Lead story: EDF has momentus week amongst bid for UK grid assets Companies and organizations included in this week’s round-up include: EDF, Cheung Kong Infrastructure Holdings Ltd, Hongkong Electric Holdings Ltd, Li Ka-Shing Foundation, NC Warn, Duke University, Duke Energy, Progress Energy, Lawrence Berkeley National Laboratory, SolarCentury, Chatham House, Sellafield, Magnox Swarf Storage, NRG Energy, Toshiba Corp US Department of Energy (DOE), Tokyo Electric Power Co., Calvert Cliffs, EDF Group, UniStar Nuclear Energy, Constellation Energy, US Nuclear Regulatory Commission and Louisiana Energy Services

Weekly Intelligence Brief 2 August - 9 August

EDF has momentus week despite drop in profits

Soon after Electricite de France (EDF), the world’s biggest nuclear plant operator, had announced just over a week ago that its profits plunged, and no sooner it received an unexpected bid for its British electricity distribution network.

The bid of EUROS 6.9 billion ($9.02bn) came from East Asia's richest businessman Li Ka-Shing.

News reports have stated that analysts are saying that a sell-off could considerably help off load the utility’s debts, which is in part due to its ambitious nuclear new build plans.

"I think we are all a bit surprised about the price, it's quite high," said analyst Per Lekander of banking group UBS, in a news report.

He and other analysts were expecting a bid closer to EUROS 5.1bn.

EDF reported its first half profits fell 47 percent to euro1.66 billion, from euro3.1 billion in the same period of 2009.

It was reported that EDF took a EURO1.1bn hit over risks related to planned nuclear reactor construction in the United States, a key part of its global strategy amid hopes of a resurgence of nuclear energy.

The company's shares rose slightly, however, on news of the bid for EDF's distribution networks in Britain.

A consortium of Cheung Kong Infrastructure Holdings Ltd, Hongkong Electric Holdings Ltd and the Li Ka-Shing Foundation offered to buy the networks for a total of euro6.9 billion, including debt, according to EDF.

Henri Proglio, EDF Chairman and CEO, stated: “During the first six months of the year, the Group was faced with numerous challenges, which outcomes are critical for EDF’s medium term development, be it standing for the company’s interests in the context of NOME’s Law project, or working on the necessary reorganization in order to reverse the trend in French nuclear fleet’s performance.

“I am happy to confirm that the nuclear output will be higher in 2010 and that we are reversing the trend on kd after three years of decrease in a row.

“Despite an uncertain economical and regulatory environment, the Group continued its development. Hence EDF strengthened its positions and increased its operational investments in generation fleet as well as networks, in particular in France.

“Recurring results obtained in H1 2010 enable us to confirm our financial objectives for FY 2010.”

Image: Henri Proglio, EDF Chairman and CEO

Construction delays for EDF in France

EDF said that it has experienced a new two-year delay in construction of an EPR reactor in western France.

The reactor at Flamanville, one of two EPR reactors that the company is building after years of development, is now expected to go online in 2014 instead of 2012 and to cost about EURO 5bn overall instead of the EURO3.3bn as earlier estimated.

EDF said that “significant progresses have been made on the Flamanville EPR site, and a number of critical stages have been completed, including completing the discharge gallery, solving difficulties relating to the steel rebar and liner, beginning electromechanical assembly of the nuclear island, and making progress on the conventional island.”

Solar becomes more competitive than nuclear in North Carolina

Solar photovoltaic system costs have fallen steadily for decades. They are projected to fall even farther over the next 10 years.

Meanwhile, projected costs for construction of new nuclear plants have risen steadily over the last decade, and they continue to rise, said a report on behalf of NC Warn Waste Awareness & Reduction Network.

NC Warn is a North Carolina-based nonprofit watch dog tackling the accelerating crisis posed by climate change, which uses scientific research to inform and involve the public in key decisions regarding their well-being.

In the past year, the lines have crossed in North Carolina.

Electricity from new solar installations is now cheaper than electricity from proposed new nuclear plants, said the report.

This new development has profound implications for North Carolina’s energy and economic future.

Each and every stakeholder in North Carolina’s energy sector — citizens, elected officials, solar power installers and manufacturers, and electric utilities — should recognize this watershed moment, said the report.

The paper states that commercial-scale solar developers in North Carolina are already offering utilities electricity at 14 cents or less per kilowatt hour.

Meanwhile, Duke Energy and Progress Energy are pushing ahead with plans for local nuclear plants that, at current estimates, would generate electricity at the higher rate of 14 to 18 cents per kilowatt-hour.

The “crossover” is largely thanks to a marked decline in the costs of solar photovoltaic (PV) systems seen over the past decade.

The study cites figures from the Lawrence Berkeley National Laboratory indicating that the cost of solar PV fell from US$12 per installed watt in 1998 to US$8 in 2008, on average – a one third drop in 10 years.

In 2008 and 2009, costs fell even more rapidly, bringing the 12-year fall to 50%. Meanwhile, the expense of nuclear has ballooned.

The estimated cost of construction in the United States at the start of the nuclear renaissance was around $2bn per reactor.

It now stands at close to $10bn.

The Duke University research has only focused on North Carolina where the 14 cents figure is net of public subsidies.

It is also specific to the North Carolinian regulatory context, according to a chinadialogue.com report, where like in other US states tax benefits and incentive payments for solar electricity can help lower costs to customers.

But the authors argue that solar is expected to be cost-competitive without subsidies within the decade.

In a China Dialogue report, Jeremy Leggett, the founder of the UK’s largest solar company, SolarCentury, said that even cloudy Britain “will reach residential grid parity between solar and fossil-fuel power within five years.”

“When you begin seeing solar production on this level, it starts making a significant difference,” said Antony Froggatt, senior research fellow in the energy, environment and development program at UK think-tank Chatham House, in the news reports.

It’s no longer a niche thing,” he said.

“It’s very clear that the learning curve for solar is very fast. We are seeing very, very rapid production and economy of scale is clearly crucial.”

Blackburn and his co-author, Sam Cunningham, argue that the strengthening renewables sector, combined with the perceived financial risks of new nuclear, is influencing investor behaviour: “Very few other states [American states other than North Carolina] are still seriously considering new nuclear plants.

“Some have canceled projects, citing continually rising costs with little sign of progress toward commencing construction.

“Many states with competitive electricity markets are developing their clean energy systems as rapidly as possible.”

Some experts are not convinced that renewable power is yet in a position to squeeze out new nuclear, however.

Froggatt points out that, in the United States, it is gas, not renewables, that is posing the biggest threat to the nuclear industry.

“Shale oil gas has totally changed the market in the US and brought down the price of gas significantly,” he said.

“How that pans out over the next few years and whether it’s a permanent fixture or temporary is probably the key issue for nuclear because that’s the main competitor.”

“Will falling prices speed up the development and installation of solar in China? Development, absolutely, because lots of the world’s solar is made in China. But I’m not sure it’s going to change nuclear ordering in the next 10 years,” said Froggatt.

The Duke University study rejects the argument that solar cannot replace baseload power from nuclear or coal because of its intermittent nature as “obsolete”, stating that it becomes a “manageable issue” when solar-generated electricity feeds into a power grid with wind, hydroelectric, biomass and natural-gas generation.

“You have to think about the role of both types of generation in the overall supply and demand balance,” said Simon Harrison, energy director at global engineering consultant Mott MacDonald. 

“Solar is a technology that is essentially available when the sun is out, while nuclear is there 24 hours a day,” he said.

Before we can even contemplate moving into a world where solar replaces nuclear, a lot of things have to happen – around storage, around smart grids and so on,” said MacDonald.

Decommissioning success at 50 year old Sellafield waste silos

Hazard reduction at Sellafield has transferred 14,800 litres of historic radioactive liquid waste from a fifty year old waste storage silo for safe treatment.

Facility Manager Byron Smith explained: “This facility represents one of the most significant decommissioning challenges we are faced with at Sellafield.

“Completion of this liquor transfer from the Magnox Swarf Storage Silo is an important step towards emptying the silos, processing the waste and decommissioning a legacy plant.”

“The original Magnox Swarf Storage Silo was constructed in the 1960s with three further extensions built in the 1970s and 1980s.

“Intermediate Level Waste mainly comprising Magnox fuel cladding was stored

under water in the twenty two individual compartments within the facility.

“We have already retrieved 586te of solid waste cladding from the silos in the 1990s and now we have successfully demonstrated that we can empty the liquid effluent from the facility.

“This has been the culmination of 5 years planning and testing by the project team.”

The process known as Liquor Activity Reduction (LAR) removes active silo liquor from the Magnox Swarf Storage Silo and transfers it to the Site Ion eXchange Effluent Plant (SIXEP) where the active effluent is treated.

This first production transfer marks the start of a scheduled programme of LAR movements to SIXEP designed to reduce the activity of silo liquor by about 90% over the next 3 or 4 years.

Following this, the solid waste inventory will be removed from the facility, processed and encapsulated for safe long term storage.

After each transfer, the silos will be topped up with clean water before the operation is repeated on a weekly cycle.

This will gradually reduce the silo liquor activity through dilution, significantly reducing the overall environmental risk from the facility and radiation dose to the plant workers.

India to use US nuclear fuel rods

India and the United States have signed in Washington DC an agreement on using U.S. nuclear fuel rods for nuclear energy plants in India, Indo-Asian News Service reported.

India has signed similar agreements with Russia and France as previously reported on Nuclear Energy Insider.

New Delhi and Washington signed an agreement in 2008 on cooperation in nuclear energy, in particular the construction of U.S.-built nuclear plants in India.

However, the agreement was held up because India's potential use of nuclear fuel rods was deemed insecure due to the country’s lack of laws on nuclear energy.

Washington has been wary of the possibility of India using foreign companies to service and regulate safety at the nuclear sites.

Until 2008, India was under international limitations on buying fuel, reactors and other equipment used for nuclear energy.

After the limitations were lifted, India decided to build four new nuclear plants using U.S., Russian and French technology and equipment, according to a RIA Novosti news report.

Loan hold up affecting utility profits and new build plans in USA

Executives with NRG Energy's nuclear joint venture with Toshiba Corp warned they might stop spending without a DOE loan decision in the first half of 2010 after settling an ownership dispute with a Texas municipal utility and signing an agreement with a new partner, according to a Reuters news report.

Tokyo Electric Power Co. agreed to invest $125m in NRG's Texas project, but the investment is contingent on government backed Department of Energy loan support.

The Energy Department has had little to say in the five months since President Barack Obama announced the first nuclear loan commitment of $8.3bn to a Southern Co-led consortium for two new reactors to be built in the US state of Georgia.

The U.S. House of Representatives has approved the Obama administration's request to add $36bn to the loan guarantee fund, but the senate has not acted on the request for new money yet, said the report.

The DOE has $10bn in existing funds it can allocate with three “project hopefuls” remaining on the DOE loan short-list -- Constellation Energy Group's Calvert Cliffs expansion in Maryland, NRG Energy's South Texas Project two-unit addition and SCANA Corp's Summer project in South Carolina.

The waiting game "has begun to affect the prospects for the Calvert Cliffs project," Constellation Energy Chief Executive Officer Mayo Shattuck told investors and analysts this week.

"As a result of this delay and uncertainty, we have begun reducing our spend rate on the project, impacting jobs," Shattuck said.

Constellation officials had hoped to obtain a loan commitment by the end of 2009 for the Calvert Cliffs project, which it is developing with EDF Group through a partnership called UniStar Nuclear Energy.

Conservatives turn around Lib Dem view of nuclear new builds in UK

Energy Secretary Chris Huhne has said that he believes nuclear investors are waiting to come forward.

However, he stands strong on his previously stated rule out of government subsidies for new power stations.

In an interview on BBC1's AM Show on Sunday, the Liberal Democrat minister admitted that in the past he and his party stood firmly against the expansion of nuclear power but that their stance had changed when they entered into coalition with the Conservatives.

"My position and my party's position was always one of scepticism about the economics of nuclear power, but what we did in the coalition agreement is recognise the differences between the Conservatives and the Liberal Democrats.

"We responded with an agreement, which will say very clearly there will be no public subsidy for nuclear because it is an old technology... But at the same time, if investors come forward with proposals it is absolutely clear they will go through.

"We believe that will happen.

“We believe there are investors who will be investing in new nuclear," Mr Huhne said.

Huhne also said in the interview that there will be no question of guaranteeing electricity prices.

He said that nuclear will have access, like all other forms of low-energy technology, is the advantage of not paying through the EU emissions trading scheme.

$9bn Calvert Cliffs project in limbo

Constellation Energy and the French EDF Group say they're committed to building a nuclear-power plant next to the one Constellation already operates at Calvert Cliffs on the Chesapeake Bay, but the $9bn project could experience hold ups due to held up DOE loan support and the rising construction costs of new power stations.

"When we get the DOE loan guarantee, that certainly is a major step forward for us," UniStar Chairman Michael J. Wallace said in an interview last week.

"We then need to go through calculations on all the other variables to see whether this project can go forward on an economically sound basis.

“And we have to continue to do that over the next several months."

At stake are thousands of construction jobs, hundreds of permanent jobs to run the unit and 1,600 megawatts of carbon-free energy to ease Central Maryland's electricity shortage and the resulting high prices.

EDF took a provision of 1.1 billion euros related to its holding in Constellation Energy Group Inc. due to the “less favorable” outlook for power prices for existing power generators and a planned new nuclear reactor at Calvert Cliffs, the Paris-based company said in an e- mailed statement.

The French utility powerhouse has expanded in Europe, China and the U.S., driving up debt, as it braces for a state-led overhaul of the French power market and struggles to raise nuclear output at home.

The utility, which is selling its UK grid to cut borrowings (see story in this intelligence brief), is planning to develop EPR reactors in Italy, the UK and US despite costs and delays mount for its project in Normandy.

New Mexico Uranium deconversion plant one step further

According to local news reports, the first step has been taken toward a uranium deconversion plant in Lea County in southeastern New Mexico.

The U.S. Nuclear Regulatory Commission held the first of several public meetings on an environmental impact statement for the International Isotopes Inc. nuclear deconversion facility proposed for a site about 14 miles west of the city of Hobbs.

In April, Louisiana Energy Services and International Isotopes agreed International Isotopes will provide uranium deconversion services for the LES' National Enrichment Facility, which will produce enriched uranium for commercial nuclear power plants.

The LES plant is being built near Eunice.

The $3bn enrichment facility also will produce tons of depleted uranium tails each year, which Idaho-based International Isotopes will use in its proposed facility.

The facility would deconvert uranium tails and simultaneously extract fluorine gases that could be sold to be used in manufacturing solar panels, computer screens and medical equipment.

The soonest International Isotopes could break ground on its facility is early 2012, said NRC's licensing project manager, Matt Bartlett.

Bartlett told the Lea County public meeting the International Isotopes facility will not be a nuclear facility in that the process will be a chemical one.

But he said the NRC has oversight because uranium tails are involved.

"That is an 18-month formal review," Bartlett said in a new report.

"Running in parallel we have the environmental impact statement, which typically takes 24 months."

A safety review will look at such factors as radiation, chemical, fire, seismic and security issues, while the environmental review will study air, water, soils and plants, public health, historical and archaeological property and artifacts and environmental justice.