Nuclear Energy RenaissanceOpportunities and Challenges

Richard Black

Office of Nuclear Energy

Associate Deputy Assistant Secretary for Nuclear Power Deployment

ASQC Sept. 08 (2)

Nuclear Energy Challenge: Securing Our Energy Future

♦ Today, 104 nuclear reactors generate 20 percent of America’s electricity.

♦ U.S. electricity demand may grow by 50 percent over the next 25 years.

♦ To maintain the 20 percent nuclear share requires building the equivalent of 45 to 50 one-thousand-megawatt nuclear reactors.

♦ Nuclear power is the only proven base load producer of electricity that does not emit greenhouse gases.

♦ Nuclear power is necessary to meet our needs for carbon-free, dependable and economic electric power.

North AnnaMineral, Virginia

BellefonteHollywood, Alabama

Grand GulfVicksburg, Mississippi

ASQC Sept. 08 (3)

Nuclear Energy … Why Support Expansion of Commercial Nuclear Power

♦ US Electricity Demand Increasing• 300 GWe of additional capacity needed by 2030• 50 GWe new nuclear capacity needed to

maintain current share

• Only zero-emitting baseload technology that can be expanded by a significant margin to provide energy security and diversity

Electricity Generation by Resource

-

1,000

2,000

3,000

4,000

5,000

6,000

7,000

1950 1960 1970 1980 1990 2000 2010 2020 2030

BkW

h

CoalNatural GasNuclearOilRenHydroProjected

♦ Power companies are unwilling to increase by a significant percentage their market capitalization to build new nuclear plants

♦ Problematic Risks:• Regulatory Uncertainty (Both NRC and State)• Litigation Risk • Economic Risk

» Long Construction Durations» High Capital Costs and Commodity Price Escalation

» Allocation of risk in EPC contract

ASQC Sept. 08 (4)

Status of U.S. Reactor Licensing Applications

ASQC Sept. 08 (5)

Nuclear Power 2010 … Working with Industry to Build New Nuclear Plants

♦ Authorized by Energy Policy Act of 2005 (EPAct)♦ Reduce technical, regulatory, and institutional barriers to new

deployments

♦ Three Early Site Permit Demonstration Projects• Address site suitability, environmental protection, and emergency planning

issues• Clinton, North Anna and Grand Gulf sites approved

♦ New Nuclear Plant Licensing Demonstration Projects

• Develop COL applications and obtain Nuclear Regulatory Commission (NRC) approval

» 2 COLAs supported by NP 2010 submitted to NRC in first quarter FY 2008» TVA (NuStart) COL application docketed by NRC January 18» 2 additional COLAs submitted to NRC based on NP 2010 project activities

Complete two light water reactor advanced designs (Westinghouse AP1000, GE ESBWR)

♦ Combined Construction and Operating License (COL) Guidance and Generic Issues Project

♦ Standby Support Insurance Incentive♦ Loan Guarantee ($18.5B) & Production Tax Credit Incentive Support

(1.8¢ kwh for 8 years -- but COL submitted by 12/31/08; Start Construction by 1/1/2014; Start Ops by 1/1/2021)

ASQC Sept. 08 (6)

Gen IV Nuclear Energy Systems Initiative

♦ Purpose; Lead a global partnership to perform the R&D needed to develop the next generation reactors;

• Safe

• Secure

• Sustainable

• Economical

♦ Gen IV Program; focuses on long-term R&D;

• Sodium-cooled Fast Reactor (SFR) in support of Global Nuclear Energy Program (GNEP)

• Very High Temperature Gas Reactor (VHTR) in support of Next Generation Nuclear Power Plant (NGNP)

♦ NGNP Program; Provides the basis for commercializing a new generation of advanced nuclear plants to supply competitive, emissions-free, high-temperature process heat, co-generate electricity and/or hydrogen.

ASQC Sept. 08 (7)

Global Nuclear Energy Partnership (GNEP)

♦ GNEP Purpose: A comprehensive strategy to support safe, secure civilian nuclear power expansion world wide;

• Work with other nations (23 Nations signed Statement of Principles) to develop and deploy advanced nuclear recycling and reactor technologies.

• Provide reliable, emission–free energy with less waste burden

• Enhance nuclear safeguards to monitor nuclear materials and facilities

♦ Advanced Fuel Cycle Initiative (AFCI): The domestic technology development and deployment component of GNEP, to develop and demonstrate advanced fuel cycle technologies.

• Execute R&D program to address outstanding technical uncertainties and programmatic risk areas of advanced fuel cycles

• Continue industry engagement to develop information needed for fuel recycling facilities and used fuel management capabilities

• Collaborate with industry and utilities to develop appropriate systems and economics models

ASQC Sept. 08 (8)

Diverse Carbon Resource → Nuclear Hybrid Energy Systems → Strategic Energy Parks = Resilient & Secure Energy

Nuclear Island-Present or future generation-Process heat and/or electricity

Renewable-Electric Integration-Electrolysis or co-electrolysis driver-Additional electricity to grid

Hydrogen Generation Plant-Upgrade of fossil and bio feedstocks-Catalytic feedstock for CTL

Liquid Fuels & Chemicals Plant-Coal and biomass to liquids-Process chemicals

Carbon Feedstock-Coal-Biomass

We can never be truly energy “independent,” but we must resolve to be more energy “resilient.” — Sen. Jay Rockefeller

The Vision—Hybrid Energy Systems Built Into Strategic Energy Parks

ASQC Sept. 08 (9)

Nuclear Hybrid Coal to Liquid

Gasifier

Product Upgrade

Fischer-Tropsch

Synthesis

Gas Cleanup

Nuclear Plant Electrolyzers

CO2

H2S Sulfur

Product

Synfuel25,000 barrels/day

H2

O2

Coal 4,400

tons/day

Little carbon is converted to CO²Nuclear Hybrid uses 70% less coalRemaining CO² recycled to gasifierNo CO² emissions

ASQC Sept. 08 (10)

♦ The issues facing Nuclear Power expansion are financial , political, environmental and legal; these issues are interrelated.

Financial:

• Significant risk to company’s balance sheet and ability to obtain equity financing driven by:

» Escalating commodity prices

» Uncertain labor supply and construction experience

» Engineering, procurement and construction delays

» Costs of alternative energy sources

• U.S. Loan guarantee uncertainty

Political:

• National nuclear energy policy lacking (including disposal – Yucca or recycle?)

• Carbon tax uncertain

• Competing interests for government incentives/subsidies

• Uncertain regulatory rate recovery

Nuclear Energy: Challenges to Renaissance?

ASQC Sept. 08 (11)

Nuclear Energy: Challenges to Renaissance?

Environmental:

• Availability and impact on water resources

• EPA Clean Water Act on best available technology to mitigate fish impacts

Legal/Contractual:

• Complexity of EPC contracts

• Financial terms and conditions – spreading risk of financing

• Liability between owner and vendor for delays or cost overruns