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New-Build Nuclear Power Station Finance Can Risks Be Controlled?

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New-Build Nuclear Power Station Finance Can Risks Be Controlled? New-Build Nuclear Power Station Finance Can Risks be Controlled? Ed Merrow Independent Project Analysis, Inc. • Because of their long execution times, favourable financing is very important to nuclear station economics The Crux of the Problem • Favourable financing schemes in turn are very dependent on a project’s risk profile • Unfortunately, it is difficult to find a class of projects with a poorer risk history than nuclear power plants • Then the key questions become Why are nuclear power plant projects so problematic? Can the risks be controlled? 2 | Success Rate Defining Success We deem a project to be a Success if all occurred: 100% and Failure 90% Costs Grew (real) Less than 25% 80% Cost Competitiveness Less than 25% 70% 60% Projects<$500 MM Execution Schedule Slipped Less than 25% 50% 40% Severe and Continuing Operability No Megaprojects Problems (First two years) 30% 20% Oil Megaprojects 10% Nuclear Power Projects (n=74) 0% 3 | Effective Stable Basic Strong integrated Complete Front-end Risk Reduction Shaping Data owner team Loading (FEL) Requirements • Allocation of project • Early days were • Very few NPP owners • Detailed understanding benefits and costs plagued by constant have had the strong and accounting for the into a configuration design changes project organisations site context for the that is stable and will essential to project • Reasonable stability not collapse and in design now controlling the • Bringing the design to a create turbulence in achieved projects point from which full execution • Cannot field cross- detailed design can functional teams commence at sanction • Have deferred and • Very high levels of lost control to project execution contractors planning, supply chain management, scheduling, controls When these four conditions are met, the megaproject planning, constructability success rate exceeds 80 percent analysis, contracting planning, change management, data There is no reason to believe that NPPs will not follow management the same pattern 4 | Thank you 5 | United States Brazil Independent Project Analysis, Inc. Independent Project Analysis Latin America 44426 Atwater Drive Rua Deputado Heitor Alencar Furtado, 3415 Ashburn, VA 20147 Edificio Montelig—4° andar USA Campo Comprido +1 703 729 8300 Curitiba—Paraná 81200-528 Brazil +55 41 3028 9028 Australia Independent Project Analysis, Inc. Level 2, Suite 2 Singapore 192 High Street Independent Project Analysis, Pte Ltd. Northcote, VIC 3070 No. 1 International Business Park Australia #10-02 The Synergy +61 3 9458 7300 Singapore 609917 Singapore +65 6567 2201 United Kingdom Independent Project Analysis, Ltd. Wellington House – First Floor The Netherlands Worton Drive Independent Project Analysis, Inc. Reading RG2 0TG WTC The Hague Business Center, Room 03.25 United Kingdom Prinses Margrietplantsoen 33 +44 118 920 7800 2595 AM The Hague The Netherlands +31 70 335 0707 Edward Merrow www.ipaglobal.com Chief Executive Officer +1 703 989 0515 [email protected] 6 | .
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