Sustaining supply chains for a business that is characterised by strong safety regulation, very long lead times and dramatic fluctuations in cycles of activity is an issue for some countries. For the nuclear sector this is particularly the case for key components like large forgings and castings but also smaller, level three supply chain items like switches and valves. The nuclear sector also has unique features such as strong quality assurance requirements, and corresponding materials certification requirements.

Almost by definition, the supply chain is most robust in those countries that also have a significant live nuclear fleet based on incumbent nuclear designs like the US, France, Russia, South Korea and China. This is reinforced where that is in combination with new build plans as well as government policy that drives and supports the industry.

“When we talk about the supply chain, that means countries like China, Korea or the US have to a lesser extent challenges, while European countries like Switzerland, Sweden and even the UK, do have their challenges,” Michael Kruse, Managing Partner and Global Leader Energy in the Utilities Practice of Arthur D. Little Schweiz AG, tells NEI.

There are also spill over effects, especially across the second and third tier suppliers of specialised components and equipment that they are delivering into the supply chain. “The reason is that when there is not a repetitive business, then the capabilities of companies will shrink and diminish,” says Kruse. However, while the industry – bar a few hotspots here and there – has largely been in a position of managed decline for decades that landscape has radically changed in the last few years and supply chain challenges must now be addressed if the sector is to meet new and reinvigorated market demands.

“There is no global answer to address all these challenges and businesses need to think on a more regional perspective,” says Kruse, adding: “It is a significant issue in Western Europe, as well as to an increasing extent in Eastern Europe, especially at those plants that are operating Russian technology, because this will also lead to increasing supply chain issues due to the geopolitical situation. The most severe supply chain issues are related to Europe and possibly countries that are closely tied to European technology, like South Africa. Conversely, in countries like the US, China and Japan there is a strong and large nuclear fleet and a domestic market in general.

Supply chains don’t just concern physical components though. Another critical element for the nuclear sector concerns the skilled and experienced people that are needed for development to take place. While there are regional variations at play, the recruitment and human capital development issue is significantly more widespread. This is currently a big issue in the UAE and Turkey, for example, as well as Saudi Arabia, which plans to start building soon.

“I think this is a general issue in most countries, excluding China, Russia and also countries like India which are all special cases. But in regard to Western countries, the ageing of staff at the operator end, as well as at the supplier end, creates a significant challenge. Entities are struggling with these capabilities due to ageing and lack of young professionals entering the industry. Losing experienced workforce also means they are losing the capabilities needed to oversee the product that’s going to be produced, permitted, and then installed in the plant. One of the key issues is that 80% of the effort is documentation-related and companies need to understand how to do the technical documentation, the licensing and permitting-related documentation for equipment and components,” Kruse explains. He adds: It’s a linked process. You cannot isolate the operator side from the supplier side because the operator has an oversight responsibility. It also needs to their contribution to the supply chain, in regard to requirements management, configuration, documentation, licensing and quality assurance. This is a significant challenge in many countries right now, “not speaking about the challenges with certified craftsmen like welders and radiation protection labour”, Kruse adds.

It’s clear that in order to overcome this issue requires education programmes and also effective marketing to make the industry more attractive as an employment opportunity due to the energy transition. Developments like SMR and fusion do have an air of excitement that might go some way to making the nuclear sector more attractive to the young, brilliant engineers needed but there is stiff competition. “There is loss of people, especially the younger workforce from the oil and gas sector or the nuclear sector into the renewable sector. It’s technicians but also the academic workforce working elsewhere and that creates workforce challenges,” Kruse says.

Digital tooling to support management and training as part of a knowledge transfer programme is emerging as part of the solution, but Kruse argues that it is not a complete answer. “People are pinning their hopes on digital tools that are emerging like building information modelling and configuration management tools which link into the requirements management. However, in the end there are always three dimensions that need to be considered in a supply chain. You have the human element, you have the technology element, and you have the organisation element. That cannot all be solved just by digital tools. Interfaces need to be managed, they need to be human and need to take decisions. Nuclear oversight needs to be done by someone and both the operator and the supplier need to have these capabilities. That will always require humans so they cannot be fully replaced,” he says.

Nonetheless, digital tools can make some supply chain issues easier, such as engineering of components, ageing management of operating plants and exchanging g requirements between regulators, owners, and suppliers. “This is a big issue, ensuring the equipment is being manufactured and installed in a conformant way and doesn’t create any non-conformities, which lead to cost overruns and risk energy availability of the plant,” notes Kruse.

Developing a suitable regulatory regime

Another related supply chain challenge is the licensing and regulatory processes that are in place. Kruse cites SMRs as an example: “One of the main barriers to SMR development is international standards determination with regard to licensing and product standardisation. SMRs require a standard supply chain, which leads to economies of scale and learning curve effects that will bring down the cost. That is needed to make the levelised cost of energy competitive against renewables and this is only possible if the licensing of SMRs is similar to aviation, for example. When you license an aircraft in the US, by the US authorities, it’s also accepted by the European authorities. For nuclear, that is not the case. It’s country-specific licensing and though there are a lot of efforts underway to make that process more harmonised it’s not really progressing satisfactorily.”

Kruse continues: “This will also affect the supply chain because economically viable SMRs require a standardised global supply chain. Today, nuclear new build often demands a significant local component. Countries like the Kingdom of Saudi Arabia and Turkey mandate local content for example, and that means modification of an open supply chain which requires that the local workforce are appropriately educated and all the manufacturing is certified.”

Considering other aspects of new build, another key supply chain issue is the loss of capability as the industry has fragmented. Suppliers from Western countries in particular do not have a strong integrated EPC capability like they used to when they were building multiple second generation plants.

Kruse argues that companies like Framatome, Westinghouse and Siemens had far stronger vertically integrated supply chains and could therefore manage the end-to-end supply chain in-house. “This capability doesn’t exist anymore among Western suppliers,” says Kruse. Conversely, Eastern suppliers, for example Rosatom, have a backwards vertically-integrated capability. “Their supply chain is capable of delivering locally but, irrespective from sanctions, is actually hardly able to deliver globally. This is because the local standards are often different from Western standards and then they need to either replace sub-suppliers, or they are internal sub suppliers and need to manufacture according to Western standards, like ASME and IEEE that they are not used to. Again, that’s strongly related to documentation requirements. If you link it also to the labour issue in Western countries then if the owner organisation is short of capable people, then they cannot manage the supplier and the supply chain sufficiently to avoid cost overruns and redundant work and reengineering efforts,” Kruse concludes.

Light at the end of the tunnel?

Improving the capabilities of the supply chain is a complex and multi-faceted challenge but Kruse believes there are positive actions that can be taken. He says: “I think one main requirement is to continue working on international harmonisation and standardisation of licensing and permitting. That’s one key element. Secondly, I think that some existing plants need to get
the ‘as built’ documentation, as well as the modification documentation in place and digitised so they have a proper component inventory and the needed master data for every component available. That will allow them to become more independent and knowledgeable about what they have really built into the plant as components.”

Kruse says that new plants tend to already have this kind of information available in a digital format as regulators nowadays have quite strict configuration management requirements asking the owner and the supplier to have a digital model of the plant, including all digital information available on the installed equipment and components. Older plants don’t all have that and there are even still a significant number of components which are not properly documented. “Often only the supplier who has been servicing the plant has the knowledge about that and this means that there is a risk for the operator by not having sufficient intelligence if the supplier is not available anymore, or if they want to have a dual source strategy,” explains Kruse, adding: “That technical database is a prerequisite to build a more robust supply chain, to understand where operators do have obsolescence of materials, or where materials and suppliers are at risk. That kind of classification is the groundwork that is needed.”

This information needs to be available to operators to build a resilient supply chain if alternative suppliers are to be sourced and are to be able to meet the replacement requirements for those components. “In Western Europe many operators have not done this homework yet and I would also suppose this is the case in the US even though the US has a larger fleet. Where those vulnerabilities exist, the risks to component supply chains are necessarily higher whereas in a bigger, more robust market that’s less likely to happen, although not impossible,” notes Kruse.

In Western Europe, many operators are concerned about the capability of the supply chain and suppliers of critical components leaving the market, or losing the required capabilities that means they can deliver on time, at the right cost and quality. That puts the economics of the plant at risk.

The nuclear supply chain is also complex. There is the supply chain for new build, then for operations and another for decommissioning. There are international and quite local components in that supply chain. “There’s market design, policy and all sorts of other things that go into that but if you can’t build and maintain it at a reasonable cost, you’re nowhere. The common denominator is the question of technical and licensing and safety-related standards and the availability of knowledgeable people who can deal with the requirements engineering well,” says Kruse. He concludes: “The levelised cost of energy needs to be competitive against renewables that only have a very low marginal cost. This is the biggest challenge for nuclear power plants and the supply chain has to play a quite important role to deliver that promise of safe and cheap energy. There is simply no one gold bullet to fix it.”