Nuclear New Build: Insights Into Financing and Project Management
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Nuclear Development 2015 Nuclear New Build: Insights into Financing and Project Management NEA Nuclear Development Nuclear New Build: Insights into Financing and Project Management © OECD 2015 NEA No. 7195 NUCLEAR ENERGY AGENCY ORGANISATION FOR ECONOMIC CO-OPERATION AND DEVELOPMENT ORGANISATION FOR ECONOMIC CO-OPERATION AND DEVELOPMENT The OECD is a unique forum where the governments of 34 democracies work together to address the economic, social and environmental challenges of globalisation. The OECD is also at the forefront of efforts to understand and to help governments respond to new developments and concerns, such as corporate governance, the information economy and the challenges of an ageing population. The Organisation provides a setting where governments can compare policy experiences, seek answers to common problems, identify good practice and work to co-ordinate domestic and international policies. The OECD member countries are: Australia, Austria, Belgium, Canada, Chile, the Czech Republic, Denmark, Estonia, Finland, France, Germany, Greece, Hungary, Iceland, Ireland, Israel, Italy, Japan, Korea, Luxembourg, Mexico, the Netherlands, New Zealand, Norway, Poland, Portugal, the Slovak Republic, Slovenia, Spain, Sweden, Switzerland, Turkey, the United Kingdom and the United States. The European Commission takes part in the work of the OECD. OECD Publishing disseminates widely the results of the Organisation’s statistics gathering and research on economic, social and environmental issues, as well as the conventions, guidelines and standards agreed by its members. This work is published on the responsibility of the Secretary-General of the OECD. The opinions expressed and arguments employed herein do not necessarily reflect the official views of the Organisation or of the governments of its member countries. NUCLEAR ENERGY AGENCY The OECD Nuclear Energy Agency (NEA) was established on 1 February 1958. Current NEA membership consists of 31 countries: Australia, Austria, Belgium, Canada, the Czech Republic, Denmark, Finland, France, Germany, Greece, Hungary, Iceland, Ireland, Italy, Japan, Korea, Luxembourg, Mexico, the Netherlands, Norway, Poland, Portugal, Russia, the Slovak Republic, Slovenia, Spain, Sweden, Switzerland, Turkey, the United Kingdom and the United States. The European Commission also takes part in the work of the Agency. The mission of the NEA is: – to assist its member countries in maintaining and further developing, through international co-operation, the scientific, technological and legal bases required for a safe, environmentally friendly and economical use of nuclear energy for peaceful purposes; – to provide authoritative assessments and to forge common understandings on key issues, as input to government decisions on nuclear energy policy and to broader OECD policy analyses in areas such as energy and sustainable development. Specific areas of competence of the NEA include the safety and regulation of nuclear activities, radioactive waste management, radiological protection, nuclear science, economic and technical analyses of the nuclear fuel cycle, nuclear law and liability, and public information. The NEA Data Bank provides nuclear data and computer program services for participating countries. In these and related tasks, the NEA works in close collaboration with the International Atomic Energy Agency in Vienna, with which it has a Co-operation Agreement, as well as with other international organisations in the nuclear field. This document and any map included herein are without prejudice to the status of or sovereignty over any territory, to the delimitation of international frontiers and boundaries and to the name of any territory, city or area. Corrigenda to OECD publications may be found online at: www.oecd.org/publishing/corrigenda. © OECD 2015 You can copy, download or print OECD content for your own use, and you can include excerpts from OECD publications, databases and multimedia products in your own documents, presentations, blogs, websites and teaching materials, provided that suitable acknowledgment of the OECD as source and copyright owner is given. All requests for public or commercial use and translation rights should be submitted to [email protected]. Requests for permission to photocopy portions of this material for public or commercial use shall be addressed directly to the Copyright Clearance Center (CCC) at [email protected] or the Centre français d'exploitation du droit de copie (CFC) [email protected]. Cover photos: Olkiluoto-3 (Hannu Huovila, TVO), Finland; VC Summer (SCANA), United States. FOREWORD Foreword Nuclear new build has been steadily progressing since the year 2000, with the construction of 94 new reactors initiated and 56 completed reactors connected to the grid. Among these new reactors are some of the first generation III/III+ reactors of their kind. This period has been one of technological, structural and geographical change, and the experiences gained since the beginning of the 21st century, as well the challenges that projects have faced and the solutions sought to overcome these challenges, have been gathered in this report to provide a valuable reference for policy makers and stakeholders concerned with nuclear new build. The report was written under the oversight of the OECD Nuclear Energy Agency (NEA) Working Party on Nuclear Energy Economics (WPNE) and the NEA Committee for Technical and Economic Studies on Nuclear Energy Development and the Fuel Cycle (NDC). Two well-attended international workshops in September 2013 on financing, and in March 2014 on construction, provided detailed information on a broad range of specific issues from highly regarded experts, and the present report draws extensively upon these discussions. Using a combination of conceptual analysis, expert opinion and seven in-depth case studies, the report aims to synthesise experiences and provide insights into the principal challenges facing nuclear new build and to propose possible solutions to address and overcome them. It focuses on the most important challenges when building a new nuclear power plant, namely assembling the conditions for successful financing and managing highly complex construction processes and their supply chains. The report offers an instructive overall picture of the state of nuclear new build today, ongoing trends and possible ways forward. NUCLEAR NEW BUILD: INSIGHTS INTO FINANCING AND PROJECT MANAGEMENT, NEA No. 7195, © OECD 2015 3 ACKNOWLEDGEMENTS Acknowledgements The report was written by Professor Dr Jan Horst Keppler, Senior Economic Advisor, and Dr Marco Cometto, Nuclear Energy Analyst, of the Nuclear Energy Agency’s (NEA) Division of Nuclear Development (NDD). The authors are responsible for the overall content, the co-ordination of the project and the conceptual chapters. However, the report benefited greatly from the substantial contributions provided by colleagues at the NEA, outside experts and representatives of NEA member countries. Dr Sang-Baik Kim, Nuclear Energy Analyst at the NEA, contributed the case studies on nuclear new build (NNB) projects at Barakah from the United Arab Emirates (UAE) and Shimane (Japan). Mr Vladislav Sozoniuk, NEA Nuclear Energy Analyst, wrote the case study on the NNB project at Tianwan (People’s Republic of China). Mr Orme Thompson, NEA Consultant from Harvard University, contributed the case study on the NNB project at Vogtle (United States) and Dr Marco Cometto wrote the case study on the NNB project at Akkuyu (Turkey). Mr Chris Savage, from the World Nuclear Association (WNA) and from the Vanbrugh Consulting firm, contributed the section on the evolving structure of the nuclear supply chain, while Professor Mauro Mancini, Politecnico di Milano, wrote the section on the divergence between actual and estimated costs in large industrial and infrastructure projects. Mr Philippe Leigné, Electricité de France (EDF) contributed the case study on NNB projects at Flamanville (France), Taishan (China) and Hinkley Point (United Kingdom). Ms Erica Bickford and Dr Matt Crozat, United States Department of Energy (DOE), wrote the case study on the new build project at VC Summer (United States). Dr Geoffrey Rothwell, Principal Economist in the NEA Division of Nuclear Development, provided extensive comments on the completed manuscript. 4 NUCLEAR NEW BUILD: INSIGHTS INTO FINANCING AND PROJECT MANAGEMENT, NEA No. 7195, © OECD 2015 TABLE OF CONTENTS Table of contents Executive summary .........................................................................................................................9 PART I. Introduction and overview of nuclear new build projects ..........................15 Chapter I.1. Introduction ..........................................................................................................17 Chapter I.2. Overview of the number, size and status of different nuclear new build projects ........................................................................................................21 PART II. The importance of long-term solutions for electricity price stability and financing as a condition for successful nuclear new build .................27 Chapter II.1. The value of electricity price stability for nuclear energy ...........................29 II.1.3. The economic value of long-term pricing arrangements such as contracts for difference with and without mark-ups over historic market prices ........................................................................................................46