Past, present and future

29 December 2001

This is the first in a regular series that looks at how various individuals see the industry. As the title suggests, it might involve a look at the past, or the present, or the future of the industry, depending upon the viewpoint of the individual concerned. In this, the first of the series, Allen Kilpatrick, the recently retired president of AECL, talks to NEI about his view on the current state of the industry.

The industry has seen some dramatic changes over the last five years. Privatisation and deregulation have transformed the market. Nuclear now has to compete with other fuels, most notably, gas-fired combined-cycle plants.

In addition, climate change and air quality issues have resulted in an opening for the industry to ‘become respectable’ in the eyes of the public. This gives the nuclear industry an excellent opportunity to develop its position in the market.

To increase nuclear’s role in power generation, reactors have to be designed to have lower capital costs. If we are to compete with combined-cycle plants, then plants have to offer a faster return on investment. A critical part of this will be to reduce the construction time of new reactors.

The future of the industry will also be affected by what value is placed on the avoidance of carbon emissions.

The market will be most likely looking for new reactors that will be smaller in size than those used at present. The probable optimum size for the next generation of reactors is 600MWe, rather than the current average of about 1000MWe.

Capital cost reduction hasn’t been a major issue until fairly recently. In retrospect, we perhaps should have become more market-oriented more quickly. In particular, it might have been better if AECL had become more entrepreneurial more quickly. That said, I feel that my best achievement with AECL has been to bring the company to recognition of the new market realities. We are in competition with gas-fired plants, and we have to compete effectively to maintain our position.

There are many encouraging signs for the nuclear industry. The OECD and the World Energy Council (WEC) have said that there is a growing public recognition of a concern over climate change and that nuclear power can be one of the solutions to this. For example, nuclear power can be used to produce hydrogen for use in fuel cells.

One of the most contentious issues AECL has faced has been the consequence of the report a few years ago by Carl Andognini into the nuclear operations of the former Ontario Hydro. Overall, the report did not have a huge impact on AECL. The report was very clear that it was not the technology that was at fault, and that indeed, the Candu technology was sufficiently robust to be able cope with the then poor operating protocols of the utility.

Since the publication of the report, Carl Andognini has spent a good deal of time explaining to our customers and potential customers that the technology was not a problem. The Chinese in particular were initially concerned over the report. However, we have been able to reassure them.

Carl Andognini has become quite a fan of the technology, praising its robustness and the ability, with on-line refuelling, for very high load factors to be achieved.

Looking to the future

There are a number of issues that will face my successor. I see three main issues that will need to be addressed by a new president and AECL’s executive team. These are:

•Growing the services business.

•Attracting and retaining good young people into the industry.

•Developing the relationship with our shareholders.

The service business is an increasingly important part of the industry, as the life extension of current plants grows in importance. To sustain medium-term growth of the company, we must grow the service business.

As far as attracting young people to the industry is concerned, the problem mainly lies in the area of nuclear physics, rather than engineering. We will have to convince people that the nuclear industry has a strong future.

It is actually a very good time for people to enter the industry. The demographic profile of the industry is such that new entrants into the industry will have excellent promotion prospects.

I also think that AECL must continue to improve and develop the awareness of the public with regard to the nuclear industry. There is still a lot of public opposition to nuclear power in Canada and, more importantly, a lot of ignorance. We have found that the more people know about the industry and understand it, the more they are prepared to accept it.

The question is, should we spend money in Canada on improving public acceptance towards the nuclear industry, given that it is unlikely that there will be any new construction in the foreseeable future in Canada, or should that money be spent instead in Turkey or Korea, where new construction is much more likely.

We will need to accelerate development of the next generation of reactors. As part of that, we will need to take on partners that are needed to help bring the construction costs down and, more importantly, to improve our market access. Up until now, AECL has not really been involved in partnerships. Obviously, we will need to choose any partner with care. We would like a partner that has a geographical location that will give us better market access. We are not restricting our search to companies necessarily involved in the nuclear industry. There are many parts of the construction of a nuclear power plant that are for example, civil construction, rather than nuclear.

Overall, I believe that the industry is in a strong position. There are still a number of issues that we must continue to address, such as reducing construction costs, but the opportunities are currently very bright.

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