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U.S. Nuclear Industry Life in the Fast Lane. Thomas A. Christopher President and CEO AREVA NP Inc. CEO and Vice-Chairman AREVA Inc. The Energy Highway. U. S. is facing dramatic challenges in energy supply Volatile fuel costs Coal prices increased 57% in two years
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U.S. Nuclear IndustryLife in the Fast Lane Thomas A. Christopher President and CEO AREVA NP Inc. CEO and Vice-Chairman AREVA 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 Average Age of Plants (years) “New” gas, “Old” Coal and Nuclear
Combined Cycle Power Plant 500 – 600 MW Class CC: Air Emissions Source: Duke
Coal Production Cost Example TVA’s Cumberland Plant is One of Their Largest Baseload Plants • 2 coal-fired units @ 1300MWs each • Both on line in 1973 • Burns pulverized #9 bituminous coal (3% sulfur & 10% ash) Sulfur Dioxide • Nitrogen oxide
Market Drivers: Fuel PricesMarket Faces High and Volatile Natural Gas Prices Hurricanes
Value of a Nuclear Power Plant Estimated 2015 Curve 2015 2010 2007 Peak Load Price Value of Nuclear Source: Global Energy Decisions
PJM Daily Loads and Locational Marginal Pricing (LMP) Aug. 2, 2006 Aug. 1, 2006 Aug. 3, 2006 Aug. 5, 2006 Aug. 7, 2006 Aug. 4, 2006 Aug. 6, 2006 Aug. 8, 2006
Double-digit Residential Electricity Rate Increases From 10% - 72% in 10 states 25 -35% increase 1/06 10% increase 3/1/06 22% increase 1/06 If auction adopted, increase could be 35% 13% increase 1/06 Regulators requested 20% increase Phased increases 15% - 5/06, 25% - 1/07 19% - 6/07 Increases range from 35% to 72% Rate Caps Disappearing 19% for FPL, 12% others 12% IN 6/06
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 ~2.7B€ Fuel ~2.8B€ Maintenance ~3.1B€ Operations ~4.7B€ ~13.3B€
AREVA NP Inc. North American Locations – June 2007 • Richland, WA • 571 People • Fuels • Federal • Denver, CO (shared AREVA) • 6 People • NS • Naperville, IL • 19 People • NE-A • I&C • Marlborough, MA • 113 People • NE-A • NE-R • Toronto, Canada • 60 People • AREVA NP Canada Ltd. • Pittsburgh, PA • 20 People • I&C/ES • • Westborough, MA • 12 People • E-Lab • NE-A • Idaho Falls, ID –(Shared AREVA) • 1 Person • Federal • • • • • • • • • Philadelphia, PA • (shared AREVA) • 10 People • I&C/E S • Federal • • • Benicia, CA • 44 People • NE-A • NS • New Plants • • • • • Lynchburg, VA (4) • 1,842 People • All • • • • Albuquerque, NM (shared AREVA) • 5 People • Federal • • Charlotte, NC • 561 People • All • Fort Worth, TX • 59 People • I&C/ES • NE • Aiken, SC – shared AREVA • 1 Person • Federal • Erwin, TN • 9 People • Fuels • Atlanta, GA • 45 People • I&C/ES 20 Locations 3,378 Employees/Contractors
Historical US Nuclear Plant Construction Costs Were Out of Control Due to Regulatory Changes and Escalating Costs Vogtle Perry Beaver Valley 2 Hope Creek Braidwood Diablo Canyon Wolf Creek March 1979 TMI Accident Catawba Palo Verde 1 LaSalle 1 Oconee Quad Cities McGuire 1 & 2 Dresden
In 1989, a New Licensing Process Introduced by the NRC Apply for Construction Permit Construction Permit Issued Construction Apply for Operating License Operating License Issued Operation Early Site Permit ITAAC Verification Combined License Issued Construction Operation Design Certification • 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 Old Process 10 CFR Part 50 New Process 10 CFR Part 52
New Build Scope Yesterday and Today 1970s - 1980s Typical Scope Total Plant Contract NSSS, Equip. RV, SG, RCP I & C , NSSS Nuclear system design & licensing Fuel handling equipment 2010 – 2020 Typical Scope Total Plant Reactor containment: equipment design & supply Emergency diesel generator: building design & supply Nuclear auxiliary building: equipment design & supply Safeguards buildings equipment supply & design AREVA Scope Will Be 50% of Total Plant Contract
A Number of Utilities Are Moving to Create a New Nuclear Option 40-Year License To Build COL Issued 2010-11 COL Hearings COL Submit & NRC Review COL Prep Site Selection 2010 2012 2006 2007 2008 2009 2011 US EPR CEG #1 CEG #2 CEG #3 Ameren AP1000 Duke Progress SCE&G TVA Southern ESBWR Entergy Dominion ABWR NRG Dominion
New Business Model Emerges to Respond to Capacity Demand - as UniStar Standard Plant EPR Offering CEG Part Owner / Operator CEG AREVA PO EPR (AREVA) CONTRACT #1 Owners CEG / Utility #1 BECHTEL PO BECHTEL PO CEG Operator STG Vendor Marketing Activity 2005-2006 CONTRACT #2 PO EPR (AREVA) Owners CEG / Utility #2 PO BECHTEL STG Vendor PO EPR (AREVA) CONTRACT #3 Power Purchase Agreement (Utility #3) Owner CEG PO BECHTEL STG Vendor PO EPR (AREVA) CONTRACT #4 Power Purchase Agreement (Utility #3) Owner CEG PO BECHTEL STG Vendor
AREVA’s Third Generation US EPR is Designed to Meet Today’s Needs
Four Train Concept Each Safety Train is Independent and Located Within a Physically Separate Building.
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 5 More Pumps 8 Less HX 8 Less Tanks 724 Less Valves
Estimated 2006 Production Costs 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 -TimeHires 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