WEC European Regional Study: The Future Role of Nuclear Power in Europe

1. WEC European Regional Study: The Future Role of Nuclear Power in Europe Alessandro CLERICI, Chairman of the study, ABB Italy Ifri Energy Breakfast Roundtable Brussels, February 27, 2007 1

2. INDEX • Preamble • The launch of WEC Regional Study • The WEC Study Report • 3.1. Introduction • 3.2. Chapter I • 3.3. Chapter II • 3.4. Chapter III • 3.5. Chapter IV • 3.6. Conclusions • 4. Next Steps Ifri Energy Breakfast Roundtable Brussels, February 27, 2007 2

3. Preamble Ifri Energy Breakfast Roundtable Brussels, February 27, 2007 3

4. • Energy is and will remain one of the major global concerns of • the 21st Century and Europe is no exception. • By 2050, the world population is expected to reach close to 9 •  billion people. Without a doubt, global energy consumption will • grow strongly and is forecast to double to some 20,000 Mtoe per • year. • Electricity penetration rate is always increasing and electrical • energy consumption is forecast to triple to some 45,000 TWh per • year. Ifri Energy Breakfast Roundtable Brussels, February 27, 2007 4

5. Nuclear power is again becoming the subject of analyses and discussions. The possible recourse to nuclear power basically depends on • environmental problems • its economic feasibility compared to other energy sources • load growth and substitution of old plants • public acceptance • The possible security of supply of some primary energy resources and their price volatility is another factor in favour of better analyses on the nuclear option. EChas considered what above in their “green paper”. Ifri Energy Breakfast Roundtable Brussels, February 27, 2007 5

6. What about Europe? Europe is the continent with the largest number of reactors in operation in 2005 (204 over 441 worldwide), the largest nuclear capacity in operation (172 GW over 368 GW worldwide) and the largest production of electricity from nuclear plants (1200 TWh over 2600 TWh) which corresponds to about 28% of the total electricity produced in European countries (4200 TWh). Ifri Energy Breakfast Roundtable Brussels, February 27, 2007 6

7. After the nuclear industry restructuring of the nineties, Europe has also the largest manufacturing NPP industry with BNFL (including the previous BNFL, ASEA ATOM and it was including the previous Westinghouse nuclear, now Toshiba), FRAMATOME ANP (AREVA) and the RUSSIANS. Europe has the major shares of world capacities in conversion of uranium oxide to UF6, in enrichment and final fabrication; European uranium resources are however scarce and Europe will depend more and more in exploration and extraction abroad. Ifri Energy Breakfast Roundtable Brussels, February 27, 2007 7

8. 2. The launch of WEC Regional Study Ifri Energy Breakfast Roundtable Brussels, February 27, 2007 8

9. The launch of WEC Regional Study • In 2005, the European Regional Group decided to launch a study “The Future Role of Nuclear Power in Europe”. • A study group was created, including 25 activemembers from 20 European countries. • The first Study Group Meeting took place in Bucharest, in May 23, 2005 and the fifthandlast onein HelsinkionNovember1-2,2006. • The final report has been launched in London by WEC on January 30, 2007 and it is now on WEC site http://www.worldenergy.org/wec-geis/news_events/news/pressreleases/pr220107.asp Ifri Energy Breakfast Roundtable Brussels, February 27, 2007 9

10. 3. The WEC Study Report Ifri Energy Breakfast Roundtable Brussels, February 27, 2007 10

11. 3.1. Introduction • Energy in general and electricity in particular are always more essential to economic development and to prosperity, health and security of citizens: GDP is strictly related to energy consumption/cost/quality of supply. • The world population in these last 10 years has seen an increase of more than 12% and now East & South East Asia together with South Asia account for more than 55% of the global world population; Europe has seen an increase in population of 1.4% (EU 25 of 2%) and has now the 13.6% of the 6.4 billion people leaving in the world. (EU 7.2%). • The world primary energy consumption, now of about 11,000 MTOE, has seen an increasein 10 years of 20%led by E-S&SE Asia availing an increase of around 35% compared to the 7.3% value of Europe and 10.2% of EU 25. Ifri Energy Breakfast Roundtable Brussels, February 27, 2007 11

12. The world electricity consumption, now of about 18,000 TWh, is characterized by an increasein the last 10 years of more than 31.5%with E-S&SE Asia having a value above 60% compared to the 16% one of EU 25 and 20.6% of EU 25. • Electricity consumption is therefore growing faster than primary energy consumption also in Europe and in EU 25 and its penetration rate is always more increasing. Ifri Energy Breakfast Roundtable Brussels, February 27, 2007 12

13. Considering the dramatic increase of electricity consumption driven by E-S&SE Asia (e.g. China and India) and by a portion of world population of around 1.7 billion people which doesn’t avail now commercial energy sources, there is the expectation of future high and volatile fossil fuel prices, of security of some prime energy resourcessupply and of environmental problems caused by the explosion of coal plants in E-S&SE Asia and gas CCGT plants in liberalized markets. It is worth mentioning how oil and gas prices have seen a practical doubling in these last 2 years. Ifri Energy Breakfast Roundtable Brussels, February 27, 2007 13

14. Considering: • EU 25 is always more dependent on external energy supplies (50% now and more than 70% in 2030) • the key role of Russia and other CSI countries in the European energy arena • the necessary investments to meet growth in demand and old power plants replacement • the commitment for CO2 emissions • European competitiveness in 2005, the WEC European Regional Group decided to launch with high priority a study to clarify the conditions nuclear should meet, to be re-integrated into the European electricity market. Ifri Energy Breakfast Roundtable Brussels, February 27, 2007 14

15. The four main chapters of the final WG report cover four areas: • Electricity production in Europe (coordinated by A. Gonzales - Spain) • Overview of existing NPP’s in Europe (coordinated by F. Naredo - Belgium) • Development of new NPPS’s with existing technologies(2010-2030) (coordinated by D. Beutier /M. Benard -France) • Nuclear power with new technologies (coordinated by F. Carré - France) The conclusions report the key issues raised by the WG with respect to the possible “renaissance” of a nuclear option in Europe. Ifri Energy Breakfast Roundtable Brussels, February 27, 2007 15

16. 3.2. Chapter I: Current Overview of the Electricity Production in Europe Coordinator: Mr. Antonio Gonzalez (FORO NUCLEAR - Spain) 1.1. Introduction 1.2. Current Overview of Electricity Production in Europe . Ifri Energy Breakfast Roundtable Brussels, February 27, 2007 16

17. The Ageing Factor 80% in 2020 >30 years 30% now > 30 years Ifri Energy Breakfast Roundtable Brussels, February 27, 2007 17

18. 3.3. Chapter II:Overview of Nuclear Power in EuropeCoordinator: Mr. Fernando Naredo (Westinghouse-Belgium) • Status of NPPs in Europe • Economics and Performances of Existing NPPs • Life Extension and Power Up-ratings • Status and Strategies on Radioactive Waste Management and Decommissioning • Public Acceptance • Governmental and Industrial Prospects for Nuclear Power Ifri Energy Breakfast Roundtable Brussels, February 27, 2007 18

19. Installed nuclear capacity and number on nuclear units EUROPE 36 December 31st, 2004 70.0 70 Nuclear Capacity GWe (left) 58 Number of reactors (right) 60.0 60 50.0 50 Nuclear reactors 40.0 40 Installed capacity GWe 31 30.0 30 23 18 20.0 20 15 11 9 6 7 4 4 6 10.0 10 5 4 1 1 1 1 0.0 0 UK Ukraine France Romania Spain Finland Russia Belgium Bulgaria Slovakia Hungary Lithuania Sweden Slovenia Germany Czech Rep. Netherlands Switzerland Ifri Energy Breakfast Roundtable Brussels, February 27, 2007 19

20. Ifri Energy Breakfast Roundtable Brussels, February 27, 2007 20

21. Economics and Performance of the Existing Plants • Most of the nuclear plants operating in the EU are fully amortized at this time, and their generation cost is mainly due to O & M + Fuel. • O&M costsarein the rangefrom 4 to 6 euros/MWh. Fuel cost is increased due to uranium prices but still remains approximately 3.5-4 euros /MWh. • Total costis therefore very competitive even with provisions for final waste management, decommissioning and special taxes (when applicable). Ifri Energy Breakfast Roundtable Brussels, February 27, 2007 21

22. Nuclear power plants are the most reliable ones Ifri Energy Breakfast Roundtable Brussels, February 27, 2007 22

23. Life Extension and Power Up-rating Reactor age of operating NPPs in Europe is as follows: • 30% between 25 and 35 years • 60% between 15 and 25 years • 10% less than 15 years Ifri Energy Breakfast Roundtable Brussels, February 27, 2007 23

24. NPP licensed life was planned originally for up to 40 years, to be extended, on the basis of periodic safety reviews, up to 50 to 60 years. • Without life extension, planned reactor closures would affect more than 80% of all NPPs by 2025. • Life extensions are programmed or in consideration, among the others, in Bulgaria, France, Netherlands, Czech Republic, Romania, Slovenia, Sweden and Switzerland. Ifri Energy Breakfast Roundtable Brussels, February 27, 2007 24

25. Life extension and power up-ratings are the cheapest Sources for increasing European electricity generation and security of supply without impact on emissions (e.g. Sweden). Ifri Energy Breakfast Roundtable Brussels, February 27, 2007 25

26. Radioactive Waste Management andDecommissioning • Low and Intermediate Level Waste Management is a common practice with no impact on the environment and on the public acceptance. • For High Level Waste, technical solutions exist (deep geological disposal) and there is no urgent time requirement, considering available interim storage facilities. Ifri Energy Breakfast Roundtable Brussels, February 27, 2007 26

27. It is essential to act quickly at the government level to find and check suitable locations and to approach public opinion. • In any case, appropriate legislations are necessary to secure the financing for decommissioning and high level waste disposal. Ifri Energy Breakfast Roundtable Brussels, February 27, 2007 27

28. Public Acceptance • Risk perception is changing with a lower concern for major accidents. NIMBY effect for new plants is still strong but by far less for life extension of existing NPP’s. • Recent polls in Sweden, Italy, Germany, Poland, etc. have provided key indicators of change. Ifri Energy Breakfast Roundtable Brussels, February 27, 2007 28

29. Governmental Attitude Considering: • the increasing importance of energy in competitiveness in all countries • the high oil and gas prices and their security of supply • the environmental concerns (CO2 emission charges) many governments are more and more oriented to consider a possible nuclear option Ifri Energy Breakfast Roundtable Brussels, February 27, 2007 29

30. 3.4. Chapter III: Nuclear power with current technologies (2010-2030) Coordinator: Mr. Michel Benard (EdF- France) & Mr. Didier Beutier (Areva-France) Ifri Energy Breakfast Roundtable Brussels, February 27, 2007 30

31. Need for New Power Capacity • Many power plants operating in base load are approaching their end of life (mainly coal fired and nuclear) and will have to be replaced. • Electricity demand is expected to grow at a rate of 1.5 to 2.0% per year. • IEA (WEO 2004) estimates that more than 1,000 GW have to be installed in overall Europe between 2000 and 2030 (replacements+increased demand). • As concerns nuclear energy, available technologiesare known: they are called 3rd generation reactors. Ifri Energy Breakfast Roundtable Brussels, February 27, 2007 31

32. NPP Technologies Available on the Market The performances with respect to safety and economics are set at a very high level: • design lifetime: 60 years • availability: better than 90% • fuel cycles: 18 months to two years • very low core damage probability and large off-sites releases • very low occupational radiation exposure European Utilities have joined efforts to establish clear general acceptance criteria for new plants. Ifri Energy Breakfast Roundtable Brussels, February 27, 2007 32

33. The majority of European countries have an electricity consumption which is large enough to allow them to operate large-size nuclear plants, or have sufficient interconnections with neighbouring countries to do so. • Mainly large-size (i.e.1000 MWe and more) NPPs can compete with good chances of success. Ifri Energy Breakfast Roundtable Brussels, February 27, 2007 33

34. The list of reactors under consideration is the following: • ABWR, ESBWR, both developed by GE, and SWR 1000, developed by Framatome ANP (AREVA). These three models belong to the BWR family, and are large-size reactors as defined above. • EPR, developed by Framatome ANP (AREVA), AP-1000, developed by Westinghouse, and VVER91, developed by Hidropress. These reactors belong to the PWR family and are also large-size reactors. • Candu-6,ACR 700 (developed by AECL) which are reactors using heavy water. These two models have a size close to 700 MWe Beyond 2020, one could also include more innovative and small size reactor types. Ifri Energy Breakfast Roundtable Brussels, February 27, 2007 34

35. Nuclear Fuel Cycle • The weak step is uranium mining, since domestic uranium resources are scarce. Europe will remain strongly dependent on external sources of uranium,consuming more than 28,000 tons per year, producing less than 5,000 tons per year (Russia, Czech Rep). • All other operations are mastered on the continent: conversion to fluorides, enrichment, uranium fuel and MOX fuel fabrication, reprocessing. Ifri Energy Breakfast Roundtable Brussels, February 27, 2007 35

36. The current world rate of consumption (66,000 tons/year) widely exceeds the world mining production 36,000 t/year in 2004. The rest of the supply is drawn from existing military and civilian stockpiles. • From Red Book (IAEA‑NEA 2003), up to 14.4 Million tons may be available at a price up to around $130/kg. • In order to secure nuclear fuel procurement in Europe, significant investments should be made both inuranium exploration and extraction abroad and in domestic material recycling. Ifri Energy Breakfast Roundtable Brussels, February 27, 2007 36

37. Radioactive Waste and Decommissioning • Each country isresponsible for taking care of its own waste. • As soon as possible in all involved countries, operational repositories for the final disposalof short-lived low and intermediate level waste should become standard practice. • Regulatory framework should be set up. • For high level waste or spent fuel as such, national programmes should be launched to develop safe technologies. • Success requires public and political confidence, and real benefits to the local communities hosting repositories. • For funding of such long term expenses as plant dismantling and high level waste disposal, sufficient amount of money should be put aside each year. Ifri Energy Breakfast Roundtable Brussels, February 27, 2007 37

38. Economics of New Nuclear Power Plants Main items affecting the total cost of kWh from new NPP’s, compared to alternative energy productions are: • Licensing and permits • Local conditions, taxes and inflation rate • Investment cost for the specific NPP (overnight cost - OVN) • Insurance from major accidents • Operation and Maintenance (O&M) • Fuel prior to electricity production • Spent fuel and waste management excluding final disposal • Decommissioning • Final waste disposal • GHG emission penalties / advantages Ifri Energy Breakfast Roundtable Brussels, February 27, 2007 38

39. Approaches and values for each cost item are different in different countries. • The major portion of the cost of the produced kWhis thatconnected to the investment and it is strongly influenced by: • plant size and number of units per site • standardization and number of plants ordered • local safety rules and local taxes/costs/conditions • required Return On Investment (IRR) Ifri Energy Breakfast Roundtable Brussels, February 27, 2007 39

40. The overnight cost (OVN) of future Generation 3 projects should be lower than the costs recently announced for the two first EPR (FOAK-First Of A Kind Unit). According to vendors’ knowledge, it is likely to stand in the 1200-2000 €/kW range (in Euros 2005), lower values being reached when full benefit can be drawn from series and site effects (for comparison, the OVN cost of 1360 €/kW indicated by France in OECD report was related to a program series of 10 EPR and based on a 2002-2003 study). Ifri Energy Breakfast Roundtable Brussels, February 27, 2007 40

41. Financial Aspects Different financial approaches are strongly affecting the kWh costs attributable to the overnight construction cost (OVN) and relevant interest costs during construction. The preliminary conclusions of WEC WG provide the following datafor the total production cost including decommissioning and final waste disposal. Ifri Energy Breakfast Roundtable Brussels, February 27, 2007 41

42. O&M+ fuel+decommissionning Costs • O&M costs are in the range 6-9 €/MWh(excluding special case local taxes) • Fuel prior to electricity production is evaluated for the next years at 3.5 - 4.5 €/MWh for Light Water Reactors • Fuel Cycle back end(Temporary waste management + reprocessing+ final disposal) is considered by new investors 1-4€/MWh • For decommissioning, they have deferred costs that do not contribute substantially to the total kWh cost, even if the actual values may be high (e.g. 250-1000$/kW);the range of cost is 0.5-1 € / MWh Ifri Energy Breakfast Roundtable Brussels, February 27, 2007 42

43. In conclusion, the total production cost could range (excluding special case local taxes): • for a single unit order: from 25-35 euros/MWh with Finland approach to 50-60euros/MWh for higher IRR • for amultiple unit order, as considered by some large utilities, the value is 35 to 45 euros/MWh Ifri Energy Breakfast Roundtable Brussels, February 27, 2007 43

44. With emission trading at 20 €/ton of CO2, the following "advantages" have to be considered for NPP’s with respect to: Gas CCGT plant : 6-8 €/MWh Coal plant : 15-18 €/MWh Ifri Energy Breakfast Roundtable Brussels, February 27, 2007 44

45. For comparison purposes, the present kWh price offered by an IPP in Italy with a CCGT plant and with a gas cost close to 0.3 euro/m3 is around 70 euro/MWh, not considering the CO2 emission charge of ~ 7euro/MWh; 80% of the 70 euro are gas cost! Ifri Energy Breakfast Roundtable Brussels, February 27, 2007 45

46. Construction time length Apart from the time for licensing, site definition/preparation and final authorizations, for a new generation 3 plant from the first concrete poured to commissioning on the grid (excluding FOAK) total construction time is in the range of 3.5 to 5years. Ifri Energy Breakfast Roundtable Brussels, February 27, 2007 46

47. Public Acceptance Nuclear energy will only develop within the limits of public acceptance. Since it has been a subject of controversy for a long time, members of nuclear bodies in research, industry and administration are aware they have to respond to social demands, such as: • assurance of no serious accident consequence, • protection of facilities against external aggression, • transparency and full reporting from operators, • established independence of safety authority, • coherence with explicit national policy priorities, • established waste management policy, • public involvement, in a nutshell, being trustworthy Ifri Energy Breakfast Roundtable Brussels, February 27, 2007 47

48. 3.5. Chapter IV: Nuclear Power with a New Generation Technology (2030-2050) Coordinator: Mr. Frank Carré (CEA-France) • Potential for New technologies (Generation IV; fast breeder reactors, etc.) • R&D for New Technologies of Nuclear Power and Financing: Generation IV International Forum, Contribution of Europe etc. • Nuclear Fuel Cycle and Non Proliferation Requirements: Utilization of Uranium Resources and Waste Management, etc. • Means to Implement the Recommended R&D Programme: Competences, Facilities, Budget. Ifri Energy Breakfast Roundtable Brussels, February 27, 2007 48

49. Development of key breakthrough technologies needed for prototype reactors around 2020 and industrial deployment by 2040: • Fast neutron systems with a closed fuel cycle to make an efficient use of natural uranium (80-90% as opposed to 0.5% with LWRs today) and to minimize the long term noxiousness and decay heat of the ultimate waste to be disposed. • High or very high temperature nuclear systems for other energy applications than electricity production such as hydrogen, synthetic transportation fuels, and process heat for the industry. Ifri Energy Breakfast Roundtable Brussels, February 27, 2007 49

50. R&Dwork on 4th generation systems needs to be complemented bycontinuing R&D to further optimize 3rd generation reactors that are anticipated to last throughout the 21st century. R&D on improving the conversion ratio of LWRs is of special interest to provide flexibility while facing rising costs of natural uranium in the 2nd half of the 21st century Ifri Energy Breakfast Roundtable Brussels, February 27, 2007 50