Nuclear Power Then and Now

1. Nuclear PowerThen and Now Symposium on Economics in the Nuclear Industry Northeastern New York Section American Nuclear Society John M. Tuohy Jr. PE Thursday, March 30, 2006

2. Factors Influencing Deployment of Nuclear Energy • Emergence of new nuclear technologies • Nuclear fuel disposition • Proliferation concerns • Regulatory reform • Potential transition to a hydrogen economy • National energy security policies • Environmental policies University of Chicago Study 03/2004

3. Economics of Deploying Plants During the Next Decade • Capital cost is the single most important factor (S&W + cost of capital) • First-of-a-kind engineering (FOAKE) costs for new designs could increase capital costs by 35 percent • Without Federal financial policies to assist the nuclear sector, new nuclear plants coming on line in the next decade are projected to have a levelized cost of electricity (LCOE) of $46-$70 per megawatt-hour (MWh). Estimates for coal- and gas-fired electricity are $34 and $36 per MWh, respectively. • With Federal governmental assistance in the form of loan guarantees, accelerated depreciation, investment tax credits, and production tax credits, new nuclear plants could become more competitive. LCOEs could reach the $32-$50 per MWh range, depending on the assistance package. University of Chicago Study 03/2004

4. Economics of Deploying Plants During the Next Decade Economics of Deploying the Next Series of Nuclear Plants • With the benefit of the experience from the first few plants, LCOEs are expected to fall to the range of $31-$45 per MWh even if there is no continued financial assistance. Future Greenhouse Gas Policies • If stringent greenhouse policies are implemented and advances in carbon capture and sequestration development prove less effective than hoped, coal-fired electricity’s LCOE could rise as high as $84 per MWh and gas-fired electricity’s LCOE could rise as high as $49 per MWh. With such prices, the competitiveness of nuclear energy would not be an issue. University of Chicago Study 03/2004

5. Electric Power Industry Fuel CostsDecember 2004 through November 2005 “A gas price of $4.50 per MBtu would yield an LCOE of $45 per MWh. It is unlikely that new gas plants would be built at expected prices of this level.” University of Chicago Study 03/2004 Reference: Energy Information Administration

6. International Snapshot • --UK ENERGY MINISTER MALCOLM WICKS CHALLENGED INDUSTRY TO ANSWER how it believed greater certainty over nuclear licensing could be achieved, along with shorter planning processes, without a weakening of current regulatory scrutiny and safeguards. The UK nuclear industry needs to address some of these fundamental questions if nuclear "is ever to be considered part of the future energy mix,"

7. EU Perspective March 28, 2006 - Guardian Unlimited - Nuclear reactions; Impetus within the EU for a revival of atomic energy is gathering pace – • The overwhelming majority of EU leaders at last week's EU summit, including Tony Blair, gave strong backing to a revival of nuclear power as the answer to Europe's need to reduce its growing dependence on overseas energy supplies and to combat climate change. Only Germany and Austria explicitly rejected the nuclear option in secret summit talks, according to senior German diplomats who pointed out that Angela Merkel, the country's chancellor and a trained physicist, favored it personally but was bound by her social democrat coalition partners to reject it.

8. Nuclear Energy – Then and Now • Generation I – Early Prototype Reactors • Shippingport • Dresden • Fermi • Generation II – Commercial Power Reactors • PWR, BWR, CANDU, VVER • Generation III – Advanced LWR • ABWR • AP600 • EPR • System 80+ • Generation III+ – Evolutionary Designs • Extensions of the designs of the 70s and 80s • Improved Economics • Construct, Operate, Maintain • Replacements for the existing fleet • Address CO2 emission issues

9. Nuclear Energy – Worldwide • 441 operating power reactors • 31 countries • 363,000 MW • 30 reactors under construction • 24 countries planning 104 reactors • Applications outside electric generation • Hydrogen production • Water desalination • District heating

10. Nuclear Energy – United States 219,300 MW of new generation needed by 2025 (EIA) Evolutionary Designs and Features • Revolutionary Near-Term Design • PBMR

11. Generation IV Industrial Forum (GIF) (10 Nations) • GIF - Objectives for New Nuclear Reactor Systems • Sustainable • Meets Clean air objectives • Effective fuel utilization • Effective management of nuclear waste • Economics • Clear life-cycle cost advantage • Financial risk comparable to other energy projects • Safety and Reliability • Very low likelihood of core damage • Excel in objective safety and reliability measure • Designs that eliminate the need for offsite emergency response • Proliferation Resistant • Inherent

12. Generation IV Industrial Forum (GIF) (Results) • Generation IV -Revolutionary Designs • Gas Cooled Fast Reactor (GFR) • Lead Cooled Fast Reactor (LFR) • Molten Salt Reactor (MSR) • Sodium Cooled Fast Reactor (SFR) • Supercritical-Water –Cooled Reactor (SCWR) • Very High Temperature Reactor (VHTR) • Gas Turbine-Modular Helium Reactor (GT-MHR) • Pebble Bed Modular Reactor (PBMR)

13. Revolutionary Near Term Candidate • PBMR • Helium coolant • Graphite moderator • 900 °C vs 340 °C helium reactor outlet temperature • Demonstration plant operational 2011 • Thermal efficiency > 40% • 400 MWth • 165 MWe • Small Modular

14. PBMR • Accommodate growth in smaller modular increments • Locate near demand • 24 month construction lead time (first concrete to fuel load) • Low operating cost • Load following capability • Predictable fuel cost and availability • Address Climate change

15. PBMR History • RSA Electric Picture • 90% Coal • 5% Nuclear • 5% Hydro and pumped storage • 1995 Eskom pre-feasibility study • HTR 15 MWe (40 MWth) research reactor at Julich • Operated from 1966 to 1988 • THTR 300 MWe (750 MWth) • Operated from 1985 to 1988 • 1997 Technical and Economic study • 1999 Acquired license from HTR GmbH • 2000 PBMR Company formed • Eskom, IDC of SA, BNF, Exelon

16. PBMR Electricity Demonstration Project Has Been Launched • Currently over 700 equivalent full-time staff working on project at PBMR and at strategic suppliers • Basic design being completed and detailed design started • Revised Environmental Impact Assessment (EIA) submitted and updated Safety Analysis Report (SAR) nearing completion • Construction Manager mobilizing • Contracts with key suppliers for critical components moving forward • Firm construction schedule established at Koeberg-South Africa • Site Access January 2007 • Construction Excavation Starts May 2007 • Fuel Load September 2010 • Plant Turnover to Client September 2011

17. PBMR Demonstration Plant • 400 MWth (165 MWe) module • Footprint: 5000 m2 • Profile: 41m above grade, 22m below grade • Dry cooling an option • Base load or load following capability • Application • Electric, hydrogen production, district heating, desalination • Cost competitive with SA coal at coastal site

18. PBMR (Environment and Safety) • Fuel design leads to inherent safety (no melt down) • Addresses concerns on climate change and resource utilization • Combustion of atom of C + O2 releases ~2 ev of energy • A single fission releases ~200,000,000 ev of energy

19. Summary and Conclusions • PBMR is a maturing, full-scale, Generation IV design today • PBMR has a supportive South African government and a utility launch customer for electricity • Construction is scheduled to start mid-2007 in South Africa • German technology base, simplified design, inherent safety, on-line refueling and the use of proven TRISO fuel provide confidence in safe, reliable and economic operation • Modularity provides competitive economics through manufacturing repetition and staged introduction of capacity • The PBMR design is flexible and adaptable to a wide range of energy applications • PBMR truly will be the 1st Generation IV reactor

20. Then • Regulated Utilities • Procured and Operated power plants • Guaranteed Operating Profit • Long term and broad perspective • Supported Participation in Professional Societies

21. Then • Architect Engineers • CPFF - the longer it takes the more they make • AEC (NRC) Regulations were still being formulated • Nuclear Codes were still under development • RFP preparation and review • Proposal evaluations • Redesigns to reflect vendor information • Document reviews (Charge 10 cents per copy for Xeroxing) • Drawing reviews (Drawing holds pending info needed) • Interferences (models) • Cut and paste really meant cut and paste • Slide rules where still in use

22. Now • Independent Power Generators • Profits no longer guaranteed • High profit margins are possible but get passed on to stockholders not consumers • Consolidation of ownership • Industry matured, plants operating very efficiently • Lots of pressure on personnel • Limited utility involvement in design and construction

23. Now • Architect Engineers • CPFF contracts not open ended • Mature licensing environment • New licensing protocols being implemented • Personnel implementing licensing inexperienced and short-handed • Codes and Standards have matured but are not being updated very vigorously (industry no longer supports code development as it once did)

24. The Public Will Ultimately Decide • The future really depends on whether we can effectively get accurate information out to the public • Avoid being duped (e.g. KI Pills) • The press is the gate-keeper I am optimistic!