Reshaping the IAEA Milestone process8 May 2013
The IAEA milestones process remains a major guide for countries, and especially newcomer countries, entering into a nuclear programme. However, it should be revised to take into account new models for nuclear plant construction and the possible emergence of small reactors. By A. Bugat, M. Lecomte, A. Vallee and L. Auzel
Before the Fukushima accident in the spring of 2011, many countries indicated strong interest in developing nuclear energy. Since then, many projects have continued although they may have slowed temporarily.
Over the last three years, NucAdvisor, a consultant that provides advice, expertise, technical and financial assistance, training and engineering services for clients planning to build nuclear facilities, has been directly involved in, or has evaluated the set-up of nuclear power programmes in more than a dozen countries, including Egypt, Libya, Tunisia, Kuwait, UAE, Jordan, Malaysia, Thailand, Vietnam, Saudi Arabia, Kenya, Bulgaria, Lithuania and Poland. This provides NucAdvisor with important feedback on the challenges and difficulties faced by these countries in setting up their nuclear programmes, and on the main drivers of the nuclear renaissance as far as it concerns newcomers.
What has become clear is that a significant number of projects cannot be clearly related to the Milestones process, through which the IAEA has set, over the last decade, the basis for a large consensus around the way nuclear programmes should be developed. Experience has shown that the nineteen issues in the IAEA milestone process no longer have the same importance as other issues such as financing, site selection and public acceptance. Finally, the authors suggest that a review of the IAEA Milestones process could be required for a quicker and well-planned introduction of SMRs and large reactors on the world market.
IAEA Milestones process
Launching a nuclear power programme is a major commitment for a country. It has to be carefully planned, requires huge resource investments and involves many stakeholders: the Government, regulatory bodies, electric utilities, grid operators, research institutes, universities and the public.
The IAEA has developed the Milestones guidelines process ('Milestones in the Development of a National Infrastructure for Nuclear Power,' NG-G-3.1) that aims to help countries work in a systematic way towards the introduction of nuclear power. In particular it serves to mark progress during planning stages, and to demonstrate to national and international stakeholders a commitment to nuclear safety and control of nuclear materials.
The process is composed of three major phases of development: pre-project work, project decision-making and a construction phase (as shown in Figure 1).
To be successful, the nuclear programme needs to be supported by the necessary infrastructure, which cover a wide range of issues (see box), such as the legal and regulatory framework, the reactor technology, the electricity grid, the strategy for management of the radioactive wastes, human resources development, financing of the project, and so on.
Funding and financing
Human resources development
Site and supporting facilities
Security and physical protection
Nuclear fuel cycle
During the first phase of the Milestones process a country conducts a feasibility study where it considers nuclear power as a possible option for the country's energy mix. This can then lead it to make a "knowledgeable commitment to a nuclear programme". Once this decision has been taken, preparatory works can start (phase 2). This includes developing national and international frameworks as well as all the necessary infrastructure for the construction of a nuclear power plant. The second phase ends with the selection of a reactor technology and bidders are invited for the construction of a nuclear power plant. Finally, the third phase covers the construction activities until commissioning of the plant.
In all, according to the IAEA process, planning the construction of a nuclear energy unit in a country could take 10-15 years, from the first pre-feasibility study to plant commissioning. The extremely long duration of this process is not at synchronised with investment schedules and prospects nowadays. Time, and uncertainty which goes with it, are major drawbacks to the development of nuclear energy. Therefore streamlining the IAEA process looks to be a prerequisite to a true nuclear renaissance.
Countries planning nuclear power programmes can be split into four groups:
(a) Strong and historical nuclear countries
Most in this group, including USA, France, UK, Russia, Canada and Korea are continuing with nuclear energy. Japan is also part of this group but its real nuclear future cannot be clearly described. Germany and Italy are clearly phasing out nuclear, however from our point of view, final decisions in Switzerland, Spain and Belgium have not been reached. Countries in this group are members of IAEA, but they mainly follow their own national guidelines as well as those of the Nuclear Suppliers Group and the International Framework for Nuclear Energy Cooperation.
(b) Nuclear countries willing to increase the importance of nuclear in their electricity mix
Almost all of these are countries with large GDP growth and huge needs for electricity; they mobilize all types of energy, and nuclear is an important part of the answer to their needs. Countries in this group include China, India, Brazil, South Africa, Finland, Czech Republic, Bulgaria, and Argentina. These countries have a nuclear framework very similar to group (a) and do not refer explicitly to the IAEA Milestones process.
(c) Newcomers to nuclear energy with great financial means, emerging countries, or countries of Central Europe
This group includes UAE, Libya, Saudi Arabia, Poland, Kuwait (although its programme is temporarily withdrawn), Algeria, Nigeria and Kazakhstan.
(d) Newcomers to nuclear energy without great financial means
These countries include Lithuania, Thailand, Malaysia, Indonesia, Egypt, Jordan, Tunisia, Morocco, Kenya, Bangladesh, Turkey, Vietnam, and so on.
Using the process
It appears that the IAEA Milestones process is almost exclusively dedicated to countries of groups (c) and (d), that is, the newcomers to nuclear energy. Most of those countries have made, or make, explicit reference to the "IAEA Milestones process" when launching their new build programmes. The status of nuclear in the country and its existing nuclear activities often play a role in the chosen path, however key issues driving the process may be quite different.
Phase 1, which includes pre-project activities and feasibility studies, is the most "political" phase. It mainly involves governmental agencies and ministries. This is for diplomatic reasons (such as ensuring the country adheres to the Non-Proliferation Treaty), as well as for national reasons, including the role of the national energy strategy, public acceptance and the need to set up a regulatory framework. Almost all the newcomers (including the richest ones like UAE) respect the requirements of this phase, even though the implementation can differ.
It appears that this Phase 1, which was at the origin considered by many as the most important to assure the compliance with non-proliferation, safety and security international regulations, does not present any significant difficulties. Countries are willing to show a total and immediate compliance; their governments sign bilateral agreements with all the "big" nuclear countries, and at the end of the day encounter no difficulties during the IAEA audits of Milestone 1.
An exception to this positive picture is related to stakeholder involvement: national authorities often underestimate the need to consult local authorities, organizations or neighbouring countries, but this is now improving.
Phase 2 (preparatory works) appears to be the key phase of a nuclear programme, for three reasons:
- The work shifts from the high-level considerations of a programme to the practical ones related to the site selection and the preparatory works for building a nuclear facility
- The responsibility shifts almost in every case from a para-governmental agency (NEPIO) to an owner/electrical utility
- The main, difficult issues such as site selection, qualification and financing come to the forefront.
A significant number of projects cannot be clearly related to the Milestones process, because they take place, from the beginning, in the framework of bilateral agreements between the emerging country and a large nuclear country (as of today, mainly Russia, but also to a less extent Japan and Korea). These are the cases of Vietnam with Russia (Ninh Thuan I) and Japan (Ninh Thuan II), of Turkey with Russia (Akkuyu), of Bangladesh (Rooppur) and Belarus with Russia, and of Bulgaria with Russia (Belene, until it was stopped).
In all these cases, the existence of a package including financing, brought by the nuclear country of the vendor, is the dominant issue of the Milestones process, sending all others (such as safeguards, radioactive waste, industrial involvement, procurement, etc.) into a second tier. Nuclear safety in particular will not be independent of the technology, as it depends on the reactor type. The notable exceptions are related to site selection, site qualification (though they partially depend on the reactor type), environmental protection and the licensing regulatory process, which must remain independent of the vendor.
That said, the existence of a financing solution allows the pace of the project to be accelerated, even if many issues would have needed more time to be correctly addressed (regulations, public acceptance, wastes, safety culture). Establishing a good safety culture in the newcomer country is a major challenge, cutting across several of the 19 issues, which must be adapted when a package exists.
In almost all cases, the NEPIO or the owner asks for support from dedicated consultancy companies or large engineering groups. The scope of these owners' engineer services can vary broadly from one country to another. It is important to note that even if the reference to the IAEA Milestones process is not explicit in the RFP, these companies will generally make reference to it in their proposals, thus demonstrating that it is a shared recognized framework.
A change in focus
Financing, site selection and public acceptance have become the drivers of nuclear programmes, as the economic benefits of nuclear energy are highly contingent upon the speed at which nuclear projects are developed. They take the lead over some issues initially considered as prominent in the IAEA milestones process, such as international and national legal frameworks or capacity-building.
While implementing the IAEA methodology, it also turns out that some issues are strongly interrelated, such as technology selection, procurement model, financing and operation. The key point is recognizing that each NPP project requires, mainly for safety reasons, the involvement of an experienced nuclear power producer; their role very often can be as financing party but essentially as operator or co-operator. And this power producer will require a technology that it is accustomed to. It is quite evident that these elements deeply change the procurement models when compared to the Milestones process.
The evolution of project schedules towards more realistic timeframes and of full scope owner's engineering services towards tailor-made services is also progress; it enables nuclear projects to be competitive with other long-term projects, such as renewable energy.
As we may conclude from the above considerations, a central core can be extracted from the 19 issues of the Milestones process, which is not exactly the same than when the Milestones process was defined.
We think that this central core comprises:
- Site and environment
- National and international acceptance
Three issues which we consider in fact as totally interdependent are:
- Funding and financing
- Technology (reactor but mainly fuel cycle and waste management)
- Management (operator and capital structure of the owner).
Furthermore, Milestone 2 ('Ready to invite bids for the first nuclear power plant') appears to be somewhat unrealistic because it assumes separate processes for selecting investors, vendors (for example, reactor technology) and eventually associated operators. But most of the recent examples of successful contracts are not based on that kind of process; they rely on the selection of a consortium investors/vendors, or investors/ operators/vendors (for example, in Lithuania, UAE, Poland, Bulgaria, Vietnam, Turkey, and to come in Jordan). The most interesting case is Lithuania which began in 2009 a process for selecting only one investor and changed it one year ago to selecting a vendor/investor (GE-Hitachi). But it is difficult to say whether this process will continue or not, when taking into account the negative results of elections and a referendum on 14 October.
This is why we think that the sentence characterizing funding and financing (Milestone 2 of the IAEA document) is not really adapted to the present situation: "Having identified and obtained a reliable source of financing and having funded the activities of the national infrastructure will satisfy the principal financial aspects required to support the request for bid for the first nuclear power plant". Stress ought to be put more explicitly on:
- The increased difficulty of financing a NPP project, in equity with national means or in debt with international loans, due to the "crisis," but also to a large extent due to the numerous uncertainties (political, safety requirements, public acceptance) characterizing today's nuclear activities
- The new context for banks due to the international arrangements taken to strengthen the accounting balances (Basel III agreements)
- The fact that the competition between vendors has obscured the stringent necessity to rely on a utility partner experienced with nuclear operations (of which there are not so many on the worldwide market)
- The fact that the utility/partner/investor will prefer to select the reactor technology it is accustomed to, without competition.
Finally, the reshaping of the Milestones process must also include new paradigms, such as mainly the probable emergence of Small Modular Reactors within the next ten years. The process for ground-based SMRs will not be fundamentally different from those of the existing Milestones process (but probably simpler, for example concerning industrial involvement).
However, transportable reactors (floating or immersed) will require significantly different approaches. First, they will require adaptation of the international and legal frameworks to take into account relatively frequent maritime transportations of fresh fuel or spent fuel contained in the plant. Second, they will introduce new sharing of responsibilities between the emerging countries and the country of the vendor (concerning the role of the safety authorities, waste storage and/or repository facilities international and legal frameworks, safeguards, security and physical protection, and so on). Lastly the technical issues related to the site (such as choice, qualification, environmental protection, involvement of neighbouring countries, emergency planning) have to be largely adapted specifically for floating systems such as the Russian barge and immersed systems such as the French DCNS FlexBlue. It must be noticed that these concepts of SMRs, which are compatible with leasing solutions, could simplify to a large extent the setting up of the safety culture by focusing it on waste management, environmental protection and emergency planning. This is why it is important that the IAEA working group on transportable NPPs proposes an expedited Milestone process for TNPPs.
The IAEA Milestones process still constitutes a major guide for all countries that are entering a nuclear programme, due at least as much to the consensus with which it has been built than its current pertinence. The experience of nuclear projects launched in the last four years show that this process would gain by being reshaped with input from the major issues of modern nuclear projects: financing, site and environment, public acceptance. This would allow countries to focus from the beginning on solving the major difficulties they will face, to avoid wasting time on unrealistic solutions and to keep up the momentum of their projects.
A. Bugat, M. Lecomte and A. Vallee, NucAdvisor, 168/172 boulevard de Verdun, 92408 Courbevoie Cedex - France.
L. Auzel, Ingérop, 168/172 boulevard de Verdun, 92408 Courbevoie Cedex - France.
This paper was originally presented at ENC 2012, 9-12 December 2012, Manchester UK.