UK eyes state-owned decom company; US accelerates nuclear support, injects into Vogtle
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UK government set to end outsourcing of decommissioning projects
The UK government is likely to bring back "in-house" the decommissioning of the first generation of UK reactors after errors in the contractor procurement process raised the cost to UK citizens, the Financial Times reported October 15.
In March, Energy Secretary Greg Clark announced the UK Nuclear Decommissioning Authority (NDA) would terminate its contract with Cavendish Fluor Partnership (CFP) for the management and decommissioning of the 12 reactor sites. The contract was allocated to CFP subsidiary Magnox in a 6.1 billion-pound ($8.1 billion) tender launched in 2012.
"It has become clear...that there is a significant mismatch between the work that was specified in the contract as tendered in 2012 and awarded in 2014, and the work that actually needs to be done," Clark said.
In its report, the FT said the most likely outcome is the NDA creates a new subsidiary to take control of the Magnox clean-up program, citing industry sources with knowledge of the matter.
On October 10, the UK National Audit Office (NAO) said there had been "fundamental failures" in the NDA's procurement process for the Magnox contract.
The flawed procurement process raised "serious questions about [NDA's] understanding of procurement regulations; its ability to manage large, complex procurements; and why the errors detected by the High Court judgement were not identified earlier," the NAO said.
A separate enquiry into the Magnox contract is being led by Steve Holliday, former CEO of National Grid. The enquiry team was due to publish an interim report this month.
Areva-EWN consortium wins German decommissioning contract
German utility ENBW has awarded an Areva-EWN consortium the contract to dismantle and package reactor pressure vessel internals for the future 1.5 GW Phillipsburg (KKP2) and 1.4 GW Neckarwestheim (GKN2) decommissioning projects, Areva said in a statement October 16.
The KKP2 and GKN2 pressurized water reactors (PWRs) are scheduled to be shut down in 2019 and 2022 respectively and dismantling is to start immediately.
AREVA Decommissioning and Services GmbH and EWN will use new technologies such as remote controlled underwater equipment to dismantle the reactor internals, Areva said in its statement.
The decommissioning partners will also use a sampling and characterization approach to optimize segmentation and packaging operations, it said.
European operators should procure reactor dismantling suppliers several years in advance and start activities immediately after shutdown to minimize costs during the licensed decommissioning phase, Jorg Klasen, Director of Decommissioning at EnBW, said at the Nuclear Decommissioning Conference Europe on May 24.
Europe is set to see decommissioning activity rise sharply in the coming years as ageing fleets and energy policy shifts combine with stubbornly-low wholesale power prices.
By 2020, some 150 European reactors will have reached a 40-year lifespan. Energy policies favoring renewable energy and national nuclear phase-out initiatives have put pressure on wholesale prices and accelerated reactor closure plans.
Forecast European reactor shutdowns (indicative)
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Source: International Atomic Energy Agency (IAEA).
U.S. Energy Secretary fast-tracks support for nuclear, coal plants
U.S. Energy Secretary Rick Perry has directed the Federal Energy Regulatory Commission (FERC) to issue a final rule requiring market operators to develop and implement market rules to allow the "full recovery of costs" of plants which provide grid reliability services and have a 90-day fuel supply on site to mitigate events such as extreme weather, the Department of Energy (DOE) said September 29.
"This remarkable action by Secretary Perry will help ensure that America’s baseload nuclear fleet will remain a strategic asset that contributes to energy security, reliability, economic growth and environmental protection, while advancing American influence abroad," Maria Korsnick, President and Chief Executive Officer of the Nuclear Energy Institute (NEI), said in a statement.
The DOE called on the FERC to take final action on the proposed rule within 60 days or alternatively implement the proposal as an interim final rule, effective immediately, with provision for later modifications after collecting public comments.
"The secretary further directs that any final rule adopting this proposal take effect within 30 days of publication of such final rule in the Federal Register," the DOE’s proposal said.
The DOE argued the FERC "should take action before the winter heating season begins so as to prevent the potential failure of the grid from the loss of fuel-secure generation-- as almost happened during the 2014 Polar Vortex."
In a response statement October 2, a group of 11 oil, gas, wind and solar industry associations filed a joint motion to the FERC opposing the DOE's request for an interim final rule. The groups said the comment period "should be at least 90 days given potential ramifications for consumers and billions of dollars of electric sector investments."
Wider support measures
The Energy Secretary's directive to the FERC came after a DOE report recommended a range of initiatives to support conventional power generation and improve the security of the grid in the context of low gas prices and rising wind and solar capacity.
"We must utilize the most effective combination of energy sources with an “all of the above” approach to achieve long-term, reliable American energy security," U.S. Energy Secretary Rick Perry said in an accompanying statement.
US power prices: 2016 vs 2015
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Source: DOE, FERC.
In its report, the DOE recommended the reduction of licensing and permitting costs for nuclear, coal, hydro and advanced-generation plants, and the removal of regulatory burdens for plant siting and operations.
Specifically, the report recommends the Nuclear Regulatory Commission (NRC) removes regulation which unnecessarily raises nuclear plant operating costs and recommends NRC reviews nuclear safety rules under a "risk-based approach."
In parallel, the Environmental Protection Agency (EPA) should allow coal-fired power plants to improve efficiency and reliability "without triggering new regulatory approvals and associated costs," the report said.
The report also calls for an acceleration in the implementation of Essential Reliability Services (ERS) mechanisms to create "fuel-neutral markets and/or regulatory mechanisms that compensate grid participants for services that are necessary to support reliable grid operations."
The FERC and transmission service operators should also move forward with efforts to reform energy price formation in wholesale electricity markets, it said.
Reforms could take the form of proposals laid out by the PJM market operator and should look to mitigate negative price formation "to the broadest extent possible," the report said.
The DOE also recommended new research into "under-recognized contributions from baseload power plants," by using fuel-neutral metrics to compare the contribution to the grid of different generation types.
In addition, new research is required into future price trends in the context of limited load growth, it said.
"With significant amounts of near-zero marginal cost generation available, security-constrained economic dispatch of [Bulk Power System (BPS)] based on marginal costs may not sufficiently compensate resources for all fixed and variable costs," the report said.
US provides further $3.7 billion to support Vogtle 3 and 4 build
The U.S. Department of Energy (DOE) has agreed to provide an additional $3.7 billion in loan guarantees for the construction of the Vogtle 3 and 4 AP1000 reactors in Georgia, the DOE announced September 29.
The new loan guarantees would bring the total loan guarantees for the Vogtle expansion project to $12 billion. The two 1.1 GW reactors are expected to be completed by 2019-2020 and Georgia Power, a subsidiary of Southern Company, will own 45.7% of plant capacity. The remaining capacity will be shared between Oglethorpe Power, the Municipal Electric Authority of Georgia (MEAG) and Dalton Utilities.
If approved, the new loan guarantees would be the first issued under the DOE's $12.5 billion Advanced Nuclear Energy Projects Solicitation issued in December 2014. The new loan guarantees are subject to negotiation of definitive agreements, regulatory approvals and due diligence by the DOE.
The Vogtle 3 and 4 plant will be the first new nuclear power plant in the United States in decades.
The plant is being delivered by Westinghouse but has been subject to construction delays. Westinghouse filed for bankruptcy in March.
In July, Georgia Power sought additional aid from the federal government to complete the plant. Georgia Power's latest estimates showed capital costs could increase from the $5.7 billion estimate previously approved by the Georgia Public Service Commission, to between $6.7 billion and $7.4 billion.
“I believe the future of nuclear energy in the United States is bright and look forward to expanding American leadership in innovative nuclear technologies,” Rick Perry, Energy Secretary, said in a statement.
“Advanced nuclear energy projects like Vogtle are the kind of important energy infrastructure projects that support a reliable and resilient grid, promote economic growth, and strengthen our energy and national security," Perry said.
In July, SCANA's South Carolina Electric & Gas Company halted construction of the VC Summer 2 and 3 AP1000 plant project in South Carolina. Like the Vogtle 3 and 4 project, the VC Summer 2 and 3 plant was being delivered by Westinghouse and construction had been subject to delays.
Entergy cancels early closure of Michigan plant
Entergy has decided to operate its 811 MW Palisades nuclear power plant in Michigan until the spring of 2022 under the current Power Purchase Agreement (PPA) with Consumers Energy, the operator said in a statement September 28.
In December 2016, Entergy said it would close the Palisades plant Michigan in October 2018 due to uneconomic market conditions, cancelling a PPA with Consumers Energy in place since 2007.
However, on September 22 the Michigan Public Service Commission issued an order which granted Consumers Energy recovery of only $136.6 million of the $172 million it requested for the buyout of the PPA in accordance with the 2018 closure.
"Today’s announcement reverses Entergy’s December 2016 decision to close Palisades on October 1, 2018, but Entergy remains committed to its strategy of exiting the merchant nuclear power business," Entergy said in its latest statement.
This decision will increase free cash flow by between $100 and $150 million compared to the PPA amendment with Consumers Energy, the company said.
The Palisades plant has been online since 1971 and employs around 600 staff.
"We greatly appreciate the continued patience of our employees and the local community in Southwest Michigan throughout this regulatory process, and we will continue to focus on the plant’s safe and reliable operations,” Entergy said.
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