and a new development model for British nuclear power
No other country in Europe is developing nuclear power with as much zeal as the UK. The goal is to abolish coal power by the mid 2020s. The ‘dash to gas’ is in the past, and future wind power development can only offer declining returns. Having explored and reached the limitations of gas and wind power, it is clear decarbonization can only be accomplished with nuclear power. Three consortia have developed plans for nuclear power plants on six different sites. Adhesion to construction schedules is the number one cause of serious cost overruns, so these projects will be considered successes or failures depending on the efficiency of the construction process.
Given the poor record of past British nuclear power development, this drive towards nuclear power is even more remarkable. The British nuclear industry had a particularly dismal record of poor performance with Magnoxes and AGRs. Using a poor development model during the 1960s until the 1980s, the UK built one uncompetitive gas-cooled plant after another. Each plant was built by a different consortium with a different design, and each used unique parts and required unique fuel elements. Construction delays were insufficient to cancel a project. The British tradition of ‘muddling through’ led to eventual completion, even if some plants were obsolete upon commencing operation. One plant took an astonishing twenty years to complete. The policy was framed as government support for British technology. Even as Whitehall pursued a ‘national champion’ policy, not enough investment was channeled into nuclear power to give this unique path, their nuclear sonderweg, a hope of success. Gas-cooled reactors were never able to build up a similar body of experience as did the water-cooled reactors. Operating loads were lower, maintenance costs higher, and construction times were consistently longer throughout their history.
At one point, France was pursuing the same gas-cooled reactor technology as the UK, but a decision was made to abandon it. The rationale was that French industry would be better served by aligning with global trends instead of bucking them. Adopting water-cooled reactors en masse facilitated the extensive nuclear roll-out pursued by France in the 1970s and 1980s. The structure for this expansion was a publicly funded development model with a single operator running every plant in the country. Rather than increase costs from a lack of competition, it facilitated skills transfer, uniformity and keeping costs down.
Eschewing the French dirigiste state-driven model, the new development model draws on private sector elements of the old model. New nuclear power plants in the UK will continue to be built via consortia, but this time they will use existing designs. Hinkley Point C will put its first reactor into operation in 2025, which will be the first in Britain since Sizewell B in 1995. This project will be a first for many things; it is the first British plant built with minority foreign participation (China General Nuclear (CGN) and China National Nuclear Corporation (CNNC) are both minority investors.) Hinkley Point C will be the first in the world to receive a public subsidy as renewable power at the rate of £92.50 per MWh. This anticipates construction time of up to 10 years and the guaranteed price is indexed to any future rises in electricity prices. In the case that the plant is closed early, the company will receive compensation. This mitigates the risk of any forced premature closure without compensation for any reason, political or otherwise. Supporting nuclear power with this style of feed-in tariff is a first, though it may have started a trend. Now the two American states of Arizona and Utah are offering similar public support. The effect of this contract is monumental if it heralds a new era of public support for nuclear power, similar to the support for solar and wind. This project is tremendously important for Areva and the Evolutionary Power Reactor (EPR), as future sales of the EPR will be heavily influenced by the construction time at Hinkley Point C. This will be a chance for Areva to wipe the slate clean and move past the numerous construction delays at Flamanville and Olkiluoto. A success at Hinkley Point C 1 & 2 will pave the way for another pair of EPRs at Sizewell C.
The second project will develop two sites with ABWRs: Wylfa Newydd on the Isle of Anglesey and Oldbury-on-Severn. Hitachi claims these are more likely to be completed on time than EPRs, due to the ABWR construction record in Japan. The company prefers to reference the successful construction of ABWRs in Japan, rather than the Lungmen project in Taiwan. The Taiwanese plant has been delayed repeatedly due to political interference, greatly inflating costs.
Finally, the third group seeks to develop the AP1000. Manchester-based NuGeneration Limited is formed from a partnership between Toshiba (Westinghouse) and GDF Suez. Nugen plans three AP1000 at Moorside, and secured 200 hectares for the project in 2009. If construction goes ahead, it will employ 6,000 people. By that point, these will be the 17th, 18th and 19th AP1000s in operation. Westinghouse will provide the reactors but GDF Suez will run the plant. The commitment to invest will be made in 2018 and the first unit will begin operation in 2024.
All of these projects are being driven by reactor vendors keen to promote their designs. These are being pursued in the UK in the hope of winning future contracts in other countries. After seeking more uniformity and serialization, the UK is still embarking on multiple directions with numerous designs, partners, and operators. Perhaps this will not increase costs as much as in the past, as all of these designs will be supported by identical copies outside of the UK.
China also prioritized uniformity and domestic development, yet they currently use the reactor designs of France, Canada, Russia, and the USA as well as their own. The development of Chinese nuclear power was delayed in the past by canceling the water-cooled reactor program twice. First, Mao canceled it to focus funding on the development of nuclear weapons, then it was canceled a second time by the Gang of Four during the Cultural Revolution (1966-76) to focus on developing a molten salt reactor. After an all-out effort to develop a molten salt reactor failed, China finally devoted time and resources to develop their first water-cooled reactor at Qinshan-1.
A clear policy choice remained on whether to prioritize indigenous development or assimilate foreign technology in order to develop indigenous technology later. Though it was decided to pursue indigenous technology and use as few reactor designs as possible, other considerations would subvert this policy. It was diplomatically advantageous to buy CANDU reactors to reduce isolation after Tiananmen Square sanctions. AP1000s were selected as China’s official Gen III reactor. Yet a decision to build two EPRs was also taken. After the deal with Areva, the president of CNNC, deputy president of CGN and the president of China Triumph Industrial Engineering Co were accused of taking bribes. These three groups selected the EPR in a closed process with no international tender competition. Russian VVER-1000s were also built, possibly due to the availability of soft loans.
Ostensibly, China has exported one plant to Pakistan, but this order did not establish them as a reactor exporter. Their lone export order to Pakistan failed to establish them as a competitor, Chashma was badly built by the time it was completed in 2000. Rather than showcase Chinese capabilies, it illustrated a lack of capacity. It was difficult for it to be a copy of Qinshan-1 as intended, when most of Qinshan-I was unable to be supported by Chinese suppliers. The pressure vessel came from Mitsubishi, coolant pumps from West Germany, turbines from Sweden and the control system from Areva. Chashma was built using Chinese parts suppliers who had never supplied a nuclear power plant before. The project was delayed, and there were errors in construction. When internal sensors were damaged, they rattled around inside the core, unknown to the plant operators. Westinghouse assessed the plant and said the designers did not understand the effect of coolant flow on the core and components.
That was twenty years ago, and since then CGN and CNNC have completed many reactors that perform very well. The Chinese adaptation of Westinghouse designs in the CPR-1000 are completed on time, and have excellent operating load. Their domestic performance is an effective advertisement for export orders. This is the strongest bull market for nuclear power in Chinese history, as the latest FiveYear Plan (2016-2020) includes many new reactors. There are 42 planned reactors and 170 proposed reactors, in addition to the 22 under construction. Current policy is to not build any new wind turbines or coal mines, yet existing coal mines have the capacity to produce an additional 2 billion tonnes over the current annual production of 4 billion tonnes. This means falling coal prices will increase competition for nuclear power even in the absence of any new coal mines. On the other hand, construction costs will be assisted by falling steel prices. Massive overcapacity in steel, aluminum, glass, paper, and other heavy industries will push down prices as companies compete to avoid being driven out of business. Chinese workers used to strike for higher wages, now they strike over unpaid wages. Current plans to curtail production will cause 500,000 job losses in the steel sector and 1.3 million job losses in coal. The eventual job losses and company closures in the steel industry will likely be followed by similar contraction among other heavy industries. The collapse of the steel industry could start an avalanche, magnified in impact as numerous loans go bad. Since private debt has soared from 120% of GDP in 2008 to 240% of GDP in 2015, any companies that collapse or default on debt payments will have a domino effect throughout the economy. CGN and CNNC will perform well in these turbulent times, and will continue to find easy access to financing. They will be a calm port in the storm as they grow in a contracting economy.
In many ways, China is simply hoping to follow the path of South Korea. China’s entry into the international export market truly begins with an order from Argentina for the Hualong One reactor. Hwever, no Hualong One is in operation and only one is currently under construction which began in 2015. China sweetened the deal by offering financing for 85% of the $15b project. It seems reasonable to anticipate CGN and CNNC to continue to easily find financing for foreign construction projects.
The strongest competition for future export orders will come from Korea Hydro and Nuclear Power (KHNP), owned by the Seoul government via the holding company Korean Electric Power Co. Known as KEPCO, it should not be confused with Kansai Power Co. (also KEPCO), who also operate nuclear power plants. The first APR-1400 at Barakah is 90% complete and on track to be completed in May 2017. Barakah-2 is 60% complete. In addition, one APR-1400 is already operational at Shin-Kori-1, although its construction took seven years. It was delayed due to poor quality cabling associated with a falsification scandal. The on-time completion of Barakah-1 will be a persuasive advertisement for future new sales. KHNP is not only selling reactors, but also South Korean management capable of keeping projects on schedule. The value of this is appreciated by the UAE, who has contracted 50 KHNP employees to work at Barakah and asked for Korean assistance in setting up their training program at the Institute of Applied Technology in Abu Dhabi. Korean reactors continue to become cheaper. They are bucking the trend toward ever higher costs, as each reactor achieves a lower cost per MWh than its predecessor. Falling costs and a long history of completing plants on-time makes KHNP a strong competitor for future export orders, selling not only a reliable design but a reliable schedule.
The more things change, the more they stay the same. We are seeing new development models, yet they draw on many elements of the old. New British development will use international designs, but still will not establish real uniformity throughout the British nuclear industry. China and Korea are driving state-owned businesses to try to conquer new export markets. That being said, their reputation in sticking to the schedule in domestic construction by Chinese and Korean companies addresses the most important factor in cost control for nuclear power. This makes them powerful competitors, at a time when nuclear power is expanding to new markets.