u.s. nuclear industry life in the fast lane thomas a. christopher president and ceo areva np inc....

U.S. Nuclear IndustryLife in the Fast Lane

Thomas A. Christopher

President and CEO AREVA NP Inc.

CEO and Vice-Chairman AREVA Inc

2MIT Student Presentation Nov. 5, 2007AREVA NP Inc.

The Energy Highway

> U. S. is facing dramatic challenges in energy supply Volatile fuel costs

• Coal prices increased 57% in two years• Demand for natural gas expected to double in three years

Rising electricity prices• Electricity demand 3.3% last year – higher than forecast• Rate shocks in 10 states this year

Seven regions need to build new generation• Texas experienced a brownout this past summer

Increasing environmental obligations Personnel resource shortages

Energy Will Be a Key Issue in the 2008 Political Campaign


Current U.S. Plant Capacity and Age

0

100

200

300

400

500

600

700

800

100-499 500-999 1000+

Nameplate C apacity - MW

Nu

mb

er

of

Un

its

Total Coal P lantsTotal Gas P lants

Total Nuc lear P lants

100 - 499 500 - 999 1000+

Natural Gas 18 10 12

Coal 40 29 29

Nuclear 31 21

Average Age of Plants (years)“New” gas, “Old” Coal and

Nuclear


Combined Cycle Power Plant

Source: Duke

Pollutant Potential to Emit(tons per year)

Nitrogen Oxide (NOx) 219 *Carbon Monoxide (CO) 108 *

Volatile Organic Compound (VOC)

30

Particulate (as PM 10) 117 *Sulfur Dioxide (SO2) 22

Formaldehyde 1Benzene 0.2

H2SO4 Mist 6Ammonia 212

500 – 600 MW Class CC: Air Emissions


Coal Production Cost Example

•2 coal-fired units @ 1300MWs each

•Both on line in 1973 •Burns pulverized #9

bituminous coal (3% sulfur & 10% ash)

Nitrogen oxide Sulfur Dioxide

TVA’s Cumberland Plant is One of Their Largest Baseload Plants


US Spot Fuel Prices Continue to Experience Volatility


Market Drivers: Fuel Prices

Market Faces High and Volatile Natural Gas Prices

Hurricanes


Value of a Nuclear Power Plant

20

15

20

10

Estimated 2015 Curve

20

07

Peak Load Price Value of Nuclear Source: Global Energy Decisions


PJM Daily Loads and Locational Marginal Pricing (LMP)

0

20,000

40,000

60,000

80,000

100,000

120,000

140,000

160,000P

JM L

oad

(M

Ws)

$0

$100

$200

$300

$400

$500

$600

$700

$800

$900

LM

P $

/MW

hr

Hourly Load

Average Hourly PriceAu

g. 1

, 200

6

Aug.

2, 2

006

Aug.

3, 2

006

Aug.

4, 2

006

Aug

. 5, 2

006

Aug.

6, 2

006

Aug

. 7, 2

006

Aug

. 8, 2

006


Double-digit Residential Electricity Rate Increases

February auctions indicatedresidential prices would rise39% for Pepco, 35% for DP&L,

and 72% for BG&E; recentstakeholder discussions are

proposing phase-ins of15–25% increases per year

before a full move tomarket-based rates

MARYLAND

Central Maine Powerrates increased 10%

effective 3/1/06

MAINE

NSTAR and National Gridcustomers saw 25–35%rate increases on 1/1/06

MASSACHUSETTS

NarragansettElectric rates rose

13% on 1/1/06

RHODE ISLAND

Regulators approved22% increase for

CL&P effective 1/1/06

CONNECTICUT

Rate increases will bephased in with a 15%increase effective May 2006, a 25% increaseJanuary 2007, and a19% increase effective

June 2007

DELAWARE

Some estimate 35% increases in2007 if auction model is adopted;

utility proposals include single-digitannual increases followed by

deferred cost recovery

ILLINOIS

Pepco expectsbills to rise 12%

in June 2006

DISTRICT OFCOLUMBIA

In November 2005,Arizona PublicService askedregulators to

approve 20% rateincreases

ARIZONA

Rates rise 19%for FP&L and 12%

for TampaElectric and

Progress Florida

FLORIDA

25 -35% increase 1/06

10% increase 3/1/0622% increase

1/06

13% increase 1/06

Regulators requested 20% increase

Increases range from 35% to 72%

12% IN 6/06

Phased increases 15% - 5/06, 25% - 1/07

19% - 6/07

19% for FPL, 12% others

From 10% - 72% in 10 states

Rate Caps Disappearing

If auction adopted, increase could be 35%

North American Operating Nuclear Sites

Original Equipment Manaufacturers

B&W 7

W 48

CE 14

GE 34

A Small Part of the US Market is Deregulated


AREVA Services All Aspects of an Operating Nuclear Plant

Capital

Fuel

Maintenance

Operations

~13.3B€

~2.7B€

~2.8B€

~3.1B€

~4.7B€


North American Locations – June 2007

Lynchburg, VA (4)•1,842 People•All

Atlanta, GA•45 People•I&C/ES

Richland, WA•571 People•Fuels•Federal

Benicia, CA•44 People•NE-A•NS•New Plants

Charlotte, NC

561 People•All

Naperville, IL •19 People•NE-A•I&C

Marlborough, MA•113 People•NE-A•NE-R

Toronto, Canada•60 People•AREVA NP Canada Ltd.

Philadelphia, PA(shared AREVA)•10 People•I&C/E S•Federal

•

•

•

•

•

•

•

•

••

•

••

Westborough, MA•12 People•E-Lab •NE-A•

•••

Pittsburgh, PA•20 People•I&C/ES

Aiken, SC – shared AREVA•1 Person•Federal

Albuquerque, NM (shared AREVA)•5 People•Federal

Denver, CO (shared AREVA)•6 People•NS

Idaho Falls, ID –(Shared AREVA)

•1 Person

•Federal •

20 Locations

3,378 Employees/Contractors

Erwin, TN•9 People•Fuels

•

Fort Worth, TX•59 People•I&C/ES •NE

AREVA NP Inc.


Historical US Nuclear Plant Construction Costs Were Out of Control Due to Regulatory Changes and Escalating Costs

0

1000

2000

3000

4000

5000

6000

7000

1965 1970 1975 1980 1985 1990

Co

nst

ruct

ion

Co

sts

$/k

We

DresdenQuad Cities

Oconee

McGuire 1 & 2

Catawba

LaSalle 1

Palo Verde 1

Braidwood

Perry

Vogtle

Hope Creek

Wolf Creek

Beaver Valley 2

March 1979

TMI Accident

Diablo Canyon


In 1989, a New Licensing Process Introduced by the NRC

> Goal: simplify the two-step process

> The Nuclear Regulatory Commission (NRC), following numerous hearings and input from utilities, drafted new rules for licensing

> Congress amended the Atomic Energy Act to confirm the NRC’s authority to issue statutory combined licenses

Apply forConstruction Permit

Construction

Apply for Operating License

Operating License Issued

Operation

Construction Permit Issued

Early Site Permit

DesignCertification

Combined LicenseIssued

ConstructionITAAC

Verification Operation

Old Process 10 CFR Part 50

New Process 10 CFR Part 52


New Build Scope Yesterday and Today

10%

90%

1970s - 1980s Typical Scope

2010 – 2020 Typical Scope

AREVA Scope Will Be 50% of Total Plant Contract

NSSS, Equip. RV, SG, RCP

Nuclear system design & licensing

I & C , NSSS

Fuel handling equipment

Reactor containment: equipment design &

supply

Nuclear auxiliary building: equipment

design & supply

Emergency diesel generator:

building design & supply

Safeguards buildings

equipment supply & design

Total Plant Contract

50%50%

Total Plant


A Number of Utilities Are Moving to Create a New Nuclear Option

Site Selection

COL Prep

COL Submit & NRC Review

COL Hearings

COL Issued

2006 2007 2008 2009 2010 2011 2012

AP1000Duke

Progress

SCE&G

TVA

Southern

ESBWREntergy

Dominion

ABWRNRG

Dominion

US EPRCEG #1

CEG #2

CEG #3

Ameren

2010-1140-Year License

To Build


New Business Model Emerges to Respond to Capacity Demand - as UniStar

Marketing Activity 2005-2006

Owners

CEG / Utility #1

Owners

CEG / Utility #1

Owners

CEG / Utility #2

Owners

CEG / Utility #2

PO EPR (AREVA)PO EPR (AREVA)

PO EPR (AREVA)PO EPR (AREVA)

CONTRACT #1

CONTRACT #2

PO CEG Operator

PO BECHTEL

STG Vendor

STG Vendor

Owner

CEG

Owner

CEG

PO EPR (AREVA)PO EPR (AREVA)CONTRACT #3

STG VendorPower Purchase

Agreement

(Utility #3)

Power Purchase

Agreement

(Utility #3)

CEG

AREVA

Standard Plant EPR Offering

CEG Part Owner / Operator

Standard Plant EPR Offering

CEG Part Owner / Operator

BECHTEL

Owner

CEG

Owner

CEG

PO EPR (AREVA)PO EPR (AREVA)CONTRACT #4

STG Vendor

Power Purchase

Agreement

(Utility #3)

Power Purchase

Agreement

(Utility #3)

PO BECHTEL

PO BECHTEL

PO BECHTEL


AREVA’s Third Generation US EPR is Designed to Meet Today’s Needs


Each Safety Train is Independent and Located Within a Physically Separate Building.

Four Train Concept


Four-Train Concept

> On-line maintenance without entering action statements

> Radial arrangement simplifies layout and reduces piping

> Active cross-connects eliminated Simplifies systems Minimizes components Reduces operator burden in case of accident

> Reduced component sizes

> Separate safeguards buildings Physical separation Improved hazards mitigation

• fire, flood, external events

SYSTEMEPR Westinghouse 4-Loop

Pump HX Tank Valve Pump HX Tank Valve

SI / RHR 8 4 4 335 4 6 5 351

CVCS incl. Boration, Demin/Seal Water

11 6 8 397 11 13 14 751

CCW 8 14 6 404 7 13 7 758

Total 27 24 18 1136 22 32 26 1860

5 More Pumps8 Less HX

8 Less Tanks724 Less Valves


OL–3 EPR Under Construction


Progress at Flamanville


Calvert Cliffs #3 Schedule

Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4

EPR Design Certification

DC Application Preparation & Review DCA Prep & NRC Interactions NRC Review DC Rule

(preparation - 33 mos, review - 24 mos, rulemaking - 10 mos)

COL Licensing

Site & Reactor Technology Selection(evaluation: 6 mos)

COL Project Planning(preparation: 6 mos)

COL Application Preparation & Review COLA Prep, NRC Mtgs NRC COLA Reviews Hearing

(preparation - 24 mos, review including hearing - 39 mos)

Project Execution

Procurement & related engineering(Major NSSS components on-site - 63 months) Planning Long lead component procurement and fabrication

Detailed engineering for Construction Plng Detailed engineering for construction

(Final construction ready designcomplete before construction start)

Simulator Procurement / Installation Plng Manufacture, Test & Install(Simulator required operational 12 months before fuel load)

Plant Construction Planning Site Preparation Plant Construction, Start-up Testing

(Site prep - 15 months, construction - 48 months)

20122008 2009 2010 2011Activity

2005 2006 2007 2013 2014 2015 2016

(1)

(3)

Start Software Development

Start Fuel Load

COL Application Submitted

Simulator Operational

(2)

Final Design Approval (FDA) Issued

DC Application Submitted

NSSS Components On-Site

First Concrete Pour

Engineerng Complete

Project Plan Approved

Simulator Order Placed

(1) Limited Work Authorization (LWA) Issued(2) Final Environmental Impact Statement (FEIS) Issued(3) Final Safety Evaluation Report (FSER) Issued

DC Rule Issued

COL Issued

Provisional Turnover


Estimated 2006 Production Costs

$14.0

$31.4

$23.4

0

5

10

15

20

25

30

35

4-Loop Plant US EPR Coal

$/M

Wh

New Build Will Cost Less to Operate Than Existing Plants


AREVA Will Continue to Need New Employees

Current openings end of Feb. 007– 307

Total Full -Time Hires

Total 2006 2007 Goals

Internal Hires

225 200

External Hires

337 325

Total Hires 562 525

New Hires Needed

by 2010 = 1000


Types of Engineers Supporting EPR Projects

> Mechanical – fluids, heat transfer,

FEM > Civil – soil interaction, earthquakes> Structural – linear and non-linear analyses> Electrical – design, diesel generators, one-lines> Electronics – digital instrumentation and control> Nuclear – neutronics, thermal/hydraulics> Fire – nuclear fire safety> Materials – fatigue, stress, FEM> Construction (just starting)

Olkiluoto 3 RV head manufacturing


The Next Generation of Leaders

> Key skills Problem solving and decision making

• Short-term crisis management• Long-term construction management

Working with teams (domestic and international)• JV, LLC, etc.

Learning from mistakes

Broadened knowledge base• New NSSS vendor responsibilities – 50% of entire plan

– Civil– Structural– Etc.

Ability to adapt to rapid innovation and technology• New ideas• Technology• Curiosity


In Summary - It’s an Exciting and Challenging Time

> This is a critical time in the energy generation industry – demand supports the Nuclear Renaissance

> We face greater economic and environmental challenges than ever before

> Nuclear is making a comeback Environmentally friendly Energy independence

> We have the new technologies but success depends on New approaches, innovation, enthusiasm and

dedication A new generation of “employees”

Our Business Is Growing Fast – We’ll be Here For a Long Time

u.s. nuclear industry life in the fast lane thomas a. christopher president and ceo areva np inc....

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