The writing is on the wall

Since its ‘inaugural’ annual symposium as the World Nuclear Association (WNA) in 2001, the former Uranium Institute has to broadened its remit, to cover every aspect of the nuclear industry. This apparent change of focus was indicated in the 2001 opening speech given by the then chairman of the WNA, Agneta Rising, who said: “This would have been the 26th Annual Symposium of the Uranium Institute. Instead, it is the Inaugural Symposium of the new WNA.”

But essentially, the WNA Symposium is two meetings for the price of one: it still remains one of the most important annual gatherings of the front-end fuel cycle industry; but it is also a meeting on the nuclear power industry as a whole, and what the future holds for it. Consequently, there is the curious situation (for a meeting without simultaneous tracks) where the delegates that are present for one session are almost completely different to those attending the next session.

In the 2004 meeting held last month (which reverted to the old nomenclature: rather than being the fourth, it was the Twenty Ninth WNA Annual Symposium), there was far more of a realisation that these two areas are in fact interdependent. Along with a sense that the nuclear renaissance is actually now underway, as vice president of New York Nuclear Daniel Einbund claimed, there was also a real concern that we may not have enough reasonably-priced uranium to fuel the next generation of nuclear power.

Nevertheless, the meeting discusses two different worlds: one in which there is uncertainty over whether uranium demand forecasts can be met and at what cost (anti-trust guidelines permitting); and another where there will be enough nuclear reactors to supply the almost unimaginably high energy demands of the future, no matter what the implications for uranium requirements. Because these two worlds contain hugely different numbers of nuclear reactors, this annual event has in recent years developed something of a split personality.

VISION OF THE FUTURE

Opening the proceedings, WNA director general John Ritch reminded the delegates why nuclear has to be a major component of future power generation. There is, he said, “a very real danger that we may be unable to reconcile the wants and needs of the expanding world population with the preservation of the Earthly biosphere that enables civilization to evolve. The most fundamental requirement is to achieve a global transformation between energy technologies. Only such a sweeping revolution can curtail the rate at which we pour greenhouse gases into our atmosphere, inviting ecological catastrophe.

“When I took this job just under four years ago, I was surprised to learn that many in the industry were sceptical about the climate crisis that led me here. By now, however, I think that even many of the curmudgeons in our industry are beginning to realise that global warming is not just a convenient argument for nuclear power but a profound reason why our industry must succeed. Even as we speak, the devastating flood of carbon waste into the atmosphere – still unmitigated by all the rhetoric of Kyoto and minimal actions that have actually resulted – continues at the rate of 800t of CO2 per second. It is the guiding premise of the WNA that any successful strategy to achieve a global transformation between energies must use nuclear power in a central role – not only to generate electricity, but also in the future to separate pure hydrogen for transport and to desalinate seawater.”

Hydrogen production

Nuclear power must therefore play a key role in a sustainable future. Accordingly, as in recent WNA Symposia, there was a session on ‘the hydrogen economy and sustainable development’.

Hans Forsström, head of the nuclear fission and radiation protection unit in the European Commission (EC) DG Research, outlined the research programme on hydrogen and fuel cell technology in the European Union (EU). “The EU has acknowledged the potential of hydrogen and fuel cells for a long time,” he said. “However the past two years have seen an unprecedented number of significant new initiatives, not only in the EU but worldwide.”

Two years ago – at the request of Loyola de Palacio, the outgoing EC commissioner for energy and transport, and Philippe Busquin, the (now former) EC commissioner for research – a High Level Group for Hydrogen and Fuel Cells was formed. In mid-2003, the group published a report titled Hydrogen Energy and Fuel Cells – a Vision for our Future, which outlined the research, deployment and actions necessary to move towards a sustainable hydrogen-oriented economy with fuel cell energy converters.

The report recommended the creation of a Hydrogen and Fuel Cell Technology Platform made up of different stakeholders such as industry, regulators and the public. Set up in January 2004, this platform is currently playing an important role in discussions over what should be the role of hydrogen and fuel cell research in the upcoming Framework Programme beginning in 2006. Eventually, the EC aims to set up a European Research Area in hydrogen.

This is obviously something for the nuclear industry to get excited about. In Forsström’s words: “It’s clear that nuclear energy is one possible source. I’m sure that some would even say that it’s the best source for the future.” But he also said that, despite “some minor research going on in the Euratom programme on high temperature reactors and very high temperature reactors,” the EC “is not doing very much work on nuclear and hydrogen.”

In fact, it would seem that, at least within the EU, nuclear may well end up sitting on the sidelines. The 2003 report of the high level group stated: “In the longer term renewable energy sources will become the most important source for the production of hydrogen.”

Japan is carrying out research at its High Temperature Test Reactor, and the USA has committed itself (at least in principle) to the Next Generation Nuclear Plant to demonstrate hydrogen production, so “why is the Commission not really doing a lot in the research on the Euratom side? Well one important thing is: you need political acceptance,” Forsström said, adding: “Euratom decisions on research are unanimous decisions. And that means that you need to get all the member states to agree. You might realise that this is a difficult thing.”

Fortunately, the impact of this bad news was softened by the next speaker, Paul Kruger of Stanford University, who asked where the energy for the next 50 years is going to come from. He posed the question: “How will your children heat their homes when the price of natural gas gets to the point when only electric utilities can buy it?” The answer, of course, is obvious: “Whether the future generations will like or dislike nuclear, they will learn to accept it because it is absolutely necessary.”

Kruger believes that the question is not one of ‘nuclear or renewables’, as many in the environmental lobby would have it. On this point, Kruger stated: “We are fighting a battle today between the nuclear fraternity and the alternative energy fraternity (renewables) and I hope we leave today with the hope that these two fraternities can join each other and solve the problem of where the total amount of energy must come from.” Under the scenario presented by Kruger, we will need all the electricity we can get. “Nobody knows what the future of electrical energy demand is going to be, but I think it should be obvious that it’s going to be much more than we have now because we are heading into more and more electricity intense new applications,” he said.

The bottom line

Maybe nuclear must play a major part in long-term energy supply purely because there is no viable alternative. But in the short to medium term, there is a choice, and that choice is to some degree based on economics.

In the session on ‘the economics of nuclear power’, Malcolm Grimston of Imperial College, London, UK discussed liberalisation of power markets. Although an important consideration for nuclear power investors and operators, Grimston showed how unpredictable liberalisation is – not least because the way that politicians react is unpredictable. For example, he said: “In Norway, where there was a major capacity crisis in 2002/3 in the winter (one back from the one we’ve just had), the politicians said: ‘This is the market in operation,’ stood back, and the thing corrected itself. On the other hand, Gray Davis thought it was worth spending $43 billion of Californians’ taxes in trying to deal in a panicky way with the outcomes of the Californian crisis.”

In his paper he concluded that heavily capital-intensive sources of electricity, such as nuclear, “are inherently unattractive for ‘merchant’ power plants which will sell their output into uncertain markets for several decades. This is not to say that a ‘merchant’ nuclear fleet cannot be built, but it is noticeable that the decline in new orders for nuclear plants in the market economies has coincided with growing liberalisation of power markets.”

However, Grimston added: “I don’t think investment in any other sort of plant is all that much better. CCGT is better – much cheaper to build, you get the money back far more rapidly – but even with CCGT in a country like the UK they’re not being built at this moment.”

Perhaps not so good for new nuclear (or any other) build, deregulation has helped create an environment in which investment in existing nuclear plant is attractive, as Bruce Lacy, manager of nuclear business at Alliant Energy, showed. In the USA, there is a strong correlation between the states that have undergone market liberalisation and nuclear plant sales, mergers and consolidations. In addition, with the exception of Vermont, all plant sales in liberalised states have occurred only after liberalisation.

In contrast to Grimston’s analysis, Lacy concluded that the business environment provided by liberalisation is an essential step towards investment in new nuclear plants in the USA.

REACTOR REQUIREMENTS

As mentioned earlier, new plants will only be built so long as there is enough confidence that there will be an adequate fuel supply. For quite some time, many people in the industry have taken this for granted, but this last year has caused some to question this assumption.

Following such an eventful year in the front end of the fuel cycle, many delegates were eager to hear the presentation by James Graham, president and CEO of ConverDyn. Graham described what he saw as the root causes of the shutdown at the Metropolis conversion facility. First of all, he said: “We’ve got to look at history first to see what put us into this condition.” He continued: “If you go back ten years, wave after wave of events occurred that impacted the conversion industry. Well-intended, logical, everyone would do that – but it did have an impact. One event by itself probably would have gone through – we would have never noticed it.” The main events he listed were:

• The Russian HEU Agreement – which laid out the schedule for some 150,000tU as UF6 contained in EUP to be delivered into the USA beginning in 1995.
• Privatisation of USEC, resulting in USEC receiving the equivalent of over 23,000tU of UF6 in 1998, all of which would displace primary conversion.
• Cutbacks in civilian nuclear programmes in the late ’70s and ’80s, the end of the Cold War and utility deregulation resulted in huge quantities of uranium inventories becoming available in the late ’80s and ’90s.

But it didn’t end there. Pressure increased to deliver North American conversion to Europe, as North American enrichment customers were attracted by centrifuge enrichment capacity in Europe. Transport accordingly becomes increasingly important. On new transport regulations, Graham commented: “Cylinder protection –TS-R-1. Obviously that goes into effect at the end of this year – all for five minutes. We’ve been transporting cylinders around the world for years, we’ve never had an incident, and suddenly we now need protection, and all that money, time, exposure, safety, for five minutes. And, at the end of it, with the thermal protection, will we be safer?”

And again, it didn’t end there: new perceived threats posed by terrorism diverted focus onto security issues. “And finally, in 2003, we saw the results of all those prior years of decisions of the industry – some of us can look at it and say that we were penny wise and dollar foolish, because you can push the envelope so far but at some point in time you have to pay the piper. And, for us at Metropolis, 2003 was a year of stress.”

In July and September 2003, several minor chemical releases occurred in the plant. On 12 September, Honeywell ceased all production to carry out repair work and an extensive review of plant equipment and procedures. Production was back up on 21 November. But on 22 December 2003, while preparing to start up a second fluorination train in the UF6 building, another release occurred, this time resulting in fluorine compounds travelling off-site. The rest is – hopefully – history.

“I think the events of 2003 and 2004, although painful to those participating in it, and painful for some of the utilities that dealt with it on a personal basis, were a lesson learned for the industry,” he said. That lesson for the whole industry, of course, is to plan and to invest. “We made the decision,” Graham said, “to cut back, and we saw the results of those decisions on 22 December when we had a release from our site – the first release in the history of our facility.”

Graham ended his talk saying that, though ConverDyn had learned from the experience, it didn’t mean that it would be plain sailing from now on. There are still questions that need to be answered; for example, will there be an HEU II, or increased US HEU downblending?

Indeed, the future looks tough for the conversion industry, according to the next speaker, Scott Melbye, vice president Marketing USA & Latin America at Cameco. He said that post 2006 will be “a critical time period in the conversion market due to the fact that there is an anticipated decrease in known supply while at the same time there is an expected increase in demand.”

Melbye acknowledged that we have all seen this gap between projected supply and demand before, “and we know that sources of supply today will change in order to meet demand in the future. The question is: what will change and where will this supply come from?” The possibilities he listed were:

• New primary production facilities – “but not until conversion prices justify new plant investment.”
• Expansion of existing plant.
• More secondary supplies.
• Inventory drawdown – “but only if there is inventory available.”
• Decreasing tails assays – “but this may be a zero sum game, since enrichers already take advantage of operational tails assays that are below transactional tails assays.”

Eric Cline, minister of industry and resources in Canada’s Saskatchewan provice, agreed that action was needed, and said there was a growing realisation that “any secondary source of uranium is finite and we must look ahead to primary production to meet future demand”.

A nuclear fuel renaissance?

As mentioned earlier, Daniel Einbund said he believes that “there is little question that we already are in the middle of the Renaissance of nuclear power generation.” However, he went on to say: “I am not so sure that there is a renaissance in nuclear fuel.”

Not sponsored by the nuclear industry: Michelangelo's David

As Einbund gave a history lesson on the Middle Ages and the Renaissance, comparing these eras with the ‘Nuclear Fuel Age’, it was extremely refreshing to hear such a humorous presentation on this worrying topic. It is not difficult to guess which of the three eras came out worst in his analysis – his conclusion summed it all up: “We all know Michelangelo’s David. It stands majestically over 4m tall at the Academia Gallery in Florence. I propose to you that if Michelangelo had been under the sponsorship of the nuclear industry, David would be the size of a deck of cards, as cost cutting requirements would have not made it possible to supply such a big piece of marble.”