its 54 months hole, as it were, and they devel- first big nuclear island component construction schedule, and begin oped a factory/modular model. that will go into the reactor—and China seems to be the real proving generating electricity by 2013. So did the United States, and it is fundamentally on schedule. ground for nuclear power in general Fifty-four months will become this has made US skilled labor in Right now, the construction sites and for the AP1000 design in our baseline time to beat—and I modular construction more com- look like a swarm of ants—it’s the particular. Is it safe to say that expect to beat that time on all the petitive than it is in China. And we China is, in essence, the first wave classic large-scale construction remaining projects. expect significant improvements for a new build in nuclear power? scene. in this area over China. So, in If so, what are the lessons you’re Some might challenge the China- short, when it comes to modular learning about actually construct- At Vogtle, there’s been no letup on as-first-wave idea. The argument construction, instead of the China- construction—on what we’ve been ing the AP1000 for the second wave would be that the situation in which would happen elsewhere— as-first-wave being a false analogy, allowed to build under the NRC’s China is so dramatically different in the United States, for instance? we see it as really a direct and limited work authorization. All the from anywhere else, that any com- usefully predictive analogy. back-fill is finished for the plants, The first big lessons are about parison to China amounts to a false the first part of the foundation, modular construction—mostly analogy. In effect, just because a The general design of the Westing- the construction of the support about how to handle the structural nuclear plant is built in 54 months house AP1000, with its emphasis facilities. And work continues all modules at the site. Some of these in China doesn’t mean you’ll be on passive systems, raises safety able to do the same elsewhere. How down the supply chain—with all are very big. There’s a module margins and reduces the overall would you answer that? the manufacture of equipment, called the CA-20, which is essen- footprint of the nuclear island—and so all the reactor vessels, steam tially a 10-story building. We’re It’s a fair question. And I’ll say that a smaller footprint goes a long way generators, and reactor cooling learning many lessons at Sanmen when you talk about commodity in reducing construction time. What else seems to be helping reduce construction costs? You mentioned the maturity of the AP1000 design, which is really A game changer in the United States comes in the form of Part important. It’s easily three times more efficient than the designs 52 of the NRC regulatory process—the advance approval of of the ’80s. But the other game design right down to the specs for bolts and threads at the changer in the United States comes in the form of Part 52 of attachment points between rebar in the structural modules. the NRC regulatory process—the advance approval of design right down to the specs for bolts and about how to dress a module like installation—laying pipe, cable— threads at the attachment points that on-site, better ways to lift all the small-bore stuff—China between rebar in the struc- components. Some of these are may be 10 to 15 percent more tural modules. All of this gets very big lifts, of up to 1,000 tons. productive than a comparable approved—before construction— workforce in the United States. in something called the Design James Fallows reports in the Decem- Having said that, what seems very Control Document. We’re finishing ber issue of The Atlantic that China clear on a daily basis is that our one of those right now. In fact, is preparing, by 2025, for 350 modular construction system—the we’re in the process of taking all million people to live in cities that advantages of modularity—are of the important, time-saving 1 don’t exist now. In short, China is playing to the dominant strengths lessons learned in the construc- in a hurry on all fronts. of the United States, where there tion of the AP1000 in China—I’m That’s right. And so, when it has been a long-standing, high talking about hundreds of lessons comes to putting up structural level of experience in factory/ learned—and writing those design modules, they sometimes man- modular construction in other lessons directly into the Design handle the pieces into place. We’re industries—like petrochemicals, Control Document for Vogtle learning from that. We’re learning fossil fuel generation, refineries, Plants 3 and 4, the two reactors how to lift heavy structures better, oil extraction. that will be built for Southern how to brace walls when pouring Company in Georgia.

concrete, and how to better test 1 “Dirty Coal, Clean Future,” James Fallows, The Atlantic, December 2010, http://www. theatlantic.com/magazine/archive/2010/12/ dirty-coal-clean-future/8307/.

10 | Gridlines | PwC We expect the Chinese analogy to carry over to the United States. We expect the AP1000 design to be a game changer for how nuclear can make an impact in the world.

Scale model of the Sanmen nuclear power company facility.

As you may know, Southern is we’re very, very positive about own consumption and growth but As someone deeply involved in cur- currently doing advance construc- just because they are a known also to support export of energy rent construction of nuclear power tion, preparing its site to receive nuclear operator with a good and export of their industries to plants, what would you say is the the bottom-head of the contain- history and with a very developed places like Germany and places takeaway about nuclear power? ment domes for the AP1000. In infrastructure. in the West. The AP1000 was designed with China, all of this work has been two basic premises. First, to Historically, countries that reacted Many observers have said that the completed. We sent a team from provide large-scale electricity strongly against nuclear build world will continue to move for- Westinghouse to observe that safely, and second, to do it reli- in the aftermath of Chernobyl— ward with nuclear power; that, in construction, and these people ably, with the highest standards, an event that bears very little many ways, the world has no choice have now been sent to advise with indigenous labor forces, resemblance to Fukushima, by but to keep pushing forward in just and consult in the bottom-head and at a pace that will make a the way—those countries that about every pathway including construction process at the Vogtle difference in decarbonizing the constrained themselves against nuclear. There’s too much of a de- plants. Currently at Vogtle, the world. We’ve seen that much of nuclear power ended up buying mand rebound in the coming years, big non-safety-related buildings this is already happening. It’s a lot of electricity from outside and the issue of global warming has are up—the concrete batch plant, to be answered in some way. Would being done. So far, in China the their own country. The very same warehouses, the modular assembly you agree with this? use of the AP1000 design has, thing may happen to Germany, building is done. All the excava- in some ways, been about their which has reacted strongly against Yes. Your point about the world tion is done, and now the backfill pressing need for speed: they nuclear power post-Fukushima. demand and the world direction is finished. need to provide for a demand that Some countries haven’t forgotten on nuclear—even though a lot of is colossal. In the United States, What other countries, aside from that lesson and may be positioning countries have taken a pause to the pressing issue has been about China, seem intent on new build themselves to become suppliers take a breath and analyze the situ- economics—and much of that is for nuclear? of nuclear-generated electricity ation—the situation is exactly as about hitting your construction to places like Germany. In other you have described it. If anything, There are two that come readily milestones. We’re hitting ours in words, energy security, energy we feel that this incident may to mind for different reasons. China. We’re hitting the schedule, markets, and continuity of supply actually engender a new build out- Number one is Brazil, a country we’re hitting the time frames. And remain a strong pull for many side the United States toward Gen that already has two nuclear because it’s modular construction countries especially in places like III reactors—and away from the units in operation and another we’re talking about, we expect the Czech Republic where they Gen II designs that the Chinese one being built, and as you know the Chinese analogy to carry over stated an intent to buy two more were doing in the past and some they’re hosting the World Cup to the United States. We expect plants at Temelin 3 and 4, but also other countries were embarking and they’re hosting the Olympics the AP1000 design to be a game Lithuania, Poland, Slovakia and on. So, despite this cautionary and have unbelievable economic changer for how nuclear can make Hungary. If anything, they’re more moment in history, we think that growth. So they’ve indicated that an impact in the world. ■ they will not modify their current positive than ever about the the Gen III style like the AP1000 plans for going out to bid, and need for them to build large design, will emerge from all of that is clearly one of the places baseload units not only for their this very well.

PwC | Gridlines | 11 Interview

A few words with Vaclav Smil …

“The fortunes of nations,” Vaclav Smil writes in his 2008 book Global Catastrophes and Trends: The Next Fifty Years, “are not determined primarily by strategic designs or economic performance but by the magnitude and efficien- cy of their energy conversions.”

We are now in the midst of just such a grand transition from fossil fuels to renewable and alternative energy sources. This evolution, Smil observes, is “the most funda- mental future shift in the global economy. It is not, as one might think, further globalization but rather the coming epochal energy transition,” which Smil discusses here in the context of nuclear power.

Smil’s abiding focus is on the deep structures that have shaped history “To attack this in the simplest way, you would point to the singular problem of scale.” and that drive future trends. Born in 1943 in what is now the Czech Republic, Smil is Distinguished is an assessment of the rise and Let’s talk about nuclear power. Professor in the Faculty of Environ- fall of American manufacturing. You’ve written that “no rational ment at the University of Mani- long-range energy plan of any ma- Smil has given briefings and toba, where he has taught since jor modern economy should exclude testified on wide-ranging risk and 1972. The first non-American to the nuclear option. The debate energy issues at the White House, receive the American Association shouldn’t be about whether to pro- the US House of Representatives, for the Advancement of Science ceed but about how to proceed.” and the US State Department. He Award for Public Understanding of I’ll tell you why I say it. It’s here. is a regular consultant to agen- Science and Technology, Smil has It’s a fundamental part of the cies and associations including published 32 books on energy, the energy mix, embedded into the the World Bank, the Rockefeller environment, the history of tech- baseload supply of electricity. Foundation, the CIA, and the nology, and global risk assessment People don’t realize this. In the Department of Defense. In 2010 and most of the recent ones have US nuclear power provides 20 Smil was named by Foreign been reviewed by Bill Gates on percent of the power generation. Policy as one of the Top 100 his website. His next book, In Canada, nuclear’s share of elec- Global Thinkers. (Not) Made In USA, (MIT Press), tricity generation is 30 percent. In Japan 30 percent. This is a huge

12 | Gridlines | PwC Getting [to a world without fossil fuel] will be expensive and require considerable patience. Coming energy transitions will unfold, as the past ones have done, across decades, not years.

percentage. People think about are up and running all the time. more manageable. This was a France, which generates 75 per- They are very efficient, with load natural catastrophe, but still it was cent of its electricity via nuclear factors [a percentage measure largely human error that caused power, but no, think about others of efficiency over time] of 95 its extent. also—Belgium, 50 percent rate, percent, many of them. We do not for instance. have any other large-scale genera- And these were old plants. tion of electricity as reliable—I’m Fukushima is 40 years old. It and The typical Western countries are not saying as economical, because other plants like it will have to be 20 to 40 percent. This is not two economics have been a barrier. replaced. Japan will build some or four percent. It’s a baseload, But if you are practical, you can- new nuclear power plants. There it’s factual, it’s embedded. And not say you can do without it. may be some delay and they may nuclear can deliver the power at build fewer of them than planned. a large scale—one gigawatt, two You visit and lecture at Tokyo Uni- But this is not the end of nuclear gigawatts, three gigawatts. The versity regularly and have written power for Japan. What alternative biggest nuclear power plant in extensively about Japan and China. do the Japanese have, after all? Japan provides 10 gigawatts of You said you were writing about To import more coal? Or to import electricity. So it has this poten- the Fukushima accident. It seems more liquefied natural gas to gen- tial for scale already built in. It like the nuclear industry would be erate electricity? can deliver power to the emerg- extremely sensitive to that kind ing megacities of the world. So of fatal discontinuity. What’s the What effect will Fukushima have on why don’t we use third or fourth impact? Is this “game over” for the nuclear industry in China? the nuclear sector? generation nuclear? Why not do This is just a postponement for that? Because otherwise [if we do No. I’ve been corresponding with the nuclear industry, which will not] we are cutting 30, 40 percent many, many people who are continue to grow. Two years from of our juice, and this is not an extremely knowledgeable about now, it will be business as usual. option. Nuclear power fits the nuclear design, and it appears that Again, like Japan, the Chinese scale that’s needed. this was very largely preventable, have no choice because of the actually. They butchered the first mind-boggling demand statis- The IEA projects electricity demand day, basically. Fukushima, as you tics you mentioned. Imagine in to grow most rapidly in non-OECD know, is a problem that is now 2000—I think it was three years countries like China, which is about one-tenth of Chernobyl altogether if not four—I think projected to triple its demand by in terms of total radioactivity 2035 to 9,594 terawatt-hours— 2004, ’05, ’06—each of these years released into the environment. or 27 percent of all the electricity So it’s a serious thing, but if 1 Under the IEA’s New Policies Scenario, which generated on the planet.1 And that takes into account planned energy security and they would have taken the right climate policy commitments, world electricity of course doesn’t include the rest of steps in the first day, the radia- generation is expected to grow to 35,336 terawatt- Asia. In other words, world demand hours by 2035. China’s electricity generation is tion released could have been projected to grow from 3,495 terawatt-hours in for electricity will grow at a scale 2008 to 9,594 terawatt-hours in 2035. Nuclear’s that is staggering. one-tenth of what was actually share of that will rise from 2 percent (68 terawatts) released, one-tenth, so it could to 9 percent (895 terawatts). The IEA projects US Exactly. You put one nuclear generation to be 5,169 terawatt-hours by 2035, have been only like one percent according to Marco Baroni, senior analyst at the power plant and it could serve a of Chernobyl. So it would have IEA. By comparison, the total electricity generation for the United States in 2009 was 3,949 terawatt- megalopolis and it could do that been a “disaster” but very much hours, according to the EIA. reliably for 30 years. These plants

PwC | Gridlines | 13 The scale of human aspiration and the energy required to provide it are the things that somehow most advocates of green technologies do not want to talk about.

the Chinese built more coal-fired required to provide it—are two resource categories supplied electricity capacity than the total the things that somehow most annually an equivalent of about electricity-generating capacity of advocates of so-called green half a billion tons of oil. If during Germany or France for the same technologies do not want to look the coming decades we sought to period. And practically all of it in at. And much of this has to do replace worldwide only 50 percent coal. So there’s that option. Again, with where people will be living. of all fossil fuels with renewable the Chinese need to build some- A couple of years ago, we passed a energies, we would have to thing on the order of 60 gigawatts great milestone in human history. displace fossil energies equivalent of electricity capacity every year. Half of the people live now in to about 4.5 billion tons of oil, a So, yes— they’ll be building cities. And not just in cities, they task equal to creating an almost nuclear. live increasingly in megacities. entirely new industry whose energy output would surpass that You’re obviously not against A typical city in Asia has one to of the entire world oil industry that renewable energy, but why are some two million people. China before took more than a century to build. of the leading renewable alternative long will have dozens of cities energy pathways insufficient to with five, eight million people. Al Gore proposes to replace the address the world’s need for energy? How do you run a city like that on two nonrenewable forms of gen- To attack this in the simplest way, a wind turbine or a photovoltaic eration in the United States—fossil you would point to the singular cell? How do you run modern fuel and nuclear—which now problem of scale—the sheer scale megacities where most of the amount to about 900 gigawatts of the world population that will population would be housed in of installed capacity and took soon be aspiring to a middle-class high-tower structures, how do nearly 60 years to build, but this way of life and to levels of con- you run them on renewable poses some spectacular chal- sumption and consumer activity energy sources? lenges. America’s wind turbines that are made possible by electric- and solar photovoltaics now add You’re a realist about the pace of ity [That breaks down to] seven up to less than four percent of the large-scale energy transitions, and billion people of whom one billion total electricity generating capac- this one—the transition from fossil- ity of more than 1,000 gigawatts. are filthy rich compared to the fuel based energy to alternative and rest, another billion already are Even if all the transmission lines renewable energy—will take place were in place, which they are not, getting there, and the rest want to over generations, and not, as some because of significantly lower load be there eventually. All of them, proponents have claimed, over a (capacity) factors of renewables quite reasonably, want what we single decade. Why is that? have [in terms of quality of life (typically no more than 25% and comfort], and what we have By the late 1890s, when com- compared to 75% for fossil and is made possible, to a large extent, bustion of coal (and a bit of oil) more than 90% for nuclear sta- by electricity. This—the scale of surpassed the burning of wood, tions) the country would have to human aspiration, and the energy charcoal, and straw, each of the build more than 2,500 gigawatts

14 | Gridlines | PwC of new wind and solar capacity to of Arizona and you can power long these things last, say after These are just some of the reasons replace today’s thermal (coal, gas, the country, but then you have 20 years when solar and wind are why energy transitions in large nuclear) generation—and under to build high voltage transmis- installed in millions of units and economies and on a global scale no imaginable scenario could this sion lines from that little square have accumulated the working are inherently protracted affairs. be done in a decade. to everywhere in US — and still lifetime of hundreds of millions of A world without fossil fuel com- to find what to do after the sun hours. Do we have any experience bustion is highly desirable, and, In addition, this would mean, of sets, not a trivial challenge given with giant solar panels working to be optimistic, our collective course, writing off, in a decade, that we have no practical way to for 20 years? Do we have any determination, commitment, and the entire fossil-fuel and nuclear- store electricity on gigawatt scale. experience with giant offshore persistence could accelerate its generation industry, an enterprise Trillions of dollars will need to be wind farms working reliably for arrival. But getting there will be whose power plants alone have spent on financing to rebuild the 20 years? expensive and will require consid- replacement value of at least infrastructure to support that. It’s erable patience. Coming energy $1.5 trillion. Another $2.5 tril- an infrastructural problem. People What will happen to a wind tur- transitions will unfold, as the past lion would be spent to build the live in big cities so you have to bine farm if a massive ice storm ones have done, across decades, new replacement capacity and bring the juice to them on a scale comes, as it sometimes does in not years. ■ the requisite high-voltage lines. which is amazing. parts of the northern US, and liter- Where will deeply indebted and ally grows a thick coating of ice on financially precarious America get You build the one nuclear power every surface out there? $2.5 trillion to invest in this new plant—like them or hate them— infrastructure within a decade? and one plant easily equals 2,000 You’ve seen these recent tornado megawatts. You build one big outbreaks in the [US] south—170 But you’ve written favorably about wind turbine, it’s two megawatts tornadoes touching within a few solar—and some have argued that or three megawatts. So again, hours over six states. What will committing a large enough area you have to build thousands happen to these mega-wind farms to solar could actually achieve the of wind turbines to equal one in Oklahoma or Texas when they’ll kind of replacement of fossil fuel nuclear plant. be touched by mega-tornadoes? generation that many seek. That’s a rare event, but it happens Right. Put enough solar panels in Then there are the many unfore- again and again. a little square somewhere the size seen risks. We don’t know how

PwC | Gridlines | 15 Nuclear power at a glance*

440 Number of nuclear plants in operation worldwide as of February 20115 23–54 The number of new nuclear plants needed globally per year 12 to replace decommissioned plants Number of countries that and to increase nuclear’s share generate over one-third of 1 of total electricity generation. electricity by nuclear power6

1,500 78.7 Gigawatts of nuclear power Projected percentage of global needed worldwide to reduce gross nuclear power generation global carbon emissions by increase from 2008 to 20357 at least 1 billion tons per year by 2060—the equivalent of 1 carbon stabilization wedge2

72 64 From 2007 to 2035, percentage Number of new nuclear plants of world expansion in installed currently under construction nuclear power capacity that is worldwide8 expected in non-OECD countries3

Rankings of the nations generating # # # # the greatest percent- 1 2 3 4 age of electricity from nuclear power 4: Lithuania France Slovakia Belgium

*Source: IAEA, as of May 24, 2011. http://www.iaea.org/programmes/a2

1 The figure, 54 new reactors per year, assumes, engineering.dartmouth.edu/news-events/lecture- 3 International Energy Outlook 2010, pg 77, 6 According to the Nuclear Energy Institute, in among other things, that clean coal technology is series/issues-in-energy/ (cue to 1:03:30). Glaser’s http://www.eia.doe/oiaf/ieo/pdf.o484(2010).pdf. 2009, 16 countries relied on nuclear energy to not very successful, that installation of renewable rough calculation uses projections by Robert supply at least one-quarter of their total electricity. 4 Nuclear Energy Institute, http://www.nei. generation is lower than expected, and that carbon- J. Goldston, “Climate Change, Nuclear Power Countries generating the largest percentage of org/resourcesandstats/nuclear_statistics/ trading schemes are widely adopted, “Chapter and Nuclear Proliferation: Magnitude Matters,” their electricity in 2009 from nuclear energy were worldstatistics/. 3: Projections to 2050,” Nuclear Energy Outlook, in “Energy Policy,” http://www.pppl.gov/pub_ Lithuania*: 76.2%; France: 75.2%; Slovakia: Nuclear Energy Agency, OECD, 2008, pg 104. report/2010/PPPL-4502.pdf. Goldston projects a 5 Power Reactor Information System (PRIS), 53.5%; Belgium: 51.7%; Ukraine: 48.6%; Armenia: threefold increase in worldwide growth in energy International Atomic Energy Agency (IAEA), 45.0%; Hungary: 43.0%; Switzerland: 39.5%; 2 Carbon Mitigation Institute, Princeton University, demand from 2,000 gigawatts to 6,000 gigawatts http://www.iaea.org/programmes/a2/, and Slovenia: 37.8%; Sweden: 37.4%; Bulgaria: http://cmi.princeton.edu/wedges/intro.php. a year/per year by 2060. Glaser’s figure of 1,500 Nuclear Energy Institute, http://www.nei. 35.9%; Korea, Rep.: 34.8%. And from a presentation by Professor Alex gigawatts assumes a growth in the share of nuclear org/resourcesandstats/nuclear_statistics/ *Lithuania’s last operating unit was shut down Glaser, “Great Issues in Energy: The Nuclear generation worldwide to roughly 25 percent of worldstatistics/. in 2009. http://www.nei.org/resourcesandstats/ Option,” April 9, 2010, Dartmouth College, http:// the current share. nuclear_statistics/worldstatistics/.

16 | Gridlines | PwC United States China

104 Number of nuclear 4 Number of new nuclear 27 Number of nuclear plants under units in the United States units currently under construction in China12 construction in the United States10 42% Percentage of active worldwide % Electricity production Amount of federal loan nuclear construction taking place 20.2 $8.3 13 provided by nuclear guarantees made available in China in the United States billion to these plants11 in 20099 75 gigawatts, Projected installed nuclear capacity in China by 2035 and Amount of federal loan $10 57 plants its equivalent in 1,300-megawatt guarantees that remain billion nuclear power plants14 undistributed

+49% Rankings of the top 3 countries # # # 14% generating the most 1 2 3 electricity from Percentage of world Estimated change in world nuclear power: United France Japan electricity production electricity production by States provided by nuclear nuclear power by 2030, if power in 2009 carbon legislation and other inducements are adopted15

7 Projections are based on the International Reactors in the World, 2010,” International Atomic will not begin until the combined license is issued 13 Ibid. Energy Agency’s New Policies Scenario, Energy Agency, IAEA, pg 19, http://www-pub.iaea. (currently expected in fourth-quarter 2011). Office 14 “Figure H-5, World Installed Nuclear Generating which assumes a cautious implementation of org/MTCD/publications/PDF/iaea-rds-2-30_web.pdf. of New Reactors email, 1-10-11. Capacity, by Region and Country,” http://www.eia. some carbon reduction measures such as, in the 10 Construction activities for two Westinghouse 11 “DOE Delivers Its First, Long-Awaited Nuclear doe.gov/oiaf/ieo/ieoecg.html. United States, a 15 percent federal renewable AP1000 reactors designated as Vogtle, Units 3 Loan Guarantee,” Peter Behr, New York Times target for electricity, extension of renewable 15 That is, a projected 49 percent increase in and 4, began in March 2010. Construction is being Energy & Environment, February 17, 2010, subsidies like the production tax credit, and world electricity production from nuclear power by conducted under a limited work authorization, http://www.nytimes.com/cwire/2010/02/17/17 modest carbon legislation, or some version 2030 under the IEA’s 450 Scenario, as compared which allows for the placement of engineered climatewire-doe-delivers-its-first-long-awaited- thereof after 2020, World Energy Outlook 2010, with the business-as-usual Reference Scenario, backfill, concrete mudmats, and a waterproofing nuclear-71731.html. http://www.iea.org/weo/index.asp. World Energy Outlook 2009, Table 9.2, “World membrane to prepare the nuclear island base for 12 PRIS, IAEA, http://www.iaea.org/programmes/ Energy Demand and Electricity Generation,” 8 PRIS, IAEA, http://www.iaea.org/programmes/a2/. the foundation work. Preconstruction activities a2/, and Energy Information Agency, International International Energy Agency, pg 324. (excavation) are under way at the V.C. Summer site 9 “Table 6. NUCLEAR ELECTRICITY PRODUCTION Energy Outlook 2010, pg 80, http://www.eia.doe/ in South Carolina. Official construction activities AND SHARE FROM 1980 TO 2009, Nuclear Power oiaf/ieo/pdf.o484(2010).pdf. PwC | Gridlines | 17 Tools and tactics

Mission-critical management Control environment and analytics play a pivotal role in success

By Stephen Lechner, Mark Rauckhorst, and Daryl Walcroft

18 | Gridlines | PwC “Project control tools have been quite valuable. They’re an independent set of eyes to check for where we might need some focus.”

Large capital projects fail to achieve cost, on construction projects, including detailed schedule, and quality objectives for reasons planning and scheduling, active change that are well-known: unclear definitions management, cost controls, risk management, and objectives, loosely defined delivery and quality controls, safety management, and con- contracting strategies, and absence of robust tract administration tools. However, on a large, communication and reporting lead the list. complex project like a nuclear plant, project But of the many areas of concern, none are management teams should also incorporate more important, when it comes to building detailed control analytics to supplement the a new nuclear power plant, than developing standard project control tools and procedures. a transparent governance structure and a comprehensive control environment. The effective deployment of control analytics could be a pivotal point of Of course, all major capital projects need to leverage for the nuclear industry. With control have a strong governance structure and a analytics, a project management team can control environment, but with nuclear con- proactively analyze the performance of a struction the control environment is critical. project and its associated risks through the use It must stand up to intense regulatory and of modeling techniques and identify those risks public scrutiny and include the required that have the highest potential for significant processes and tools to manage the extreme adverse consequences to project execution. complexity of nuclear permitting, licensing, With timely identification of project risks, and construction along with the difficult the project management team is able to take transition from construction to start-up and mitigation measures, enhancing project perfor- operations. It must also be able to adapt to mance and thereby attracting more attractive the ever-shifting, multidimensional aspects of project financing and reducing regulatory risks. these projects, and it requires the use of agile and unique systems and controls to enable Equally and perhaps more important, the use management to deliver the promised value. of control analytics must be seen against the backdrop of an approaching, massive demand A comprehensive control environment includes for baseload generating capacity. Many ana- the common control tools and procedures used lysts now say that world markets are poised for

Engineers in a nuclear power station, Scotland.

PwC | Gridlines | 19 an economic rebound. When this happens, management and financial decisions. But sum- the demand for energy will increase and mary reports can misrepresent actual project owner-operators in the energy sector will status, which in turn can draw management face major pressures to build baseload down the road of flawed strategic decision generating capacity. making. Standard scheduling software, more- over, is not designed to perform comprehensive Renewed construction of large capital projects analytics and detailed metric trending on like new power plants will require greatly multiple schedules. improved capital project efficiency and sustainable cost reductions. In short, it will Maintaining a clear view of project costs is also be more important than ever to manage the a challenge for a project management team. development and operations of capital assets The sheer number of different price escalators— in order to increase cash flow and optimize for instance, the complexity of refinancing the ROI [return on investment] delivered by as projects advance, capital budgeting, cost big capital projects. forecasting and cash flow, rate-making policy, and O&M [operation and maintenance] The toll taken by poor or lax scheduling budgeting—are among the many factors that controls—a key feature addressed in the complicate the determination of an accurate controls analytics landscape—is clear both in forecast cost at completion. the field and in quantified results. According to a 2007 study by McGraw-Hill Construction, Compounding problems is the matter of large- poor project integration can add 3 percent to scale risk factors that can loom over a project a project’s total cost. Scheduling problems are management team: potential supply chain compounded in large capital projects where challenges (such as supplier backlogs, global multiple stakeholders use different project tariffs, and value-added taxes that make schedules with varying standards, software, the procurement of large-scale equipment and approaches. difficult); interaction with a complex variety of country and export requirements; the failure Often, these detailed schedules are then of contractors to deliver on time and budget; linked to more-summary-level schedules that and, for regulated utilities, the risk of public management uses to make important project service commission cost disallowances.

The effective deployment of control analytics could be a pivotal point of leverage for the nuclear industry.

20 | Gridlines | PwC What’s needed is a targeted suite of To address extremely complex problems, focus on schedule, cost, and risk management tools that offers a comprehensive analysis of QRA is already being used by agencies and can establish the foundation for an effective schedules, of cost and financial parameters, companies constructing large capital projects. control environment. Active processes and con- and of other risk data—merged into a com- For example, we observed one company using trols to measure, monitor, and assess project prehensive view of likely risks and outcomes. QRA to analyze the construction schedules of status and potential impacts, along with tools Quantitative risk analysis (QRA) combines a number of liquid natural gas (LNG) plants to analyze and quantify project risks, provide all three of these main elements—schedule, around the world to highlight potential delay management with the information needed to financial, and risk for a given construction risks on a new LNG project and to respond to prioritize its actions. Without this information project. It establishes date trends and metrics the risks by using recovery plans and work- and knowledge, projects have the potential and can analyze risks over tens of thousands around schedules before the risks became for missing many if not all of the desired of computer-generated iterations using proba- problems. That project finished two weeks objectives. bilistic methods of analysis. The result offers ahead of the planned completion date. a comprehensive view of likely risks moving New nuclear can and should be an important forward and quantitative parameters to aid in QRA has also been used in new nuclear con- part of the world’s energy solution when it management decision making. struction to integrate schedule, cost, and risk comes to addressing the need for more energy data and to assist with the development of a while mitigating adverse climate impact. If QRA enables a project team to integrate cost, risk- and issue-management system as well as nuclear is to be part of the solution, however, schedule, and risk data to model numerous develop a master schedule of project work and it will require projects that are executed in a permutations of possible project outcomes. establish a reporting framework for commu- structured and predictable manner. Having the Cost, schedule, and risk data are entered into nicating project metrics to management and proper control systems and tools in place helps a computer simulation that runs several thou- regulators. “These project control tools have management execute the plan. sand random iterations. Managers are then been quite valuable,” according to one project able to see the discrete impacts upon the cost manager at a new nuclear construction site. About the authors and scheduling of specific risks and threats. “They’re an independent set of eyes to check us Typical QRA output highlights cost and sched- for where we might need some focus.” Stephen Lechner and Daryl Walcroft are based in ule estimates with degrees of certainty—raising San Francisco and Mark Rauckhorst in Atlanta, for When it comes to new nuclear construction, PwC’s capital projects and infrastructure practice management’s level of confidence for current ([email protected], +1 415 498 6596; projects and providing a platform for better setting up a proper control environment is criti- [email protected], +1 415 498 6512; and decision making regarding future actions. cal. Although there is no one tool or technique [email protected], +1 678 419 2087). to ensure successful project execution, a clear

PwC | Gridlines | 21 Tools and tactics

From build …

By Chris Fynn and Jeff Briner

A worker scales a lattice of steel rods, Hanford, Washington. 22 | Gridlines | PwC … to “go” Passing the baton is seamless with early, thorough choreography

Taking delivery of a large capital project like a platforms, different data for the same object, nuclear power plant—the turnover and com- and containing data arranged for a builder’s missioning—barely resembles the process of needs but not an owner’s. A car builder, for picking up a new car at an automobile dealer- instance, will be deeply interested in the tensile ship, but it could be a lot closer with systemic strength of an automobile frame, but the owner management of information flows that can just wants to know the frame is solid. make a tremendous difference in efficiency and effectiveness. Call it the “Library of Babel” effect— too much information, scattered over too many Commissioning involves a massive different sources and too many languages that transfer of responsibility, risk, and data don’t communicate. Stakeholders may be eager from the builder to the new owner. With a to get the plant up and running, but all the data nuclear plant, many different contractors and are in the wrong systems and there are always vendors will have spent years installing several conflicting data values for the same item. The hundred thousand components of interest— car manufacturer may recommend tire pressure large and small. Ultimately, it is the owner’s at 35 psi, but the tire manufacturer recom- responsibility to be able to prove that what was mends 32 psi. Which is correct? The problem, designed is what was built and that what was then, in part, is one of data consolidation and built is what is being operated. Over the life of reconciliation—how to ensure that the owner the construction process, this data often gets of a new plant receives an accurate, complete, scattered among different construction units, consistent, and useful “manual” for the plant’s different vendors using different software operation. Obviously, no book or physical

PwC | Gridlines | 23 Safety is the guiding first principle of asset configuration management and the guiding first principle of the nuclear industry itself.

manual is big enough for a nuclear plant. of the nuclear industry itself. Nuclear operators Rather, in the case of a nuclear power plant, need to know exactly what assets they have an entire suite of software systems, often called in order to manage and operate them safely, enterprise asset management (EAM) tools, and that’s the bottom line for nuclear power. is needed to bring all the disciplines and EAM-related applications must accurately languages of operation into one cohesive and reflect what is on the ground in the plant itself. living set of operating guidelines. EAM systems Beginning with the foundational principle of provide a range of advantages for nuclear One Asset, One View goes a long way toward plants and, in fact, any large capital project. avoiding complexity, opacity, and the missteps that can come with building, testing, turning Safety comes first, of course. And asset over, and commissioning. configuration lays the groundwork for achieving it. During Senate hearings into the To hit the ground running, establish- causes of the Deepwater Horizon disaster, a ing asset configuration during the pattern emerged. It became clear that in day- design-build phase of the project is to-day operations on the oil platform, there was safer, faster, and cheaper. Most people a disconnect in what engineers call the rig’s think of EAM systems, if they think of them at “design basis.” Over time, the parts and com- all or even know they exist, as part of opera- ponents that were supposed to be operational tions and maintenance, and they are. However, or the parts listed in the computer systems as many owners begin thinking about gathering operational were, out on the actual platform the asset data for their new plants fairly late in itself, broken or nonfunctioning, or they had the turnover and commissioning process. This been replaced by different parts. In some cases, often leads to a less-than-efficient movement the parts were simply nonexistent. Safety, then, of asset data from the construction computer is the guiding first principle of asset configura- systems into the operators’ computer systems— tion management and the guiding first principle eating up valuable time and scarce resources

24 | Gridlines | PwC Engineers inspect an array of steel cable tailings, Scotland.

before the plant can be confirmed compliant be managed regardless of which process makes to regulatory standards for safe operation. The updates to the asset. A single source for all as- current practice is equivalent to buying and set data makes for a faster transition between picking up a new car and having to figure out builders and owners—and the sooner owners for yourself what size engine you have, what can get their plants up and running safely, the replacement spark plugs are needed, what type better for everybody. The fact that an expensive of tires were put on, and what gas to use—all step can be removed lowers the total cost of at your own expense. In the case of regulated ownership, lowers energy rates, and improves energy markets, this cost must be passed on to profitability. Because installing EAM in the the consumer. design-build phase needs to be considered early, the asset owner-operator should address Establishing an enterprise asset management this in the contracts with the engineering, pro- system early during the design-build phase of curement, and construction (EPC) vendors. But a project is key to not missing a step or risking the owner is not the only beneficiary. Indeed, a problem when the handoffs occur between having a single asset repository populated by builders and operators. It greatly reduces, or EPC vendors can also reduce their cost of doing in many cases eliminates, an entire sequence business, support their warranty services, and of data translation, validation, verification, deliver reliability and construction feedback to and reloading. their internal resources.

The design-build phase is exactly where the Efficiency rises with reliability-centered “Library of Babel” problem starts in the first maintenance. From a business perspective, place, so installing an EAM system during that the most important aspect of EAM is to run the phase facilitates the consolidation of all asset plant at the highest level of efficiency pos- data into a single source. Having that single sible—to keep the plant running and to do it as source enables accurate asset configuration to safely and cost-effectively as possible.

PwC | Gridlines | 25 Even with redundancy, expensive failures occur that could have been prevented. The opposite is true as well. Some maintenance can be unnecessary, ineffectual, and expensive.

A worker stands in front of a control monitor at the Qinshan No. 2 nuclear power plant in Zhejiang, China.

What EAM allows a plant owner to do is Finally, the proof can be found in the execute operations and maintenance with nuclear construction occurring in reliability. This emphasizes preventative China, where early and optimized installation maintenance, reduces risks of costly failures, of EAM in the design-build phase is happening and reduces less manageable corrective main- faster and more broadly than anywhere else. At tenance, which is often. At a macro level, of China’s Daya Bay nuclear power station, for in- course, nuclear plants are designed to be very stance, the Daya Bay Nuclear Power Operations safe. Engineers have added multiple layers of and Management Company (DNMC) is imple- redundancy. But at a micro level, when it comes menting SAP’s EAM solution in three existing to specific systems, components, and protective power plants operating six reactors. The EAM devices, it is rare that strong reliability analysis solution lays the foundation and planning for is performed on how these components might the coming rapid expansion in nuclear power— fail and how they should be maintained. establishing an SAP EAM template that will op- erate systemwide across a fleet of 16 new units Even with redundancy, expensive failures occur in various phases of construction, turnover, and that could have been prevented. The opposite commissioning, as well as another dozen plants is true as well. Incorrect maintenance can be under design. PwC implemented our standard unnecessary, ineffectual, expensive, and in SAP EAM template across Daya Bay’s large some cases damaging. Well-executed EAM nuclear fleet to help mitigate the risks associ- processes supported by reliability-centered ated with rapid expansion. maintenance (RCM) practices can help ensure that microlevel designs are fully optimized to Installation of EAM tools early in the design avoid needless and expensive work. Integrated phase of the nuclear asset life cycle will reduce RCM and EAM practices build knowledge and the transfer time from contractor to operator, lasting value into the asset repository to link reduce costs for all involved, and offer Daya failure modes for a given plant design and de- Bay’s management a single EAM overview of its fine how to manage those failures. As a result, entire fleet of reactors, coordinating everything from turnover to operation, EAM provides from daily plant operations to supply chain to a plant with a fully optimized maintenance asset maintenance to finance. At the end of the program at the most effective cost and with day, the handing over of a major nuclear power maximum safety.

26 | Gridlines | PwC Installation of enterprise asset management tools early in the asset life cycle during the design will reduce the transfer time from contractor to operator and reduce costs for all involved.

plant will always require a great deal of science as well as art. However, the use of EAM systems during engineering design can avoid many mis- steps along the way.

Cars are designed, built, and delivered to meet industry safety standards and individual driv- ing needs. Designers constantly use real-world failure information to improve their designs for safety and reliability. A car comes fully documented with recommendations on how it should be safely operated and maintained. The documentation about the car (asset) is mostly captured when the car is designed, and much of that gets included in the owner’s manual. This is the safest and most cost-effective way to own a car. The nuclear industry needs to continue to adopt similar practices and continue its focus on designed safety that comes with efficient and effective configuration management across all asset lifecycle phases.

About the authors

Chris Fynn, based in New York, and Jeff Briner, who alternates between Cleveland and China, serve in PwC’s enterprise asset management practice ([email protected], +1 646 471 1266; and, [email protected] +1 859 466-6222).

Daya Bay nuclear power plant, Guangdong province. PwC | Gridlines | 27 Interview

A few words with Michael Johnson …

Director, Office of New Reactors, U.S. Nuclear Regulatory Commission. You don’t have to look far to find an ex-submariner in the nuclear power sector. Michael Johnson, who graduated from the US Naval Academy in 1978 with a Bachelor of Science in Ocean Engineering, served in the nuclear submarine force for eight years. He’s been in the regulatory field for 24 years, starting in the Office of Inspection and Enforcement. He began his current position as the Director of the Office of New Reactors in May 2008.

To what extent has Fukushima Do you anticipate any slowdown of From a regulatory perspective we affected the Office of New Reactors the ongoing reviews for the plants think that’s very exciting. Some of and the regulatory environment? in Georgia or South Carolina—the the changes are more evolutionary, Vogtle and the V.C. Summer plants, such as—redundancy additions Well, since Fukushima, in addition respectively? and added diversity between sys- to supporting our around-the- tems. Other designs are actually clock coverage, for example, of We are continuing with our what you might call revolution- our operations center and the reviews for those plants, and the ary—plants like the Westinghouse site team that is in Japan, we task force that I mentioned is AP1000, for instance, which uses have been continuing our licens- working on near term and longer greatly enhanced passive features ing reviews of new reactors. One term actions that might be taken. in its safety functions. of the actions the NRC took as a Should those actions have implica- tions for new reactors we would result of Fukushima was to stand We’re looking at a new genera- then have to catch up with the up an internal task force headed tion of plants that were designed process, if you will, to make sure by Charlie Miller. Gary Holahan, and will be built to be safer. So that the designs that we certify who is a deputy of the Office of we have a sense of comfort with or the licenses that we approve New Reactors, is on that task respect to the new reactor designs. reflect any adjustments. We’ll have force, which was chartered by the Of course, I’m not going to say to wait and see how that unfolds. NRC to look at lessons learned that there will be nothing for new But today I would say we’re from Fukushima. It’s that task reactors—we’ll have to wait and continuing on. force that would identify potential see—but I feel very comfortable things that the Office of New Reac- The designs of the new reactors that about where we are. The Gen- tors would need to consider and eration III design represents a adjust as appropriate. are being built in Georgia, South Carolina, and China—they’re part different era that has incorporated so many new improvements to The technical requirements that of what’s been called Generation safety. Against the backdrop of exist for new reactors are largely III. Against the backdrop of recent Fukushima, this new generation the same technical requirements events, talk to me about the Genera- tion III design. seems to address a lot of the risks that exist for operating reactors, that existing reactors don’t neces- and the guidance that we use to We’re actively reviewing 12 sarily have in their design. apply those requirements in review combined license applications and of designs and license applications we’re reviewing a number of Gen- 1 All are names of so-called Generation III are the same, so, in short, we’re eration III designs—the AP 1000, advanced nuclear reactor designs, which feature, among other things, simplified design, passive continuing those reviews for new the ESBWR, the USAPWR and features, improved redundancies, smaller con- 1 struction footprints, and modular construction reactor licenses, even as we look the EPR design. These designs elements—the AP1000 is a pressurized water to identify lessons learned and any are exciting in that they are built reactor design from Westinghouse; ESBWR, or Economic Simplified Boiling Water Reactor, is from potential changes that we might upon lessons from the past—upon General Electric–Hitachi; the USAPWR, Advanced make to those requirements operating experience—and every Pressurized Water Reactor, designed to satisfy regulatory requirements in the United States and going forward. one of them has changes that abroad, is from Mitsubishi; and EPR, or European improve the safety of the design. Pressurized Reactor, is from Areva.

28 | Gridlines | PwC For applications currently under of the Inspector General. So a review, who’s going to be the first program that I think was good The designs for the current generation of to be issued a license? is going to get better. reactors are exciting in that they are built We’ve just recently issued sched- What other top concerns do upon lessons from the past … and every ules for the completion of reviews you have? for Vogtle and for Summer. If we one of them has changes that improve the hold to these schedules and ulti- It’s critically important that the safety of the design. [From] a regulatory mately approve them, they will be operating fleet remains safe while the first to be issued licenses. we’re focused on new designs. perspective we think that’s very exciting. That’s why the NRC created a The nuclear industry, like many separate office for new reactors, others, is prone to problems in the so new reactor licensing doesn’t supply chain—especially for this distract from oversight of the industry, quality component parts operating fleet. We must always are key. Is the nuclear power supply recognize that an accident, or a chain something that the Office of significant incident at an operat- New Reactors is concerned about? ing plant, would be the surest What other big issues are out there the so-called one-step licensing The supply chain is something way to imperil what is potentially for the new reactor field? And what process—builds on lessons that we that we’ve been focused on, and going to be real movement with are you most focused on—what are learned from the last time we did it’s something that the industry is respect to the renaissance for new your worries? licensing reviews and it is a much focused on, too. We look at key reactors. more efficient process. My big concern is making sure vendors around the world to make that we complete this initial round sure they have quality assurance Once a facility receives its license, What would you say are the key we will verify that the new plant of reviews for the design certifica- things that you have changed from programs that are up to our expec- is built in accordance with the tions in front of us in a way that a few decades ago—the last time tations. Of course, the primary design before they can load fuel ensures that what we approve is nuclear power plants were be- responsibility for quality rests with and begin operation. Once again, safe. If they’re built, we expect ing built—to help streamline the the applicant and the licensee, that they’ll be in operation a long regulatory process and help lower but we do inspect a sample of responsibility for ensuring the time—so I want to make sure that the cost? vendors. We can’t monitor every plant is built in accordance with we’re doing it in a way that’s safe. vendor around the world, obvi- the approved design and the Most of the changes reside in Part And to be candid, I want to make ously, so we’ll visit a sampling of regulations rest with the licensee. 52 of the licensing process, a one- sure that we also do it on sched- vendors. As an example, I was in [Southern Nuclear’s] Buzz Miller step process, which has us review ule. Both safety and scheduling Japan Steel Works, which fabri- will tell you, he won’t sleep until and approve the design before are major drivers for me. cates the major forgings for the he can actually begin operations. construction begins. Part 52 also world, and ran into Westinghouse So he’s going to be up a lot of has provisions for an applicant to Many have pointed to schedul- folks who were out inspecting the nights between now and construc- ing delays in the licensing process submit and receive approval for component that they’re actually tion to operation. as one reason for the high cost of a particular site without apply- going to receive from Japan nuclear power. Does the Office of ing for a specific plant to be built It seems like the US is going to be Steel Works. New Reactors work in a proactive on that site. So, for instance, 20 getting maybe a handful of new reactors—not 20, but a handful— way to streamline the permitting to 25 years ago, nuclear plants What about the issue of fraudulent to see whether they come in on time process and, if so, how does one being built in the old two-step or counterfeit parts in the nuclear and on budget. Does that make balance streamlining with safety process could spend 10 to 12 power supply chain? This would sense to you? and oversight? years getting through the wickets seem to be a serious issue for the We are the safety regulator, so of the construction permit and sector. Are you addressing this? I think you’re right. I think that’s then the operating license. Now, the way it will play out. These we’re primarily interested in mak- Counterfeit and fraudulent parts however, many of the issues that folks who will be first, includ- ing sure that whatever designs we are not a new issue. The industry once cropped up late in the old ing Vogtle and Summer, will get approve are safe. But while that is worried about this the last time two-step process get resolved up through the process and begin a focus, we also have paid a lot of around, and we’ve continued to be front and early so that licensees construction. And I think if that attention to the regulatory process concerned about counterfeit and can proceed expeditiously through works well, you’ll see others begin because we want that to be as fraudulent parts. We are actually construction. And if they construct construction, and you’ll see per- streamlined and as efficient as we working to strengthen our activi- that plant as it was designed, haps others coming forward with can possibly make it. In fact, the ties to address counterfeit and entire licensing process that we they can proceed expeditiously new applications. ■ to operations. fraudulent parts as a result of a use—Part 52 of our regulations, recent inspection by our Office

PwC | Gridlines | 29 Interview

A few words with Joseph A. “Buzz” Miller …

Executive Vice President of Nuclear Development, Southern Nuclear. Miller is responsible for overseeing nuclear-generation expansion for Southern Company and for Georgia Power, including the only two nuclear plants currently under construction in the United States—Vogtle plants 3 and 4 in Georgia. At the time of this conversation, in November 2010, Miller and his team were in the final push to complete a major regulatory milestone for the Vogtle plants.

Among all your concerns, what’s the most pressing right now? It’s an important time in our licensing process, which is crucial for us to maintain schedules. The Westinghouse Design Control Document is a massive, complex document that essentially is the approval from NRC [the Nuclear Regulatory Commission] for the operating and construction license—the new, one-step process by which an operator obtains a license to construct and operate a nuclear power plant. There are 23 chapters in the Design Control Document that cover every safety system in the AP1000 [reactor].

You are moving dirt around. There is extensive construction going on at Vogtle. Right now there are something on the order of 1,300 Southern’s Buzz Miller on-site in Georgia. construction workers there. Can you break that down? What are they doing in particular? all of that because that dirt will be liquefaction, where during an under the nuclear island. We have earthquake the ground behaves There are about 1,500 workers seismic analyses that are per- like a fluid. To do that, we have now—most of them from the formed that address how the site to have the right kind of dirt and Shaw Group, the main contractor. would respond in an earthquake. we have to compact it to meet the We had to do a major excavation assumptions in our analyses. All about 90 feet deep covering an Can you explain the seismic work? this backfill work requires NRC area of about 42 acres—21 acres approval. We have two full-time each for Unit 3 and Unit 4 that There are assumptions in the NRC resident inspectors at Vogtle we’re building. That’s a massive seismic analyses about how the right now, and they can go any- amount of earth work. We actually earth under the nuclear plant will where, at any time, to inspect any have to backfill all of that about behave during an earthquake. safety-related activity to ensure halfway, and we have to compact You want to avoid soil prone to

30 | Gridlines | PwC In nuclear we like to say we’re a learning organization. So we’re learning on all kinds of fronts right now. We’ve learned about dirt, for instance—all dirt is not created equal.

that procedures are being fol- There are four AP1000 plants our people and the quality—the lowed, that quality requirements in China that are a year and a nuclear quality. And we want to are being handled appropriately, half, two years ahead of your build that quality into the plant. and that we’re meeting the codes construction schedule. You have a So we created a surveillance group and standards that we’ve said we memorandum of understanding specifically for Vogtle 3 and 4. would use. with the Chinese—they’ve come We’ve come up with a risk-based over here, you’ve gone over there. approach where we’ve analyzed Right now you’re preparing the What have you learned so far from components based on their landscape for the bottom-head of their construction process? nuclear function, their difficulty the containment vessel. How much Let me say this about the Chinese: in fabrication, our fleet operating does one of those things weigh? they’re on a very aggressive experience, and schedule issues. You saw panels—plates—that schedule. Shaw, the lead con- As a result, we have a full-time are going to be welded together. struction contractor, has learned person in Italy. We have a full-time Those plates are going to form lessons related to the handling of person in Korea. We have full-time a giant bowl that’s going to be big structural modules. Certain people in Lake Charles, Louisiana, picked up and put inside the hole. modules that are being built on where modules are being built. The whole vessel, which is like the ground, horizontally, in China, a giant kettle, weighs about 800 for example, will be constructed What about unforeseen problems at the Vogtle construction site? tons. Then we’re going to build vertically at the Vogtle site. three rings that one by one get set Well, in nuclear we like to say and welded on top of that lower Like one of those 1,000-ton walls? we’re a learning organization. part. And then there’ll be an upper That’s right. Shaw is learning So we’re learning on all kinds of head that is built, and that will be that the fewer times one has to fronts right now. We’ve learned picked up and put in. We have a reposition something like that, about dirt, for instance—all dirt is lot of big lifts. the better. not created equal. We excavated, and then backfilled, millions of And modularity is an example of What about the supply chain? tons of earth, but that backfill how things have changed since 30 You’ve got pressurizers being made needed to have certain specific years ago? in Italy; and in Japan, turbine characteristics to pass the NRC’s That’s right. Two major changes generators. That would seem an in- seismic requirements—so much from the past are, first, getting credibly complex thing to manage. sand in relation to so much clay in the design work to nearly 100 What’s your biggest concern there? order to avoid liquefaction during percent complete prior to doing What keeps you up at night? an earthquake. A lot of our backfill the major construction. Second didn’t have the right qualities. It’s a great question. And I’ll tell is this modular construction and you: with the components, qual- standard plant approach, which So we needed to get a license ity is the most important thing, other industries have shown to be amendment through the NRC period. And safety. The safety of vastly superior to stick building. regulations for the right kind of

PwC | Gridlines | 31 backfill. And we’ve worked out a ally an economic way to build. of a diverse fuel supply for our it’s a big project. We’re aware of lot of minor unforeseen issues— But it’s a combination of things— customers. We clearly believe that our standing, particularly on the paperwork issues—and other a regulatory structure that allows nuclear has a role in the future nuclear side, but we recognize shortcomings. It’s been sort of for things like early rate recovery or we wouldn’t be doing this. the strength of our company and like preseason before the regular to help finance projects, good And we’re not in this to just build of our people—and that’s just the season starts. management focus, solid financial one and be done. We’re going to way it is. If it’s our role to lead integrity on Wall Street, and an execute this, and then we’ll look at within the industry, then that’s Many have pointed to the regulato- exemplary operating nuclear fleet. building additional nuclear units where we’re headed. ■ ry structure in the southeast United in Southern. States and the difference between How important is carbon legislation See the Web at www.pwc.com/ that structure and the more deregu- to you? In some ways the nuclear industry gridlines for the full interview lated market up in Maryland and has taken a couple of recent hits Carbon legislation might be a with Joseph A. “Buzz” Miller. elsewhere. They note that as being with big projects coming to a stop, boon to the nuclear industry. But a key point of leverage that has but Vogtle 3 and 4 are actual con- allowed Southern to capture early Southern is like a microcosm of crete examples of huge projects that cost recovery from the ratepayers, the United States. Our nuclear are moving forward. So it seems like for instance, to help finance nuclear generation is a reflection of the you’re carrying the standard for an construction. Is that correct? national picture for nuclear. So too industry that really does need to with our coal generation. We are prove itself. Is that right? It is a key factor. Our regulatory certainly aware of and involved in structure helps us do that. We’re the debate on carbon legislation, I think that’s fair. And we didn’t recovering finance costs during but frankly, I don’t worry about race to get in that position. We’ve construction, which, while it is on it. We are all about executing been methodical but realistic the front end, over time will save the Vogtle project, which is part about our approach, and we our customers money. So it’s actu- intend to execute this. And, yes,

Two major changes from the past are, first, getting the design work to nearly 100 percent complete prior to doing the major construction. Second is the modular construction and standard plant approach, which other industries have shown to be vastly superior to stick building.

First containment vessel plates arrive for Plant Vogtle Units 3 and 4, September 8, 2010. 32 | Gridlines | PwC Routine inspection of an outer-chamber reactor vessel at the Kruemmel nuclear plant near Geesthacht, Germany.

Story continues from page 8 Indeed, in the United States, the Vogtle project in Georgia and the V.C. Summer project in the difference. “That demand is not going to South Carolina are the lone US standard-bearers vanish,” says Westinghouse’s Pérez, “and some for the nuclear industry. But few have written countries in Central Europe may, by dint of new about the broader scene: about how useful the nuclear construction, become nuclear electricity juggernaut of Chinese nuclear power plant con- exporters—to countries like Germany.” Such a struction will be as a rough baseline reference geopolitical landscape may in part explain why to construction elsewhere or how South Korea a company like GE-Hitachi is planning sales plans to export 80 nuclear power reactors by in Europe of 10 to 15 new reactors in the next 2020, acquiring a 20 percent share in the world decade, and why Pérez sees countries like the market.27 Even less known is that some of the Czech Republic, Lithuania, Poland, Slovakia sharpest critics of nuclear power and some of and Hungary as likely regions for new nuclear the most respected critical studies of the sector construction in the near future.25 acknowledge that the industry should be given All of this has been encouraging for the nuclear a chance to demonstrate the ability to build new sector as a whole, though little reported. Rather, reactors on time and on budget. in addition to new concerns about safety, one A quiet chorus of assent has been rising. is more likely to hear, in the United States In April 2010, Ernest J. Moniz, Director of the especially, about other very real challenges to Laboratory for Energy and the Environment nuclear power: high-risk premiums for loan at MIT’s Department of Physics, spoke at guarantees and the long-term projections of low-price domestic natural gas and its effect on 25 Ibid, http://www.marketwatch.com/story/ the nuclear industry in the states—or on price the-nuclear-option-is-back-on-the-table-2010-05-20. escalation for new nuclear construction. These 26 “NRG Abandons Project for 2 Reactors in Texas,” Mat- thew L. Wald, New York Times, April 19, 2011, http://www. factors were cited in the October 2010 canceling nytimes.com/2011/04/20/business/energy-environment/20nuke. of watershed projects like Constellation Energy’s html?src=busln. Calvert Cliffs 3 in Maryland and the April 2011 27 “South Korea Bets on Nuke Exports to Power Economy,” Kiyohide Inada, Asahi Shimbun, May 7, 2010, http://www. cancellation of NRG’s South Texas Project.26 asahi.com/english/TKY201005060259.html, and “Asia Powers Up Its Nuclear Ambitions,” Myra P. Saefong, Market- Watch, May 20, 2010, http://www.marketwatch.com/story/ asia-powers-up-its-nuclear-ambitions-2010-05-20?pagenumber=2.

PwC | Gridlines | 33 China is preparing, by 2025, to accommodate 350 million people in cities that don’t exist now, requiring an electrical grid that is the equivalent of what the United States built over 120 years.

Dartmouth College’s annual Great Issues in What all of these people—nuclear advocates baseline time to beat—and I expect to beat that Energy Symposium. While allowing for certain and skeptics alike—recognize is that nuclear time on all the remaining projects in China.” caveats, Moniz’s conclusions were favorable. power will remain an important part of the After Sanmen 1 and 2 are completed, four more global energy mix. AP1000 reactors will be built on the site. Farther “Nuclear power looks like a credible candidate north, at the Haiyang site, six AP1000 reac- for expansion in the decade after this one,” The devils and the angels of nuclear tors will be added upon completion of Haiyang Moniz said, “after we see whether we can actu- may still lie in the details, however. 1 and 2. For Pérez, safety always comes first ally build these plants in the US successfully.”28 Taking a step back from the big picture of in his discussions. But solving the construc- At the same symposium, Princeton University’s global energy need and nuclear construction, tion time puzzle is also a pivotal issue for the Alex Glaser, who focuses on issues surround- the nuts and bolts of getting it all done present industry moving forward. Achieving this will ing nuclear proliferation, cited a study from the a separate set of challenges. First among them take a coordinated effort between vendors like National Research Council last year that con- is ensuring a solid controls environment during Westinghouse, utilities like Southern, and regu- cluded, among other things, that nuclear power construction. Second is incorporating an asset lators like the NRC. Most observers agree that be given a chance to prove itself commercially management system as projects rise to smooth with a baseline case in hand, new construction viable within the next decade.29 the transfer of design data between contractors in the United States should gain the scheduling and plant owners and operators, and to help advantages of standard design. And this will in Peter Bradford, of the Union of Concerned keep plants running smoothly and effectively. turn reinforce a positive cycle—potentially mak- Scientists and author of several recent articles ing for a shorter review schedule for the NRC, challenging the nuclear power industry, also For the nuclear sector, construction costs, an according to William E. Cummins, director of weighed in last year at an Environmental Policy abiding challenge faced by the industry, are regulatory affairs for Westinghouse. Forum on nuclear power. “Prove that these also thought to be completely within the advanced reactor designs work in five or six industry’s control. That’s the general feeling 28 “Great Issues In Energy: Nuclear Power, Panel Presentation and Q plants with federal help,” Bradford said, “and on the Westinghouse corporate campus just & A”, Dartmouth College, April 2010, http:// engineering.dartmouth. then we can talk about an expansion.”30 Even north of Pittsburgh, where Gridlines spent a edu/news-events/lecture-series/issues-in-energy/. 29 “America’s Energy Future: Technology and Transforma- one of the most stringent critics of nuclear day touring the AP1000 control center, visiting tion, Summary Edition, National Academy of Sciences, 2009, power, Joseph Romm of ThinkProgress who the new plant training facilities, and speaking Executive Summary, pg 5, http://books.nap.edu/openbook. also addressed the Dartmouth symposium, with executives like Ric Pérez, president of php?record_id=12710&page=5. 30 The Environmental Forum, Volume 27, Number 1, January/Febru- still counted nuclear power—a projected 700 operations, who had just returned from one ary 2010, pg 53, http://www.ferc.gov/media/statements-speeches/ gigawatts of new nuclear power globally by of his quarterly visits to China. wellinghoff/2010/01-04-10-wellinghoff-sec.pdf. 2050—as one of 13 significant carbon wedges 31 “Great Issues In Energy: Nuclear Power, Panel Presentation and Q & A” Dartmouth College, April 2010, http:// engineering.dartmouth. that will be needed to forestall a global “Sanmen will be finished in its targeted time of edu/news-events/lecture-series/issues-in-energy/. warming crisis.31 54 months,” Pérez says. “That will become our

34 | Gridlines | PwC “You can think of China as a huge laboratory for deploying technology,” a US government official says. “We have advanced ideas. They have the capability to deploy it very quickly. That is where the partnership works.”

“The basic AP1000 design will not change from that we don’t end up losing the opportunity for plant to plant,” Cummins explains. Different the American people to have a clean baseload locations will pose different construction chal- supply of electricity?” lenges, but the economies of standard design should serve the industry well. Each new plant Problems always crop up with large capital will not require, in effect, the reinvention of projects. The key for the nuclear sector may lie the regulatory wheel, “so regulatory approval in a new generation of analytical tools—sched- times should be reduced,” says Cummins. ule analytics, project finance modeling, and The NRC’s Office of New Reactors concurs, and quantitative risk analysis—that can help the it also points to China as a proving ground for Buzz Millers of the world forecast construction improvements in regulatory efficiencies. headaches. So-called Monte Carlo modeling tools have been around ever since John von “We are taking advantage of the [AP1000] con- Neumann coined the term to describe a method struction going on in China to test parts of our of calculation that uses random samplings run construction inspection program and incorporat- on computers many thousands of times. Monte ing any lessons learned into our [US] program,” Carlo methods were used in the Manhattan says Donna Williams, Technical Assistant at the Project and have been developed for broad Office of New Reactors. “We anticipate that the application across many fields. number of on-site inspection hours will decrease for each subsequent plant that we inspect.” Why would such analytical systems work for nuclear power plant construc- “The regulator is not the major issue tion? Consider the issue of scheduling. The that needs to be addressed,” says Dale sheer volume of activities required for a big Klein, former Chairman of the Nuclear Regula- capital project is staggering. One typical activity, tory Commission (2009), who spoke to Gridlines for instance, might be to install a foundation recently. “I think the regulator can obviously be for a building. Another might be as small as a little bit more efficient without compromis- installing a pipe. A third might be to excavate ing safety and security. But what I would like a 180-foot hole. to see is a more articulated national energy program of where nuclear fits in, and then the But the count keeps going, to reach hundreds of next question will be, How do we finance and thousands of key activities, each with as many develop these very capital-intensive plants that as hundreds of subtasks. Scheduling tools are are going to be around for literally decades, so now part of a new generation of quantitative

PwC | Gridlines | 35 “No rational long-range energy plan of any major modern economy should exclude the nuclear option,” says Vaclav Smil. “The debate should be about the best way to proceed, not about whether to proceed at all.” 34

Workers pour concrete at a nuclear construction site in southeast China’s Fujian province, June 2009.

risk analysis. Schedule analytics form one data It may be that disciplined blocking and This kind of activity, the practical experience set. Another data set includes financial tools tackling is more needed than the stuff being gained in other sites rising worldwide that help managers predict price escalators that of rocket science, and in the red clay of Geor- with a completely new generation of reactors, vendors will charge owners over the life span gia, control analytics, like almost everything else and a universe of advanced control analytics of the project. For instance, time-phase analyses in the nuclear sector, are being put to the test. may offer the hope that the industry’s Gordian take two or three years’ worth of data and cast Knot—bringing plants in on time and on that forward so that managers can project future While there’s no single solution to the chal- budget—may soon be met and mastered, trends and make adjustments where needed. lenges of an entire industry, there is a unlocking the tremendous energy potential A third data set consists of the long-term risks desire—within the industry and within the of nuclear power. for large capital projects, including supply chain utilities it serves—to make nuclear work to play an important role satisfying the world’s increas- delays and even regulatory risks. These three About the author sets of data are then run through a specialized ing energy appetite as the epochal shift occurs Monte Carlo–type application, the data spinning from fossil fuels to renewable sources. Mark Svenvold writes about energy and environmental out calculations many thousands of times. issues for Gridlines as well as The New York Times “We are the ones that innovated the technol- magazine and many other print and online news sources. His latest book is Big Weather. The result is that managers like Buzz Miller ogy,” Duke Energy’s CEO Jim Rogers said in have a comprehensive view of what’s happening May of last year.32 In January 2011, Duke 32 “US Nuclear Power Build-up Taking First, Tentative Steps,” on a construction site. They can determine pro- Energy made a bid to purchase Progress Energy, Steve Gelsi, MarketWatch, May 20, 2010, http://www.marketwatch. duction rates, predict whether milestones will a merger that many observers acknowledged com/story/americas-nuclear-buildup-takes-first-steps-2010-05- would make financing for both companies’ pro- 20?pagenumber=2. be reached, learn whether more people will be 33 “Duke Energy–Progress Energy Behemoth Covets Nuclear Power needed to achieve targets, know where supply posed nuclear plants easier. “Our size and scale, Amid Soaring Costs,” Robert Trigtaux, St. Petersburg Times, Janu- once combined, position us well for nuclear ary 11, 2011, http://www.tampabay.com/news/business/energy/ chain vulnerabilities lie, and even determine the duke-energy-progress-energy-behemoth-covets-nuclear-power- likely risk tolerance of regulatory agencies. generation,” Progress Energy’s CEO Bill Johnson amid-soaring/1144673. 33 said after the merger was announced. 34 Vaclav Smil, Energy Myths and Realities, AEI Press, 2010, pg 154.

36 | Gridlines | PwC To discuss the issues India Singapore Bharti Gupta Ramola Mark Rathbone Tel +91 124 4620 503 Tel +65 6236 4190 [email protected] [email protected] Global capital projects Italy South Africa and infrastructure leader Guido Sirolli Mark Ally Richard Abadie Tel +390 6 57083 2125 Tel +27 11 797 5049 Tel +44(0) 20 7213 3225 [email protected] [email protected] [email protected] Japan Spain Australia Kenji Yoshida Guillermo Masso Joseph Carrozzi Tel +81 90 5428 7652 Tel +34 915 684 353 Tel +61 2 8266 1144 [email protected] [email protected] [email protected] Malaysia/Vietnam/Thailand/Cambodia/Laos Sweden Brazil Andrew Chan Yik Hong Lars Tvede-Jensen Mauricio Girardello Tel +60 3 2173 1219 Tel +46 8 555 33 403 Tel +55 11 3674 2469 [email protected] [email protected] [email protected] Mexico UK Hazem Galal Francisco Ibañez Tony Poulter Tel +55 21 3232 6168 Tel +52 55 52 63 60685 Tel +44 20 780 45814 [email protected] [email protected] [email protected] Canada Middle East US Brian Pawluck Neil Broadhead Peter Raymond Tel +1 604 806 7701 Tel +971 4 304 3199 Tel +1 703 918 1580 [email protected] [email protected] [email protected] Central and Eastern Europe Charles Lloyd Tibor Almassy Tel +971 56 682 0617 Nuclear contacts Tel +36 1 461 9644 [email protected] Chris Fynn [email protected] Tel +1 646 471 1266 Netherlands [email protected] China/Hong Kong Martin Blokland Hongbin Cong Tel +31 8879 27586 Philippe Girault Tel +86 10 6533 2667 [email protected] Tel +33 1 56 57 8897 [email protected] [email protected] Russia Germany Artem Petrukhin Chris Green Hansjörg Arnold Tel +7 495 967 6224 Tel +44 161 245 2339 Tel +49 69 9585 5611 [email protected] [email protected] [email protected] Stephen Lechner Tel +1 415 498 6596 [email protected]

Contributors

Strategic Direction Marketing, Operations + Outreach Editor Richard Abadie Lee Ann Ritzman William Sand Sondra Chrusciel Becky Weaver Design Sotiris Pagdadis Jennifer Wiley Odgis + Company Tony Poulter Online Janet Odgis Peter Raymond Adiba Khan Rhian Swierat Banu Berker

See the Web at www.pwc.com/gridlines for the full interview with Joseph A. “Buzz” Miller. www.pwc.com

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