Platts - Friday, February 06, 2009 http://www.platts.com ------------ US nuclear units' 2008 generation was second-highest ever Washington (Platts)--5Feb2009 US nuclear units generated 806.6 million net megawatt-hours in 2008, the second highest level ever, according to data collected by Platts. The nation's 104 operating power reactors generated a record 807.5 million megawatt-hours in 2007. The average net capacity factor for US plants was 91.54%, down from 92.47% in 2007. Eighteen units had capacity factors of 100% or higher in 2008, down from 21 units in 2007. The median capacity factor for all US units in 2008 was 92.02%, down from the 2007 median of 93.66%. ------------ Germany to expand energy research, technological development London (Platts)--5Feb2009 The German economy ministry released a strategic paper Thursday that outlines plans for radically changing Germany's energy supply system in order to make the country one of the world's most energy efficient and climate-friendly major economies while decreasing dependence on energy imports. According to the strategic paper, this goal can only be achieved by "significant decreases in energy consumption and carbon emissions, massive increases in energy efficiency and a broad expansion" of the use of renewable energy. The plan focuses on strong support for renewable energy development, reducing energy consumption and increasing efficiency, but it also includes the continued use of nuclear and fossil-fuel power generation as bridge technology. These changes, the paper said, would also require "significant technological improvements and this requires much more investment into research and development of technology in the energy, transport and storage sectors." As there was a "limited time frame" to reform Germany's "entire energy system," the paper said Germany also needed to "optimize fossil energy resources and use nuclear power as a bridge technology" while constantly increasing the use of renewable energy. The paper said the limited time frame of the next decades also opened up opportunities to improve Germany's energy sector, "as significant parts of the power plant park and grids have to be renewed in the coming decades." According to the paper, it is the responsibility of Germany's political leadership to create reliable regulatory and legal frameworks to support the needed changes. The paper supports the development of new coal and gas fired power stations as ways to reduce Germany's carbon emissions. "Today's coal plants have efficiency rates of 35% to 40%, while the newest coal plants achieve efficiencies of 51% and gas plants can already achieve 60%." Despite the high costs in developing modern fossil power plants, the paper said that long-term efficiency improvements would outweigh investment costs and that carbon trading made the use of inefficient power plants less profitable in the long-term CCS AND RENEWABLES CONCERNS But the paper said that there remained uncertainties concerning carbon capture and storage (CCS) technologies. "Capacity and safety concerns of CO2 storage sites and the significant reduction of efficiency have to be addressed," including a political and legal framework for CCS technology, the paper said. There are also, according to the paper, "great challenges" in integrating renewable technologies into the grid and dealing with the volatile availability of renewable energy sources such as wind or solar. On a global scale, the paper recommended optimizing renewable sources regionally. "Coastal and mountainous regions could supply large amounts of wind energy, moderate climate zones could be used to produce biomass and desert zones can be used for large-scale photovoltaic installations." The paper said that such an extensive use of renewables would require significant improvements in energy transport and storage technologies--but it also said developments in the past few years had shown that Germany's "high knowledge makes significant technological progress [in this sector] possible." INTERNATIONAL APPROACH NEEDED; SUPPORT FOR NABUCCO The strategic paper called for a political framework that would support energy technologies that were not yet competitive, create economic incentives to expand the power grids despite falling consumption, increase technological research and development and public acceptance for the needs for change in Germany's energy policy, including the use of modern conventional power plants. Finally, the paper said that Germany needed an international approach to secure its efficient energy structure by increased foreign energy policy through the European Union, including the use of LNG and a diversification of its natural gas supplies through the planned Nord Stream and Nabucco pipelines. Nord Stream is to transport Russian natural gas through the Baltic Sea into Germany and Europe and Nabucco would bring Central Asian gas through Turkey and Austria into Western Europe. ------------ GDF Suez, Iberdrola to bid on UK NDA land for new reactors Barcelona (Platts)--4Feb2009 GDF Suez and Iberdrola have joined forces to bid on UK Nuclear Decommissioning Authority land on which to build new nuclear reactors, the companies said February 4. The two companies, along with Scottish & Southern Energy, will bid on UK NDA land at Oldbury, Wylfa, and Bradwell. Iberdrola spokesman Keith Grant said the company couldn't comment on which sites it was targeting or which reactor design it might use. Iberdrola, which owns Scottish Power, had previously announced it was working with Scottish & Southern Energy on the NDA bid. The current structure, according to Grant, is that GDF Suez and Iberdrola will each take 40% of the bidding company and Scottish & Southern Energy will take 20%. Grant did not rule out other potential future partners. He said the partners had already submitted their indicative bid to the NDA and will participate in the electronic auction of the sites planned for the end of March. Other known bidders include EDF Energy; a consortium of RWE npower and E.On UK, and Vattenfall. A land development company, Ainscough-Johnston, has also confirmed it will be bidding for the sites. ------------ Entergy timeline for spinning off merchant nuke plants uncertain Washington (Platts)--4Feb2009 Entergy still plans to form a separate company for its merchant nuclear generating plants, but the timeline for spinning off those assets is now undefined because of the distressed credit markets. Company executives said Tuesday that they still intend to "maximize the value" of the non-utility nuclear business. But Entergy has not moved as quickly as it had anticipated when it announced its plans in fall 2007. It said it was in a state of "rolling readiness" to complete the transaction. "This strategy enables Entergy to execute the spin-off following receipt of regulatory approvals and once the timing is right to access the credit markets," the company said in the Tuesday financial filing with the US Securities and Exchange Commission. Entergy said it is taking longer than originally anticipated to receive approvals from state regulators. The Federal Energy Regulatory Commission approved the plan in June 2008, and NRC completed its review the following month. The NRC's approval expires July 28, but Entergy said it could apply for an extension. It is still awaiting decisions from the Vermont Public Service Board and New York Public Service Commission. Enexus Energy, which will be the new publicly traded company that owns 5,000 MW of merchant generating capacity, secured in late December a credit agreement for $1.175 billion. The credit agreement will provide Enexus with the cash once it is ready to operate. Enexus says it needs to obtain about $4.5 billion in debt financing to complete the transaction. "We are not a bigger-is-better company," Entergy Chairman and CEO Wayne Leonard told financial analysts in a teleconference to discuss the company's fourth-quarter 2008 earnings. The company will, however, consider all "reasonable alternatives" if the separation of the business units falls through, he said. In other business plans, the company says its suspension of the NRC reviews of its two applications for combined construction permit-operating licenses has not changed its position on preserving the option to develop new nuclear power plants. Leonard said negotiations fell apart with GE-Hitachi to build reactors at the Grand Gulf and River Bend sites. The company is taking time now to consider "alternative technologies and other vendors," he said. --Jenny Weil, jenny_weil@platts.com ------------ France's GDF Suez, Spain's Iberdrola work on joint UK nuclear bid London (Platts)--4Feb2009 France's GDF Suez is in discussions with Spanish utility Iberdrola to form a joint bid to buy land suitable for new nuclear plants from the UK government, a GDF Suez spokesman said Wednesday. In March, the UK's Nuclear Decommissioning Authority is to sell land sites for new build, through an electronic auction, as the UK advances its plan for a fleet of new nuclear plants. GDF Suez had refused Tuesday to confirm press reports that it planned to bid for the sites jointly with Germany's RWE, Iberdrola--which owns UK energy company ScottishPower--and Sweden's Vattenfall. According to a report on the construction news website Contract Journal, GDF Suez is "tipped" to make a bid for UK energy suppliers Centrica or Scottish and Southern Energy as part of a UK nuclear expansion plan. GDF spokesman Antoine Lenoir said Wednesday the company was in direct discussions with Iberdrola over a joint bid for the land. Lenoir would neither confirm nor deny if GDF Suez was considering bidding with other companies, but maintained that concrete discussions were taking place with Iberdrola. He would not say whether GDF Suez was to announce this Wednesday, as stated by La Tribune newspaper. Last week, the French government said EDF would build a second EPR nuclear power plant at the Penly site in France, and that GDF Suez would participate in the project. GDF Suez said oil and gas major Total would also be involved. Lenoir said GDF Suez's nuclear plans in France were moving in parallel to its UK expansion plans, and the alliances are different: "We have discussed with Total about the project in France, so we will all work together with EDF for the French project, but that is another subject--in the UK, effectively, our partner is Iberdrola," he said. GDF Suez was competing with EDF to build an EPR plant in France. EDF, 85% owned by the French government, will lead the new plant project at Penly, and take a majority stake. It is not yet clear what involvement GDF Suez, or Total, will have in the project. GDF Suez, which operates nuclear plants in Belgium through its Electrabel subsidiary, is looking to expand its fleet, and has named the UK as a viable growth area. It will face stiff competition, as EDF's recent takeover of the UK nuclear generator British Energy sent clear signals that it plans a large fleet of new plants and gave it access to prime nuclear build sites. Centrica wants to be involved in new plants and European heavyweights RWE, E.ON, Vattenfall and Iberdrola, are all looking to enter the UK's nuclear sector. ------------ German day-ahead power bearish on lower demand London (Platts)--4Feb2009 German day-ahead OTC power prices were bearish Wednesday as consumption Thursday was expected to be lower and a drop in power plant generation was balanced by a slight rise in wind power production. Day-ahead baseload OTC last traded at Eur55/MWh ($70.74/MWh) before 1200 GMT, while peak last traded at Eur69/MWh, putting both contracts Eur8/MWh lower than the previous day. Power bourse EEX closed the same contracts at Eur64.03/MWh in base and Eur74.99/MWh in peak. "The expected 1 GW drop in power plant generation tomorrow was balanced out by a rise from zero wind production today to an expected average of 1.5 GW Thursday," one trader said. Sources said the day-on-day drop in prices was a result of lower overall power demand in Germany expected Thursday. The German weather service DWD said it expected temperatures Thursday to reach 4 to 7 degrees Celsius during the day and drop to minus 3 to plus 3 degrees at night. Wind levels were forecast to be weak to moderate. Nuclear and fossil power generation availability, according to EEX, was expected to drop from 68.20 GW Wednesday to 66.91 MW Thursday. Further out on the curve, Platts Power Index (PPI) for the German forward market dropped in value despite a rise of CIF ARA 2010 coal from Tuesday's $82.65/mt close to $83.75/mt midday Wednesday. The index's core contract, Cal 2010 base, dropped 20 euro cents to Eur49.55/MWh, pulling down the PPI by 19 euro cents to a midday value of Eur48.20/MWh, a 3.05 point loss to 771.15. 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. ------------ US nuclear industry calls for loan guarantee program shake-up Washington (Platts)--4Feb2009 A nuclear industry official said Tuesday that the US Department of Energy has done such a poor job of running a program to provide federal loan guarantees to clean-energy projects that it may be time to move the program to another agency that is better equipped to handle the job. Derrick Freeman, senior director for government affairs at the Nuclear Energy Institute, said in an interview that DOE is taking far too long to issue the billions of dollars in federal loan guarantees that Congress authorized in major energy bills in 2005 and 2007. "DOE's inability to move the program, to get the program going full steam ahead is of great concern for a lot of folks," Freeman said. "Democrats and Republicans [alike] are saying, 'What the heck is going on at DOE?'" Freeman said DOE was not designed to deal with the types of issues associated with the loan-guarantee program, including assessing applicants' credit-worthiness and judging the economic viability of high-risk energy projects that commercial banks are often reluctant to finance. "There's questions about whether an agency that is not equipped and has never taken on such a large task is adequately able to hold the program," said Freeman, who added that the program "could be moved" to another federal agency. Congress created the loan-guarantee program in the Energy Policy Act of 2005 as a way of financing advanced energy projects--including wind farms, nuclear power plants and advanced coal plants--that eliminate or sequester carbon dioxide emissions that are blamed for global climate change. At present, DOE is authorized to issue a total of $42.5 billion in federal loan guarantees for a variety of energy projects. DOE has done three rounds of solicitations since fiscal 2007 for all of that money, but the department has yet to award a single loan guarantee. Dan Leistikow, DOE's public affairs director, acknowledged that the department has not moved as quickly as it would like on the loan-guarantee program. But new Energy Secretary Steven Chu is committed to speeding up the process, Leistikow said. "Fixing the program is a top priority for Secretary Chu so that we can get moving with investments that will build a new energy economy, put Americans back to work and address the climate crisis," Leistikow said. Several senior lawmakers have questioned DOE's handling of the loan-guarantee program in recent years, including Senator Jeff Bingaman of New Mexico, the Democratic chairman of the Senate Energy and Natural Resources Committee. At Chu's January confirmation hearing, Bingaman said "there's been a lot of frustration here in our committee and more generally, I think, about the length of time it's taken to implement some of what we have previously enacted" regarding the loan-guarantee program. "We still have no loan guarantees that have been made" under the program," Bingaman said. "I guess my question to you is whether you are confident that the department will be able to implement all of the new responsibilities that are contemplated in this economic recovery bill for the department, and do so in a rapid and responsible way." Chu said he shared Bingaman's concern, and that he would work to improve the loan-guarantee program. NEI's Freeman said he backs a bill that Bingaman introduced in 2008 that would create an independent, quasi-government corporation to issue loan guarantees for advanced nuclear projects. Bingaman's spokesman, Bill Wicker, said Tuesday that the energy committee will hold a hearing soon to examine the delays with DOE's loan-guarantee program. Freeman said he hoped the committee would re-examine Bingaman's bill in the forthcoming hearing. Samuel Bodman, who served as energy secretary under former President Bush, acknowledged at the end of his term in office that he struggled to hire the type of financial experts needed to run the loan-guarantee program. But Bodman said DOE ultimately put a good team in place. DOE's loan-guarantee program could receive tens of billions of additional dollars under the massive economic recovery package that is winding its way through Congress. Some Washington insiders have expressed concerns about DOE's ability to handle the infusion of federal funds. --Dipka Bhambhani, dipka_bhambhani@platts.com ------------ Parsons wins contract for expansion of LES enrichment plant Washington (Platts)--3Feb2009 Parsons has been awarded a two-year contract by LES to "provide engineering, construction management, and construction services" for the expansion phase of the National Enrichment Facility, Parsons announced February 3. The value of the contract was not disclosed. Parsons, a California-based engineering and construction firm, said it was awarded the contract "based on its approach, engineering excellence, and ability to partner and develop the project in a fast-track manner while meeting [NRC] licensing requirements." LES announced in November that it plans to expand the annual capacity of its centrifuge uranium enrichment facility under construction in Eunice, New Mexico from 3 million SWU to 5.9 million SWU. That will push the plant's predicted completion date to the end of 2014, resulting in a total construction cost of more than $3 billion, LES said last year. When completed, the facility will be able to provide 50% of all enriched fuel for the 104 operating power reactors in the US, Parsons said. ------------ Luminant, MHI form joint venture for work on two APWRs in Texas Washington (Platts)--2Feb2009 Luminant and Mitsubishi Heavy Industries, or MHI, have formed a joint venture, the companies said in a February 2 statement. The two companies are working together on developing two MHI-designed US-APWRs at the Comanche Peak site in Texas. In the statement, Mike Blevins, Luminant's executive vice president and chief nuclear officer, said the joint venture "formalizes and enhances our existing work with MHI." ------------ EDF, GDF Suez welcome authorization for new EPR Paris (Platts)--30Jan2009 Electricite de France and GDF Suez welcomed the announcement of a second French EPR, to be built in partnership at the Penly nuclear power plant site on the Channel. In a January 30 statement, Pierre Gadonneix, chairman/CEO of EDF called the decision by French President Nicolas Sarkozy to authorize construction of a new EPR "excellent news for the whole nuclear industry and for jobs in France." Gerard Mestrallet, chairman/CEO of GDF Suez, said in a statement that the new reactor was "very good news for France's energy security." He said his group, parent of Belgian nuclear operator Electrabel, was "proud" to be a partner with EDF in the future venture and to be recognized as France's "second major player in nuclear, both at home and abroad." GDF Suez has long sought to be allowed to conduct its own EPR construction project in France. But the government has opted to let EDF lead the second EPR project, in part to appease labor unions that oppose nuclear power plants being operated by a private company. The French government owns 35% of GDF Suez. Sarkozy's office said in announcing the decision that that "the state acknowledges the will of GDF Suez to assume project ownership of and to operate [France's] following EPR," after Penly-3. But that unit is neither authorized nor sited at present. ------------