Vendors’ views Framatome1 October 1998
The coming decade is a vital one for the nuclear power industry. With many old plants coming to the end of their operating lives, decisions will soon have to be made regarding what form of power generation will replace them. NEI asked the major vending companies to answer questions addressing the issues most likely to effect the industry’s future.
1. Manufacturing and construction of PWR NSSS and nuclear islands were Framatome's business activity after its founding in 1958. But now, Framatome’s original business is mature, and is changing, due to the weakness of the world market for new nuclear power plants and the accentuation of new needs and new demands on the part of electric utilities. That is why supplying services and fuel are essential for a company to be a 1st tier supplier.
All of our customers are interested in optimal plant availability, reduced frequency and duration of outages for refuelling, more efficient organisation during these outages, improved plant safety, and so on.
In all, 434 units are currently in service around the world, more than half of them PWRs. The annual maintenance of nuclear plants represents 2 to 3% of its initial investment cost. It is estimated that the world nuclear services market today represents about FF32 billion (US$ 5.3billion) a year.
The Asian market, however, is in a strong period of growth: in South Korea, Framatome supplies services, essentially at the request of its customer, KEPKO, for the two PWR units that Framatome has built there. The People’s Republic of China has also signed a maintenance contract with Framatome for the two Daya Bay nuclear islands.
The countries of Central and Eastern Europe, equipped with Russian (ex-Soviet) design reactors, have potentially large needs for safety upgrading of their nuclear plant units. For the most recent of them, similar to our PWRs, we have had numerous contacts with the authorities and operating utilities in these different countries. In these countries, we perform, along with the rest of the European Union, analyses and studies in the framework of programs financed by the EU.
Another pillar of Framatome's recurrent nuclear activities is its nuclear fuel business, which is now in a strong competitive position. With sales of more than 1300 t of PWR fuel annually, the Group is the world’s leading producer of nuclear reactor fuel.
2. The market can be divided into five broad geographic regions: Western Europe (in particular France); the United States; Japan; the other countries in Asia (in particular China); and Eastern Europe.
In Western Europe, the nuclear fleet, made of 152 large reactors, is mature. Due to the rather slow increase of electricity demand, there are no plans for new construction in the short term, with the possible exception of Finland. However the replacement of the ageing reactors will have to be prepared in the coming decade. In the United States, no new plants are being built.
Japan is the only advanced industrial nation that is still pursuing a nuclear power plant construction programme. India has made known its desire to build new nuclear plants, but its refusal to sign the Nuclear Non-proliferation Treaty prevents nations that have signed it, which includes France, from doing business there.
In the East European countries, financing for new plant construction is lacking. Consequently, plant upgrading is the principal market in this region.
China is the Asian nation offering foreign companies the best prospects in the sector of nuclear plant construction. China decided to carry out a broad-scale nuclear programme. China has three nuclear power plants in service today. The goal is to have an installed nuclear capacity of 20000 MWe by 2010. Framatome has been working in the People’s Republic of China for over 15 years. It has already been awarded contracts for four PWR nuclear islands at the nuclear power plants of Daya Bay (commissioned in 1994) and Ling Ao (commissioning schedule for 2003). China insists on some key issues: proven advanced technologies; competitive electric power; eventual technological independence for China's nuclear industry; significant participation of Chinese companies in the manufacture of components. In May 1997, the presidents of France and of the People's Republic of China signed a “Joint Declaration for a Global Partnership”, in which special attention was given to cooperation in the field of nuclear power plants.
3. See question 2.
4. After having developed techniques for working in radioactive environments over 20 years, Framatome provides nuclear facility dismantling services. In this field, as in that of new construction, the company develops its methods in close collaboration with the French Atomic Energy Commission (CEA): this work is necessary for gas-cooled reactor technology, now at the end of its useful life. All of the units in France are shut down. Unfortunately, SuperPhenix is now decommissioned and has to be dismantled.
Framatome, in association with STMI, is responsible for processing and characterising the wastes during the dismantling of the fuel storage building of the prototype Brennilis 70 MWe heavy-water reactor in Brittany, which was permanently shut down in 1985. Framatome is also presently involved in the dismantling of the BR3 vessel owned by SCK-CEN in Mol (Belgium), which was the first European PWR in Europe.
5. Framatome's original business, nuclear power, still accounts for a major share of the company's business activity, even though the profile of this activity has profoundly evolved over the past 10 years. The slowdown in the rise of energy demand, due to the recent world economic recession, has put a brake on new plant construction. Export prospects appear limited and are unable to compensate for the overall drop in new unit orders. Framatome began very early to study the opportunity of entering complementary fields of business, such as nuclear services and maintenance.
The prospects for strong growth in the field of maintenance and nuclear services were rapidly confirmed, and the share of company revenue resulting from this new business has been rising steadily over the past 10 years, growing from 5% in 1986 to 26% in 1996. The tendency is expected to further increase in the next few years,
during which new construction will account for 20% of the nuclear power business overall, versus 40% for nuclear services and components and approximately 40% for nuclear fuel.
6. In the next century, by meeting future energy requirements, nuclear power will undoubtedly recover the position it once held in the 60s and 70s, when the large American, German and French nuclear equipment programmes were initiated.
The World Energy Council foresees a 50% increase in the consumption of energy between 1990 and 2020 as an average assumption. The share of electricity in the energy supply is also expected to increase on account of its easy utilisation and the flexibility of its distribution. Besides these structural issues, the acknowledged progression of the impact of CO2 emissions will contribute to giving nuclear energy back its former position.
The return of nuclear energy is obviously conditioned by two essential factors. The first is that of competitiveness: Framatome does not intend to placidly wait for a rise in the cost of fossil fuels, but has implemented a systematic process to reduce the cost of nuclear energy. The second essential factor is waste. In the French context, this problem seems to me to be as much political as technical. In France, a clear, comprehensive and systematic strategy was decided in 1991: it is known under the name of the Member of Parliament who promoted it as the Bataille law. Its implementation will allow a final solution to be implemented before decisions have to be taken concerning the renewal of the French nuclear power plants.
7. I am realistic: the nuclear energy industry has entered a phase of profound mutation.
The falling prices of coal, oil and natural gas, progress in mining, and the improved efficiency of conventional thermal power plants have partially eroded the cost advantage of electricity of nuclear origin. On the other hand, its environmental advantages are obtaining greater and greater recognition.
Burning more fossil fuels would mean more production of CO2, and more methane, despite all economic attractiveness and despite the performances of modern combined-cycle gas units. It only mitigates the problem, but cannot resolve it. Fossil fuels will find a far better use in transportation or chemicals than in being burnt to produce electricity.
Among the few means of producing CO2 free electric power, nuclear is probably the only one with large-scale potential. Handled responsibly, as is the case in our European Union, it is safe, reliable, economic and environment-friendly.
Of course, nuclear is not a unique and final solution for the centuries to come. But it can definitely make an essential contribution in filling the 50-to-70 year gap between now and the time when human ingenuity will, no doubt, have developed more adequate if not ideal means of competitive and environmentally-friendly electricity production.
In Kyoto, there is only a small sentence that suggests that nuclear power could participate in future electricity production investments. But the word ‘Nuclear’ does not appear at all. We are not yet at a time when nuclear power can be recognised.
Let us hope that the next Conference of the Parties at Buenos-Aires will take more account of its role.
8. In 1998, in collaboration with Siemens, EDF, and the German utilities, we will complete the basic design of the European Pressurised Water Reactor. For over a year now, we have particularly emphasised the economic competitiveness of this reactor, whose delivered kWh should be highly competitive compared to other alternatives in base load operation. To our minds, there is no question that, if we are really to have a nuclear alternative, it is essential to initiate the building of a first European Pressurised Water Reactor at the beginning of the next century.
To prepare a longer-term future, Framatome considers that it is also essential to examine reactor concepts that are technologically different from the pressurised water reactor system. It is in this spirit that we are performing preliminary studies on hybrid reactor concepts (of Carlo Rubbia type, for example) and that we are participating, in collaboration with American and Russian partners, in a feasibility study of a modular, high-temperature reactor.
9. Fast reactors will come back, either as plutonium burners or uranium savers, but nobody can seriously predict when.
10. There is no doubt that regional climatic changes, either heavy floods or dramatic droughts, as experienced this year in several regions of the world, are more and more perceived by the public as consequences of the greenhouse effect. A new consideration given to the nuclear energy will certainly follow.
|Each company received the following questions:|
|1. What activities are likely to be the most important to your business in the next decade? 2. In which parts of the world, if any, do you see expansion of the industry? More particularly, where is there potential for new plant construction? 3. What are the reasons why there is likely to be expansion in these regions and not in others? 4. What other markets are there likely to be for your products and services? 5. In 2010, what proportion of your business is likely to be in construction of new plant, compared with other activities? 6. What issues do you think are likely to be most important in shaping your future business and what do you consider to be the greatest uncertainties? 7. Are you optimistic or pessimistic about the future of the industry? 8. What new technologies and projects are you working on which could help nuclear power to compete in privatised markets? 9. How likely is it that advanced reactor concepts, such as fast reactors, will become competitive? What factors will be important to their development? 10. In 1990 a number of vendors cited increasing environmental concerns, in particular the connection between fossil fuel power and the greenhouse effect, as an important factor in encouraging new reactor orders around the world. Are there signs that this is happening?|