1. The Future of Nuclear Power Student Pugwash September 9, 2003 Andrew C. Kadak Professor of the Practice Nuclear Engineering Department former CEO Yankee Atomic Electric Company

3. What’s Happening Now ? Existing nuclear plants are valued assets by utilities operating them –low production costs –no variability due to world events such as gas and oil prices - stable prices –operating very well - high capacity factors > 90% –Making money for owners ! Utility Consolidation Deregulation and Competition

4. US Nuclear Industry Is Achieving Record Levels of Performance (1980-2002)

6. Average Duration of Nuclear Refueling Outages in the US (1990-2001) Source: Institute of Nuclear Power Operators (INPO) Note: Average Values do not include data from shutdown units

7. What About the Future ? No new orders in US for > 25 years Internationally plants still being built (Japan, China, Taiwan, Korea, Russia) Excess Capacity - went gas crazy ! 10 year or greater planning horizon Existing plant offerings judged to be too expensive and high risk for capital given past history. Future looks pretty bleak too ? It depends……….

8. On What ? “Hot days in the Summertime”  Middle East - Oil and Gas Prices Snow Depth in Washington DC More Blackouts A nuclear plant alternative that is competitive and relatively low risk to investors that can be built quickly with regulatory stability.

9. Obstacles to New Nuclear Plants High up front capital costs Long construction time Nuclear Regulatory factors –Situation today much improved –Combined construction and operating license –Pre-certified designs ready to build (already licensed). –Regulator using performance based regulation - making the utility responsible for safety.

10. Opportunities for Nuclear Credit for CO 2 Avoidance - Global Warming Prospects for Nuclear Hydrogen Economy with High Temperature Gas Reactors Generation IV Roadmap Study for next generation of nuclear plants - 20 -30 time horizon. (International effort) Yucca Mountain repository coming closer to reality. Vendors becoming more interested in developing competitive plants Public seems to be OK with nuclear as long as it is not in their backyard.

11. How About the “Study” ? Take home messages for me: –We will need nuclear energy on a worldwide basis to deal with global environmental issues and the US must take a leadership role for it to happen. –They don’t want the money spent on advanced reprocessing technologies even if it improves sustainability of nuclear energy both in terms of fuel and waste disposal because they are nervous of the fuel cycle for proliferation and other reasons (cost and safety) - they prefer a $ 100 M study for 5 years

12. –They prefer to spend this money on providing the necessary incentives and resources to allow for a rapid expansion of existing technology plants that will be necessary to achieve even their low growth scenario. –They are not crazy about the idea of the DOE building a “demonstration advanced gas plant” because the costs and incentives would not be that of the market place thus not being a true test for commercialization. –They don’t believe a single estimate of new nuclear technology costs by vendors and establish an artificial bogey of $ 2,000/kwe from which to judge future nuclear economics.

13. –They have confidence in the safety of nuclear plants. –They would support giving federal and state carbon emission credits to nuclear and that nuclear be officially listed as a carbon free source. –They are willing to spend “big bucks” to make this happen - over $ 400 million/year in first 5 years and $ 460 million/year after that. –They also appear to support high temperature gas reactors as a future possibility that may make nuclear competitive for electricity production.

14. Study Assumptions Plenty of Uranium around at reasonable prices for 50 years. All reprocessing is generally bad and risky. French and English have been doing it “safely” for 30 years. (both from a proliferation and safety point of view). Credits in the form of upfront money @ $ 200/kwe may make the difference to utilities to purchase first new plants.

15. Open fuel cycle is the way to go for the next 50 years To restart a recycling or fuel breeding cycle will not take a lot of time and will be available if needed. The government has little if any role in demonstrating technologies - it is up to the private sector. The government role should be limited to R&D for the industry to pick up and make it look like a power plant.

16. Overall Assessment They got most of it right ! –Need for nuclear is real ! –US Leadership role –Reprocessing is too expensive now so why burden nuclear with the extra cost. –Existing designs are too expensive to build –Government investment is required for R&D. –Nuclear should be treated as all other non-Carbon sources and given credits. –High temperature gas reactors are the way to go.

17. Some Areas Need Some Help While a study to evaluate and perhaps some small scale tests of fuel cycle options might be helpful, it seems like a lot of money for this part of the program. Need to incorporate some more forward looking R&D before calling for a drop in all such efforts. Some credibility should be given to vendors who are now trying to sell new reactors at capital costs well below $ 2,000/kwe which may change economic conclusions

18. Regulatory obstacles were not addressed in the report as major reasons for utilities hesitating to go “nuclear” again. Recommendations should be made to formalize regulatory stability. Consultation with nuclear utilities about the type of incentives would be necessary to bring them back to the table - long term power contracts, etc. Deep bore holes for waste disposal are not going to be any easier to site than a high level waste repository - maybe throwing this resource away in these holes is not really such a good idea.

19. The government must play a role in demonstration of new reactor technologies since no one else will. Up front investment and risk is too high and the “industry” does not exist as we once knew it. A demonstration project can be organized in such a way that it can demonstrate commercial viability if the DOE becomes the customer on a contract basis like the utility is and let’s people who know the business manage it. This will be a big change for DOE to let go. Research and demo costs can be segregated - what is key is how well the plant operates !

20. Summary The report makes a strong case for the need for nuclear energy. The issue of the need for recycling is a bit of a disappointment but if a focused research program comes out of this - good ! To jump start the new order “bandwagon”, the right incentives need to be established. A demonstration program with government financial support is a prerequisite for any new advanced nuclear plants such as the HTGR.

21. Essential Final Conditions To implement the “study” or any of the future Generation IV Roadmap plans will take political leadership and will. This can not happen without the public and the Congress behind it. This issue to too important to be left to an election or a political campaign, the security of the nation and perhaps the health of the planet depends on making the right decisions before it is too late.

22. Thanks Go to California for their colossal electricity and energy mess ! The Northeast Blackout ! –(except New England) The oil cartels that drive up the price of gasoline ! The Environment that is finally saying it has had enough!