Enrichment | Fuel review
The well-balanced market6 October 2011
A reasonable balance between available supply and power plant requirements exists at present and is forecast for the long term. The dampening effect of the Fukushima Daiichi incident might further improve the supply margin. By Thomas Meade and Michael Schwartz
The 2010 enrichment market activity slowed from the accelerated levels observed in the prior three years, but was still average by historical standards. Energy Resources International’s estimate of new commitments executed during 2010 decreased to 47 million separative work units (SWU), which was about the same as world requirements for the year. For comparison, contracting between 2007 and 2009 ranged between 70 and 139 million SWU annually, averaging 95 million SWU each year. Contracting in 2010 was not as well-diversified as in 2009: Urenco is estimated to have captured more than half of 2010 contracting captivity, while Areva and Rosatom each captured about 20%. USEC contracting is estimated to have been more limited, at about 5%, as potential customers awaited a decision on a US Department of Energy loan guarantee. A lot of contracting activity continues to take place off-market, but procurement via competitive bidding is starting to increase.
World requirements are essentially fully committed through 2012. Uncommitted requirements then rise steadily from 2% of world requirements in 2013 to 6% in 2015, 18% in 2020 and 43% by 2025. As implied by these figures, the enrichment service requirements for many nuclear power plants are fully covered through the year 2020.
The long-term price indicator reported by TradeTech has slowly declined from its peak value of $165 per SWU in May 2009 and has held steady at $158 per SWU since November 2010. Consistent with the modest surplus of supply projected over the mid-term, further weakening of enrichment prices is expected.
Requirements for enrichment services are of course primarily driven by installed nuclear generation capacity. In the wake of the unfortunate events at the Fukushima Daiichi nuclear power plant in Japan, there is a high level of uncertainty regarding the future. ERI’s current thinking is that there will be near-term delays in several national programmes. Some of these delays will extend for several years, with possible long-term consequences for new projects in some countries, but after safety evaluations, most established nuclear countries will continue to expand their nuclear power base. On the other hand, some of the smaller countries that had shown a preliminary interest in developing nuclear power may also abandon those plans for a decade or more. Post-Fukushima ‘stress tests’ may result in the need for safety backfits at some older plants that could threaten the economic feasibility of previously-planned life extensions.
Nuclear power plant requirements for uranium enrichment services in 2010 were 45.3 million SWU, up 3% from 2009, but are expected to remain flat for the next two years. The projected long-term impact on requirements of the Fukushima Daiichi accident is estimated at a reduction of between 3% and 5%. Including this, the ERI reference forecast projects that annual world requirements for enrichment services will steadily increase between 2010 and 2030 at an average annual rate of 2.2% per year. As a result, world enrichment requirements should rise 23% to 55.8 million SWU/yr by 2020 and an additional 31% to 70.0 million SWU/yr by 2030. On a relative basis, growth in enrichment services requirements in the reference forecast is modest in the West, and the Commonwealth of Independent States (CIS)/Eastern Europe. Growth is greatest in East Asia and the rest of the world.
Active primary suppliers include Areva, Urenco, USEC Inc and Rosatom. In addition, a potential new supplier of enrichment services is Global Laser Enrichment (GLE). Regional suppliers include China Nuclear Energy Industry Corporation (CNEIC), Japan Nuclear Fuel Limited (JNFL) and others.
The Areva Georges Besse (GB) II centrifuge plant began commercial operations in April 2011 and is scheduled to reach full capacity of 7.5 million SWU per year in 2016. Areva is using Enrichment Technology Company (ETC) centrifuge technology to replace the GB I gaseous diffusion enrichment plant at Tricastin, France. European, Japanese and Korean customers have taken ownership shares in GB II which now total 12%. The decision by EDF, Areva’s largest customer, to use enrichment services in inventory rather than fresh GB I enrichment production in 2011 and 2012 has resulted in Areva’s decision to operate the plant at its minimum capability of 2.5 to 3.0 million SWU annually in 2011 and 2012.
Areva plans to build the Eagle Rock Enrichment Facility (EREF) near Idaho Falls, Idaho. An application is under consideration by the US Nuclear Regulatory Commission (NRC), with license award now expected in late 2011 or early 2012. In April 2011, Areva announced that the start of construction activity had been pushed back to early 2012. No change has been announced to the schedule for first production in 2014 and 3.2 million SWU/yr capacity in 2018. The EREF license limit will be 6.4 million SWU per year, but expansion beyond a capacity of 3.2 million SWU per year will be based on market factors. The EREF was given a significant boost in May 2010 when the US DOE offered a conditional commitment to Areva of a $2 billion loan guarantee to facilitate financing, which Areva accepted in July 2010.
Total nameplate capacity from Urenco’s European and US enrichment plants was 13.0 million SWU per year as of the end of 2010, a 7% increase from the end of 2009 capacity of 12.2 million SWU. Urenco enrichment capacity has steadily expanded over the past ten years, with an average growth rate of 10% per year. Urenco’s European plants are located in Germany, the Netherlands and the UK, and have an installed capacity of 12.8 million SWU annually. This figure will expand to 14.5 million SWU/yr over the next two years. The NRC’s operational readiness review took longer than expected at the Urenco USA plant in the state of New Mexico, delaying the start of US enrichment operations until June 2010. Operating capacity at the end of 2010 was 0.2 million SWU. With installation of cascades continuing, Urenco USA is expected to reach 5.7 million SWU/yr by 2016. Urenco is well on its way to meeting, and likely surpassing, its stated capacity expansion plans to reach 15 million SWU per year by 2012 and 18 million SWU per year by 2015.
USEC’s present enrichment capability comes from the 8 million SWU/yr Paducah gaseous diffusion plant (PGDP) located in Paducah, Kentucky. The Tennessee Valley Authority (TVA) supplies electric power under a contract that runs through May 2012. ERI estimates 2010 PGDP production at 5.9 million SWU, some of which was used in underfeeding, thereby providing additional natural UF6. Production is expected to decrease somewhat in 2010 as the power supplied under the TVA contract decreases. The PGDP is expected to shut down in June 2012, although it may remain open for an additional year or two if competitive power contract extensions can be successfully negotiated and additional enrichment sales are made. State officials eager to extend the life of the PGDP have been promoting its use to re-enrich depleted enrichment tails owned by the US government.
USEC plans to replace the Paducah GDP with a new 3.8 million SWU/yr centrifuge enrichment plant known as the American Centrifuge Plant (ACP). The initial lead cascade began operation in May 2007 with prototype centrifuges, and a five-stage cascade utilizing AC100 centrifuges began operation in March 2010. The cascade initially contained 24 AC100 centrifuges; a total of 40 were operated either individually or in the cascade. Suppliers continue to build and assemble additional AC100s; as of early 2011, USEC planned to add eight new centrifuges a month. It was reported that a loss of power to auxiliary support systems in June 2011 caused six centrifuges to fail, but USEC does not believe that this has any implications for the centrifuge technology itself. If USEC receives the DOE loan guarantee for which it reapplied in August 2010, and completes financing by the end of 2011, then commercial operation could begin 24 months later (late 2013), and the nameplate 3.8 million SWU per year capacity could be reached 36 months after that (late 2016) according to USEC. This schedule conforms to the most recent milestone schedule specified by the DOE-USEC deployment agreement.
Rosatom is the state-owned corporation overseeing both commercial and military nuclear activities in Russia. At the start of 2011, Rosatom has an estimated 27.6 million SWU per year of gas centrifuge enrichment capacity in operation at four sites: Ekaterinburg (Ural Electrochemical Combine), Tomsk (Siberian Chemical Combine), Krasnoyarsk (Production Association Electrochemical Plant) and Angarsk (Angarsk Electrolyzing Chemical Combine). As older centrifuges reach their design lifetimes, Rosatom is replacing them with newer designs that have higher unit output. As a result, total annual Russian enrichment production is projected to increase by 5 million SWU over the next ten years. Rosatom’s direct commercial sales to users of enrichment services, which were 11.3 million SWU in 2010, are expected to rise significantly to nearly 17 million SWU by 2020. Significant additional indirect sales are made through wholesale transactions with other enrichment producers (see below). Rosatom enrichment plant capacity is also used for additional purposes that do not directly contribute to the world enrichment supply, such as the enrichment of depleted uranium tails.
Russia’s indirect share of the US market, through high-enriched uranium (HEU)-derived enrichment sales to USEC, which will end in 2013, is about 40%. The terms of the most recent suspension agreement amendment and subsequent legislation have officially opened up 20% of the US market to Rosatom for direct commercial sales starting in 2013. Rosatom’s export arm Tenex has announced 12 enriched uranium product contracts with approximately ten US utility customers valued at $5 billion, which includes both the uranium and enrichment components. In addition, USEC and Tenex signed a contract in March 2011 under which Tenex will provide a 10-year supply of enrichment services to USEC. Contracted supply begins in 2013 at 0.5 million SWU and ramps up to 2.5 million SWU per year by 2016.
At present, US HEU includes several sources of up to one million SWU-equivalent per year over a 15-year period that began in 2005. The TVA programme makes use of off-spec HEU contained in DOE’s 1994 and 2005 surplus HEU declarations. An additional small quantity of low-enriched uranium (totalling up to 0.45 million SWU) resulting from the DOE Reliable Fuel Supply Initiative is being commercialised between 2009 and 2011 in order to pay for HEU downblending and processing costs. An additional 68t of HEU declared to be excess to the US nuclear weapons stockpile might be expected to eventually become available to the commercial nuclear fuel market, but the release would take place over the next 40 years, which would be expected to contribute very little SWU on an annual basis.
CNEIC has approximately 1.0 million SWU per year of centrifuge enrichment capability located at two sites in China: Hanzhong (also known as Hanzhun) enrichment plant in Shaanxi province and the Lanzhou enrichment plant in Gansu province. The majority of this capability is used internally. The Chinese enrichment capability uses centrifuges that are imported from Russia and will complete expansion to 1.5 million SWU per year during 2011. In 2010, senior CNEIC officials indicated that China planned to significantly increase its enrichment supply capabilities over the following three years. Although details concerning how CNEIC will increase enrichment supply have not been made public, it seems clear that China will want to introduce its own enrichment technology. The status of indigenous centrifuge (and possibly laser) technology is unclear. An indigenous-technology demonstration facility reportedly began operation in 2010, but reliable information is scarce. Indigenous centrifuge capacity is estimated to become 0.5 million SWU by the end of 2012. CNEIC is expected to continue to expand enrichment supply to keep pace with a major portion of China’s rapidly increasing requirements using a combination of indigenous and Russian centrifuge technology.
Small enrichment facilities are also present or planned in Japan, Argentina, Brazil, India, Pakistan and Iran. Original Japanese centrifuge capability of 1.05 million SWU per year has been fully retired, but development of a next-generation centrifuge has been completed and is now expected to result in a commercial plant (at Rokkasho) with initial capacity of 0.15 million SWU in 2011 and full capacity of 1.5 million SWU per year in 2020. Following a number of delays, Industrias Nucleares do Brasil (INB) is believed to have started limited production at the Resende enrichment plant in 2009 in two cascades. The schedule to ramp up capacity to 125,000 SWU per year has been pushed back by three to four years to 2015 or 2016. A second stage could increase capacity to 200,000 SWU/yr. Argentina is working to upgrade and reactivate the Pilcaniyeu gaseous diffusion plant, which originally shut down in 1989, by September 2011. The original capacity was just 20,000 SWU per year, but capacity of the upgraded plant could ultimately be as much as 3 million SWU/yr. Iran’s goal is to have enough centrifuge capacity operating (about 100,000 SWU per year) to supply its single nuclear power unit, which went critical in May 2011 and is expected to be connected to the grid later this year. The output of enrichment facilities in these other countries is not likely to be economically competitive and will be for internal use only. The combined output of the enrichment facilities of these other suppliers currently totals about 100,000 SWU per year, but is projected to rise to 350,000 SWU/yr over the next five years.
Recycle materials, primarily in the form of mixed oxide (MOX) fuel, contributed about 1.6 million SWU-equivalent to supply in 2010. MOX fuel is currently used in Europe and has begun in Japan, and the disposition of military plutonium into MOX fuel could start as early as 2014 in Russia and 2018 in the USA. Russia also blends recycled uranium from VVER-440s and other sources. Recycle materials are projected to supply a total of 2.5 million SWU per year by 2019. Reconsideration of the use of MOX in Japan may result in lower supply.
While no firm plans have been announced, sources of potential future supply beyond those already discussed are available. Any potential expansions will be based on market conditions and the ability to underwrite the expansions through long-term enrichment contracts. Decisions to invest in new enrichment capacity can generally be made with less lead time than is needed to build new nuclear generation capacity.
If GE-Hitachi (GEH) ultimately makes the decision to deploy GLE commercially, then a commercial lead cascade could potentially be operational by 2014 utilizing laser technology. The technology is modular and expandable and the capacity of the proposed facility in Wilmington, North Carolina could be in the range of 3.5 million to 6 million SWU/yr, according to GEH. The decision on whether to proceed is expected in 2012.
Expansion of enrichment capacity beyond the above levels is possible. Significant additional ETC manufacturing capability is available in 2017 and beyond to supply the centrifuges if needed. Expansion of the USEC/ACP from 3.8 million SWU per year up to the licensed limit of 7.0 million SWU per year is possible as well, with room for further expansion at the site.
World annual supply capability of economically competitive and usable enrichment services amounted to 47.1 million SWU for 2010, providing a typical 4% margin over 2010 requirements of 45.3 million SWU (Figure 1). As shown in Figure 1, a reasonable balance between available supply and power plant requirements exists at present and is forecast for the long term. A modest supply excess is apparent between 2016 and 2020, however. Supply exceeds requirements by about 10% during this period as compared to the 5% experienced between 2006 and 2010 and expected between 2011 and 2015. The supply shown in the figure also assumes that underfeeding will take place at Urenco and Areva enrichment plants in the future. The Urenco and Areva capacity used for underfeeding rather than for direct enrichment sales is assumed to ramp up to approximately 2 million SWU annually by 2017.
Suppliers shown in Figure 1 cannot be guaranteed to supply enrichment services, or to develop as or when expected. However, a reasonable balance between available supply and power plant requirements is forecast to continue well into the future.
This article was originally published in the September 2011 issue of Nuclear Engineering International (p33-36)
Thomas B. Meade and Michael H. Schwartz, Energy Resources International, Inc. (ERI), 1015 18th St, NW, Suite 650, Washington, DC 20036, USARelated ArticlesAgreement extends Paducah enrichment operations Demand down, for now Supply margins erode A changing market