Japan increases cooperation with Vietnam

by Francois Roussely, European vice-president of Credit Suisse and honorary president of EDF

INTRODUCTION

The French nuclear industry faces a double challenge toward 2030: to build new plants, ensure operation of existing plants, and prepare for lifetime extension over 40 years. At the same time, they must manage the dismantling of some facilities. Internationally, the challenge is even harder: to take a share of emerging markets, which are very segmented and very competitive.

The French nuclear industry can improve its supply response compared with others, provided that it can make a convincing case for funding, and a proper model of strategic alliances has been established…

I. THE FRENCH NUCLEAR INDUSTRY

Building on the success of its civilian nuclear, France and its industry can legitimately claim to occupy a prominent place in the current renaissance of nuclear civilian world. However, long recognized as a model in the technology sector of civil nuclear, France is seeing its image degrade.

The credibility of the model has both EPR and the ability of the French nuclear industry has succeed in building new power plants have been seriously undermined by difficulties encountered on the Olkiluoto site in Finland and that of the third Flamanville unit.

Concurrently, while the world average availability of nuclear power plants – measured by the availability coefficient Kd – has increased significantly over the past fifteen years, the availability of French nuclear power has decreased sharply in recent years.

It is therefore important to rectify the situation quickly, taking emergency measures necessary, and thus enable the French nuclear industry has, which has the abilities, position themselves on the new civil nuclear market. If this were not so, the credibility, and therefore the actual existence of this industrial tool around AREVA would be threatened.

It is therefore recommended:
– Ensuring the support of French actors, under the responsibility of AREVA, to allow the completion of construction at Olkiluoto in the best conditions;
– Establish a plan of priority actions under the responsibility of EDF, to ensure
nuclear plant construction Flamanville 3 minimises cost and delays;
– Define and implement a program of actions to improve the availability of
French reactors, including by improving the management of outages;
– Continue and strengthen exchanges between EDF and [French regulator] ASN to determine how to meet the demands of the ASN while limiting the impact on the outage durations of plants.

It also follows from these findings and recommendations should imperatively
to make a return of experience [EPR construction sites] of Olkiluoto, Flamanville 3, and Taishan (China), before starting the actual construction of Penly 3. The schedule of operations in the United Kingdom will be a benefit in the same order…

II THE REACTOR MARKET…

…For the French nuclear industry, a medium-term prospects are emerging very clearly: because of the French reactor lifespan of greater than 40 years, let alone 50 years, the markets in which the French nuclear industry can compete are mostly export.

…The EPR reactor is among the best models of 3rd generation reactors and is unique at present in the French nuclear industry. How can we sustain an export policy with only one product?…

The complexity of the EPR comes from design choices, notably of the power level, containment, core catcher and redundancy of systems. It is certainly a handicap for its construction, and its cost. These elements can partly explain the difficulties encountered in Finland or Flamanville. The EPR should therefore be further optimised based on feedback from reactors under construction and past achievements. This optimisation would be lead jointly by EDF and Areva, in conjunction with ASN, with a view to make the detailed design as safe [as the current design].

In parallel, smaller models than the EPR may better suit the needs of some customers. It is therefore necessary to complete the French package and offer several competitive product families on the international market.

ATMEA 1 may be one of these products. A third-generation pressurised water reactor, with a power rating between 1000 and 1150MW, it was conceived jointly by Areva and MHI. However, once certified, Atmea 1 will only have real commercial opportunities if the reactor design studies take into account the contributions of confirmed operators, above all EDF, and if a reference nuclear power plant designed around this reactor is built in an experimental country.

With the same objectives, and at the same safety level, we must also take into consideration new reactors with smaller power ratings developed by our industrial partners outside of France. When these different stages have been completed, the catalogue of French exports will be strengthened.

Finally, the experts spoken to for this report have reaffirmed unambiguously their conviction that there is no question of the French nuclear industry selling cheap reactors, in which the low cost results in a lower degree of safety compared with supposedly equivalent models.

III: THE FUEL CYCLE AND WASTE DISPOSAL

Front-end security of supply

The moderate growth scenarios at the global level tend to demonstrate that, overall, the mineral resources and other industrial capacities needed to cover the needs of the front end (mineral extraction of uranium, conversion (or fluoration), enrichment, fabrication of fuel assemblies) exist, or could be relatively easily setted, provided that manufacturers have a sufficient visibility and financial resources necessary and know with their electrical customers, anticipate, that is, decide upon new production capacities, or replace aging production capacities.

Given the inevitably long duration of exploration, and then development of a new mine, uranium mine development must not be reduced. On the other hand, the national security of supply remains an important subject.

For the front end, it is essential to reinforce strategic dialogue between the government, Areva and EDF; Areva is a first-class uranium miner (in 2009, the largest producer worldwide, with on the order of 20% of primary uranium production) and EDF is the biggest consumer of enriched uranium in the world. One idea would be for Areva to transfer its mining operations to a new company that it would manage, and in which it would retain a majority share; others would be shareholders. In addition, such a transaction would significantl reduce Areva’s requirements for capital.

Promoting the French competence of the back end

The provisions set forth and the steps adopted to manage the fuel assemblies unloaded from reactors (the ‘spent fuel’) are what one means by the term ‘back end’. Global politics have de facto divided the back end into two categories: direct final storage and reprocessing and recycling, which contribute to reducing the volume and radioactivity of the final waste, and also conserve the primary resource uranium.

We recommend promoting the means and industrial expertise in the areas of French reprocessing and recycling. The position of France will be, in any event, dominated by the constant concern of non-proliferation.

Realisation of the deep geological repository: study guaranteed with schedule set by law

Long-term storage of waste in France was the object of a law on 28 June 2006, of which the present report does not see a need to revise. This law establishes a deep storage centre assigned to ANDRA, and the regulatory deadline of 2015 for the submission of the request for corresponding authorisation.

It is therefore indispensable that ANDRA defines urgently the operational planning necessary for the 2015 deadline for the deep storage facility.

To meet this objective, it is proposed that ANDRA works as a matter of urgency with EDF, Areva and the CEA at an optimised definition of the deep storage repository and its implementation. In parallel, this work should empower the ASN, whose role in the definition of a realistic structural specification may prove to be crucial.

IV: TOWARD A REORGANISATION OF THE FRENCH NUCLEAR INDUSTRY

The state must strengthen its role in the organization of the French nuclear industry whilst accommodating the new international situation.

Nuclear governance in France must be strengthened and tightened, to ensure effectiveness of the mastery of the many issues (strategic, political, industrial) in the sector, and a real monitoring of the French nuclear export offering.

The strategic importance and magnitude of the tasks of reflection, leadership and coordination to implement in the field of nuclear justify the constitution of a Ministry of Energy headed by a full minister, or a general secretariat linked to the Presidency of the Republic. The department or the general secretariat will be based on an identified central government direction, have all skills required to carry out its mission, and its own budget. It would provide the secretariat of the Nuclear Policy Committee, over which presides the head of state.

Concurrently, the mission of the International French Nuclear Agency (AFNI)must be extended to develop a French international nuclear consulting programme. Each state that desires to develop civil nuclear power, or which considers developing a fleet of nuclear power stations must create or reevaluate a safety dossier. This consists of a series of standards, plans and procedures covering the safety and security (interior and exterior) of nuclear facilities and their site. France is able to offer its cooperation in the establishment or improvement of these dossiers.

The state must create an industrial structure dedicated to export

The failure in the UAE has especially demonstrated the French actors’ organisational limitations faced by a new demand for first-time buyer. The outcome might have been different if the UAE’s position has been better known; had there been an objective analysis of demand, leading to a proposed offer under the leadership of EDF.

The practical side of exports should be reconsidered, keeping in mind that accessible markets are segmented and vary in kind, depending on whether one is dealing with a country with experience of nuclear electricity generation or a first-time buyer. It is necessary to form an interface that can, for everyone, identify and record applications, interact with the potential client on the desired contract model, and then reply with a position in principle and a choice of organization with identification of the leader and the type of offer wished. This interface is not designed to do deals, but only to propose the organization best adapted to the satisfaction of the customer’s request. It is indeed a services company, in advance of the offer.

The French nuclear industry should be tightened around its associated national champions in a new dynamic

In a market that has become global and competitive, and after some regrettable vicissitudes, it is important that henceforth the nuclear industry can reorganise itself to consolidate its strengths, reinforce its coordination and develop its export performance, its principal market in the future.

– As a rule, for projects of construction of nuclear power plants, both in France and abroad, EDF must be the architect-engineer of ‘Team France’.

Engineering plays a major role in any new construction and represents a significant portion of its total cost. This is the area in which knowledge of different actors are not only complementary but necessarily linked to the success of the operation. The central role is held by the leader, the architect-engineer who organizes all the roll-out of the transaction and manages the interfaces. The leader should combine the skills in all areas concerned and, in particular, should have direct or indirect knowledge of an operator to optimize installation and benefit from operating experience in all the details of the final design.

In today’s global market, the unique advantage available to France is to be able to integrate in its bid the unique experience of the operator EDF, which is also responsible for overall engineering of the project. The two models recognised worldwide are EDF, which has kept its role in the construction of the French park and applied its help in several export projects, and the US engineering companies that have built a large number of nuclear plants, in the USA and worldwide, but do not operate them.

Thus, EDF is so far the only group to have long experience and recognition to exercise the responsibility of architect-engineer. Nevertheless, if an international client does not want EDF, and EDF does not wish to respond to a tender, the consortium that responds to the invitation to tender must find an operator and an engineering company which can be relied upon to have skills comparable to those of EDF.

– The role of AREVA

AREVA today encompasses the activities of the nuclear fuel cycle, the design and manufacture of nuclear islands, and services to plant operations.

The creation of a company from the mine to decommissionng is an idea that has provoked debate in its time, though less today. On the one hand, it is able to offer a complete service to customers. On the other hand, the diversity of levels and investment cycles would spread the financial risks and ensure reasonable profitability over all of the cycle.

The integrated model is based on the cyclical character of a business portfolio that is diversified and consistent, but it does not excuse the rationalization of the company and better cost control.

– It is now essential to give a new impetus to strategic ties between EDF and AREVA

EDF is the main client of AREVA, and AREVA is EDF’s leading provider. The links between the two groups left over by history and based on industrial and technological proximity appear to have weakened in recent years, when shared objectives of general interest have given way to business objectives. EDF has thus launched a process of diversifying its suppliers (mainly in the front end of the fuel cycle); AREVA has worked to expand its portfolio of foreign clients. Both approaches, although they have their logic, have nonetheless helped to create the distance found today.

But the expectations of these two groups under public control is that their complementarities develop whenever the satisfaction of customer demand requires. This may mean that operate joint research and analysis prior to a particular subject, which will then reflect back to both…only a serious dialogue and a shared desire, without ulterior motives, in the two branches will make the partnership strategic. This agreement is a strategic imperative for France to unite effectively its civil nuclear industry internationally, to prepare for the challenge of the renewal of French nuclear power plant fleet, to accompany the necessary revitalization of the French economy.

The review of the current geopolitical nuclear shows the fundamental role of China. EDF and AREVA have actively been present for many years in China. In this context, it is recommended that, with their experience, AREVA and EDF to offer Chinese players, under the responsibility of the state, a common contract of partnership.

– It is also about national champions, integrate and support the network of small to medium enterprises vital to the French industry

These manufacturers need the help of great actors (EDF, AREVA …) to improve their offer, to have standards … They also need a certain independence to respond to requests from competitors for major French players.

It is proposed that the state gives the CEA, in collaboration with the Pôle Nucléaire Bourgogne (Burgundy Nuclear Partnership), a mission of identifying skills and potential of these industries. Finally, second-tier manufacturers may be encouraged to strengthen their concerted action within a professional group that would be their passport for the state and major players.

Maintaining a high standard for safety and security must always be first priority for all players in the French nuclear industry.

– The universal imperative of security, however, has not so far led to the adoption of global standards for nuclear power.

The safety rules are being defined at the state level, unlike other sectors where the demand for safety is also very important (aerospace, for example).

The issue of acceptable nuclear risks, or more generally acceptable technological risks, is a debate for the entire society, and whose answers are naturally dealt with by politics. Nonetheless, it is held that the notion of competitiveness of nuclear power and the variety of security rules by states reinforce the relevance of this debate and the need to clarify some safety requirements. The only reasonable logic is that safety requirements cannot continue to grow. In this context, it is proposed to launch, under the responsibility of the state, a task force whose mission would be to formulate proposals to involve the best safety requirements and economic constraints, including an international vision, European at least.

At the same time, and consistently, it is proposed to entrust to IRSN the role to establish a corpus of safety provisions in force in France and ensure their dissemination and promotion internationally, so that industry can refer to them in their bids. It is not, to date, the mission of ASN to intervene in the process of export supply.

– In France, the state should define a modus vivendi with the Safety Authority, that is, to reaffirm the sovereign role that must not be abandoned of an independent authority.

ASN must also continue its efforts to enable understanding by the largest number of its many of his positions. The right and duty of ASN’s communications for complex subjects is particularly delicate. It is necessary to prevent events with very limited consequences to cast unwarranted suspicion on an entire technology.

– Outsourcing is a major challenge for the nuclear industry

Maintenance of nuclear power plants for EDF in France alone employs more than 20,000 external workers grouped in 600 corporate partners, including 16,000 working in controlled areas.

It is proposed, with reference to existing texts, to establish a charter setting out the working conditions that would apply to all employees of nuclear power in France. The charter could be based on the Charter of Progress and Sustainable Development established in January 2004 between EDF and trade associations representing companies that provide maintenance services operating on its nuclear facilities.

It is also proposed that any company allowed to work on a nuclear site is subject to approval by the supervisory authorities. Such approval would be required regardless of the contractual status of employees involved (CDI, CDD, interim, etc. ..).

V – COMPETITIVENESS AND FINANCING OF NUCLEAR

In a world where energy is deregulated in many economic areas (Europe, North America, …) the question of financing of civilian nuclear energy and therefore its competitiveness, is now essential.

Civilian nuclear energy has almost no captive use, unlike other energy sources like oil with road transport. The question of the relative costs of nuclear power and fossil fuels has a highly fluid answer: a new oil spill, such as in the Gulf of Mexico recently, and its environmental damage, a new discovery to better capture the potential of unconventional oil and gas, an increase of global warming are all factors that can have a strong impact on the price of oil or coal, and so on competitiveness in the medium term compared with nuclear energy.

The production cost of electricity has three main components: investment costs, costs of operation and maintenance costs of the fuel cycle. In the first case, the competitiveness of nuclear energy depends fundamentally on two basic factors: control of construction costs and conditions of its funding. The overall financing needs of a nuclear project are high but not exceptional in energy.

What might be the conditions for private funding?

Private investors are now very reluctant. The highly capital-nuclear should not be a deterrent in itself. In theory, a nuclear power plant lends itself ideally to long-term financing because of its economic stability when in service: no climatic hazards, marginal costs and low running costs, a supply base, with good reliability. A comparison with the oil industry shows that it is not the amount of investment, or even the rapid inflation of costs, which poses a problem for private investors to engage in nuclear energy.

A reflection on the financing of nuclear necessarily leads to ask the question “Is nuclear an industry like any other?” While there is no doubt that openness to private funding is a major trend, the fact remains that nuclear power has its own characteristics (risk, security regulations and safety issues related to defense). In addition, the state remains, in France, as in many countries, the guarantor of nuclear power.

The nuclear industry must achieve competitiveness attractive for private investment.

Wanting to create the economic conditions for private financing of nuclear power is not an ideological choice but a reality: it is the most reliable measure of the competitiveness of our industry. Its development will be done by a more extensive national programme led by the state. Our industry must improve its competitiveness and become attractive to private investors. This requires determined action by companies. This will also require a change of industrial culture.

The main focus of industrial progress are clearly marked and already give rise to an intense work of all actors in the nuclear industry: reduction of construction time, standardization and series construction, design simplification, construction of multiple units on the same site, increased efficiency of plant management.

Strengthening the competitiveness of the French Civil Nuclear also requires real commitments of the State, such as the below:
– Continue implementation of a price on CO2
– Support the extension of plant operation to 60 years, with consistent safety levels
– Plan a moderate but steady increase in electricity prices (in constant Euros) to enable the preparation of funding for the renewal of the fleet over the long term
– Ensure that the transfer price EDF electricity under the Nome law well covers the full cost of fleet renewal
– Pursue political efforts to ensure that all multilateral financing for renewable energies are also open to nuclear power

VI – THE MEANS OF AN AMBITIOUS CIVIL NUCLEAR POLICY

Strengthening Public Information
The nuclear industry is and will remain a very specific sector. Nuclear power is indeed probably the only economic activity whose future is largely determined by public opinion. The acceptance by the public and institutional actors is a major condition for the development of civilian nuclear power.

For the French, the nuclear trump card is its essential contribution to energy independence. More than 70% [of the population] since 2005 recognize that nuclear power brings us independence. Seven French people out of 10 believe that nuclear power is good for the economy and create jobs. The French also cite the environmental asset of nuclear energy and the relatively low cost of electricity produced. Nuclear power is for many a symbol of national pride.

The management of nuclear waste requires the development of a communication effort: for 60-70% of the French, it is the most compelling argument against nuclear power.

Although informing people may not be enough to convince them, it is still essential that all citizens have access to reliable information, as noted by the European Commission’s Nuclear Illustrative Programme – Communication to the Council and the European Parliament dated 4 October 2007. It is therefore proposed to establish a national web portal, hosted by the new Ministry of Energy, which would make available lots of reliable information.

Meanwhile, it is proposed to launch a national program for energy education and energy industry trades in schools, starting from primary school. It is also proposed to determine the practical arrangements consistent with the safety rules in force (including Vigipirate Plan), to open again to the public nuclear power plants and industrial facilities of the controlling actors of the French nuclear industry.

Affirming a major role in defining new international rules of civil nuclear power

The new industrial battle of civil nuclear power is now so important that it requires states to invest, sometimes by abandoning their traditional positions, arguing strongly and at the highest level of business development of its major firms and increasing intergovernmental agreements.

A number of responsible countries, including of course France are both:
– In favor of this rise (climate aspects, energy without emitting CO2, partial response to the growth of global energy demand)
– And worried by the hazards caused by it: diversion of fissile material for terrorist purposes, non-compliance with safety standards, inadequate consideration of local geological hazards, inadequate training of engineers and technicians, facility managers, etc..

In relation to elements of the international context (proliferation risks of civilian nuclear revival, the civil nuclear renaissance), it is desirable to support the establishment of a “global governance” of civilian nuclear power.

This would promote the development of responsible nuclear power, that is guarantee compliance with the requirements of best non-proliferation, safety and nuclear security. “Team France” must therefore:
– Participate fully in the development of international standards;
– Become more involved in civil nuclear of the future
– Promote the access of countries wishing to civilian nuclear power without making concessions on issues of safety, security and non-proliferation.

An R & D to match our ambitions

To facilitate greater efficiency of research and development of the French nuclear industry, the coordination between different actors, mainly CEA, EDF and AREVA must be strengthened. It is proposed that a strategic plan is developed R & D at national level with the CEA, the relevant ministries and key industries. This plan will serve as reference for the multiple-year planning of the CEA in the nuclear field and a reconsideration of the financing system of the CEA.

The research and development programs to implement the civil nuclear field are divided into four categories:

Front end. This front-end research, the responsibility of the CEA, in association with the CNRS and the universities must cover the major areas of nuclear physics, materials, mechanics, chemistry, numerical simulation …

Test methods. Developments in the nuclear field often involve the use of heavy equipment such as test reactors or irradiation, hot laboratories, sophisticated measuring devices … This is another responsibility of CEA, in conjunction with industry, should ensure the maintenance of a suitable potential.

Support for industrial achievements. This should include strengthening programs for the optimization of third-generation reactors (with the EPR a priority) and prolonging the lifetime of nuclear power plants to 60 years or more.

For the future. Entry into the large loan of initial funding for the ASTRID prototype is an important decision that shows France and the world the French desire to develop these fourth-generation systems.

Training and Human Resource Management of the French nuclear industry

The nuclear renaissance is launching a challenge to renew skills in all areas, from boilermakers to specialised engineers. Generations of technicians, engineers and researchers recruited at the time of major construction programs of 1970-1980 are retiring and must be replaced. The sector is now facing, in a short time, the dual obligation to preserve the knowledge and know-how, and to train a new generation of staff to support international development and guarantee the performance of the existing fleet.

The management, maintenance and development of skills of all employees of the French nuclear industry are critical to meet the challenges and ambitions of France in the nuclear field. The efforts made by the French education system are not yet up to the challenge. This statement refers to both the number of people trained and the range of courses covered.

In addition to the actions of industry players, we must now define and initiate a coordinated national plan for skills development, which should involve all stakeholders: government, industry, stakeholders of the French education system.

This national plan could include:
– Implementation and development of measures to strengthen and sustain jobs in the nuclear industry;
– Coordination of training efforts in the nuclear field at the highest state level;
– Creation of a “nuclear campus”. The International Institute of Nuclear Energy will be placed within the campus, as coordinator of training for client countries and foreign centers of excellence that France wishes to develop in partnership with other states
– Integration of “nuclear strategy” as part of a training program of the Institute of Higher Studies of National Defense (IHEDN) and National Institute of Advanced Studies in Security and Justice (INHESJ).

THE 15 MAIN RECOMMENDATIONS

Structural measures
1. Create a Department of Energy or a General Secretariat of Energy, and consolidate the nuclear skills center of the state within a dedicated management.
2. Create a service company, prior to offers, that identifies customer needs and offers a scheme of industrial response
3. Confirm EDF in its role as architect and engineer of “Team France”.
4. Establish a charter setting out the conditions of employment applicable to all employees of nuclear power in France and requiring the approval of all businesses that need to act on nuclear power stations in France.
5. Diversify the international French nuclear offering
6. Further optimization of the EPR from the feedback of the four reactors under construction and of past achievements. This optimization should be a development carried out jointly by EDF and AREVA.
7. Support the extension of plant operating life to 60 with a constant level of safety.
8. Review and reaffirm the mission of ASN as defined in the Law of Transparency and Nuclear Safety 13 June 2006.
9. Assign at the IRSN role to establish a corpus of security provisions in force in France to ensure their dissemination and promotion abroad.
10. Ask ANDRA to associate urgently with EDF, AREVA and CEA in the definition and optimization to implement the proposed deep geological waste repository
11. Establish a national nuclear web portal.
12. Create a nuclear power campus of nuclear power.

Emergency measures
13. Provide, under the responsibility of AREVA, the completion of construction at Olkiluoto under the best conditions.
14. Establish a priority action plan, under the supervision of EDF, to ensure the construction of the nuclear Flamanville 3 in the best cost and time conditions.
15. Provide feedback from construction of Olkiluoto 3 and Flamanville 3 in advance of Penly 3 construction and deadlines consistent with the timing of construction of the EPR in the United Kingdom.