Strategic opportunities in the nuclear power equipment ... · Strategic opportunities in the nuclear power equipment manufacturing industry Greater NPP efficiency – provision of

Report for the Round table"Power equipment manufacturing, cooperation in the global market"

Moscow, June 1-3, 2015

Strategic opportunities in the nuclear power equipment manufacturing industry

2150601_AtomExpo_Story_ENG.pptx

1 2 3 4 5 6 7Demographic dynamics

Globalization & future markets

Scarcity of resources

The challenge of climate change

Dynamic technology & innovation

Global knowledge society

Sharing global responsibility

Megatrends

Source: Roland Berger Strategy Consultants

> Energy

demand

> Food and

water

> Other

commodities

> Rising CO2

emissions

> Global

warming

> Ecosystem at

risk

RB identified 7 megatrends that will shape the world's future,of which 2 will have major impact on the energy business …

3150601_AtomExpo_Story_ENG.pptxSource: Roland Berger Strategy Consultants

According to the current Reserves/Production ratios, we won't have an energy problem,but we need to be careful about what energy sources are used in the future …>… because until 2030 the world's primary energy demand will rise by ~25% (i.e. from 13.8 Gtoe to 16.9 Gtoe) and is expected to continue to be met mostly by fossil fuels1) …>… contributing greatly to the increase of CO2 emissions from 32.5 Gt to 41.5 Gt2) which represent over 75% of today's 54 GtCO2e emitted greenhouse gases>Over 40% of the CO2 emissions today (i.e. 13.5 Gt out of the total 32.5 Gt) are from electricity and heat production …>

> … hence it is for the power sector to be in the forefront of tackling the global warming– CO2-free power alternatives are to be pursued

Key insights on the future of the energy business

1) Renewables' share is expected to rise from 1.6% in 2013 to 3.2% in 2030 (from 4% to 6% with large hydro included)2) Leading to sea level increases and more intense & frequent extreme weather events (e.g. tropical cyclones, floods, droughts)

… namely the scarcity of resources and the climate change challenge, which together define the future demand for CO2-free power


Strategic opportunities in the nuclear power equipment manufacturing industry

Greater NPP efficiency – provision of advanced technical solutions for new and existing NPPs aimed at achieving higher efficiency % ratios and longer lifetimeASMRs – conventional (i.e. electricity production) and niche (e.g. district heating, desalination) applications based on Small Modular ReactorsBGreater power supply flexibility – fundamentally limited load change flexibility of NPPs to be tackled by further developing energy storage technologiesC

Nuclear power as one of such CO2-free power sources will continue its growth - Players in the market will have 3 major growth opportunities



Although the installed base of operating reactors has decreased since Fukushima, construction of 18 new reactors has started

2413

2014

435

ShutdownRestart

2

New operating

plants

2011

44413 7218

2014Reactors

going online

Construction

suspended

2

New reactors

in construction

2011

691)

Nuclear fleet evolution [no. of reactors]

Source: WNA, Roland Berger Strategy Consultants

1) Includes the Chinese Experimental Fast Reactor (CEFR) not taken into account in 2011

A

Operating Under construction

> Comments:

– 13 projects under construction went online, including an experimental reactor in China (not taken into account in the 2011 RB view)

– 2 reactors restarted after long-term shutdown (Canada)

– 24 shut down, of which 22 are permanent shutdowns

> Comments:

– 18 projects planned in 2011 started construction phase (including the CAREM prototype in Argentina)

– Construction of two reactors was halted (Bulgaria)

– 13 reactors went online, mainly in China


1

1

1

1

2

2

2

2

2

2

2

5

5

6

10

Argentina

United States

Republic of Korea

India

Russian Federation

Mainland China 28

France

Finland

Brazil

Belarus

United Arab Emirates

Ukraine

Slovak Republic

Pakistan

Japan

Taiwan

Country breakdown of the NPPs under construction [no. of units, MWe net]

Comments

> Most of the NPPs under construction are

located in East Asia and Eastern

Europe:

– China (28 units) and Russia (10

units) have the lion's share

– Very few projects in OECD countries

(exceptions – USA and South Korea)

> All NPPs under construction should be

in operation by 2020

70 GWe of nuclear capacity is under construction around the world, with half of this in China and Russia

A

Source: IAEA, WNA, Roland Berger Strategy Consultants

∑ = 72 reactors70 GWe


From 2014 to 2030 the global installed nuclear capacity will grow from 372 GWe to between 470 GWe ("low") and 637 GWe ("high")

North America

Latin America

Western Europe Eastern Europe East Asia

98

239

168

268

147

Middle East and

Southern Asia

Africa

68 89 10912411768 79 7292104

2 5 10 2 9 25 2758 39 59

6 7 15 6 10

-18/+25 -25/-1

NPP development scenarios to 2030 [2014-2030, GWe]

372435

722

470

637

TOTAL WORLD

94 118143101119

-49/+7 -28/-8 +11/+36 +4/+24 +49/+170 +70/+141

+1/+9 +0/+4 +3/+8 +0/+7

+2/+33 +14/+34

+63/+350 +98/+265

RB high 2030RB low 2030Public high 2030Public low 2030Feb 2014

A

Source: IAEA, WNA, Roland Berger Strategy Consultants


New NPPs set new standards for plant efficiency and lifetime, with a turbine island expected to contribute greatly to these developments

Further advancement of blades' 3D-shape and their structural interconnections, blades of greater length in low pressure cylinders>Development of new alloys, composite materials and protective surfaces (incl. anti-corrosion and anti-erosion protection of the blades apparatus)>Greater degree of modularity of turbines (incl. achieving shorter MRO campaign durations)>Usage of low-speed turbines given the trend towards greater single unit capacities of new NPPs>

Technological development directions – Example of a turbine island

A


> Development of unified modernization packages, greater degree of "informatization" of turbines for remote health monitoring / fleet management


Demand for electricity supplies to remote locations (e.g. ore mining areas)

Demand for district heating

Demand for desalination

Demand for industrial process heat & hydrogen production

Demand for renovation of ageing power-gen units (e.g. NPPs / coal-fired CPPs)

SMRs due to their modular design, more incremental CAPEX and longer fuel cycle can provide a range of new nuclear applications

B


SMR applications

1

2

3

4

5


SMR market potential in BRICS is estimated to be ~ 100 GW of capacity additions in 2020-2030

42

26

11

9

97

2

2

5

28

45

Источник: Roland Berger Strategy Consultants

B

Source: IEA, WNA, Roland Berger Strategy Consultants

Electricity, heat

Desalination

SMR market size in BRICS counties


1) Light-water pressurized reactors 2) Heavy-water reactors 3) High-temperature gas-cooled reactors4) Fast-neutron reactors with lead-bismuth coolant 5) Fast-neutron reactors with sodium coolant6) Exceptions – CNP-300 (2 units in Pakistan), HTR-PM (up to 18 units х 210 MWe in China), SMART (2 units in S.Arabia)

B

> Characteristics of most of Gen III SMRs:

– combination of passive and active safety systems

– often modular design

– slightly better efficiency rates compared to bigger "technology donor"-reactors

> Characteristics of Gen IV SMRs:

– mostly passive safety systems

– significantly better efficiency rates

> First FOAK plants of Gen IV SMRs will come online no earlier than in 2020 (SVBR-100 as an exception)

> No firm contracts for commercial plants in place6)

> Distinguishing feature of SMR designs being developed in USA (e.g., Westinghouse SMR200, nuScale) – active involvement of power-generation utilities for the purpose of streamlining licensing processes

КОММЕНТАРИИ

DesignLicensing of the design

Construction of a FOAK plantConstruction of commercial plants

SMR projects development schedule until 2025 (selection)


FOAK SMR-based nuclear power plants are to come online in 2016-2018, hence a window of opportunity now for non-NSSS suppliers

13 14 15 16 17 18 19 20 21 22 23 24 25

РБН с НТ5)

Gen4 Module (США)

Примеры проектов АСММ

РБН с СВТ4)

EM2 (США)

HTR-PM (КНР)

ВТГР3)

Поколение IV

AHWR (Индия)

ТВР2)

СВБР-100 (РФ)

SMR 200, nuScale (США)

SMART (Южная Корея)

CAREM-25 (Аргентина)

CNP-300 (КНР / Пакистан)

ЛВР с ВД1)

Поколение III

PRISM (США), 4S (Япония)

HI-SMUR (США)


1

Grid stability

Importance of electricity storage

> Storage technologies are perfectly adapted for supplying negative (into storage mode) and positive balancing energy (into generation mode) thanks to very quick reaction times, good scalability and low start-up costs

> Furthermore, storage technologies can also provide black start services after system breakdowns

> Storage technologies allow for the full use of electricity generated from renewables by storing the surplus energy during hours with low demand and using it when demand is high and generation from renewables is low

> Storage technologies can be charged during off-peak hours(night) and discharged during peak hours (day), making it possible to run base load plants constantly – also applies to nights for charging storage plants and discharging them during peak-hours instead of using peak load plants

1 Grid stability

C

The importance of electricity storage in the power market

Electricity storage ensures grid stability, helps integrate fluctuating / non-predictable RES and allows for a constant use of base load plants

2

Renewables integration

3

Peak shaving

2 Renewables integration

3 Peak shaving

Source: BWK, Energiewirtschaftliche Tagesfragen, Pike Research, Roland Berger Strategy Consultants


R&D Demonstration Market ready

COMMENTS

> There are 3 types of physical storage for storing electricity

> Direct electrical storage with capacitors and coils is feasible only on a small scale

> For large-scale electricity storage, electrical energy has to be converted into and saved as mechanical or chemical/ electrochemical energy

> Only 3 storage technologies are already fully ready for the market

MECHANICAL STORAGE

CHEMICAL /ELECTRO-CHEMICAL

STORAGE

ELECTRICAL STORAGE

Hydro-pumped storage

Flywheel

Diabaticcompressed air energy storage

Adiabatic compressed air energy storage

Rechargeable battery

Redox-flow

Hydrogen;

synthetic natural gas

Super capacitor

Superconducting coil

Capacitor

Energy can be stored mechanically, electro-chemically and electrically using different technologies

Overview of existing electricity storage technologies by physical storage type

C



Specific investment costs (in EUR/kW) of different storage technologies can vary widely

> Specific investment costs can vary widely depending on total installed capacity, area of application, construction environment, etc.

> Especially batteries have a broad range of specific investment costs (depending on the type of battery)

> Large-scale storage technologies (pumped hydro, CAES1), hydrogen) have typical investment costs between 700 and 1,400 EUR/kW, although pumped hydro can be significantly more expensive when new artificial lakes and underground pipes have to be built

> Of the large storage technologies, only pumped hydro has a high efficiency range

> Batteries and super capacitors are the technologies with the greatest storage efficiency

BatteriesPumped storage

Fly-wheels

CAES1)

1000 2000 3000 4000 5000 6000

Capex [EUR/kW]2)

Eff

icie

ncy

ran

ge

20%

4

0%

60%

8

0%

100

%

Hy-dro-gen

Flow batteries

Super capacitors

Mechanical storage Electrochemical and electrical storage

COMMENTS

1) Compressed air energy storage 2) Capex/power with power defined as the amount of energy which can be released in a given time interval

Comparison of different storage technologies – Efficiency range / CAPEX

C

Source: BWK, Energiewirtschaftliche Tagesfragen, Pike Research, Solar-Fuel, Roland Berger Strategy Consultants


Batteries

Flow batteries

Hydrogen/methane (stationary)

Pumped Storage

CAES

FlywheelsSuper

capacitors

1 kW 10 kW 100 kW 1 MW 10 MW 100 MW 1000 MW

Super-cond. coilS

econ

dsM

inut

esH

ours

Day

s/m

onth

s

Capacity (logarithmic scale)

Dis

char

gin

g ti

me

Capac-itors

> Pumped storage, CAES and hydrogen storage represent the only technologies with high capacity and long discharging times

> Batteries already have storage capacities of several megawatts and are ideal for backup power system support

> Flow batteries have the potential to further increase discharging times

> Direct electrical storage with capacitors or superconducting coils can be realized only with small capacities and with very short discharging times

COMMENTS

Mechanical storage Electrochemical storage Electrical storage

Comparison of different storage technologies – Discharging time / Capacity

Pumped storage, CAES and hydrogen storage represent the only technologies with high capacity and long discharging times

C



While all regions today rely on pumped storage, battery storage and CAES will also play a significant role up through 2020

151.9

76%

7%

5%

8%

3%

103.2

Pumped StorageCAESNaS batteryAdvanced flow batteryLi-ion battery

34.3

78%

14%

3%3%

2%

25.4

51.6

70%

8%

5%

15%

3%

32.8

48.9

77%

4%5%

8%

6%

31.2

2.10.8

10.58.9

1.51.12.9 2.9

> Hydro-pumped storage represents the major share of installed storage capacity globally and in every region

> In Western Europe and Asia Pacific, battery storage capacities are expected to increase significantly

> In the US and Western Europe, CAESsystems will also be developed

> Africa will see no growth in storage technologies

Global North America

Western Europe

Asia Pacific

Latin America

Eastern Europe

Middle East

Africa

COMMENTS

Grid storage capacity outlook by region and technology in 2010-2020 [GW]

C

Source: Pike Research, Roland Berger Strategy Consultants

18150601_AtomExpo_Story_ENG.pptxSource: DERA, BGR

Production: 12 Gtoe

Reserves: 942 Gtoe

Resources: 12,706 Gtoe

Note: Gtoe = Gigatonnes of oil equivalent

2.0001.5001.000 2.500 4.5005000

Current potential of world energy reserves and resources (static reach1) in 2011)

1) Static reach: Reach of fossil fuels based on the current global consumption and the current amount of reserves and resources. The static reach assumes constant consumption in the future and fixed reserves. As these input factors are dependent on the geological and technological changes as well as economic and political developments, the static reach is not a predictive instrument but provides a snapshot in time of a dynamically developing system.

Reserves Resources

Hard coal

Lignite

Uranium

Crude oil

Natural gas

Years

As per current R/P ratios, we won't have an energy problem, but we need to be careful about what energy sources are used in the future …

Resources BACKUP


… because until 2030 the world's primary energy demand will rise by >20% and is expected to continue to be met mostly by fossil fuels …

Source: ExxonMobil, Roland Berger Strategy Consultants

Evolution of primary energy demand by sources, 2013 and 20301) [Gtoe]

2013 2030

Oil 33.6%

Gas22.5%

Coal25.2%

Nuclear5.6%

Biomass/Waste9.1%

Hydro2.3%

Other1.6%

Oil 31.4%

Gas25.1%

Coal22.2%

Nuclear6.8%

Biomass/Waste8.2%

Hydro2.7%

Other3.2%

13.8 16.9

Note: Gtoe = Gigatonnes of oil equivalent 1) Due to rounding the sums are slightly below 100.0%

Resources BACKUP


32,547

19,753

12,794

+27%

41,464

28,092

13,373

Total GHG emissions 2013:

approx. 54 GtCO2e

Evolution of CO2 emissions [Mt], composition of 2013 emitted GHGs

Source: EIA, IPCC

OECD Non-OECD World

Fluorinated gases

2013 2030

Nitrous oxide

Methane

Carbon Dioxide (CO2)

1%

8%

77%

14%

Note: Mt = Megatonnes, GHG = greenhouse gases, GtCO2e = Gigatonnes CO2 equivalent

… contributing greatly to the >25% increase of CO2 emissions which represent over 75% of today's emitted greenhouse gases

Climate change BACKUP


Note: Mt = million tonnes, 1) Others: Commercial/public services, agriculture/forestry, fishing, energy industries other than electricity and heat generation, other energy industry own use and other emissions not specified elsewhereSource: IEA

CO2 emissions split up 2011 [Mt]

World

OECD

Non-OECD

7.2%26.6% 14.6%40.4%

6.0%22.3% 20.7%41.5%

5.3%14.2% 26.5%45.6%

11.2%

9.2%

8.4%

More than 40% of the current CO2 emissions today are from electricity and heat production …

Others1)ResidentialTransport Manufacturing industries and construction Electricity and heat production

31,342

12,341

17,888



250

300

350

400

450

500

550

1900 1920 1940 1960 1980 2000 2020

-0.6

-0.4

-0.2

0.0

0.2

0.4

0.6

0.8

1.0

1.2

1.4

1.6

1.8

Tem

per

atu

re e

volu

tio

n v

s.

1960

-199

0 av

erag

e [°

C]

CO

2co

nce

ntr

atio

n in

th

e at

mo

sph

ere

[ppm

]

Year2030

1960-1990 temperature average

Evolution of CO2 concentration and global temperature 1900-2030

1) CO2 ppm assumptions following IPCC A1FI scenario as business as usual scenario, 2) Annual median temperature relative to 1960-1990 average, 3) Uncertain future outcomes refer to the scenarios RCP2.6 (aggressive mitigation strategies) and RCP8.5 (business as usual)

CO2 ppm1) Temperature evolution2) Uncertain future outcomes3)

Source: IPCC, Guardian, Met Office

Business as usual

Aggressive mitigation strategies

… hence it is the power sector which primarily contributes to the global warming – CO2-free power alternatives are to be pursued

> Global warmingis largely attributed to the growing CO2

emissions

> Global warming leads to sea level increases and more intense & frequent extreme weather events(e.g. tropical cyclones, floods, droughts)

> Effects of climate change can be manageable after 2050 if the total CO2 emissions are reduced by ~35% until 2030 compared to 2013


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