With power reactor vendors betting on a shower of orders from established nuclear electricity-generating countries, their perceived risk in exporting reactors to nuclear power newcomers, especially developing countries, is increasing, according to industry executives. Ten years ago, there was little anticipation that a surge of new nuclear plant construction would be on the horizon in Asia, Canada, the UK, the US, and continental Europe. As a result, the world’s vendors courted energy-planning bureaucrats in countries without nuclear power, such as Chile, Indonesia, Thailand, Turkey, and Vietnam. None of these countries has set up a nuclear power program. Nonetheless, with predictions of a worldwide move toward nuclear power plant construction moving closer to reality, some of these countries are now dusting off faded contacts with reactor vendors.

During an IAEA workshop last month, representatives from about two dozen states, most of them developing countries, said they were considering plans to begin generating nuclear electricity by around 2020 (NW, 14 Dec. ’06, 4). According to industry experts, however, many of these countries will be disappointed when they approach international nuclear power plant suppliers. “Most will find out that they are going to have to wait in line,” said a US DOE official attending the December workshop.

During the next 15 years in Asia, said Han Ki-in, senior vice president for nuclear projects at Korea Power Engineering Co. Ltd., or Kopec, “Everyone is expecting that more nuclear power plants will be ordered in Korea, Japan, and China. These are the markets where everyone is trying to position themselves. After that, for other markets, there may be limitations on construction personnel, materials, safety know-how, and financing, so meeting all this demand will be difficult.”

Andrew White, president and CEO of General Electric’s nuclear energy business, said the first bottleneck that will arise when orders start coming is likely to be in large forgings. “We need super ingots for this equipment, sized at around 500 tons each,” he said. After that, shortages may arise in manufacturing capacity for pressure vessels, he said. And “in a lot of places, including developing countries but also the US, there are concerns about availability of construction personnel and engineers,” White said. He said availability of financing will depend on whether a project is sponsored or operated by a government agency ? as he said is the case in China, Japan, Korea, and France? or whether private-sector firms are involved. If private utilities or merchant generators are involved, judging the financial viability of projects will rest on detailed assessments, White said. These analyses will involve loan guarantees, incentives, and tracking of risk by credit agencies, he said.

The workload for these analysts is increasing along with what Akira Omoto, formerly a senior engineer at Tokyo Electric Power Co. and now head of the IAEA’s nuclear power division, calls the “rising expectations of more and more countries that they will get nuclear power in the future.” An optimistic IAEA scenario forecasts that the current level of installed nuclear capacity, about 360 gigawatts, may increase to about 510 GW by 2020. The IAEA’s low projection for 2010 is about 420 GW, Omoto said. Vendor officials said the low projection is closer to current industry estimates.

As of the end of last year, Omoto said, the IAEA had technical cooperation projects with six countries related to plans for construction of power reactors or reactors coupled to desalinization systems. For 2007 and 2008, he said, these countries include Algeria, Bulgaria, Indonesia, Jordan, Morocco, Nigeria, the United Arab Emirates, Egypt, Sudan, and Turkey.

Westinghouse’s Lipman said, “Even from a budget point of view, we couldn’t possibly invest money in bidding on projects in all these countries.” According to sources, the cost to a vendor of preparation and involvement in a single bid might run as high as (US)$100 million. “There aren’t too many of these we can afford at any one time,” Lipman said. “And we don’t have enough professionals to take on more work,” he said.

“You look at what your assets are, say, over the period of the next 10 to 15 years,” said a senior executive for Bechtel Corp. in Asia. “How much steel you can get, how much financing, how many engineers you’ll have, how many lawyers, and then you ask, who wants nuclear power plants and how serious are they?” Then, he said, “you draw up a series of matrices and you decide where you want to try to earn your money”

Lipman said, “If you have a good shot at selling a series of identical power reactors in the US, or in the UK, and your alternative is selling a reactor or two in a country without any track record, without any money, and without any infrastructure, from the point of view of corporate risk management your decision is simple.”

White said that GE begins its assessment by “finding out whether a country which is interested in nuclear power fits four of five basic criteria.” These include whether the country is approved by US government agencies as acceptable for doing business, whether it has an acceptable nuclear energy administration, whether liability arrangements are in place, and whether there is an open, competitive market. “If the answer to these questions is yes, then we ask further questions about how serious they are about buying reactors, and take it from there,” White said.

Capacity crisis at Japan Steel Works threatens global nuclear power plant production, Leo Lewis, Times, 17 March 2008.

A 100-year-old steel mill that once forged guns for the Japanese Imperial Navy has hit a production bottleneck that threatens to derail more than £150 billion of global nuclear power-plant construction. The capacity shortage at Japan Steel Works (JSW) has created a worldwide stampede among electricity producers to place orders with the Tokyo-based engineer for nuclear reactor cores – a specialised component in which the company has an effective global monopoly. As the stakes have risen in the tussle to reach the front of JSW’s order-book queue for reactor cores, energy analysts said that down-payments have soared beyond £50 million per unit. In some cases, European and American energy groups are placing huge deposits on equipment that will not be built for another decade. Nuclear energy experts fear that in its haste to expand production, the nuclear industry may have overlooked this part of the equation, potentially jeopardising the future of the 237 reactors expected by The World Nuclear Association to be built between now and 2030.

 Project coordinator: Richard Tanter
Additional research: Arabella Imhoff
Updated: 22 January 2010