New Build

Jeni Bauser speaks to those in the industry to pin down what the UK can learn from other nations to bring down new build variable costs before engineers even break ground.

By Jeni Bauser

After a decades-long hiatus in construction of nuclear power plants in the US and UK, the British government recently approved ten new nuclear power stations as part of its £40bn future energy programme.

New construction will come with a hefty price tag, and there are variations in cost estimates.

A 2009 Massachusetts Institute of Technology (MIT) study concluded that inflation and rising construction costs increased the overnight cost to about $4,000/kW.

The UK’s 2008 White Paper on Nuclear Energy states that the cost is roughly £1,250/kW (about $2,037/kW).

Given the magnitude and expense of these projects, the related interest and financial cost of construction is financially significant, as well. Any delay would raise costs further.

Currently, the US produces the most nuclear energy in the world, with 104 operating nuclear reactors that provide 20% of the country’s electricity.

France produces the highest percentage of its electrical energy from nuclear reactors— 78%. Nuclear energy provides 30% of the electricity for the EU, and in the UK, nuclear power generates roughly 19% of its electricity.

No plant has been built on time in the UK. However, with the recent experience of other nations, these initiatives could help the UK construct new nuclear plants on time and within budget.

Streamlined government licensing

The US Nuclear Regulatory Commission’s (NRC) more streamlined licensing procedure, a Combined Construction and Operating License (COL), establishes a single licensing process to build and operate a new plant.

But regulatory bodies will still review plant construction to ensure that it meets the approved design.

“The COL provides more certainty for utilities going forward, allowing for more public participation early on, and for most of the design to be completed, and approved, before construction begins so delays are minimized,” says Beth Thomas, Communications Coordinator for Nuclear Development at Southern Nuclear Operating Company in Alabama.

“You need to go into a project with regulatory certainty,” says Danny Roderick, Senior Vice President for Nuclear Plant Projects at GE Hitachi Nuclear Energy.  

“Before you reach commercial terms, companies must understand a government’s requirements so you don’t have to rework the design right before you build or as you build, which would significantly impact the schedule and cost.”

Standardization of reactor designs

A number of countries, including the US, Japan and France have adopted a type-certified process, whereby the regulatory agency certifies a particular design and its construction process.

This could facilitate the standardization of reactor designs and consequently lower costs for follow-on plants.

France has the greatest standardization in the world, exclusively using three standard types of pressurized water reactors (PWR). Contrastingly, the US and Japan use a number of reactor types.

Dale Kline, a former official of the NRC, once said the US has 104 kinds of nuclear reactors and one kind of cheese, while France has over 100 cheeses and one type of reactor.

“The hope with standardized designs is that we can get into all the details of construction at the first hearing with the regulatory agency so we avoid changes and repeat hearings later on, which delay operation and revenue generation,” said Leslie Kass, Director for Business Policy and Programs at the Nuclear Energy Institute (NEI).

“UniStar benefited from the fact that our company is 50% owned by Électricité de France (EDF), which created the standardized plants in France,” says Mike McGew, Senior VP for Commercial Operations. “We’ve institutionalized their knowledge and employ the most up to date practices.”

UniStar Nuclear Energy, a joint enterprise between Constellation Energy and EDF, is developing a fleet of four new Generation III European Pressurized Reactors (EPR) for the US market.  

The company site explains that the fleet approach “will help ensure fewer delays in securing regulatory approvals and constructing the plant, and will lower the cost of parts and of operating and maintaining the facility.”

Jarret Adams, a spokesperson for AREVA, says, “We have proven that the fleet approach has reduced costs; this is not just a theoretical proposition.” 

John O’Neill, a partner at the Pillsbury Winthrop law firm, explains that increased collaboration between regulatory bodies will create more standardization in the review and certification processes, greatly reducing the time and cost of construction.

“The plant being bought in the UAE will depend on design certifications in countries like the US, France, Korea, and Japan, and they will get the benefit of having sophisticated regulatory bodies certify them first. That type of cooperation is different and hasn’t been done before.”

The construction of fleets of standardized reactors also enables utilities to flexibly assign operating and maintenance personnel to each plant in the fleet on an as-needed basis.

This could save costs associated with surplus personnel, which are substantial, e.g., it costs roughly half a million U.S. dollars and 3.5 years to train a senior operator.

Technological advances

Countries like China, the US, Japan, and Korea are building new Generation III reactors like the Westinghouse AP 1000 and AREVA’S EPR reactor.

These designs use modular construction techniques with fewer parts and are overall simpler designs.

This increases efficiency and reduces the costs of designing and building tailor-made reactors.

“Modular construction not only has less parts and pieces, but they are also being built the same,” says Beth Thomas of Southern Nuclear Energy Company.

“This creates a more streamlined approach, so you can benchmark these applications with other plants and repeat that process in a more efficient and cost effective manner.”

Leslie Kass notes that Korea has used this modular technique to build the same design eight or nine times, and “each time they improve their cost as well as their time to build, which are totally related.”

The NEI estimates the first wave of new plants in the US will take 5 years to build, and can then be reduced to a 39-month schedule, as seen in Asia. Southern Nuclear Company is constructing the Westinghouse AP1000 model at its Vogtle site in Georgia.

Other plants will reduce the time and cost of licensing by referencing the Vogtle application and 75% the same, while the remaining 25% will address specific site issues.

Government support

State-owned companies don’t need the same incentives that private companies need to be encouraged to support nuclear power.

As part of the US Department of Energy’s 2010 Nuclear Power Program, the government will cover $500 million in cost overruns resulting from regulatory delays for the first two new US nuclear reactors, and will pay half that for the next four reactors.

The Energy Bill also provides production credits of 1.8 cents per kW per hour for the first three years of operation to ease investor anxiety.

In addition, loan guarantees are vital in the US to control total costs.

“The most powerful tool we have is the loan guarantee programme,” says Kass of NEI. 

“It’s not a subsidy as companies pay their own way, but the government co-signs the loan so companies get its AAA credit and thus a lower interest rate.”

“The US loan guarantee programme is an essential component to spurring investment in the nuclear field,” says Adams of AREVA. 

“Based on the current economic environment, I think it would be extremely difficult if not impossible to finance such a project without it.”

While the UK government won’t provide any subsidies, its 2008 White Paper on Nuclear Energy discusses steps to facilitate private investment in nuclear power stations, including ensuring that the Nuclear Installations Inspectorate (NII) is equipped to review new build proposals through the Generic Design Assessment, and “working with the NII to explore ways of enhancing the transparency and efficiency of the regulatory regime, without diminishing its effectiveness, in dealing with the challenges of new build.”

“Getting the loan guarantees which at the end of the day don’t cost the government a penny will give additional assurances to the companies to make the investment,” says O’Neill of Pillsbury.

A more affordable future