Colette Lewiner Global Leader Energy, Utilities & Chemicals Capgemini Nuclear Global and European Markets status
Colette Lewiner
Global Leader Energy, Utilities & Chemicals Capgemini
Nuclear Global and European Markets status
| Energy, Utilities & Chemicals Global Sector
Agenda
� Fukushima accident and first lessons learned
� Impact on General Energy Outlook
• Sustained development
• Security of supply
• Energy mix changes:
� LNG market changes
� Renewables
� Electricity generation costs
� Impact on Nuclear plants operations and development• Existing plants
• New builds
• Plant lifetime extensions/ Decommissioning
� Impact on Nuclear operators and vendors
� Conclusions
2
| Energy, Utilities & Chemicals Global Sector
Fukushima accident
� Exceptional circumstances: 9.0-magnitude undersea e arthquake off the coast of Japan on March 11, 2011 triggering a tsunami that travelled up to 10 km inland.
� Fukushima nuclear plant: with 6 boiling water react ors (BWR) maintained by TEPCO has been hit by the earthquake and tsunami:� Reactors 4, 5 and 6 were shut down prior to the earthquake for maintenance. � Remaining reactors shut down automatically after the earthquake. Grid
electricity supply for cooling purposes collapsed and then the tsunami flooded the plant , knocking out emergency generators.
� 20km radius evacuation around the plant from March 12
3
Highest rating (level 7) on the International Nuclear Event Scale. Second level 7 rating in history, following
Tchernobyl.
Source: http://www.jaif.or.jp/english/
| Energy, Utilities & Chemicals Global Sector
Source: www.guardian.co.uk
Fukushima accident first safety lessons learned
Global warming could trigger more frequent exceptional events � Need to design plant infrastructures
for really exceptional earthquakes and Tsunamis
� Spent fuel pools containment building� Simultaneous Natural Catastrophes
have to be taken into account� Emergency measures to be revisited� Cooling systems redundancy to be re-
assessed � Spent fuel management policy to be
rethought� Radiological permanent assessment
on the site and around� Crisis communication to be re-
designed
4
Out of the 440 nuclear reactors in the world, 20% a re situated in a zone with significant seismic activity
Months will be needed to have the full details on the accident, urgency
measures and site situation. This feedback will enrich lessons learned.
| Energy, Utilities & Chemicals Global Sector
Strengthening nuclear safety regulations
Regulators and politicians are revisiting safety regulations• European regulators are defining stress tests to
be applied to existing reactors and new builds• Politician are calling for international safety rules
and safety body:• French President Nicolas Sarkozy wants to host a
meeting in Paris of nuclear industry officials from the G20 nations in May, aimed at coming up with new global safety standards by year end
• International Atomic Energy Agency (IAEA) director-general Yukiya Amano has called a major conference on nuclear safety to be held in Vienna from 20 to 24 June 2011. He wants the conference to provide an initial assessment of the Fukushima-Daiichi accident and its impact and consequences. He also wants to launch the process of strengthening nuclear safety and the response to nuclear accidents and emergencies. He declared on April 4 that “Rigorous adherence to the most robust international safety standards and full transparency, in good times and bad, are vital for restoring and maintaining public confidence in nuclear power.”
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Will there be a new international safety body?
International Nuclear Events Scale (INES)
| Energy, Utilities & Chemicals Global Sector
Fukushima accident other lesson learned
� Media covered extensively the event with a dramatic and alarming bias
� Public opinion• USA: According to a March 22 survey by the Civil Society
Institute, the Fukushima disaster is having a major impact on U.S. views about further expanding the use of nuclear power in US:� 53% of Americans would now support “a moratorium on new nuclear
reactor construction in the United States,� 67% now say they would oppose “the construction of a new nuclear
reactor within 50 miles of their home.” � 58% are now “less supportive of expanding nuclear power in the United
States” than they were a month ago • Germany : � 250,000 anti-nuclear protesters gathered in 4 German cities on March 26� Voters backed the anti-nuclear Greens party against Chancellor Angela
Merkel’s coalition in the March 27 state elections in Baden-Wuerttemberg and Rhineland-Palatinate
� Political decisions• Usually politicians reacted by calling for safety assessment of existing
and new reactors and deciding moratoriums on new projects in order to draw lesson learned from the accident
• Only Germany has stopped for 3 months its 7 oldest reactors and has declared a moratorium on its 2010 plant lifetime extensions
6
| Energy, Utilities & Chemicals Global Sector
Fukushima is triggering a debate on present and
future Energy Mix� Media and some anti-nuclear groups are asking for a
nuclear phase out. Before asking ourselves if it is feasible, one needs to ask if it is desirable. An immediate nuclear phase out is not possible while keeping the lights on.
� A long term phase out is possible but needs to be assessed against the following criteria:
• Sustained development: global warming and greenhouse gas emissions decrease
• Security of supply• Electricity generation costs
7
World electricity generation by type (New Policies Scenario)
Source: IEA: World Energy Outlook 2010
20%
37%
30%
12%1%
Are you in favor of stopping the electricity generation from nuclear
power plants in France?
Fully in favor
Rather in favor
Rather opposed
Fully opposed
Don't know
Results of nuclear opinion survey in France (March 2011)
Source: L’express, SIA, Opinion Way, Published April 2011
72%
27%
Would you accept an increase in electricity tariffs so that the France
can stop to generate electricity from nuclear power plants?
No
Yes
| Energy, Utilities & Chemicals Global Sector
Agenda
� Fukushima accident and first lessons learned
� Impact on General Energy Outlook
• Sustained development
• Security of supply
• Energy mix changes:
� LNG market changes
� Renewables
� Electricity generation costs
� Impact on Nuclear plants operations and development• Existing plants
• New builds
• Plant lifetime extensions/ Decommissioning
� Impact on Nuclear operators and vendors
� Conclusions
8
| Energy, Utilities & Chemicals Global Sector
Consumption and CO2 emission evolutions
� In 2009, during the crisis, energy consumption and GHG emissions dropped
� In 2010 ETS sectors emissions projected to increase by 3,6% compared to 2009 (Deutsche Bank). Despite this increase the objective could be met.• However ETS markets are not predictable enough to
stimulate long term CO2 free generation investments. This is why UK decided to set a carbon price floor . Starting in 2013 at £16 per tonne, the tax-inclusive carbon price in 2030 will be at £70 per tonne
� Energy savings objective will be difficult to meet. This is why EU Commission adopted the EnergyEfficiency Plan 2011 : • Focused on instruments to trigger renovation in buildings, to
improve energy performance of the appliances and to foster energy efficiency
• For now only a strategy paper. Legislative proposals with concrete binding measures to follow.
• Germany’s ETS emissions to strongly increase if reactors shutdown according to the Deutsche Bank: • If 7 oldest reactors permanently shut down while 10 others
continue; Germany’s ETS emissions over 2011-20 would increase by 250Mt relative to the current forecasts.
• If 7 oldest shut down and other 10 closed in line with the 2002 legislation, ETS emissions to increase by 370Mt.
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Primary Energy Consumption
Sustained Development
Phasing out nuclear will have a dramatic effect on CO2 emissions increase
EU Greenhouse gases emissions objective
Sou
rce:
Eur
osta
t, E
EA
, B
P s
tatis
tical
rep
ort o
f w
orld
ene
rgy
2009
, E
urop
ean
Com
mis
sion
–C
apge
min
i es
timat
ion,
EE
MO
12
EU Energy efficiency objective
| Energy, Utilities & Chemicals Global Sector
Security of supply
It is risky to rely too much on imported Oil and Gas:
� Arab spring: limiting oil exportations
� Russia gas dependency: in 2030, Russian gas should provide 50% of EU gas demand
10
Gas imports through pipelines and pipelines project s (2009)
UK12 bcm
(i.e. 131 TWh)
NO96 bcm
(i.e. 1,034 TWh)
DK
LIBYA9 bcm (i.e. 99 TWh)
FR
PTES
GR
IT
RO
BG
PL
SK
CZ
AT HU
SI
DE
LU
CH
FI
EE
LT
LVIE
BENL
50 bcm(i.e. 536 TWh)
RUSSIA115 bcm
(i.e. 1,245 TWh)
Nabucco
Southstream
Nor
dstr
eam
Whitestream
MedgazGALSI
Baltic pipe
Skanled
SE
TAP
Gr e
enst
ream
TGI
Transmed
BBL
ALGERIA30 bcm
(i.e. 324 TWh)
NL
Source: Eurogas, BP statistical review of world energy 2010 , companies web sites, GIE gte – Capgemini analysis, EEMO12
Main exporting countries
Total amount of gas exported
Major gas flows
Projects of pipelines capacity increase
99 TWh
Projects of pipelines capacity increase
Projects of new pipelines (planned or under construction)
Built segments of pipelines under construction
Main countries of destination for new pipelines
Interconnection projects financially supported by the European Energy Recovery Plan (EERP)
GALSI
Source: The West.com.au
Security of Supply
| Energy, Utilities & Chemicals Global Sector
On the short term gas will increase its market share
� Success in unconventional gas production at cheap cost has allowed the US to become nearly self sufficient
� New gas liquefaction trains have been commissioned in 2009 and 2010
� These factors combined with the economic crisis, have created a gas bubble and lowered gas prices
� The EU gas market is oversupplied and has an overhang between 10-30 bcm to make up over the next few years
� However• Fukushima accident will deprive Japan of at
least 9.7 GW of nuclear capacity• This capacity should be replaced by gas fired
plants. Gas would be imported by pipelines from Russia notably but also be provided through LNG
• The range of additional LNG consumption from Japan is 5.4 bcm/y to 11.7 bcm/y and this will accelerate the EU market re-balance
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Gas
Gas long term perspective has changed as IEA estimates now the
total gas reserves to 250 years.Gas should increase its market share
also on the long term.
| Energy, Utilities & Chemicals Global Sector
12
Will renewables increase their long term market
share?
� The RES growth is still behind what is needed to reach the 20% target in 2020
� Due to governments’ austerity plans, subsidies to renewable energies are being cut
� The 2020 EU target will be difficult to meet� China is the biggest investor; in 2010 it spent
30% more than in 2009
EU Renewable energy objective
Source: Eurostat, EEA, BP statistical report of world energy 2009, European Commission – Capgemini estimation, EEMO12
Will governments be able to reverse the trend and increase again their
subsidies to renewables?
Investors ranking in 2009 (in $bn)
| Energy, Utilities & Chemicals Global Sector
Electricity generation costs
Estimated costs of electricity in France:• Nuclear: 45 €/MWh
• Gas fired plants: 50 to 60 €/MWh (with today relatively low gas prices)
• Hydropower: >50 €/MWh but highly dependent on sites and construction conditions
• On-shore wind: 80 to 90 €/MWh
• Off-shore wind 150 to 200 €/MWh(including grid connection)
• Biomass: 130€/MWh but very variable according to production conditions.
• Photovoltaic solar electricity from 300 €/MWh (farms) to 600 €/MWh (home roofs)
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Regional ranges of levelised costs of electricity fo r nuclear, coal, gas and onshore wind power plants
• Assumption: carbon price of USD 30/tCO2• Cost of CC(S) is still in the development stage (IEA study does not consider
costs of transporting and storing the sequestered carbon in final deposits)
5% Discount Rate
Source: IEA: Projected Costs of Generating Electricity, 2010 Edition
Nuclear cost should increase after Fukushima accident as safety inspections will result in more
investments and in plants availability decrease
Costs
| Energy, Utilities & Chemicals Global Sector
Safer Nuclear Energy development is still important
to meet the future sustainability challengesWorldwide challenges:
� Tight global energy demand and supply balance
� Long term global energy security of supply
� Climate Change issues calling for carbon free energy sources
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Nuclear with hydropower are the only carbon-free sc hedulable energy source able to produce large volume of electricity
World energy-related CO2 emissions abatement
Source: IEA, World Energy Outlook 2009
| Energy, Utilities & Chemicals Global Sector
Agenda
� Fukushima accident and first lessons learned
� Impact on General Energy Outlook
• Sustained development
• Security of supply
• Energy mix changes:
� LNG market changes
� Renewables
� Electricity generation costs
� Impact on Nuclear plants operations and development• Existing plants
• New builds
• Plant lifetime extensions/ Decommissioning
� Impact on Nuclear operators and vendors
� Conclusions
15
| Energy, Utilities & Chemicals Global Sector
Existing plants: inspections and additional
investments� In Japan, operators of nuclear
power plants have announced a range of immediate measures being taken as protection against the possibility of their facilities being struck by a tsunami among which:• Ensuring emergency power sources (e.g.
using vehicle-mounted power generator).
• Diversifying and securing cooling function
• Build a higher seawall to protect the plant from tsunamis
� Restart of reactors stopped for maintenance are also postponed
� Germany announced the closure of its 7 oldest plants for 3 month. This temporary shutdown led to a 5.7% spot electricity price increase
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52 3 2
4 52
63
64 4 3
64 5
96
4
101114
2124
2118
2219
7
131416
11
22
14
1012
57
1 1
3332
0
5
10
15
20
25
30
35
1 3 5 7 9 11 13 15 17 19 21 23 25 27 29 31 33 35 37 39 41 43
Reactor Age (in years)
Num
ber
of U
nits
Distribution of reactors under operations by age
Additional CAPEX and OPEX will push Nuclear electricity cost up.
By how much?Older plants will be especially
scrutinized
| Energy, Utilities & Chemicals Global Sector
Nuclear new build:
Some programs will be cancelled other delayed
17
� Worldwide, 439 reactors are in operation , 62 under construction and 484 planned or proposed(April 2011, World Nuclear Association)
Source: World Nuclear Association
The IEA cut by half their November 2010 projection of additional 360GW of new nuclear generating capacity by 2035.
Overview of existing nuclear plants and project cap acities (as of February 2011)
| Energy, Utilities & Chemicals Global Sector
IE
CH
SE
DK
NO
FI
EE
LT
LV
PL
SK
ROSI
UK
PTES
IT
GR
FR
BE
HU
DE
AT
BG
CZLU
NL
BE: Agreement in Oct. 2009: 10 year life extension of the 3 oldest nuclear power reactors to 2025 to guard against energy shortages. In 2008, government installed a nuclear producer tax of 250M€ per year till end of lifetime. Additional proposed taxes following life extension, have not passed as a law due to the political crisis in Belgium.
CZ: CEZ started in 2009 its project to extendDukovany plant lifetime by10 years to 40 years. Further extension to 50 years under consideration.
FI: Fortum: 20 year lifetime extension of original 30 years decided in mid 2007 for 2 units at Loviisa. Operating since 1977 and 1981 they will run until 2027 and 2030, subject to safety evaluations in 2015 and 2023.TVO: Lif tetime xtension to 60 years of the two Olkiluotoreactors operating since 1979 and 1982; subject to safety evaluations every 10 years. Closure in 2039 and 2042.
FR: In July 2009 the Nuclear Safety Authority (ASN) approved EDF's safety case for 40 year operation of the 34 existing 900 MWeunits. Each unit is subject to inspection during their 30-year outage. The first, Tricastin-1, got 10-year extension to 2020.
HU: In 2005, 20 year lifetime extension for the 4 reactors of Paks nuclear plant, operating since 1982-87. Reactors to run until 2032-2037.
NL: Only plant to be shut in 2034 after a conditional extension in 2006.
SK: Upgrade program on Bohunice units 3 & 4, operating since 1984 & 1985 is under way with a 40-year lifetime extension in view (to 2025).
ES: Government granted a 4 year life extension for the Santa Maria de Garona plant to 2013. Almarez 1&2 and Vandellos 2 granted 10 year extension. In February 2011, Spain’s Congress ratified a law allowing the 8 operating nuclear units to run for longer than 40 years
SE: Life extension and uprating for Oskarshamn 3 to 60 years approved in 2010 and expected to be completed in 2013. Planned life extension to 60 years of Oscarshamn 2.
CR
SI/CR: Slovenia shares the NPP Krško 696 MW reactor with Croatia; connected to the network in 1981 and designed to run for 40 years. In 2009, NPP Krško submitted an application for lifetime extension of 20 years (to 2043).
UK: Last 4 operating Magnox reactors to be shut down by end 2012, af ter life extension s of 9 months to 2 years.5 year lifetime extension of the Advanced Gas Reactors (AGR) Heysham 1 and Hartlepool until 2019. Plant Lifetime Extension (PLEX) program could enable extended lifetimes for all UK’s AGR plants by 5 years and Sizewell B by 20 years.
DE: End 2010, government agreed to a two-tier lifetime extension of the German nuclear plants. 17 nuclear reactors to run 8-14 years longer than the 2020 deadline set by a prior government: Lifetime extension of nuclear units built before 1980 by 8 years to 40 years and of newer units by 14 years to 46 years. Operators to pay a “fuel-element tax” totaling €2.3 bn/year for 6 years and a “eco-tax” of about €15bn.
Life time extensions will be scrutinized
18
Overview of the nuclear plants lifetime extension i n Europe before the accident
So
urc
e: W
orl
d N
ucl
ear A
sso
ciat
ion
, Cap
gem
ini R
esea
rch
Germany decided to suspend 2010 lifetime extension decision.
| Energy, Utilities & Chemicals Global Sector
More reactors could be closed following the Fukushima
accident
19
• After the accident Fukushima reactors will be closed (9,7GW)• Some reactors could be closed after the new safety inspections• Some more should be closed for political reasons (as in Germany)• A combination of political and regulatory pressures could also lead to closures
According to Eurelectric, if all nuclear plants old er than 30 years would be closed in Europe, the EU 27 would lose 14% of its generation capacity. Gas demand will grow.
European reactors threatened to be closed
Source: Les Echos, April 14, 2011
Incremental Global Gas Demand in 2020 from Lower Nuclear Power Generation
| Energy, Utilities & Chemicals Global Sector
Political declarations
Emerging nuclear countries that have the most advanced programs:
South America:� Chile� UruguayAfrica & Middle East:� Egypt� Jordan� Kuwait� Morocco� Nigeria� Saudi Arabia� Tunisia� Turkey� United Arab
EmiratesEurope:� Belarus� Italy� PolandAsia� Bangladesh� Indonesia� Thailand� Vietnam
China: 27
Number of reactors under construction
Russia: 10
India: 5
South Korea: 5
Slovakia: 2
Taiwan: 2
Canada: 2
Japan: 2
Iran: 1
Argentina: 1
Brazil: 1
Pakistan: 1
Finland: 1
France: 1
USA: 1
20
Plant provisional closure:
Germany (7 oldest reactors)
New projects delayed or suspended:China (assessment); Taiwan assessment, Italy (1
year moratorium); Japan (review plans for new projects); Switzerland (moratorium); UK (delayed)
Safety inspections of existing plants:
All countries
Image S
ource: Le Figaro; IA
EA
| Energy, Utilities & Chemicals Global Sector
Agenda
� Fukushima accident and first lessons learned
� Impact on General Energy Outlook
• Sustained development
• Security of supply
• Energy mix changes:
� LNG market changes
� Renewables
� Electricity generation costs
� Impact on Nuclear plants operations and development• Existing plants
• New builds
• Plant lifetime extensions/ Decommissioning
� Impact on Nuclear operators and vendors
� Conclusions
21
| Energy, Utilities & Chemicals Global Sector
Reactors under construction
22
Generation 3 safer reactors should increase their m arket share. However market size will decrease and China and Ind ia could
favor their local vendors.
PWR (Pressurized Water Reactor)
BWR (Boiling Water Reactor)
Candu/PHWR (Pressurised HeavyWater Reactor)
AREVA: 4 EPR, Generation 3 (1,600MW): • Olkiluoto (Finland): 2013• Flamanville (France): 2013• Taishan (China / 2 reactors): 2013 & 2015
CGNPC (China): CPR-1000, Generation 2, (1,000 MW):• China: 18 reactors / 2011-2015
KEPCO (South Korea): APR-1400, (Generation 2, 1400 MW):• South Korea: 2 reactors / 2013-2014• Abu Dhabi :2 reactors /2017 for the first
MITSUBISHI HEAVY INDUSTRIES (Japan): PWR Generation 2:• Japan: 2 reactors / 2011 & 2014
ROSATOM (Russia): Generation 2 & 3• 20 VVER reactors from 400 to 1200 MW under
construction around the world
WESTINGHOUSE (US-Japan) AP 1000, (Generation 3, 1150 MW)• China: 4 reactors / 2013-2015.
GENERAL ELECTRIC HITACHI (ABWR): • Japan and Taiwan: 3 units
• AECL : None of the next generation ACR-1000 reactor sold despite $434 Mio investment.• Hindustan Construction Company (India) : 3 PHWR local technology reactors under construction.
| Energy, Utilities & Chemicals Global Sector
Agenda
� Fukushima accident and first lessons learned
� Impact on General Energy Outlook
• Sustained development
• Security of supply
• Energy mix changes:
� LNG market changes
� Renewables
� Electricity generation costs
� Impact on Nuclear plants operations and development• Existing plants
• New builds
• Plant lifetime extensions/ Decommissioning
� Impact on Nuclear operators and vendors
� Conclusions
23
| Energy, Utilities & Chemicals Global Sector
Conclusions
� Nuclear renaissance stopped or delayed by the Fukushima accident
� Existing plants will be safety tested� Lifetime extensions will be scrutinized� New programs delayed, some cancelled� Safety regulations will become more international� Debates on future energy policy are emerging
24
Decision on nuclear future will not only be scienti fic, technical or economical but also political.