Platts - Friday, January 23, 2009 http://www.platts.com ------------ UK to nominate nuclear sites to host new reactors: regulator Barcelona (Platts)--23Jan2009 The UK Nuclear Decommissioning Authority said Friday it will nominate sites it owns, but is selling, as potential locations for new nuclear reactors under the government's Strategic Siting Assessment process. The move will ensure the surplus land is included in the list of sites the government plans to review and, if approved, incorporated into a national nuclear policy statement, to be submitted for parliamentary approval in draft form later this year. Three of the sites--near existing reactors at Oldbury in Gloucestershire, Bradwell in Essex and Wylfa in Wales--are currently the subject of a bidding process in which at least seven companies or consortiums have submitted undisclosed "indicative bids." A formal electronic auction among the bidders is expected to be held in March. The list of companies bidding has not been disclosed but according to public announcements and industry sources the bidders include EDF Energy; a consortium of E.ON UK and RWE npower; a consortium of Iberdrola and Scottish & Southern Energy; Vattenfall; and GDF Suez. At least one bidder for one or more of the three sites did not involve plans for a new nuclear plant, according to an industry source. Crucially, the NDA said it would also nominate land near Sellafield in west Cumbria to the Strategic Siting Assessment program. Civic groups and regional development organizations in west Cumbria have been lobbying for new nuclear reactors on Sellafield land. Additionally, Areva, which is part of a consortium managing Sellafield for the NDA, has said it would like to build a new spent fuel reprocessing plant there to recycle used fuel for new use. "An announcement on the process and timing for the Sellafield land sale will be made in due course and in light of experience gained from the current auction of land for Wylfa, Oldbury and Bradwell," the NDA said Friday. --David Stellfox, david_stellfox@platts.com ------------ Texas muni to invest $60 mil more on new nuclear plant designs Boston (Platts)--22Jan2009 San Antonio, Texas, municipal utility CPS Energy on Thursday said its board has authorized it to invest another $60 million to plan and design a possible two-unit expansion at the South Texas nuclear station. CPS holds a 40% ownership interest in the existing two-unit, 2,500-MW station, and has been a partner with NRG Energy on a project that would add two 1,350-MW nuclear units. Muni spokesman Bob McCullough said that CPS already has spent $216 million on the expansion project, despite the fact that the city council has not committed to participate in its actual construction. The council will likely decide this fall whether to make that commitment, he said. CPS staff last year recommended that a final decision on joining the expansion be delayed until the fall of 2009 to give the utility time to assess the state of financial markets, the energy priorities of the Obama administration, federal incentives for energy development, and congressional action on carbon legislation. ------------ France mulls building two new EPR nuclear reactors: reports London (Platts)--22Jan2009 The French government is considering building two more "next-generation" EPR nuclear power plants, having said since last July that one would be built, French business daily Les Echos said Thursday. State-controlled energy giant EDF has the country's first EPR -- or European Pressurized Water Reactor -- currently under construction by France's Areva, a 1,650 MW plant at Flamanville, Normandy which is scheduled to come online in 2012. French President Nicolas Sarkozy said on July 3 that a new reactor would be built but did not say where or when construction would start. Nor did he say which operator would be behind the plant: EDF and GDF Suez, France's largest power and gas suppliers, have both said they want to lead the project. If GDF Suez were successful it would be the first nuclear power plant in France not operated by EDF. The possibility of building two more reactors, rather than one, is now being discussed by the government, as it looks to bring both EDF and GDF Suez on board for the next wave of new nuclear investment, the newspaper reported. Sarkozy held a nuclear policy meeting last Friday, where the idea of two power plants was discussed, the paper said. The President's office will not make a decision for the next three weeks, as it wants time to reflect on it, according to the report. The Journal du Dimanche said on Sunday that the government would decide on who would build the next EPR "in the coming days" and that EDF was favorite. EDF is 85% owned by the French government and has long since been France's dominant power supplier and nuclear power generator, operating 58 nuclear reactors in France. EDF would be favored over GDF Suez on the back of its sector expertise and established control procedures, according to the Journal du Dimanche. The move could also appease objections by the CGT union, a strong supporter of EDF. GDF Suez, which is 36% owned by the government, could build a third reactor at the Tricastin site in the Rhone Valley, where EDF currently operates four reactors, the Sunday paper said. According to Les Echos, the idea of a GDF Suez plant is now being chewed over by Sarkozy's office. Both EDF and GDF Suez told Platts this week that they were waiting for the government's decision, without giving more details. The offices of Sarkozy and Christine Lagarde, minister for industry and finance, were unavailable for comment Thursday. Antinuclear federation Sortir du Nucleaire Thursday sent out a communique saying the launch of a new EPR, not to mention two, would "violate official commitments" made -- by EDF and, by extension, the government -- in documents submitted to the national debate on the first EPR that was held in 2005. It cites a statement in those documents that the new EPR would provide "solid experience of construction and operation" of the unit to support a decision on series construction of EPRs to replace EDF's existing reactors when the time comes. In other words, Flamanville-3, scheduled for startup in 2012, should operate for two or three years before any further EPR project is launched in France. Sortir du Nucleaire said it would file suit against any construction license issued for a new EPR. ------------ Chu sworn in as energy secretary Washington (Platts)--22Jan2009 Steven Chu was sworn in as energy secretary January 21. Chu and six other nominees for high-ranking positions in President Barack Obama's administration were confirmed by the Senate in a voice vote January 20. Chu received a Nobel Prize in physics in 1997 and is a former director of DOE's Lawrence Berkeley National Laboratory. ------------ US NRC starts investigating generator problems at Brunswick plant Washington (Platts)--21Jan2009 Three US Nuclear Regulatory Commission inspectors began Tuesday an inspection into problems with two emergency diesel generators at Progress Energy's two-unit Brunswick station in North Carolina. The team is focusing on the utility's January 1 discovery of a failure of a component on one of the plant's four emergency diesel generators. The malfunction, which would have prevented the generator from performing its safety function if there was a loss of offsite power or a loss-of-coolant accident, was found during routine surveillance testing, Progress Energy had reported to NRC. Plant crew ran tests on the other three emergency diesel generators and found a similar problem on one other diesel. NRC said Wednesday that plant workers made repairs to the component on one diesel generator and replaced the component on the other. Both diesel generators were tested and "restored to operable" by January 2, NRC and Progress Energy said. NRC's special inspection team, which is expected to complete its work in early February, comprises two region-based inspectors and a resident inspector stationed at the site. NRC said the team will be developing a sequence of events, reviewing the company's actions following discovery of the problem, evaluating the adequacy of the company's prior post-maintenance testing and identifying any generic issues for Brunswick or other nuclear plants. NRC said a report will be issued within 45 days of the completion of the inspection. --Jenny Weil, jenny_weil@platts.com ------------ French energy major EDF mulls long-term US dollar bond issue London (Platts)--21Jan2009 French energy giant EDF is mulling a long-term US dollar bond issue to finance growth opportunities, the state-controlled company said Wednesday. Europe's large utilities are finding new ways to fund expansion projects, notably through bond issuances in euros. EDF, one of Europe's largest utilities and 85% owned by the French government, said Friday it had issued two long-term bond facilities of Eur2 billion ($2.58 billion) each, of six years and 12 years in maturity and with annual coupons of 5.125% and 6.25% respectively. France's dominant gas supplier GDF Suez has also issued long-term bonds in recent weeks. With European banks' willingness to lend money severely dented by the financial crisis, which seems to have worsened in the last week, as indicated by the share performance of the UK--and US--banking sectors, utilities with ambitious expansion plans, like EDF and GDF Suez in France, have looked to the bond market to raise finance. Since the market turmoil took off in September, EDF has launched a series of bond issuances, in euros, British pounds and Swiss francs and is yet to issue bonds denominated in the US market. As EDF pursues an ambitious global growth strategy in the nuclear sector, it has, in the last few months, taken over UK nuclear generator British Energy and is to take a 49.99% in US power company Constellation Energy, subject to regulatory approval. The stake in Constellation would give the French company a strong foothold in the US nuclear market. EDF's investment plan includes the building of four nuclear reactors in the UK, two in the US, two in China and one in France. This would require between Eur40 and Eur50 billion in total, including contributions from partners, and EDF expects its new financing requirements for these projects to be between Eur12 billion and Eur20 billion. The next nuclear plant to be completed by EDF is the 1,650 MW Flamanville-3 European pressurised reactor plant, due online in 2012. In December 2008, EDF announced that the construction costs of the plant would be around Eur4 billion, compared with initial estimates of Eur3.3 billion made in 2006. The company said higher raw material costs and the impact of regulatory changes forced up the construction costs of the plant. A sustained economic downturn may see material prices fall back in the next few years, and this could again affect the cost of its new plants. ------------ Chu confirmed as energy secretary Washington (Platts)--22Jan2009 The US Senate confirmed Steven Chu as energy secretary in a voice vote January 20, nearly four hours after Barack Obama was sworn in as the country's 44th president. Chu, a Nobel Prize winner and former director of Lawrence Berkeley National Laboratory, was among seven nominees the Senate confirmed together. Chu sailed through his confirmation hearing January 13, during which he emphasized the importance of producing electricity without producing greenhouse gases. Chu told the Senate Energy and Natural Resources Committee that nuclear power accounts for roughly 70% of the emission-free electricity produced in the US. He said the nuclear waste issue should not deter the construction of new reactors. ------------ French nuclear regulator mulls 60-year licenses for EDF reactors Paris (Platts)--20Jan2009 France's Nuclear Safety Authority, ASN, is prepared to give conditional approval for 60-year nuclear power plant operating licenses if Electricite de France justifies that length of operation technically, senior ASN management indicated Tuesday. ASN chairman Andre-Claude Lacoste said the agency has asked EDF to submit a detailed safety case for long-term operation of the oldest French power reactors, two units of which are scheduled for relicensing this year after 30th-year outages. Olivier Gupta, ASN deputy general manager responsible for power reactors, said ASN could issue conditional judgment on 50- or 60-year operation provided EDF's dossier is solid. EDF senior managers last month expressed confidence that all of the utility's 900 MW-class pressurized water reactor units -- the oldest in its 58-unit fleet -- will be licensed for 40 years' operation, and pledged to "do everything" to stretch their lifetimes to 50 and then 60 years. However, Gupta told Platts on the sidelines of an ASN press event in Paris, "EDF hasn't told us anything about their plans yet, we've only seen statements they have made about longer-term operation." ASN is scheduled to rule this year on a further decade of operation for EDF's oldest reactors, from 30 years to 40 years of lifetime, based on the results of 30-year operation for two pilot units -- Tricastin-1 and Fessenheim-1 -- and EDF's technical assessment of the units' physical state going forward. Lacoste said that in the context of this year's license decisions "there's no reason we have to limit our vision to 40 years," if EDF provides a convincing technical basis for approving longer operation. In France -- as in many countries -- there is no specific license limit such as the 40 years typical for US reactors. French operators must instead demonstrate to safety authorities that each unit is safe to continue to operate. Gupta said ASN would continue to review and relicense nuclear units every 10 years. This is the first time French safety authorities have openly said they were willing to consider endorsement of more than 10 years' forward operation. A few years ago, Lacoste suggested the regulators might require mid-term reviews for older plants, shortening the licenses in practice to five forward years. ASN officials said the difference lies in the quality of EDF's technical case for operating its nuclear units to 40 years. At the press event, Lacoste noted that neighboring countries like Switzerland and Germany have power reactors that have exceeded 40 years' operation. At an investors' day meeting in London last month, EDF's CFO Daniel Camus said that extending each 900 MW PWR's lifetime to 60 years would create a net value for EDF of Eur1.2 billion/unit ($1.55 billion/unit) and generate a "pretty gigantic" cash flow. EDF has 34 units in the 900 MW class of PWRs, its oldest. It also has 20 1,300 MW class PWRs, some of which are approaching 20 years' lifetime this year, and four units of the newer 1,500 MW class. EDF's 18 oldest PWRs, all in the 900 MW class, are scheduled to be shut between 2015 and 2020. Camus said keeping them in operation would avoid "massive" investment in new generating capacity during that period, when EDF expects to need between Eur12 billion and Eur20 billion to finance its ambitious nuclear plant construction projects in China, France, the UK, and the US. --Ann MacLachlan, ann_maclachlan@platts.com ------------ German power prices fall across curve on bearish fundamentals London (Platts)--19Jan2009 German day-ahead OTC power prices opened the week's trading session at fairly low levels as temperatures across Germany, the Alpine regions and France rose to seasonal averages and generation remained healthy. German day-ahead baseload OTC was last heard at Eur61/MWh ($80.77/MWh) before 1200 GMT, peak at Eur75/MWh. German power bourse EEX published the same contracts at Eur58.83/MWh and Eur74.05/MWh respectively and French Powernext closed at Eur59.74/MWh in base and Eur71.11/MWh in peak. "Prices came off in Germany after Powernext was so low and as rising temperatures reduced demand and strong Alpine rains filled hydro levels," said a trader. Wind power output, according to sources, was expected to fall from Monday's 10,000 MW peak hour production to about 5,000 MW Tuesday. The German weather service DWD said it expected Tuesday's temperatures in Germany to reach plus 1 to plus 6 degrees Celsius during the day and drop to between minus 4 and plus 2 degrees at night. Wind levels were forecast to start off weak but the pick up to stormy levels during the day, with the strongest levels expected along the coasts but overall levels were expected to be lower than Monday. Nuclear and fossil power generation availability, according to EEX, was expected to be healthy, rising from Monday's 68.85 GW to about 69 GW Tuesday, a level forecast to be maintained until the end of the working week. Further out on the curve, Platts Power Index (PPI) for the German forward curve was in a bearish mood, coming close to falling below Eur50/MWh for the first time since being launched September 15, 2008. Reacting to the bearish prompt market and by weak carbon, coal and oil prices, the PPI fell by 1.91/MWh since Friday's close to Eur50.08/MWh midday Monday. In points, this was a drop of 30.45 to 801.20. The PPI is a weighted forward power index, based on German front-month, front-quarter and front-year base load wholesale prices to indicate curve movements in continental Europe's benchmark power market. Front-month is weighted singularly, front-quarter three-fold and front-year 12-fold. The front-year contract will roll over on the last trading day of November each year. ------------ South Korea's Wolsong-1 to begin lengthy outage in April Bonn (Platts)--16Jan2009 Wolsong-1 will be shut from April 2009 to December 2010 for replacement of all fuel-bearing coolant channels and their feeder tubes, an official with Korea Hydro & Nuclear Power Co. Ltd. said January 15. KHNP officials said in 2006 that the pressurized heavy water reactor in South Korea would be shut for nearly two years for the outage, beginning around 2009, but did not give a more specific timeframe. The 678-MW unit has been operating at a derated capacity of about 622 MW since 2004. According to Korean industry and safety sources, channel elongation at Wolsong-1 was found to be progressing faster than had been predicted, forcing KHNP to replace the tubes about three years prior to the end of the unit's licensed 30-year design lifetime in November 2012. Irradiation and thermal stresses cause stretching and sagging in the fuel-bearing channels in Candu reactors, and full-scale replacement has been performed at several PHWRs in Canada, Argentina and India to allow continued operations. ------------