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Nuclear power reactor vendors have been forced to adapt to the fact that governments are no longer willing to assume the risks associated with nuclear new build projects, Jerry Hopwood, vice president of product development at Candu ������ý����, said today.

Hopwood spoke at the ������ý���� Nuclear Association’s 2014 Symposium in London.

Vendors have taken on the role of “kick starting” a project, “because we are the guys who get the wiggle at the end of the rope,” Hopwood said. “There is always project uncertainty until financing comes along. If there’s no financing, there’s no project.”

Many jurisdictions have re-evaluated the state-owned model due to project cost overruns and schedule delays, high government debt loads, other funding priorities leading to privatization of non-core assets, and technological maturity, he said.

Private sector models are difficult to execute for nuclear projects due to first-of-a-kind issues, their large capital requirement, long construction timescales and investor return expectations. But they can work within a positive framework of incentives – for example the UK’s Contracts for Difference model.

Several emerging markets are still developing state-owned models, but are incorporating mechanisms where risks are placed with the appropriate parties, such as nuclear initial public offerings and build-own-operate-transfer.

“Public-private partnership seems to be where the sector is going,” he said.

This combination means a project is financed by both the government and a private investor, with the public share able to attract export credit. Such a model requires a power purchase agreement matched to debt obligations and the project risks are allocated between government agencies and private companies.

Regulatory and technology risks are “two separate sides to the same coin,” he said. Other risks include engineering, supply and project management; technical services; skilled labour and availability and rates; training and commissioning, and lifetime operational support.

Government sponsored financial incentives encourage private sector companies to take increased financial responsibility for nuclear new build projects.

These include contracts for difference and power purchase agreements; loan guarantees; export credits; carbon credits; and cost and schedule overruns.

“Vendors play a critical role in the success of the public-private partnership model by focusing on key areas, which are project risk reduction and regulatory feedback. “No matter how the risks are allocated, if they are too high, you won’t get the financing,” he said.

For example, license applications are costly, but it money well spent as any issues ironed out with the regulator early on will reduce project costs later on, he said.

“Working closely with regulators, vendors can ensure that reactor designs meet safety and environmental standards before project deployment,” he said. “A vendor pre-project design review of a new nuclear power plant allows the regulatory body an opportunity to assess a design prior to any licensing activities and to identify potential issues that would require resolution.”

Further co-ordination between regulators, either bilaterally or through multi-lateral forums, such as MDEP, can help to harmonize views and mitigate risks.
“In that way a design qualified in the home country can be used elsewhere. We need regulatory cooperation across the world,” he said.

The success of future new build projects is “imperative” to ensure the long-term sustainability and growth of the industry, he said. “Failure is not an option.”

Vendors play a key role, he said, to ensure this success and must work collaboratively with the key stakeholders in a project. Vendors “have to have a certain level of openness” to ensure the success of nuclear power plant projects wherever they are, he said.

Researched and written
by ������ý���� Nuclear News