U.S. Nuclear Industry
Life in the Fast Lane
Thomas A. Christopher
President and CEO AREVA NP Inc.
CEO and Vice-Chairman AREVA Inc
The Energy Highway
> U. S. is facing dramatic challenges in energy
supply
Volatile fuel costs
• Coal prices increased 57% in two years
• Demand for natural gas expected to double in three years
Rising electricity prices
• Electricity demand 3.3% last year – higher than forecast
• Rate shocks in 10 states this year
Seven regions need to build new generation
• Texas experienced a brownout this past summer
Increasing environmental obligations
Personnel resource shortages
Energy Will Be a Key Issue in the 2008 Political
Campaign
AREVA NP Inc. MIT Student Presentation Nov. 5, 2007 2
Current U.S. Plant Capacity and Age
800
8
73
700 Total Coal Plants
Total Gas Plants
7
600
N umber of Units
53
Total Nuclear Plants
500
400
6
24
9
300
20
200
55
48
100
12
12
0
0
100-499 500-999 1000+
N ameplate Capacity - MW
“New” gas, Average Age of Plants (years)
“Old” Coal and 100 - 499 500 - 999 1000+
Nuclear
Natural Gas 18 10 12
Coal 40 29 29
Nuclear 31 21
AREVA NP Inc. MIT Student Presentation Nov. 5, 2007 3
Combined Cycle Power Plant
500 – 600 MW Class CC: Air Emissions
Pollutant Potential to Emit
(tons per year)
Nitrogen Oxide (NOx) 219 *
Carbon Monoxide (CO) 108 *
Volatile Organic 30
Compound (VOC)
Particulate (as PM 10) 117 *
Sulfur Dioxide (SO2) 22
Formaldehyde 1
Benzene 0.2
H2SO4 Mist 6
Ammonia 212
Source: Duke
AREVA NP Inc. MIT Student Presentation Nov. 5, 2007 4
Coal Production Cost Example
TVA’s Cumberland Plant is One of Their Largest Baseload Plants
• 2 coal-fired units @
1300MWs each
• Both on line in 1973
• Burns pulverized #9
bituminous coal (3%
sulfur & 10% ash)
Nitrogen oxide Sulfur Dioxide
AREVA NP Inc. MIT Student Presentation Nov. 5, 2007 5
US Spot Fuel Prices Continue to Experience
Volatility
AREVA NP Inc. MIT Student Presentation Nov. 5, 2007 6
Market Drivers: Fuel Prices
Market Faces High and Volatile Natural Gas Prices
Hurricanes
AREVA NP Inc. MIT Student Presentation Nov. 5, 2007 7
Value of a Nuclear Power Plant
Estimated 2015 Curve
2010
2007
2015
Peak Load Price Value of Nuclear
Source: Global Energy Decisions
AREVA NP Inc. MIT Student Presentation Nov. 5, 2007 8
PJM Daily Loads and Locational Marginal
Pricing (LMP)
160,000 $900
Hourly Load
140,000 Average Hourly Price $800
$700
120,000
$600
PJM Load (MWs)
100,000
LMP $/MWhr
$500
80,000
$400
60,000
$300
40,000
$200
20,000 $100
0 $0
AREVA NP Inc. MIT Student Presentation Nov. 5, 2007 9
Double-digit Residential Electricity Rate Increases
MASSACHUSETTS
From 10% - 72% in 10 NSTAR and National Grid
25 -35%saw 25–35%
states customers
increase 1/06
rate increases on 1/1/06
MAINE
10% increase
Central Maine Power
CONNECTICUT rates increased 10%
ILLINOIS 3/1/06 3/1/06
effective
Regulators approved
If Some estimate 35% increases in
auction adopted, 22% increase
22% increase for
2007 if auction model is adopted;
35%
increase could besingle-digit 1/06effective 1/1/06
CL&P
utility proposals include
annual increases followed by RHODE ISLAND
deferred cost recovery
Narragansett
13% increase
Electric rates rose
ARIZONA 1/06 on 1/1/06
13%
In November 2005,
Regulators
Arizona Public DELAWARE
requested
Service asked
regulators
20% 20% to Phased
Rate increases will be
phased in with a 15%
approve rate increases
increase effective May
increase
increases 15% - 5/06,
2006, a 25% increase
MARYLAND
25% 1/07
January- 2007, and a
February auctions indicated 19% increase effective
Increases range rise
residential prices would 19% - 6/07
June 2007
from Pepco, 35% for DP&L,
39% for35% to 72%
and 72% for BG&E; recent
Rate Caps stakeholder discussions are FLORIDA DISTRICT OF
proposing phase-ins of COLUMBIA
Disappearing 15–25% increases per year
Rates rise 19%
19% and
for FP&Lfor 12% Pepco expects
before a full move to
FPL, 12%
for Tampa 12% rise
bills to IN 12%
market-based rates Electric and
others 6/06 2006
in June
Progress Florida
AREVA NP Inc. MIT Student Presentation Nov. 5, 2007 10
North American Operating Nuclear Sites
Original
Equipment
Manaufacturers
B&W 7
W 48
CE 14
GE 34
A Small Part of the US Market is Deregulated
AREVA Services All Aspects of an Operating
Nuclear Plant
Capital ~2.7B€
Fuel
~2.8B€
Maintenance
~3.1B€
Operations ~4.7B€
~13.3B€
AREVA NP Inc. MIT Student Presentation Nov. 5, 2007 12
AREVA NP Inc.
North American Locations – June 2007
Richland, WA
•571 People Denver, CO Naperville, IL Marlborough, MA
•Fuels (shared AREVA) •19 People Toronto, Canada •113 People
•Federal •NE-A •NE-A
•6 People •60 People
•NS •I&C •NE-R
•AREVA NP
Canada Ltd. Pittsburgh, PA
•20 People
• •I&C/ES
Westborough, MA
•12 People
Idaho Falls, ID –
(Shared AREVA) •E-Lab
•1 Person
• • ••
•NE-A
•Federal
•
• •
• Philadelphia, PA
(shared AREVA)
Benicia, CA
• •
•10 People
•I&C/E S
•44 People •Federal
•NE-A
•NS
•New Plants
• • Lynchburg, VA (4)
• •
•1,842 People
•All
•
Albuquerque, NM
(shared AREVA) • Charlotte, NC
•5 People
Fort Worth, TX 561 People
•Federal
•59 People •All
•I&C/ES
•NE Aiken, SC –
Erwin, TN Atlanta, GA
shared AREVA
•9 People •45 People
20 Locations •Fuels •I&C/ES
•1 Person
•Federal
3,378 Employees/Contractors
AREVA NP Inc. MIT Student Presentation Nov. 5, 2007 13
Historical US Nuclear Plant Construction Costs Were Out of
Control Due to Regulatory Changes and Escalating Costs
7000
Vogtle
6000
Perry
5000
Beaver Valley 2
Construction Costs $/kWe
Hope Creek
4000
Braidwood
3000 Diablo Canyon
March 1979 Wolf Creek
TMI Accident Catawba Palo Verde 1
2000
LaSalle 1
Oconee
1000
Quad Cities
Dresden McGuire 1 & 2
0
1965 1970 1975 1980 1985 1990
AREVA NP Inc. MIT Student Presentation Nov. 5, 2007 14
In 1989, a New Licensing Process
Introduced by the NRC
> Goal: simplify the two-step process
> The Nuclear Regulatory Commission (NRC), following numerous
hearings and input from utilities, drafted new rules for licensing
> Congress amended the Atomic Energy Act to confirm the NRC’s
authority to issue statutory combined licenses
Old Process 10 CFR Part 50
Apply for Construction
Construction Permit
Construction
Permit Issued
Apply for Operating
Operating License
Operation
License Issued
New Process 10 CFR Part 52
Early Site Permit
Combined License ITAAC
Construction Verification
Operation
Issued
Design
Certification
AREVA NP Inc. MIT Student Presentation Nov. 5, 2007 15
New Build Scope Yesterday and Today
1970s - 1980s Typical Scope
Total Plant Contract
NSSS, Equip.
RV, SG, RCP I & C , NSSS 10%
Nuclear system Fuel handling
design & licensing equipment 90%
2010 – 2020 Typical Scope
Total Plant
Reactor containment: Emergency diesel
equipment design & generator: building
supply design & supply
50%
50%
Nuclear auxiliary building: Safeguards buildings
equipment design & equipment supply &
supply design
AREVA Scope Will Be 50% of Total Plant Contract
AREVA NP Inc. MIT Student Presentation Nov. 5, 2007 16
A Number of Utilities Are Moving to Create a
New Nuclear Option
COL Issued
2010-11
40-Year License
COL Hearings To Build
COL Submit & NRC
Review
COL Prep
Site Selection
2006 2007 2008 2009 2010 2011 2012
US EPR AP1000 ESBWR ABWR
CEG #1 Duke Entergy NRG
CEG #2 Progress Dominion Dominion
CEG #3 SCE&G
Ameren TVA
Southern
AREVA NP Inc. MIT Student Presentation Nov. 5, 2007 17
New Business Model Emerges to Respond to Capacity
Demand - as UniStar
CEG Standard Plant
EPR Offering
CEG Part Owner
/ Operator
AREVA CONTRACT #1 PO EPR (AREVA)
Owners
BECHTEL
CEG / Utility #1 PO BECHTEL
PO CEG Operator STG Vendor
Marketing Activity CONTRACT #2 PO EPR (AREVA)
2005-2006 Owners
PO BECHTEL
CEG / Utility #2
STG Vendor
CONTRACT #3 PO EPR (AREVA)
Power Purchase Owner PO BECHTEL
Agreement CEG STG Vendor
(Utility #3)
CONTRACT #4 PO EPR (AREVA)
Power Purchase Owner PO BECHTEL
Agreement CEG
(Utility #3) STG Vendor
AREVA NP Inc. MIT Student Presentation Nov. 5, 2007 18
AREVA’s Third Generation US EPR is Designed
to Meet Today’s Needs
AREVA NP Inc. MIT Student Presentation Nov. 5, 2007 19
Four Train Concept
Each Safety Train is Independent and Located
Within a Physically Separate Building.
AREVA NP Inc. MIT Student Presentation Nov. 5, 2007 20
Four-Train Concept
> On-line maintenance without entering action statements
> Radial arrangement simplifies layout and reduces piping
> Active cross-connects eliminated
Simplifies systems
Minimizes components 5 More Pumps
Reduces operator burden in case of accident
> Reduced component sizes
8 Less HX
> Separate safeguards buildings 8 Less Tanks
Physical separation
Improved hazards mitigation
724 Less Valves
• fire, flood, external events
EPR Westinghouse 4-Loop
SYSTEM
Pump HX Tank Valve Pump HX Tank Valve
SI / RHR 8 4 4 335 4 6 5 351
CVCS incl. Boration,
11 6 8 397 11 13 14 751
Demin/Seal Water
CCW 8 14 6 404 7 13 7 758
Total 27 24 18 1136 22 32 26 1860
AREVA NP Inc. MIT Student Presentation Nov. 5, 2007 21
OL–3 EPR Under
Construction
AREVA NP Inc. MIT Student Presentation Nov. 5, 2007 22
Progress at Flamanville
AREVA NP Inc. MIT Student Presentation Nov. 5, 2007 23
Calvert Cliffs #3 Schedule
2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016
Activity Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4
EPR Design Certification DC Application Final Design Approval
Submitted (FDA) Issued DC Rule Issued
DC Application Preparation & Review DCA Prep & NRC Interactions NRC Review DC Rule
(preparation - 33 mos, review - 24 mos, rulemaking - 10 mos)
COL Licensing
Site & Reactor Technology Selection
(evaluation: 6 mos) (1) Limited Work Authorization (LWA) Issued
Project Plan Approved (2) Final Environmental Impact Statement (FEIS) Issued
(3) Final Safety Evaluation Report (FSER) Issued
COL Project Planning
(1)
(preparation: 6 mos) COL Application Submitted
(2) (3) COL Issued
COL Application Preparation & Review COLA Prep, NRC Mtgs NRC COLA Reviews Hearing
(preparation - 24 mos, review including hearing - 39 mos)
Project Execution
NSSS Components On-Site
Procurement & related engineering
(Major NSSS components on-site - 63 months) Planning Long lead component procurement and fabrication
Engineerng Complete
Detailed engineering for Construction Plng Detailed engineering for construction
(Final construction ready designcomplete before construction start)
Simulator Order Start Software
Placed Development Simulator Operational
Simulator Procurement / Installation Plng Manufacture, Test & Install
(Simulator required operational 12 months before fuel load) Provisional
Turnover
First Concrete Pour
Start Fuel Load
Plant Construction Planning Site Preparation Plant Construction, Start-up Testing
(Site prep - 15 months, construction - 48 months)
AREVA NP Inc. MIT Student Presentation Nov. 5, 2007 24
Estimated 2006 Production Costs
35
$31.4
30
$23.4
25
20
$/MWh
$14.0
15
10
5
0
4-Loop Plant US EPR Coal
New Build Will Cost Less to Operate Than
Existing Plants
AREVA NP Inc. MIT Student Presentation Nov. 5, 2007 25
AREVA Will Continue to Need New Employees
Current openings end of Feb. 007– 307
Total Full -Time Hires
Total 2006 2007 Goals
Internal 225 200
Hires
External 337 325
Hires
Total Hires 562 525
New Hires Needed
by 2010 = 1000
AREVA NP Inc. MIT Student Presentation Nov. 5, 2007 26
Types of Engineers Supporting
EPR Projects
> Mechanical – fluids, heat transfer,
FEM
> Civil – soil interaction,
earthquakes
> Structural – linear and non-linear
analyses
> Electrical – design, diesel
generators, one-lines
> Electronics – digital
instrumentation and control
> Nuclear – neutronics,
thermal/hydraulics
> Fire – nuclear fire safety
> Materials – fatigue, stress, FEM
> Construction (just starting)
Olkiluoto 3 RV head
manufacturing
AREVA NP Inc. MIT Student Presentation Nov. 5, 2007 27
The Next Generation of Leaders
> Key skills
Problem solving and decision making
• Short-term crisis management
• Long-term construction management
Working with teams (domestic and international)
• JV, LLC, etc.
Learning from mistakes
Broadened knowledge base
• New NSSS vendor responsibilities – 50% of entire plan
– Civil
– Structural
– Etc.
Ability to adapt to rapid innovation and technology
• New ideas
• Technology
• Curiosity
AREVA NP Inc. MIT Student Presentation Nov. 5, 2007 28
In Summary - It’s an Exciting and Challenging Time
> This is a critical time in the energy generation
industry – demand supports the Nuclear
Renaissance
> We face greater economic and environmental
challenges than ever before
> Nuclear is making a comeback
Environmentally friendly
Energy independence
> We have the new technologies but success
depends on
New approaches, innovation, enthusiasm and
dedication
A new generation of “employees”
Our Business Is Growing Fast – We’ll be Here
For a Long Time
AREVA NP Inc. MIT Student Presentation Nov. 5, 2007 29
AREVA