Past, present and future

For some time now, it has been the received wisdom that the nuclear industry has to be economically competitive to survive in the current market. For some time, Westinghouse has put forward the target of $1000/kW for construction costs and 3 cent/kWh operating costs as an objective. There is still a way to go on achieving the target on construction costs, but the target on operating costs has already been met.

We hope that we will be able to reduce construction time from four to two years, and to reduce operating costs still further, with a target of 1 cent/kWh. The top ten plants in the USA are close to achieving this.

Confidence in the future of the nuclear industry is as high as it has been for a long time, and there is a good prospect of new construction in the USA starting in the next five years. I think that this is partly due to the positive attitude towards nuclear power that we are seeing from the current administration.

One of the biggest problems facing the nuclear industry is the length of time it takes to license and build a power plant. By introducing modularisation, we hope to be able to reduce plant construction time from four years to two years. On the licensing front, we hope that we will get the proposed ‘one-stop shop’ licensing from the NRC. Quite rightly, consultation with a lot of different groups is required to approve a nuclear power plant, but this currently requires a lot of duplication of effort. The proposed one-stop shop will make it easier, quicker and cheaper to provide the same information and conduct the same level of consultation.

Deregulation will cause consolidation among utilities. Some utilities will specialise in operating nuclear plants. We have already seen this trend underway. This means that there will be fewer customers, and that the customers will be bigger. These customers will be more efficient, and will be more committed to nuclear power, because nuclear power will form a large percentage of its output. These customers will drive new developments.

There is a growing trend for utilities to press for longer fuel contracts than previously. For example, South Texas has signed a life-of-plant fuel contract with Westinghouse, to last until the end of the operating licence of the plant.

Longer contracts reduces the cost of renegotiating the contract, and allows the utility to have confidence in the stability of the contract and its cost. Obviously, the South Texas case is an extreme example, but the trend is certainly towards longer term contracts. This needs the parties involved to have trust in each other and in the future.

Uranium supply

Uranium is a key supply to Westinghouse, which requires good access to the element. The problems at USEC, with it closing one facility, and being in the middle of its dumping lawsuit, there has been a blip in the price and availability of uranium. However, BNFL is a part owner of Urenco, and we are looking at establishing relationships and partnerships in this area.

Fuel issues

The drive from utilities to increase the efficiency of operation and reduce the cost of operation of their plant is leading to fuel seeing heavier duty. Such increased usage will place greater pressure on the fuel rods, and any weaknesses in the design will be shown up. One thing that this will lead to is a much reduced willingness on the part of operators to accept modifications carried out on the fuel system during the course of the operation of the plant. There will be an increased demand for the fuel to be free of such requirements.

Westinghouse has rigourously tested its current designs, giving it confidence that the fuel will stand up to the duty.

Global view

The fuel market is a global market. The market for fuel is fundamentally based on the number of nuclear power plants that are operating around the world. Because there is, at present, only very limited construction of new nuclear plants, there are very limited opportunities for the world market to grow. As a result of this, the main opportunity for expanding a fuel business is at the expense of competing companies. Given that there has been considerable consolidation among vendors, with just Framatome ANP (formerly Framatome and Siemens) and BNFL Westinghouse (formerly BNFL, Westinghouse, and Combustion Engineering) as the active participants in the field. GE still offers BWR fuel, but these are the only main competitors. Licencees may offer opportunities, especially with the growth of privatisation. We have moved into an era in which there are a few, big, expert competitors. The competitors have to be strong, but power plant operators are happy provided that there are two or three effective competitors.

Looking around the world at specific markets, there will be growth in Asia. There will be new plants being built in Japan and Korea. China is also likely to build plants, but we don’t see China as such a big market opportunity as we did ten years ago. We will continue to look at China as a potential market, but we don’t see it as such a major business for us.

We have not seen China meet its own internal projections, and there is a question as to whether or not we would be able to get sufficient return on investment to justify involvement. Obviously, we are still talking with China, but we do have our reservations.

As for elsewhere in the world, we see Europe as an interesting region. Finland is a real opportunity. They are serious about the possibility of building a new reactor, which will increase its significance as a market. There is government support for the project, and public opinion appears to be favourable to the project.

The situation in the Czech Republic is also interesting. The Czech Republic is trying to improve its infrastructure, which is generally supported by the Czech government and people. However, opinion in Austria is less positive, to put it mildly. How this will turn out remains to be seen, but it is clear that the Czech Republic is intent on improving its infrastructure.

The recent energy crisis in California has had a noticeable effect on the public attitude towards nuclear power. This has led to an increased interest in new construction. It is unlikely that new construction will begin in less than five years, as it will take at least that long for the public consultation to be carried out. Nonetheless, there is a more optimistic atmosphere in the USA for construction on new nuclear plants.

New technology

The Pebble Bed Modular Reactor (PBMR) is an exciting technology. I know that Exelon is very committed to the PBMR, and is looking to push this system, including in the USA.

There are significant technical challenges in making fuel for the PBMR. However, when the NRC licenses the fuel, it will open up a new market. It is certainly an exciting potential development that we look forward to. The PBMR offers the advantages of a small footprint, safety (as passive reactors have, by definition, an inherently safe design), and low level of waste generation.

Other important technical developments will be in the next generation of fuel. This will include taking various fuel features from the various plants, and making use of a combination of the best elements. As the duty on fuel increases, we are going to see developments in the use of advanced material for the fabrication, different and more efficient configurations, and different fuel mixes. The fuel for the next generation of nuclear plants will see the biggest changes. Questions that will need to be answered include:

•What is the best alloy?

•What is the best configuration for the grids?

•How do we best control debris?

•How do we best control vibration?

We are making sure that we involve customers in the discussions on what they want out of new fuel designs. This had not been the case in the past, where fuel tended to be designed, and the customer presented with a given design. Customer involvement in the design process is very important.

We are working on a three-year programme for the next series of fuel designs. By 2004-5, we should be completing these designs, and we expect them to be in operation in plants around the world by the end of the decade.

Non-proliferation

Non-proliferation is still an important issue. With the potential problems posed by rogue states, there is a great deal of political interest in finding a resolution. This presents an opportunity for us, in converting decommissioned arms into fuel. Removing weapons-grade material from circulation, locking it up into the fuel cycle will give greater security against potential proliferation. There is already a programme doing this, with Russia and the USA actively putting weapons-grade material into the fuel cycle.

Consolidation

Westinghouse is undergoing a process of consolidation in order to reduce our fixed costs. We have been consolidating our manufacturing facilities by moving the capacity at Hematite, Missouri to Columbia, South Carolina. This move is saving us tens of millions of dollars. This is the biggest piece of integration that is being undertaken.

We are also integrating our engineering codes around the company, which will make it easier for staff to move between sites. This is part of the recognition that the biggest value we get is from the skills of our people. We get significant benefit from the movement of ideas, and that is enhanced by the sensible movement of people around the company. We are a global company, and we have to think globally. It helps if people move around the company, because they then have a better appreciation of the global nature of the company and the business. My job is to bring a global fuel business to help sustain our customers. It is up to us to help our customers to be profitable.

I have to manage this global enterprise, and I don’t want to generate the impression that any one site is the centre. If I sat in Columbia all the time, it is possible that Columbia would be seen as the centre of the organisation. As a result, I’ve done a lot of travelling to all the sites. I set myself the target of visiting all the sites in my first 30 days in this position. In fact, it took me 31 days to do it. I won’t need to travel quite so much in the future, but my role will still be a very mobile one. As a result, the people on each site will have to take on more initiative, because I won’t often be there to look over their shoulder.