The Future of Nuclear Power-What are the Consequences of Fukushima?

What are the Consequences of Fukushima?

Jonathan Robinson, Senior ConsultantEnguerran Ripert, Consultant

Roberta Gamble, DirectorEnergy & Power29th March 2011

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Jonathan RobinsonSenior Consultant

Energy, Environment Practice & Building Technologies Practice

London (UK)

Functional Expertise

• 5 years of research & consulting experience, involvement in more than 40 projects. Particular expertise in:

• Opportunity Assessment

• Procurement Strategy

• Supply Chain Management Strategy

• Due Diligence for IPO/M&A activity

Industry Expertise

• Experience base covering broad range of energy sectors, leveraging long-standing working relationships with

leading industry participants:

• Renewables sector (wind, solar, tidal, hydro)

• Conventional thermal energy (coal, gas)

• Nuclear

• Oil & Gas

• Future energy (fuel cells, energy storage, smart energy)

What I bring to the Team

• Extensive track-record of energy focused research and consulting projects

• Knowledge of, and relationships with, key stakeholders in the energy sector

• Strong analytical skills

Career Highlights

• Before Frost & Sullivan, worked for a political consultancy in London and for the NSW State Government in

Australia.

Education and Nationality

• MBus, University of Sydney; BSc Politics & Law, University of Southampton, UK National.

Jonathan Robinson

3

Enguerran Ripert

Enguerran Ripert• Consultant

• London

Frost & SullivanEurope


• 4 years strategy consulting experience within a corporation and as a freelancer. Project experience includes:

• Market expansion/entry

• Product launch with potential market calibration

• Mergers & acquisitions

• Commercial due diligence

• Strategic sourcing and procurement support, best practice analysis

• Business plan development

Industry Expertise

� Energy sector experience

- BP, Saudi Aramco (Venture assessment, Procurement strategy)

- Enel, EDF (Nuclear sourcing strategies)

- First Reserve Private Equity (M&A)

� Environment and Building Technologies

- Philips (New market creation, market expansion)

- Metawater (Market analysis)

- IMI, CRH (Business plan development)


• Well developed communication and problem solving skills, Efficient project management and a good technical

understanding. Strong analytical skills and Fluency in English and French.

Career Highlights

• Frost & Sullivan highlights- Part of a multi million Euro procurement project with a key Oil & Gas client

- Due Diligence project for multi billion M&A deal

- Nuclear market assessment for a top 5 European utility

- TV appearance (CNBC, Bloomberg)

• Prior to Frost & Sullivan- 2007-2008 Paris-based Freelance consultant – Voltalia (Renewable energy start-up, 1-yr validation of entry into India)

- 2005-2007 London-based research analyst – Corporate Executive Board

Education

• BSc (Hons) Chemistry, University College London

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•Over a decade of consulting energy and power equipment and solution providers, including

- Third-party business plan verification

- Acquisition target research and due diligence

- Geographical expansion strategy

- New market exploration

Industry Expertise

•Thirteen-plus years in the power and energy sector, with focus on both traditional and alterative energy markets including:

- Gas and steam turbine markets, as well as power plant services markets

- Generator sets and other distributed generation solutions

- Renewables, in particular solar and wind industry

- T&D markets with a focus on smart grid and metering


• Years of industry contacts and connections, understanding market trends from the participant’s point of view

• Extensive client interaction and strategic project management

• Oversight of a diverse and global team of analysts and consultants

• Fluent in Italian

• Oft quoted and interviewed in national publications including the New York Times, Chicago Tribune, and NPR

Career Highlights

• Director of Frost & Sullivan Energy business unit since 2006, analyst and management roles since 2000

• Previous related experience at Siemens Power Corporation

• Long term client relationships with major industry players, including

- GE

- Caterpillar

- Cummins

- Schneider Electric

Education

•Bachelors in International Studies and in Economics from University of Wisconsin, Milwaukee

Roberta Gamble

Roberta GambleDirector,Energy and Power Systems

Frost & SullivanNorth AmericaMountain View, CA

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What Are The Consequences of Fukushima?Analyst Briefing Overview

6

What Happened in Japan

7

North AmericaUnits = 27GW = 43

Russia & CISUnits = 28GW = 22

AsiaUnits = 84GW = 90

Middle EastUnits = 2GW = 2

South AmericaUnits = 2GW = 2

6

4

4

14

4

EuropeUnits = 16 GW = 22

30%

14%

5%

2%

20%

1%

Location of Nuclear Reactors (Under Construction & Planned)

Countries/Regions Planning for Nuclear Power

Countries/Regions Using Nuclear Power

% of Nuclear Power in 2010 Energy Mix

WorldUnits = 152GW = 173

15%

Source: PRIS database, Frost & Sullivan

Nuclear Reactors Planned and Under Construction as of March 2011

8

Source: McCoys, Frost & Sullivan

Global Historical and Forecast Reactor Pressure Vessel Orders

9

Germany

Expected Decommissioning in Power

Generation Capacity

8,150

6,6103,200

1,1001,520

1,870

6,190

0

2,000

4,000

6,000

8,000

10,000

12,000

14,000

16,000

18,000

2011 - 2015 2016 - 2020

Meg

aw

att

s (

MW

)

Oil

Gas

Coal

Nuclear

No Nuclear Orders,

prioritisation of CCGT


Hard Coal

20.1%

Lignite

23.5%

Oil

1.6%

Others

8.0%

Hydro

4.2%

Wind

6.3%

Nuclear

23.3%

CCGT/Gas

13.0%

2010 Power Mix (MWh)

10

Russia


Generation Capacity

2,790 4,600

6,360

8,920

11,890

13,700

1,4701,420

0

5,000

10,000

15,000

20,000

25,000

30,000

2011 - 2015 2016 - 2020

Meg

aw

att

s (

MW

)

Oil

Gas

Coal

Nuclear

Nuclear Orders (MW)

600

2,400 2,400

1,2001,500

2,400

1,800

2,400 2,400 2,400

0

500

1,000

1,500

2,000

2,500

3,000

2011

2012

2013

2014

2015

2016

2017

2018

2019

2020

Eq

uip

men

t O

rders

(M

W)



Natural Gas

45.2%

Nuclear

16.3%

Coal

17.5%

Oil and Other

Thermal

2.7%Hydro

18.3%

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United Kingdom


Generation Capacity

1,2002,640

2,790

8,000

0

2,000

4,000

6,000

8,000

10,000

12,000

14,000

2011 - 2015 2016 - 2020

Meg

aw

att

s (

MW

)

Oil

Gas

Coal

Nuclear

Nuclear Orders (MW)

1,700 1,700

1,100 1,100

1,700

0

200

400

600

800

1,000

1,200

1,400

1,600

1,800

2011

2012

2013

2014

2015

2016

2017

2018

2019

2020

Eq

uip

men

t O

rders

(M

W)



C oa l

32.2%

Oil

1.6%

G a s

45.5%

Nuc lea r

13.5%

Wind

1.8%

Hydro

2.1%

Other

R enewables

2.7%

Other

0.6%

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Italy


Generation Capacity

2,690

480

1,080

2,610

3,150890

0

1,000

2,000

3,000

4,000

5,000

6,000

7,000

2011 - 2015 2016 - 2020

Meg

aw

att

s (

MW

)

Oil

Gas

Coal

Nuclear

Nuclear Orders (MW)

1,650 1,650

0

200

400

600

800

1,000

1,200

1,400

1,600

1,800

2011

2012

2013

2014

2015

2016

2017

2018

2019

2020

Eq

uip

men

t O

rders

(M

W)



Natural Gas

54.1%

Coal

13.5%

Other Thermal

14.3%

Solar PV

0.1%

Wind

1.5%

Geothermal

1.7%Hydro

14.8%

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United States

Current State of Nuclear Energy in the US

• US is world’s largest nuclear producer, with approximately 30% of worldwide nuclear electricity generation

• 104 plants in operation across 31 States, with a production of 799 GWh

• Exelon largest owner of nuclear power in the US, 3rd largest in world

• About 20% of US power is from nuclear energy

• Nuclear waste a growing concern:

• Almost 72 tons of nuclear waste

• Distributed among 30 states, some with no active nuclear power

• Mostly held at nuclear sites

• Three-fourths is water cooled, rest is dry cask but that is considered a temporary solution by the government

• NRC to review safety across all US nuclear reactors, with newly formed committee.

• Safety costs are expected to increase

US Power Mix by Output, 2011

Source: EIA

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United States (cont)

Announced Application

Site COL Date

Reactor Type Units

Alternate Energy Holdings

Hammet (ID) 2012 AP1000, or APWR 1

Amarillo Power Amarillo (TX) 2010 Areva US EPR 2

Constellation Energy Calvert Cliffs (MD) 2008 Areva US EPR 2

Nine Mile Point (NY) susp Areva US EPR 1

Dominion North Anna (VA) 2007 GE APWR 1

DTE Energy Fermi (MI) susp GE ESBWR 1

Duke Energy William States, Lee (SC)

2008 West.AP1000 2

Piketon (OH) 2013 Areva US EPR 1

Entergy River Bend (LA) susp GE ESBWR 1

Grand Gulf (MS) susp GE ESBWR 1

FPL Turkey Point (FL) 2009 West. AP1000 2

Luminant Comanche Peak (TX) 2008 GE APWR 2

NRG Energy South Texas Project 2007 GE ABWR 2

PPL Bell Bend (PA) 2008 Areva US EPR 1

Progress Energy Harris (NC) 2007 West.AP1000 2

Levy County (FL) 2008 West.AP1000 2

SCE&G Summer (SC) 2007 West.AP1000 2

Southern Vogtle (GA) 2008 West.AP1000 2

Tennesse Valley Auth. Watts Bar 2009 West AP1000 1

Bellanfonte (AL) susp West.AP1000 1

Transition Power Dev Blue Castle (UT) 2012 Areva US EPR 2

• 4 new reactors are planned for 2015; 9 total by 2020

• Obama government to provide $8.3B loan guarantee for 2 new reactors in Georgia; $36B in current version of 2012 draft budget for nuclear

• Nuclear Regulatory Commission statement that no change in nuclear plans

• However, inspectors at existing sites double-checking emergency equipment; may soon start 90 day study into US vs. Japan plants

• Questions on whether recent upgrades in US were also made in Japan

• However, NRC has been accused of being complacent on some recent issues, such as leaking pipes, electrical malfunctions

• Some in Congress requesting freezes on any expansion plans, a rescinding of NRC decisions to relicense Vermont plant

Source: World Nuclear Association

15

Source: Energy Information Administration, Frost & Sullivan

Levelised Generation Cost By Generation Type (EIA)

16

Source: International Energy Agency, Frost & Sullivan

Typical Nuclear Generation Cost Breakdown, 2010

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Nuclear Safety and Life Extensions

Construction Operation Decommissioning

1

5

23

2

45

2

6

3

6

4 43

6

45

9

6

4

1011

14

21

24

3233

21

18

22

19

7

1314

16

11

22

14

10

12

5

7

1 1

0

5

10

15

20

25

30

35

0 1 2 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 36 37 38 39 40 41 42 43 44

Nu

mb

er o

f U

nit

s

Age of Units

~40 years~10 years ~10 years

Timeline Breakdown of a Nuclear Project

Distribution of Global Nuclear Plants by Age

Highly likely to be granted life extensions of up to 10 yearsBenefit of granting a Nuplex (5 years) – €10-13trillion (~ +7200TWh)

Source: PRIS, Frost & Sullivan

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Contender Countries

•Uruguay•Chile•Argentina

•Belarus•Italy•Poland

•Egypt•Tunisia•Nigeria•Morocco

•Turkey•UAE•Jordan• Saudi Arabia•Kuwait

•Bangladesh•Indonesia•Vietnam•Thailand

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Conclusion

1. The cost of nuclear safety will increase, making CCGT even more attractive.

2. Nuclear plant life extensions (nuplex) will be extremely difficult to refuse as the economic benefit is so large

3. Contender countries will take more time than expected to access nuclear as capability reviews will be stricter

4. In Europe, decision delays will increase costs but nuclear is still expected to provide around 30% of Europe’s electricity to at least 2020.

5. Financing is the main issue rather than public reticence, however looming elections following necessary cost cuts will further delay decisions if nuclear is deemed unattractive.

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Next Steps

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� Register for Frost & Sullivan’s Growth Opportunity Newsletter and keep abreast of innovative growth opportunities (www.frost.com/news)

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For Additional Information

Juliet Shaw

Sales Director

Direct: +44 (0) 207 343 8363

[email protected]

Jonathan Robinson

Senior Consultant

Direct: +44 (0) 207 343 8314

[email protected]

Chiara Carella

Corporate Communications Director, Europe

Direct: +44 (0) 207 343 8314

[email protected]

Roberta Gamble

DirectorEnergy & Environment

Direct: 650- 475- 4522

[email protected]