Platts - Tuesday, December 13, 2005 http://www.platts.com ------------ WNA: Nuclear is increasingly best choice for new baseload Washington (Platts)--13Dec2005 Although it doesn't break new ground, a new report issued Dec. 1 by the World Nuclear Association (WNA) accentuates what it says is a growing recognition of nuclear power's economic competitiveness to meet future demand for electricity. The report, titled "The New Economics of Nuclear Power," encapsulates the findings of several previous studies, including the International Energy Agency (IEA) and the OECD Nuclear Energy Agency's joint 2005 study, the University of Chicago's 2004 study, the U.K.'s Royal Academy of Engineering 2004 study, and the Massachusetts Institute of Technology's 2003 analysis. The WNA report concluded that nuclear power is now cheaper to construct than fossil-fired and other generating sources for new baseload in most countries. The report says that while government subsidies are not necessary to make nuclear power economic over the long term, they may be "extremely well justified" in stimulating new investment. What is more important, the WNA report asserts, is for governments to remain focused on efficiently carrying out their oversight and licensing responsibilities. John Ritch, WNA director general, told reporters at a Dec. 1 luncheon briefing in Washington, D.C. that nuclear power has been an "under-appreciated asset" in the past. But now, due to a combination of various factors, nuclear power has become the "leading, economically competitive technology for clean energy," he said. The report attributes the positive economics to reductions in construction, financing, and operating costs, as well as waste management and decommissioning expenses. Nuclear plant construction costs are expected to be lower than in the past because of the standardization of reactor designs and construction and shorter construction periods, it said. Also, financing techniques, increased capacity factors, and longer plant lifetimes improve the case for nuclear, according to the WNA. The mission of WNA, created in 2001, is to promote nuclear power as "a sustainable and environmentally valuable energy source." The report noted that in the past, nuclear plants have been more expensive to build but had lower operating costs than other baseload power generation options. "The key development in the 'new economics' of nuclear power is that, both (construction and operating) costs considered, nuclear power has now become less expensive than fossil and any other form of electricity generation," the report said. The report says the industry believes the overnight capital costs for new plants will fall somewhere in the range of $1,000 to $1,500 per kilowatt, which includes the design, engineering, and licensing costs. The report did not look at the rise in natural gas and coal prices over the past couple of years but noted the recent increase in those fuel prices could further give nuclear power an economic edge, the WNA said. (Other studies over the past couple of years have put the overnight costs, which exclude interest and financing charges, up to around $2,000/KW. Applying discount rates of between 5% and 10%, however, put the capital costs in a more competitive range of around $1,400- to $1,800/KW, according to these reports.) Ritch said he believes the "battle for nuclear is won" and that the "question is the pace" of new construction, not whether there will be any groundbreakings. The report says there could be an expansion of nuclear capacity from about 367 gigawatts (GW) today to between 524 GW and 740 GW by 2030. That would mean bringing on line somewhere between 200 and 400 new reactors worldwide, the report said. It says some of the new reactors would be needed to replace retiring reactors, but most would be new capacity. There are 440 operating reactors today, Ritch said. There would have to be about 10,000 nuclear power plants in operation by the end of the century "to stabilize the biosphere," Ritch asserted. The report focuses on construction of nuclear plants only, not other types of generation. It notes that nuclear's cost competitiveness will further improve when fossil-fired facilities are charged carbon taxes or emissions trading comes into play. "This is particularly so where the comparison is being made with coal-fired plants (because they are so carbon-intensive) but it also applies, to a lesser extent, to gas-fired plants," the report said. The new reactors would be used to produce hydrogen and for desalination, in addition to generating electricity, he said. Of the 10,000 reactors, about 1,000 would be needed in the U.S., he said. Responding to reporters who questioned whether building such large numbers of new reactors was feasible, Ritch said he believed it would be "politically harder to go from 500 to 1,000" reactors than to increase the number of reactors in the U.S. from 103 existing today to 500 units. The report did not address the economic feasibility of such an ambitious expansion of nuclear power. The 32-page report is at http://www.world-nuclear.org/economics.pdf. For more information, take a trial to Platts Nucleonics Week at http://nucweek.platts.com. ------------ Sweden to make decision on nuclear power tax hike Dec 16 London (Platts)--12Dec2005 Sweden's Social Democrat-led government is scheduled to make a decision Dec 16 on a proposed hike in nuclear power tax for 2006, a spokesman for energy industry group Svensk Energi said Monday. The new Swedish budget, which proposes an 85% increase in nuclear tax, will lift state revenues from nuclear tax next year by SKr1.39-bil ($170-mil) to around SKr3-bil in total, based on current installed capacity, according to recent government estimates. The Swedish government was due to approve the proposal early October. The profit tax charged to hydro power producers will also increase sharply, should the proposal go through. The property tax on hydro companies will increase from SKr750-mil this year to SKr2.75-bil in 2006. These will slice into windfall profits made by carbon-free power producers since the introduction of carbon emissions trading. Meanwhile, carbon tax on heat production will be reduced to zero from January 2006. For more information, take a trial to Platts Nucleonics Week at http://nucweek.platts.com. ------------ EIA expects new plants, increased capacity in U.S. nuclear future Washington (Platts)--12Dec2005 U.S. nuclear generating capacity is expected to hit 109 gigawatts (GW) by 2030, up from 100 GWs in 2004, DOE's Energy Information Administration (EIA) reported today. EIA attributed 6 GWs of the additional capacity to newly built power reactors, the construction of which it said would be stimulated by the Energy Policy Act of 2005, and the remaining 3 GWs of new power to uprates at existing nuclear plants. New reactors expected to be added to the U.S. grid in 2014 and beyond will be the first new power reactors ordered in the country in more than 30 years, EIA said. This is the first time that EIA has projected in its annual outlook that there will be construction of new U.S. nuclear plants; last year, the industry criticized EIA for projecting no new U.S. construction through 2025. The report is at http://www.eia.doe.gov. ------------ Spot uranium price rises Washington (Platts)--9Dec2005 Ux Consulting raised its spot uranium price this week to $35.25 a pound U3O8, up 75 cents from the week before. Ux Consulting said that sellers were continuing to raise prices and were finding willing buyers. Price expectations, the consulting company said in its weekly report, are playing a key role in the market, "so much so that they have the potential of being self-fulfilling prophesies." Other analysts, however, are noting the emergence of "desperate buyers," those who have left some requirements unfilled with the expectation--mistaken as it has turned out--that prices would begin to fall. This demand, these analysts said, should continue to push prices higher. ------------ Ontario regulator report pushes gas, nuclear, wind energy mix Philadelphia (Platts)--9Dec2005 Ontario's electricity-generation portfolio should include new and refurbished nuclear plants and increasing amounts of gas-fired, hydroelectric and wind capacity over the next 20 years, the Ontario Power Authority said Friday morning in its long-awaited "Supply Mix Advice Report." The report, a key element in the development of the Ontario government's long-term plan for the electricity sector, said that by 2025 the share of capacity provided by hydro, wind and other renewable sources should rise to 37% from the current 26%. The share of capacity provided by gas-fired plants should rise to 27% from the current 16%, it said, while the share provided by nuclear plants should decrease slightly--to 35% from the current 37%--as older plants are retired and replaced by new ones. The report also warned that the government may need to slow its plan to shut down Ontario Power Generation's 6,500 MW of remainining coal-fired capacity by early 2009; coal plants in Ontario currently provide 21% of the capacity there. OPA said that while the government expects to have a sufficient amount of new gas-fired, renewable and other capacity on line in time to replace OPG's coal plants, any delay in the construction of that new capacity may force the government to delay the shut-down of one or more coal units. More specifically, the report calls for building and/or refurbishing more than 9,000 MW of nuclear capacity over the next 20 years, said Amir Shalaby, OPA's vice president of power system planning and leader of the team that spent the last six months preparing the report. The report also calls for adopting "a 'smart gas' strategy by using gas only in high-efficiency applications or applications where avoided costs are particularly high; these will include combined heat and power, cogeneration, peaking, relieving transmission constraints, and fuel cells or other distributed generation. Gas-fired plants should not be used for baseload generation, OPA said, "since this use results in higher exposure to natural gas price risks." Still further, the calls for Ontario to enter into agreements to purchase the output of up to 5,000 MW of wind capacity over the 20-year planning period, as well as up to 1,500 MW of hydro capacity and up to 500 MW of biomass-fired capaxcity. Conservation and renewables are expected to meet the entire growth in demand in Ontario over the next 20 years, said Shalaby. The Supply Mix Advice Report will be used to help OPA and the Ontario Energy Ministry develop their first integrated power system plan by the summer of 2006. The IPSP will be updated every three years thereafter. For more information, take a trial to Platts Electricity Alert at http://electricityalert.platts.com. ------------ German court lifts regulation on Philippsburg nuke Freiburg (Platts)--9Dec2005 The administrative court of the German state of Baden-Wurttemberg has lifted a regulation on operation of ENBW's nuclear power plant Philippsburg-2, initially enforced by the federal environment ministry. While the main issue--about whether the operator could manage the unit in case of emergency--has yet to be decided, the court lifted the regulation after it was imposed on Feb 28, 2005 by the federal environment ministry. The ministry, which is responsible for the operation of nuclear power units, still views the regulation as necessary to protect the German population, and has regretted the decision of the administrative court. "The decision changes the prerequisites for nuclear safety in Germany for the worse," said the ministry, adding it would look into whether a new regulation should be imposed and whether it should move the issue on to Germany's highest court. The federal environment ministry was in dispute earlier this year with the state of Baden- Wurttemberg and ENBW over who was the competent authority for safety management at Philipsburg 2. The ministry ordered ENBW to apply the so-called 'Biblis-rule' to its unit. The rule shifts liability from the nuclear watchdog to the operator, with the operator having to stop plant operation immediately if there are safety management doubts. ENBW has maintained its safety standards were high and have since been confirmed by an independent commission. For more news, request a free trial to Nucleonics Week at http://www.platts.com/Request%20More%20Information/ ------------ EDF share price above IPO level for first time Paris (Platts)--8Dec2005 Electricite de France's (EDF) share price closed above its initial public offering (IPO) level for the first time today, after the French utility announced plans to eliminate some 6,000 jobs over the next two years. The EDF stock gained 2.02% in heavy trading on the Paris exchange to close at 32.30 euros (U.S.$38.15). The government had set the price for its IPO three weeks ago at Eur 32, but the stock had slumped since then. A portfolio manager, Alain Crouzat, was quoted by Agence France Presse as saying that EDF's entry into the CAC 40 large-cap index on Dec. 19 was the main motivator for the purchases by institutional investors. Trade unions denounced the payroll attrition scheme, which foresees replacing only one in every three or four retiring employees. ------------ Constellation taps Vanderheyden to lead new nuclear plant program Washington (Platts)--8Dec2005 Constellation Energy Wednesday named George Vanderheyden, site vice president of the company's Calvert Cliffs nuclear plant in Maryland, to head its new program aimed at developing and building a new nuclear power plant. Baltimore-based Constellation said Vanderheyden will be responsible for leading the company's efforts to develop and deploy new nuclear facilities and will report to executive vice president of Constellation Energy, Michael Wallace, who also is president and CEO of Constellation Generation Group and serves as co-chief executive officer of UniStar Nuclear, the company's joint venture with AREVA Inc. Vanderheyden also will hold the position of president of UniStar Nuclear, reporting to Wallace and UniStar co-chief executive officer Thomas Christopher of AREVA. James Spina, currently site vice president of Constellation's Nine Mile Point Nuclear Station in Oswego, New York, will succeed Vanderheyden at the Calvert Cliffs facility, the company said. Succeeding Spina at the Nine Mile Point plant will be Timothy O'Connor, who currently serves as plant general manager at the facility. For more information, take a trial to Platts Nucleonics Week at http://nucweek.platts.com. ------------