Is EPR the right choice for Nuclear Power Corporation of India?

Stepping Out

The completed costs and new build project reference costs for nuclear power plants for Chinese Utilities are as under:

1. 1000 Mwe units 1300 USD / Kw installed cost in China
2. AP 1000 is 2000 USD/Kw, estimated project cost
3. EPR is 2300 USD / Kw, estimated project cost

One can compare these costs with the Indian costs for PHWRs and Russian supplied VVER 1000 MW capacity each. These numbers are available on my blog written earlier. Need less to emphasize that the domestically built nuclear power plant costs are half of what NPC would be doling out to French EPR suppliers.

Chinese Electric companies wanted to continue with proven 1000 MW French model. Utilities do not buy new model without proven operating experience. Chinese utilities were made to accept to buy Westinghouse AP 1000 due to politico-commercial reasons that existed at that point in time. Later Chinese government went on to buy EPR to avoid conflict with French suppliers and government. Russian power plants were also ordered for political reasons. Let us not forget that Chinese Government do not have problems to invest funds on such large scale. These monies are indeed completely way beyond Indian government or NPC capacity to put on the table. India may not be able to mimic Chinese route for developing nuclear power not only for lack of public financing but in addition there is a clear absence of unified political will and processes. The political parties are fractious when it comes to Nuclear power initiatives in the country.

As Nuclear deals are politically driven but what is important is to get the costs right. Any open ended costs contracts for turnkey nuclear supply will become controversial. Point in the case is Olkilouto in Finland where it went up to over 4.2 billion Euros from initial offer price of 3 billion Euros. While the Finnish case is making Areva squirm , in their own backyard in France in Flamanville there is significant slippage in construction schedule. There are amazing stories about reasons for delays including the famous concrete pouring for the foundation for the nuclear island that went wrong. The cost of raw material, preparation time and manpower put together made for colossal loss for the EDF. Such learning curves costs will put intolerable funding strain on NPC.

In this context it is important that buyer carefully constructs the price offer and obtains key commitments in absolutely balck and white terms. Especially for nuclear reactor EPR that has never delivered a single Kilowatt Hour (Kwhr) yet, no completion costs are available and unit generation cost is not proven.

I have some doubts about “series effect” claimed by AREVA for EPR, unlike what French utility EDF could do for 900 MW and later 1400 MW size units built on mass scale in mid eighties and early nineties. The difficulties in obtaining Series benifits include involvment of different manufacturers of equipments and components for different countries for supplying EPR hardware. French themselves do not need more that couple of EPRs and that wont standardize manufacturing these units in cost effective way based on local manufacturing industry support. Since EPR depends on export market, French national strategy advantage cited from previous examples are more or less of academic interest for now.

NPC will have many challenges but the one that needs to be taken care from beginning is to have a team that can techno-commercially specify , evaluate and negotiate EPR, review and approve technical documentation, drawings, get AERB approvals etc on time and other technical aspects on day to day basis. Since there is no existing experience is available for this type of reactor , this could lead to delays and eventually AREVA will try to wriggle out of fixed price contract by blaming delays occurring from NPC side. Case in point is TVO, I had mentioned above.

Finnish decision to buy EPR was indeed a big surprise and the unfortunate track record and confounded the misery for TVO. New export EPR Models , including to UNiStar Nuclear Energy of USA will be Finnish type. Government of France forced EDF to buy EPR from AREVA after the Finland export order. Today the best operating reactor in France is called N4. it is 1450 MW unit, lowest operating cost and proven design. The additional safety features that are attributed to EPR are debatable and that would require separate space to go into details.

AVREVA and EDF are owned by French Government. However it is open secret that these two companies and their respective senior management do not see eye to eye on many issues. However it is the French Government that will eventually call the shots. Under the given circumstances and clearly declared French Government policy to support EPR export and installation within the country , EDF experts cannot openly take a very strong position that could go against AREVA promoted EPR nuclear power plants.

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