A Perspective from Ed Kee
About a week ago, I attended a very interesting ANS DC Section dinner presentation by Ed Kee, Vice President, NERA Consulting, on global nuclear energy developments and prospects. Ed has been making presentations of this type all over the world, and particularly in Asia. I thought it might be useful to highlight a few of the points Ed made that really struck me.
As we all know, most of the action these days is taking place in Asia, with China leading the way. (In fact, "China leads the way" was the subtitle of his talk.) Ed pointed to some good reasons why, namely the fact that their nuclear enterprise is a government enterprise and that they are building in multiples. He noted that government control yields much greater certainty than a free market does, and that the government has deeper pockets than private enterprise when it comes to making investments that do not pay back for years. Furthermore, the fact that the Chinese are building a number of similar reactors allows them to reap the benefits of economies of scale.
He contrasts this situation with the case of the United States, with an increasingly merchant plant approach to providing electricity and lower demand growth, and to developing countries, which generally need only one or two reactors. In addition to the fact that the current numbers of planned and proposed reactors in China are much greater than the number in the US, he notes that the prospects for the planned reactors in China are probably firmer than the prospects for those in the US.
He also provided a look at the export market. Here again, he notes that government-controlled programs often are able to offer better prices than corporations. He pointed particularly to the potential attractiveness of the Russian "build-own-operate" model. He also saw increasing competition from Korea, and possibly from China, in the future.
For developing countries, one interesting observation Ed offered is that most countries interested in nuclear power see reactors as more than a source of electricity. They also want some local content and local industrial development, and to become a part of the global nuclear supply chain.
For the future, he sees that most of the action will come from government-run programs, such as in China and Russia. He paints a bleaker picture for merchant plant projects, seeing them as subject to both project risks (first-of-a-kind risks, cost overruns, etc.) and long-term market risks (changes in demand, future carbon taxes and/or requirements for renewables, etc.), and believes that new merchant power plants will require some form of government assistance, such as the loan guarantee program in the US.
Among the comments I heard from other attendees on the way out were the thoughts that it was difficult to argue with much of what Ed had presented, but that it was not an optimistic picture as far as the US is concerned. The caveat, of course, is what will happen with loan guarantees, and in the longer run, carbon taxes. And in my mind, a lot depends on what happens with the first round of projects now underway.