Trends in the Nuclear Power Industry
A number of evolving trends in the nuclear power industry have the potential to affect Cameco's uranium and fuel services businesses.
REACTORS – OPERATING, PLANNED AND UNDER CONSTRUCTION
There are 434 reactors operating worldwide, and a total of 100 new reactors that are under construction or planned for completion within the next 10 years (as of March 2007). This more than offsets 10 anticipated closures for a net increase of 90 reactors during the period. Given that new reactors tend to have higher capacities than older units, this represents a 21% growth in nuclear generating capacity. Highlights include:
- 59 reactors are scheduled to be built in Asia, as energy demand is driven by rapid economic expansion. More than 65% of this growth will occur in China and India which have plans to build 24 and 15 reactors respectively,
- in Russia, Ukraine and several other eastern European countries, it is anticipated that 14 reactors will be built, offset by one closure in Armenia,
- in Finland, a new European Pressurized Water Reactor (EPR) is being constructed and when completed, will bring the country's total to five nuclear reactors,
- France has announced the construction of a new EPR beginning in 2007, and
- in Canada, Bruce Power A Limited Partnership (BALP) is refurbishing two A units which had previously been shutdown, and both Bruce Power and Ontario Power Generation Inc, (OPG) have initiated the regulatory process for new generating units.
REACTORS – PENDING
A number of non-nuclear countries including Kazakhstan, Belarus, Italy, Indonesia, Poland, Turkey and Vietnam are considering nuclear programs. Additionally, South Africa is developing a new type of reactor, called the Pebble Bed reactor that, if successful, will be smaller and targeted at regions requiring electricity, but lacking critical distribution and transmission capability.
World Nuclear Reactors (Cameco estimate, March 2007) 1
| Outlook to 2016 | |||||||||
| Nuclear Electricity 2005 2 (%) | Operating 2007 | New | Shutdown | Operating 2016 | GWe Change | ||||
| Argentina | 7 | 2 | 2 | 0 | 4 | 1.6 | |||
| Brazil | 3 | 2 | 1 | 0 | 3 | 1.3 | |||
| Canada | 15 | 18 | 3 | 1 | 20 | 2.2 | |||
| Mexico | 5 | 2 | 0 | 0 | 2 | 0.0 | |||
| USA | 19 | 103 | 6 | 0 | 109 | 6.0 | |||
| Americas Total | 127 | 12 | 1 | 138 | 11.1 | ||||
| China | 2 | 9 | 24 | 0 | 33 | 20.4 | |||
| India | 3 | 16 | 15 | 0 | 31 | 7.0 | |||
| Iran | 0 | 0 | 2 | 0 | 2 | 1.9 | |||
| Japan | 29 | 55 | 5 | 1 | 59 | 5.9 | |||
| Korea (South) | 45 | 20 | 8 | 0 | 28 | 9.2 | |||
| Pakistan | 3 | 2 | 2 | 0 | 4 | 0.6 | |||
| Taiwan | 20 | 6 | 2 | 0 | 8 | 2.6 | |||
| Turkey | 0 | 0 | 1 | 0 | 1 | 1.0 | |||
| Asia Total | 108 | 59 | 1 | 166 | 48.5 | ||||
| Belgium | 56 | 7 | 0 | 0 | 7 | 0.0 | |||
| Czech Republic | 31 | 6 | 0 | 0 | 6 | 0.0 | |||
| Finland | 33 | 4 | 1 | 0 | 5 | 1.6 | |||
| France | 79 | 59 | 1 | 1 | 59 | 1.6 | |||
| Germany | 31 | 17 | 0 | 0 | 17 | 0.0 | |||
| Hungary | 37 | 4 | 0 | 0 | 4 | 0.0 | |||
| Lithuania | 70 | 1 | 1 | 1 | 1 | 0.4 | |||
| Netherlands | 4 | 1 | 0 | 0 | 1 | 0.0 | |||
| Romania | 9 | 1 | 3 | 0 | 4 | 1.3 | |||
| Slovakia | 56 | 5 | 2 | 1 | 6 | 0.4 | |||
| Spain | 20 | 8 | 0 | 0 | 8 | 0.0 | |||
| Slovenia | 42 | 1 | 0 | 0 | 1 | 0.0 | |||
| Sweden | 45 | 10 | 0 | 0 | 10 | 0.0 | |||
| Switzerland | 32 | 5 | 0 | 0 | 5 | 0.0 | |||
| UK | 20 | 19 | 0 | 4 | 15 | –1.4 | |||
| Europe Total | 148 | 8 | 7 | 149 | 3.9 | ||||
| Russia | 16 | 31 | 9 | 0 | 40 | 7.6 | |||
| Armenia | 43 | 1 | 0 | 1 | 0 | 0.0 | |||
| Bulgaria | 44 | 2 | 2 | 0 | 4 | 1.9 | |||
| Ukraine | 49 | 15 | 3 | 0 | 18 | 2.9 | |||
| Russia and Eastern Europe Total | 49 | 14 | 1 | 62 | 12.4 | ||||
| South Africa | 6 | 2 | 7 | 0 | 9 | 1.9 | |||
| World Total | 434 | 100 | 10 | 524 | 77.8 | ||||
| 1 Estimated by Cameco, March 2007. Based on public announcements made prior to March 2007. | |||||||||
| 2 World Nuclear Association (WNA). | |||||||||
NUCLEAR POWER SHARE
Nuclear power accounts for about 16% of the world's electricity generation. While the number of reactors and gigawatts produced are expected to increase over the next 10 years, the rate of growth in nuclear generation is expected to be less than the growth in total electricity generation. Therefore, nuclear's share of world electricity is expected to decline over the 10-year period to about 13%.
PLANT PERFORMANCE
SAFETY
There were no significant safety incidents at nuclear power plants during 2006 and nuclear power continues to be one of the safest forms of electricity production. Nevertheless, the industry is continuously seeking methods to improve its safety record.
OPERATING COSTS
Based on the first ten months of 2006, the direct costs of US nuclear electricity production was the lowest for baseload (non-hydro) electricity production for the eighth consecutive year. US production costs were 1.66 cents per kWh for nuclear, 2.28 cents for coal, 6.60 cents for natural gas and 9.64 cents for petroleum (Source: Nuclear Energy Institute NEI).
Nuclear Acceptance
POSITIVE TRENDS
North America
Public support for nuclear power in North America is trending higher. In the US, a 2006 survey prepared by Bisconti Research for the NEI, showed that 86% of the public and 88% of college graduate voters agree that nuclear energy will play an important role in meeting future electricity demand. Majorities also support license renewal for existing nuclear power plants and "definitely building" new nuclear power plants. The survey also showed 73% of Americans would find it acceptable to add a new reactor at the nearest existing nuclear power plant site.
In Canada, a recent Ipsos Reid survey showed that support for nuclear power in Ontario had increased to 62% from 58%.
In the US, 15 entities are now in the process of preparing applications for either early site permits (ESP) or combined construction and operating license (COL) for a potential new nuclear power plant. Applications from Dominion, Southern, Entergy (NuStart) and Exelon for ESPs are under review by the US Nuclear Regulatory Commission. One ESP has been approved, the first site licensed in the US in over 30 years. As many as 33 units are now being considered for potential new build. Several potential sites and reactor types have been identified with the potential for a new reactor to be completed as early as 2014.
The US has recognized the strategic risk of over-reliance on natural gas and the contribution nuclear energy can make to clean air.
Europe
The UK Prime Minister recently acknowledged that new nuclear construction must be considered in the UK's plans for energy security and Kyoto compliance.
The UK and the European Union have recognized the strategic risk of over-reliance on natural gas.
Germany, Belgium, and the Netherlands continue to back away from a previous anti-nuclear stance. In Germany, many politicians have questioned the planned phase out program for its reactors by 2021 given one-third of the country's electricity is generated by nuclear power and there is no obvious solution for replacing these plants with equally clean sources. In Belgium, the Minister of Energy commissioned a study to review Belgium's future energy challenges. The study recommended that Belgium reconsider its plan to phase out its nuclear reactors by 2025. Over half of the country's electricity is generated by nuclear power and the report warns that due to changing circumstances, it would be very costly to proceed with the phase out program. It noted that climate change action was becoming more urgent and the era of very cheap fuel prices was likely behind them. In the Netherlands, a previous decision to phase out its nuclear program was reversed.
India
In December 2006, US President Bush signed the United States-India Peaceful Atomic Energy Cooperation Act, a major step towards civil nuclear trade with India. The bill on nuclear cooperation between India and the US was passed in the US Senate by a majority of 85 to 12 in November 2006, following passage in the House of Representatives. The two countries now must conclude a bilateral agreement &ndash known in the US as the 123 civil nuclear agreement, which essentially codifies their negotiations of the last 18 months. Additional steps before trade can take place include approval from India's Parliament, India's negotiation of a safeguard agreement with the International Atomic Energy Agency (IAEA) and approval from the 45-nation Nuclear Suppliers Group. In addition, each country that wishes to trade with India must negotiate a bilateral agreement.
NEGATIVE TRENDS
While nuclear power has finally been recognized as a non-emitting technology in US energy legislation, it still does not qualify internationally for greenhouse gas emission credits.
Although progress is being made in several countries on the management of radioactive waste from the nuclear fuel cycle, it remains a controversial issue. Concerns about the long-term management of radioactive waste continue to be an impediment to the nuclear renaissance. Certain environmental groups continue to oppose the nuclear power industry.
The first few new nuclear plants will face significant business risks including "first-of-a-kind" costs, as well as possible delays in financing, licensing and construction.
SUMMARY OF TRENDS
The nuclear industry is experiencing stable growth in the form of capacity factor improvements, refurbishments, life extensions and, in the developing world, aggressive new-build programs. While it is difficult to determine which factors will dominate the outlook for nuclear in the long-term, the demand for nuclear power is expected to accelerate in response to concerns about electricity supply, the need for non-emitting base load power, and security of supply.
