Nuclear Energy Progress and Opportunities

Moving Forward:Perspective on Building New Nuclear Power Plants

Dr. Joe C. Turnage

Senior Vice President - Strategy, UniStar Nuclear Energy

EPRI Summer Seminar, August 4, 2008

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Agenda

• Worldwide New Nuclear Development

• Perspective on building New Nuclear Plants in U.S.

– Driving Forces for a Nuclear Renaissance

– Risks & Mitigation

– Indicative Timeline for New Nuclear Deployment

• Summary, Q&A

• Appendix materials

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Worldwide Nuclear Share of Electricity Production (2007)

Source: World Nuclear Association

Worldwide• ~439 commercial reactors, 372,000 MW

capacity, operating in 30 countries

• 16% of world’s 2007 electricity production

• 16 countries have at least 1/4 of their total electricity supplied by nuclear plants

• 2/3 of reactors now have >75% CF,up from 1/4 of reactors in 1990

– and, 1/3 now have >90% CF

• From 1990-2006, capacity up 13.5% (44 GW); and production rose 40%. The reasons:

– Increased availability of units (56% of total)

– New construction (37% of total)

– Uprates (7% of total)

United States:• Avg. CF is now >90%, up from 65% in 1990

• 18 of top 25 performing reactors in world

0.0% 20.0% 40.0% 60.0% 80.0%

China 

Pakistan 

India 

Brazil

Netherlands 

Mexico 

South Africa 

Argentina

Romania 

Canada* 

United Kingdom 

Russia 

Spain 

USA 

Germany 

Japan 

Finland 

Czech Republic 

Bulgaria 

Korea RO (South) 

Hungary 

Slovenia 

Switzerland 

Armenia

Sweden 

Ukraine 

Belgium

Slovakia 

Lithuania 

France 

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MW

China

29%

J apan

20%Russia

15%

Korea

13%

India

5%

Pakistan

0%

Argentina

1%Slovakia

1%

Romania

1%

Iran

2%Slovenia

2%Finland

3%

Canada

2%France

3%

Bulgaria

3%

Rest of World Nuclear Units Under Construction or Planned 2008-2017 Total = 62GW

Increased Worldwide Demand For Nuclear

• 35 new plants now under construction in 14 countries (29 GW), with majorityin developing countries

• Global competition for resources

Country Plants MWChina 17 18000Japan 10 12660Russia 10 9330Korea 7 8050India 6 2976Bulgaria 2 2000France 1 1630Finland 1 1600Canada 2 1538Slovenia 1 1000Iran 1 950Slovakia 2 880Argentina 1 692Romania 1 655Pakistan 1 300

Total 63 62261Source: World Nuclear Association

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Emerging Renaissance in the U.S.

Potential 45 GW in New Capacity, from 5 Technologies (2015-2022)

AP1000Westinghouse1,117/unit15.4GW

APWRMHI1,700/unit3.4GW

ESBWRGE1,550/unit7.75GW

ABWRGE1,350/unit 2.7GW

Unspecified1,350/unit (avg)6.75GW

US EPRAreva1,600/unit9.6GW

Source: Based on NRC-filed applications or placeholders

Potential U.S. New Nuclear Power Plant

Proposals

• 5 Technologies

• ~45GW Total (~34 units)2015-2022

• Most new U.S. nuclear activitytargeted in the Atlantic Seaboardand the South (see appendix)

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Driving Forces for a U.S. Nuclear Renaissance

• U.S. demand is beginning to outstrip capacity

• Energy prices are escalating

• Concern for the environment and CO2 accelerating

• Nuclear generation – Viable and cost competitive

– Higher construction cost, but

– Lower production costs, and

– No CO2 emissions

New Nuclear Plants

Supply / Demand

Regulatory Process

Public Acceptance

ClimateChange(CO2)

Energy Security

Energy Policy Act

The Nuclear option is inevitable. Current economic, political, environmental factors create favorable conditions for new nuclear construction in the U.S.

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Supply and Demand Fundamentals

The U.S. has a growing need for new generation

$MWH - Average Yearly Wholesale On Peak763

534522489424

NWPP- 2013

ERCOT- 2010

FRCC - 2011

VACAR - 2009

PJM - 2008

NYISO- 2009

Estimated year when 18% reserve margin is reached

Source: Cambridge Energy Research Associates – Reserve Margin DatesSource: Internal Research – Map colors indicative of peak power prices

Supply / Demand

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Nuclear: A Lower Carbon Energy Future

•A political issue whose timehas come– Prominent environmentalists are

rethinking nuclear opportunities

– Drove wide bipartisan support of the Energy Policy Act of 2005

• “Zero Emissions” Generating Source Gains new Allies– “Nuclear energy is the only non-

greenhouse-gas-emitting power source that can effectively replace fossil fuels while satisfying the world’s increasing demand for energy”- Patrick Moore, Co-Founder Greenpeace

39 18 17 15 14

1,041

622

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Life Cycle CO2 Emissions AnalysesTonnes CO2-Equivalent per GWh

"Life-Cycle Assessment of Electricity Generation Systems and Applications for Climate Change Policy Analysis," Paul J. Meier, University of Wisconsin-Madison, August, 2002

Nuclear energy lifecycle CO2 emissions on par with renewables

ClimateChange(CO2)

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63

31

20

30

40

50

60

70

80

% Oppose

% Favor

Source: Bisconti Research Inc., NEI Website

“Overall, do you strongly favor, somewhat favor, somewhat oppose or strongly oppose the use of nuclear energy as one of the ways to provide

electricity in the United States?”

Major Shift in Public Acceptance of Nuclear Energy

~ 2/3 favorability among general public -- even higher in communities near nuclear power plants:

- 82% of residents near nuclear plants favor nuclear energy- 86% have a favorable impression of the local plant

Public Acceptance

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Energy Policy Act of 2005

• Significant support – Congress and the Administration

• Addresses many risks in “new nuclear” development and deployment

• Three critical components to jump start the nuclear industry– Loan Guarantees

– Production Tax Credits

– Standby Default Coverage

• Longer term – nuclear power needs no Federal subsidy

Energy Policy Act

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Multiple Issues – Many Risks can be overcome

• Lack of U.S. nuclear infrastructure – Manufacturing– Services– Craft labor force

• Knowledge and experience of nuclear construction from “last time” seriously diminished– Abundance of caution– Many risks

• Global competition forresources

• Untested licensing process

• Global expertise & availability– Engineering– Construction – Supply Chain

• New approaches and partnerships with labor

• Visibility and predictability of licensing process

Issues Requirements for Success

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Loan Guarantees – to address the biggest Risk

• Federal Loan Guarantees are imperative to the New Nuclear solutions– Capital requirements would likely strain balance sheets of the largest

regulated and merchant nuclear power generating companies– Perceived risk by financial community requires federal government

risk mitigation

• Fundamental benefits of Loan Guarantees is creating:– A viable financial structure– Reasonable financing costs

Loan Guarantees are criticalfor “New Nuclear” 1st Wave

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Summary

• Slow but steady progress

• Nuclear Renaissance – a reality

• Success requires– Leadership– Resources– Management of Risks

Nuclear Energy Progress and Opportunities

Moving Forward:Perspective on Building New Nuclear Power Plants

Dr. Joe C. Turnage

Senior Vice President - Strategy, UniStar Nuclear Energy

EPRI Summer Seminar, August 4, 2008