Tag: Nuclear

Managing the Plant Data Lifecycle

Intelligent Plant Lifecycle Management
(iPLM) is the process of managing a
generation facility’s data and information
throughout its lifetime – from initial
design through to decommissioning. This
paper will look at results from the application
of this process in other industries
such as shipbuilding, and show how those
results are directly applicable to the
design, construction, operation and maintenance
of complex power generation
facilities, specifically nuclear and clean
coal plants.

In essence, iPLM can unlock substantial
business value by shortening plant development
times, and efficiently finding,
reusing and changing plant data. It also
enables an integrated and transparent
collaborative environment to manage
business processes.

Recent and substantial global focus on
greenhouse gas emissions, coupled with rising and volatile fossil fuel prices, rapid
economic growth in nuclear-friendly Asian
countries, and energy security concerns,
is driving a worldwide resurgence in commercial
nuclear power interest.

The power generation industry is
undergoing a global transformation that
is putting pressure on traditional methods
of operation, and opening the door to substantial
innovation. Due to factors such
as the transition to a carbon-constrained
world, which greatly affects a generation
company’s portfolio mix decisions, the
escalating constraints in the global supply
chain for raw materials and key plant components,
or the fuel price volatility and
security of supply concerns, generation
companies must make substantial investments
in an environment of increasing
uncertainty.

In particular, there is a renewed interest
globally in the development of new
nuclear power plants. Plants continue
to be built in parts of Asia and Central
Europe, while a resurgence of interest
is seen in North America and Europe.
Combined with the developing interest in
building clean coal facilities, the power
generation industry is facing a large
number of very complex development
projects.

A key constraint, however, being felt
worldwide is a severe and increasing
shortage of qualified technical personnel
to design, build and operate new generation
facilities. Additionally, as most of the
world’s existing nuclear fleet reaches the
end of its originally designed life span, relicensing
these nuclear plants to operate
another 10, 20, or even 30 years is taking
place globally.

Sowing Plant Information

iPLM can be thought of as lifecycle
management of information and data
about the plant assets (see Figure 1). It
also includes the use of this information
over the physical plant’s complete lifecycle
to minimize project and operational
risk, and optimize plant performance.

This information includes design
specifications, construction plans, component
and system operating instructions,
real-time and archived operating data,
as well as other information sources and
repositories. Traditionally, it has been difficult to manage all of this structured and
unstructured data in a consistent manner
across the plant lifecycle to create a single
version of the truth.

In addition, a traditional barrier has
existed between the engineering and
construction phases, and the operations
and maintenance phases (see Figure 2).
So even if the technical issues of interconnectivity
and data/information management
are resolved via an iPLM solution, it
is still imperative to change the business
processes associated with these domains
to take full advantage.

Benefits

iPLM combines benefits of a fully integrated
PLM environment with the connection
of an information repository and flow
of operational functions. These functions
include enterprise asset management
(EAM) systems. Specific iPLM benefits are:

  • Ability to accurately assess initial
    requirements before committing to
    capital equipment orders;
  • Efficient balance of owner requirements
    with best practices and regulatory compliance;
  • Performance design work and simulation
    as early as possible to ensure the
    plant can be built within schedule and
    budget;
  • Better project execution with real-time
    information that is updated automatically
    through links to business processes,
    tasks, documents, deliverables
    and other data sources;
  • Design and engineering multi-disciplinary
    components – from structure
    to electrical and fluid systems – to
    ensure the plant is built right the first
    time;
  • Ability to virtually plan how plants and
    structures will be constructed to minimize
    costly rework;
  • Optimization of operations and maintenance
    processes to reduce downtime
    and deliver long-term profits to the
    owners;
  • Ensuring compliance to regulatory and
    safety standards;
  • Maximizing design and knowledge
    reuse from one successful project to
    another;
  • Managing complexity, including sophisticated
    plant systems, and the interdependent
    work of engineering consultants,
    suppliers and the construction
    sites;
  • Visibility of evolving design and changing
    requirements to all stakeholders
    during new or retrofitting projects; and
  • Providing owners and operators a primary repository to all plant information
    and the processes that govern them
    throughout their lifecycle.

Benefits accrue at different times in the
plant lifecycle, and to different stakeholders.
They also depend heavily on the consistent
and dedicated implementation of
basic iPLM solution tenets.

Value Proposition

PLM solutions enable clients to optimize
the creation and management of complex
information assets over a projects’
complete lifecycle. Shipbuilding PLM, in
particular, offers an example similar to the
commercial nuclear energy generation
ecosystem. Defense applications, such as
nuclear destroyer and aircraft carrier platform
developments, are particularly good
examples.

A key aspect of the iPLM value proposition
is the seamless integration of data
and information throughout the design,
build, operate and maintain processes
for industrial plants. The iPLM concept is
well accepted by the commercial nuclear ecosystem. There is an understanding
by engineering companies, utilities and
regulators that information/data transparency,
information lifecycle management
and better communication throughout the
ecosystem is necessary to build timely,
cost effective, safe and publicly accepted
nuclear power plants.

iPLM leverages capabilities in PLM,
EAM and Electronic Content Management
(ECM), combined with data management/
integration, information lifecycle management,
business process transformation
and integration with other nuclear functional
applications through a Service Oriented
Architecture (SOA)-based platform.
iPLM can also provide a foundation on
which to drive high-performance computing
into commercial nuclear operations,
since simulation requires consistent valid,
accessible data sets to be effective.

A hallmark of the iPLM vision is that it
is an integrated solution in which information
related to the nuclear power plant
flows seamlessly across a complete and
lengthy lifecycle. There are a number of
related systems with which an iPLM solution
must integrate. Therefore, adherence
to industry standard interoperability and
data models is necessary for a robust
iPLM solution. An example of an appropriate
data model standard is known as ISO
15926, which has recently been developed
to facilitate data interoperability.

Combining EAM and PLM

Incorporating EAM with PLM is an
example of one of the key integrations
created by an iPLM solution. It provides
several benefits. This includes the basis
for a cradle-to-grave data and work
process repository for all information
applicable to a new nuclear power plant.
A single version of the truth becomes
available early in the project design, and
remains applicable in the construction,
start-up and test, and turnover phases of
the project.

Second, with the advent of single-stem
licensing in many parts of the world (consider
the COLA, or combined Construction
and Operating License Application
in the U.S.), licensing risk is considerably
reduced by consistent maintenance of plant information. Demonstrating that the
plant being started up is the same plant
that was designed and licensed becomes
more straightforward and transparent.

Third, using an EAM system during construction,
and incrementally incorporating
the deep functionality necessary for EAM
in the plant operations, can facilitate and
shorten the plant transfer period from the
designers and constructors to the owners
and operators.

Finally, the time and cost to build a new
plant is significant, and delay in connecting
the plant to the grid for the safe generation
of megawatts can easily cost millions
of dollars. The formidable challenges
of nuclear construction, however, may be
offset by an SOA-based integrated information
system, replacing the traditional
unique and custom designed applications.

To help address these challenges, the
power generation industry ecosystem –
including utilities, engineering companies,
reactor and plant designers, and regulators
– can benefit by looking at methodologies
and results from other industries that
have continued to design, build, operate
and maintain highly complex systems
throughout the last 10 to 20 years.

Here we examine what the shipbuilding
industry has done, results it achieved, and
where it is going.

Experiences In Shipbuilding

The shipbuilding industry has many
similarities to the development of a new
nuclear or clean coal plant. Both are very
complex, long lifecycle assets (35 to 70
years) which require precise and accurate
design, construction, operation and
maintenance to both fulfill their missions
and operate safely over their lifetimes. In
addition, the respective timeframe and
costs of designing and building these
assets (five to 10 years and $5 billion to
$10 billion) create daunting challenges
from a project management and control
point of view.

An example of a successful implementation
of an iPLM-like solution in the shipbuilding
industry is a project completed
for Northrop Grumman’s development of
the next generation of U.S. surface combat
ships, a four-year, $2.9 billion effort.
This was a highly complex, collaborative
project completed by IBM and Dassault
Systemes to design and construct a new
fleet of ships with a keen focus on supporting
efficient production, operation
and maintenance of the platform over its
expected lifecycle.

A key consideration in designing, constructing
and operating modern ships
is increasing complexity of the assets,
including advanced electronics, sensors
and communications. These additional
systems and requirements greatly multiply
the number of simultaneous constraints
that must be managed within the
design, considered during construction
and maintained and managed during
operations. This not only includes more
system complexity, but also adds to the
importance of effective collaboration, as
many different companies and stakeholders
must be involved in the ship’s overall
design and construction.

An iPLM system helps to enforce standardization,
enabling lean manufacturing
processes and enhancing producibility of
various plant modules. For information
technology architecture to continue to be
relevant over the ship’s lifecycle, it is paramount
that it be based on open standards
and adhere to the most modern software
and hardware architectural philosophies.

To provide substantive value, both for
cost and schedule, tools such as real-time
interference checking, advanced visualization,
early-validation and constructability
analysis are key aspects of an iPLM solution
in the ship’s early design cycle. For
instance, early visualization allows feedback
from construction, operations and
maintenance back into the design process
before it’s too late to inexpensively make
changes.

There are also iPLM solution benefits
for the development of future projects.
Knowledge reuse is essential for decreasing
costs and schedules for future units,
and for continuous improvement of
already built units. iPLM provides for
more predictable design and construction
schedules and costs, reducing risk for the
development of new plants.

It is also necessary to consider cultural
change within the ecosystem to reap the
full iPLM solution benefits. iPLM represents
a fundamentally different way of
collaborating and closing the loop between
the various parts of the ship development
and operation lifecycle. As such, people
and processes must change to take advantage
of the tools and capabilities. Without
these changes, much of the benefits of an
iPLM solution could be lost.

Here are some sample cost and schedule
benefits from Navy shipbuilding implementations
of iPLM: reduction of documentation
errors, 15 percent; performance
to schedule increase, 25 percent; labor
cost reduction for engineering analysis,
50 percent; change process cost and time
reduction, 15 percent; and error correction
cost reduction during production, 15
percent.

Conclusions

An iPLM approach to design, construction,
operation and maintenance of a
commercial nuclear power plant – while
requiring reactor designers, engineering
companies, owner/operators, and regulators
to fundamentally change the way
they approach these projects – has been
shown in other industries to have substantial
benefits related to cost, schedule and
long-term operation and maintainability.

By developing and delivering to the customer
two plants: the physical plant and
the “digital plant,” substantial advantages
will accrue both during plant construction
and operation. Financial markets, shareholders,
regulators and the general public
will have more confidence in the development
and operation of these plants
through the predictability, performance to
schedule and cost and transparency that
an iPLM solution can help provide.

Future of Learning

The nuclear power industry is facing significant employee turnover, which may be exacerbated by the need to staff new nuclear units. To maintain a highly skilled workforce to safely operate U.S. nuclear plants, the industry must find ways to expedite training and qualification, enhance knowledge transfer to the next generation of workers, and develop leadership talent to achieve excellent organizational effectiveness.

Faced with these challenges, the Institute of Nuclear Power Operations (INPO), the organization charged with promoting safety and reliability across the 65 nuclear electric generation plants operating in the U.S., created a “Future of Learning” initiative. It identified ways the industry can maintain the same high standard of excellence and record of nuclear safety, while accelerating training development, individual competencies and plant training operations.

The nuclear power industry is facing the perfect storm. Like much of the industrialized world, it must address issues associated with an aging workforce since many of its skilled workers and nuclear engineering professionals are hitting retirement age, moving out of the industry and beginning other pursuits.

Second, as baby boomers transition out of the workforce, they will be replaced by an influx of Generation Y workers. Many workers in this “millenials” generation are not aware of the heritage driving the single-minded focus on safety. They are asking for new learning models, utilizing the technologies which are so much a part of their lives.

Third, even as this big crew change takes place, there is increasing demand for electricity. Many are turning to cleaner technologies – solar, wind, and nuclear – to close the gap. And there is resurgence in requests for building new nuclear plants, or adding new reactors at existing plants. This nuclear renaissance also requires training and preparation to take on the task of safely and reliably operating our nuclear power plants.

It is estimated there will be an influx of 25,000 new workers in the industry over the next five years, with an additional 7,000 new workers needed if just a third of the new plants are built. Given that incoming workers are more comfortable using technology for learning, and that delivery models that include a blend of classroom-based, instructor-led, and Web-based methods can be more effective and efficient, the industry is exploring new models and a new mix of training.

INPO was created by the nuclear industry in 1979 following the Three Mile Island accident. It has 350 full-time and loaned employees. As a nonprofit organization, it is chartered to promote the highest levels of safety and reliability – in essence, to promote excellence – in the operation of nuclear electric generating plants. All U.S. nuclear operating companies are members.

INPO’s responsibilities include evaluating member nuclear site operations, accrediting each site’s nuclear training programs and providing assistance and information exchange. It has established the National Academy for Nuclear Training, and an independent National Nuclear Accrediting Board. INPO sends teams to sites to evaluate their respective training activities, and each station is reviewed at least every four years by the accrediting board.

INPO has developed guidelines for 12 specifically accredited programs (six operations and six maintenance/technical), including accreditation objectives and criteria. It also offers courses and seminars on leadership, where more than 1,500 individuals participate annually, from supervisors to board members. Lastly, it operates NANTeL (National Academy for Nuclear Training e-Learning system) with 200 courses for general employee training for nuclear access. More than 80,000 nuclear workers and sub-contractors have completed training over the Web.

The Future of Learning

In 2008, to systematically address workforce and training challenges, the INPO Future of Learning team partnered with IBM Workforce and Learning Solutions to conduct more than 65 one-on-one interviews, with chief executive officers, chief nuclear officers, senior vice presidents, plant managers, plant training managers and other leaders in the extended industry community. The team also completed 46 interviews with plant staff during a series of visits to three nuclear power plants. Lastly, the team developed and distributed a survey that was sent to training managers at the 65 nuclear plants, achieving a 62 percent response rate.

These are statements the team heard:

  • “Need to standardize a lot of the training, deliver it remotely, preferably to a desktop, minimize the ‘You train in our classroom in our timeframe’ and have it delivered more autonomously so it’s likely more compatible with their lifestyles.”
  • “We’re extremely inefficient today in how we design/develop and administer training. We don’t want to carry inefficiencies that we have today into the future.”
  • “Right now, in all training programs, it’s a one-size-fits-all model that’s not customized to an individual’s background. Distance learning would enable this by allowing people to demonstrate knowledge and let some people move at a faster pace.”
  • “We need to have ‘real’ e-learning. We’ve been exposed to less than adequate, older models of e-learning. We need to move away from ‘page turners’ and onto quality content.”

Several recommendations were generated as a result of the study. The first focused on ways to improve INPO’s current training offerings by adding leadership development courses, ratcheting up the interactivity of the Web-based and e-learning offerings in NANTeL and developing a “nuclear citizenship” course for new workers in the industry.

Second, there were recommendations about better utilizing training resources across the industry by centralizing common training, beginning with instructor training and certification and generic fundamentals courses. It was estimated that 50 percent of the accredited training materials are common across the industry. To accomplish this objective, INPO is exploring an industry infrastructure that would enable centralized training material development, maintenance and delivery.

The last set of recommendations focused on methods for better coordination and efficiency of training, including developing processes for certifying vendor training programs, and providing a jump-start to common community college and university curriculum.

In 2009, INPO is piloting a series of Future of Learning initiatives which will help determine the feasibility, cost-effectiveness, readiness and acceptance of this first set of recommendations. It is starting to look more broadly at ways it can utilize learning technology to drive economies of scale, accelerative and prescriptive learning, and deliver value to the nuclear electric generation industry.

Where Do We Go From Here ?

Beyond the initial perfect storm is another set of factors driving the future of learning.

First, consider the need for speed. It has been said that “If you are not learning at the speed of change, you are falling behind.”

In his “25 Lessons from Jack Welch,” the former CEO of General Electric said, “The desire, and the ability, of an organization to continuously learn from any source, anywhere – and to rapidly convert this learning into action – is its ultimate competitive advantage.” Giving individuals, teams and organizations the tools and technologies to accelerate and broaden their learning is an important part of the future of learning.

Second, consider the information explosion – the sheer volume of information available, the convenience of information access (due, in large part, to continuing developments in technology) and the diversity of information available. When there is too much information to digest, a person is unable to locate and make use of the information that one needs. When one is unable to process the sheer volume of information, overload occurs. The future of learning should enable the learner to sort through information and find knowledge.

Third, consider new developments in technology. Generations X and Y are considered “digital natives.” They expect that the most current technologies are available to them – including social networking, blogging, wikis, immersive learning and gaming – and to not have them is unthinkable.

Impact of New Technology

Philosophy of training has morphed from “just-in-case” (teach them everything and hope they will remember when they need it), to “just-in-time” (provide access to training just before the point of need), to “just-for-me.” With respect to the latter, learning is presented in a preferred media, with a learning path customized to reflect the student’s preferred learning style, and personalized to address the current and desired level of expertise within any given time constraint.

Imagine a scenario in which a maintenance technician at a nuclear plant has to replace a specialized valve – something she either hasn’t done for awhile, or hasn’t replaced before. In a Web 2.0 world, she should be able to run a query on her iPhone or similar handheld device and pull up the maintenance of that particular valve, access the maintenance records, view a video of the approved replacement procedure, or access an expert who could coach her through the process.

Learning Devices

What needs to be in place to enable this vision of the future of learning? First, workers will need a device that can access the information by connecting over a secure wireless network inside the plant. Second, the learning has to be available in small chunks – learning nuggets or learning assets. Third, the learning needs to be assembled along the dimensions of learning style, desired and target level of expertise, time available and media type, among other factors. Finally, experts need to be identified, tagged to particular tasks and activities, and made accessible.

Fortunately, some of the same learning technology tools that will enable centralized maintenance and accelerated development will also facilitate personalized learning. When training is organized at a more granular level – the learning asset level – not only can it be leveraged over a variety of courses and courseware, it can also be re-assembled and ported to a variety of outputs such as lesson books, e-learning and m-learning (mobile-learning).

The example above pointed out another shift in our thinking about learning. Traditionally, our paradigm has been that learning occurs in a classroom, and when it occurs, it has taken the form of a course. In the example above, the learning takes place anywhere and anytime, moving from the formal classroom environment to an informal environment. Of course, just because learning is “informal” does not mean it is accidental, or that it occurs without preparation.

Some estimates claim 10 percent of our learning is achieved through formal channels, 20 percent from coaching, and 70 percent through informal means. Peter Henschel, former director of the Institute for Research on Learning, raised an important question: If nearly three-quarters of learning in corporations is informal, can we afford to leave it to chance?

There are still several open issues regarding informal learning:

  • How do we evaluate the impact/effectiveness of informal learning? (Informal learning, but formal demonstration of competency/proficiency);
  • How do we record one’s participation and skill-level progression in informal learning? (Information learning, but formal recording of learning completion);
  • Who will create and maintain informal learning assets? (Informal learning, but formal maintenance and quality assurance of the learning content); and
  • When does informal learning need a formal owner (in a full- or part-time role)? (Informal learning, but will need formal policies to help drive and manage).

      • In the nuclear industry, accurate and up-to-date documentation is a necessity. As the nuclear industry moves toward more effective use of informal channels of learning, it will need to address these issues.

      Immersive Learning (Or Virtual Worlds)

      The final frontier for the future of learning is expansion into virtual worlds, also known as immersive learning. Although Second Life (SL) is the best known virtual world, there are also emerging competitors, including Active Worlds, Forterra (OLIVE), Qwag and Unisfair.

      Created in 2003 by Linden Lab of San Francisco, SL is a three-dimensional, virtual world that allows users to buy “property,” create objects and buildings and interact with other users. Unlike a game with rules and goals, SL offers an open-ended platform where users can shape their own environment. In this world, avatars do many of the same things real people do: work, shop, go to school, socialize with friends and attend rock concerts.

      From a pragmatic perspective, working in an immersive learning environment such as a virtual world provides several benefits that make it an effective alternative to real life:

      • Movement in 3-D space. A virtual world could be useful in any learning situation involving movement, danger, tactics, or quick physical decisions, such as emergency response.
      • Engendering Empathy. Participants experience scenarios from another person’s perspective. For example, the Future of Learning team is exploring ways to re-create the control room experience during the Three-Mile Island incident, to provide a cathartic experience for the next generation workforce so they can better appreciate the importance of safety and human performance factors.
      • Rapid Prototyping and Co-Design. A virtual world is an inexpensive environment for quickly mocking up prototypes of tools or equipment.
      • Role Playing. By conducting role plays in realistic settings, instructors and learners can take on various avatars and play those characters.
      • Alternate Means of Online Interaction. Although users would likely not choose a virtual world as their primary online communication tool, it provides an alternative means of indicating presence and allowing interaction. Users can have conversations, share note cards, and give presentations. In some cases, SL might be ideal as a remote classroom or meeting place to engage across geographies and utility boundaries.

      Robert Amme, a physicist at the University of Denver, has another laboratory in SL. Funded by a grant from the Nuclear Regulatory Commission, his team is building a virtual nuclear reactor to help train the next generation of environmental engineers on how to deal with nuclear waste (see Figure 1). The INPO Future of Learning team is exploring ways to leverage this type of learning asset as part of the nuclear citizenship initiative.

      There is no doubt that nuclear power generation is once again on an upswing, but critical to its revival and longevity will be the manner in which we prepare the current and next generation of workers to become outstanding stewards of a safe, effective, clean-energy future.

Wind Energy: Balancing the Demand

In recent years, exponential demand for new U.S. wind energy-generating facilities has nearly doubled America’s installed wind generation. By the end of 2007, our nation’s total wind capacity stood at more than 16,000 megawatts (MW) – enough to power more than 4.5 million average American homes each year. And in 2007 alone, America’s new wind capacity grew 45 percent over the previous year – a record 5,244 MW of new projects and more new generating capacity than any other single electricity resource contributed in the same year. At the same time, wind-related employment nearly doubled in the United States during 2007, totaling 20,000 jobs. At more than $9 billion in cumulative investment, wind also pumped new life into regional economies hard hit by the recent economic downturn. [1]

The rapid development of wind installations in the United States comes in response to record-breaking demand driven by a confluence of factors: overwhelming consumer demand for clean, renewable energy; skyrocketing oil prices; power costs that compete with natural gas-fired power plants; and state legislatures that are competing to lure new jobs and wind power developments to their states. Despite these favorable conditions, the wind energy industry has been unable to meet America’s true demand for new wind energy-generating facilities. The barriers include the following: availability of key materials, the ability to manufacture large key components and the accessibility of skilled factory workers.

With the proper policies and related investments in infrastructure and workforce development, the United States stands to become a powerhouse exporter of wind power equipment, a wind technology innovator and a wind-related job creation engine. Escalating demand for wind energy is spurred by wind’s competitive cost against rising fossil fuel prices and mounting concerns over the environment, climate change and energy security.

Meanwhile, market trends and projections point to strong, continued demand for wind well into the future. Over the past decade, a similar surge in wind energy demand has taken place in the European Union (E.U.) countries. Wind power capacity there currently totals more than 50,000 MW, with projections that wind could provide at least 15 percent of the E.U.’s electricity by 2020 – amounting to an installed wind capacity of 180,000 MW and an estimated workforce of more than 200,000 people in wind power manufacturing, installation and maintenance jobs.

How is it, then, that European countries were able to secure the necessary parts and people while the United States fell short in its efforts on these fronts? After all, America has a bigger land mass and a larger, more high-quality wind resource than the E.U. countries. Indeed, the United States is already home to the world’s largest wind farms, including the 735-MW Horse Hollow Wind Energy Center in Texas, which generates power for about 230,000 average homes each year. What’s more, this country also has an extensive manufacturing base, a skilled labor pool and a pressing need to address energy and climate challenges.

So what’s missing? In short, robust national policy support – a prerequisite for strong, long-term investment in the sector. Such support would enable the industry to secure long lead-time materials and sufficient ramp-up to train and employ workers to continue wind power’s surging growth. Thus, the United States must rise to the occasion and assemble several key, interrelated puzzle pieces – policy, parts and people – if it’s to tap the full potential of wind energy.

POLICY: LONG-TERM SUPPORT AND INVESTMENT

In the United States, the federal government has played a key role in funding research and development, commercialization and large-scale deployment of most of the energy sources we rely on today. The oil and natural gas industry has enjoyed permanent subsidies and tax credits that date back to 1916 when Congress created the first tax breaks for oil and gas production. The coal industry began receiving similar support in 1932 with the passage of the first depletion allowances that enabled mining companies to deduct the value of coal removed from a mine from their taxable revenue.

Still in effect today, these incentives were designed to spur exploration and extraction of oil, gas and coal, and have since evolved to include such diverse mechanisms as royalty relief for resources developed on public lands; accelerated depreciation for investments in projects like pipelines, drilling rigs and refineries; and ongoing support for technology R&D and commercialization, such as the Department of Energy’s now defunct FutureGen program for coal research, its Deep Trek program for natural gas development and the VortexFlow SX tool for low-producing oil and gas wells.

For example, the 2005 energy bill passed by Congress provided more than $2 billion in tax relief for the oil and gas industry to encourage investment in exploration and distribution infrastructure. [2] The same bill also provided an expansion of existing support for coal, which in 2003 had a 10-year value of more than $3 billion. Similarly, the nuclear industry receives extensive support for R&D – the 2008 federal budget calls for more than $500 million in support for nuclear research – as well as federal indemnity that helps lower its insurance premiums. [3]

Over the past 15 years, the wind power industry has also enjoyed federal support, with a small amount of funding for R&D (the federal FY 2006 budget allotted $38 million for wind research) and the bulk of federal support taking the form of the Production Tax Credit (PTC) for wind power generation. The PTC has helped make wind energy more cost-competitive with other federally subsidized energy sources; just as importantly, its relatively routine renewal by Congress has created conditions under which market participants have grown accustomed to its effect on wind power finance.

However, in contrast to its consistent policies for coal, natural gas and nuclear power, Congress has never granted longterm approval to the wind power PTC. For more than a decade, in fact, Congress has failed to extend the PTC for longer than two years. And in three different years, the credit was allowed to expire with substantial negative consequences for the industry. Each year that the PTC has expired, major suppliers have had to, in the words of one senior wind power executive, “shut down their factories, lay off their people and go home.”

In 2000, 2002 and 2004, the expiration of the PTC sent wind development plummeting, with an almost complete collapse of the industry in 2000. If the PTC is allowed to expire at the end of 2008, American Wind Energy Associates (AWEA) estimates that as many as 75,000 domestic jobs could be lost as the industry slows production of turbines and power consumers reduce demand for new wind power projects.

The last three years have seen tenuous progress, with Congress extending the PTC for one and then two years; however, the wind industry is understandably concerned about these short-term extensions. Of significant importance is the corresponding effect a long-term or permanent extension of the PTC would have on the U.S. manufacturing sector and related investment activity. For starters, it would put the industry on an even footing with its competitors in the fossil fuels and nuclear industries. More importantly, it would send a clear signal to the U.S. manufacturing community that wind power is a solid, long-term investment.

PARTS: UNLEASHING THE NEXT MANUFACTURING BOOM

To fully grasp the trickle-down effects of an uncertain PTC on the wind power and related manufacturing industries, one must understand the industrial scale of a typical wind power development. Today’s wind turbines represent the largest rotating machinery in the world: a modern-day, 1.5-megawatt machine towers more than 300 feet above the ground with blades that out-span the wings of a 747 jetliner, and a typical utility-scale wind farm will include anywhere from 30 to 200 of these machines, planted in rows or staggered lines across the landscape.

The sheer size and scope of a utility-scale wind farm demands a sophisticated and established network of heavy equipment and parts manufacturers can fulfill orders in a timely fashion. Representing a familiar process for anyone who’s worked in a steel mill, forgery, gear-works or similar industrial facility, the manufacture of each turbine requires massive, rolled steel tubes for the tower; a variety of bearings and related components for lubricity in the drive shaft and hub; cast steel for housings and superstructure; steel forgings for shafts and gears; gearboxes for torque transmission; molded fiberglass, carbon fiber or hybrid blades; and electronic components for controls, monitoring and other functions.

U.S. manufacturers have extensive experience making all of these components for other end-use applications, and many have even succeeded in becoming suppliers to the wind industry. For example, Ameron International – a Pasadena, Calif.-based maker of industrial steel pipes, poles and related coatings – converted an aging heavy-steel fabrication plant in Fontana, Calif., to make wind towers. At 80 meters tall, 4.8 meters in diameter and weighing in at 200 tons, a wind tower requires large production facilities that have high up-front capital costs. By converting an existing facility, Ameron was able to capture a key and rapidly growing segment of the U.S. wind market in high-wind Western states while maintaining its position in other markets for its steel products.

Other manufacturers have also seen the opportunity that wind development presents and have taken similar steps. For example, Beaird Co. Ltd, a Shreveport, La.-based metal fabrication and machined parts manufacturer, supplies towers to the Midwest, Texas and Florida wind markets, as does DMI Industries from facilities in Fargo, N.D., and Tulsa, Okla.

But the successful conversion of existing manufacturing facilities to make parts for the wind industry belies an underlying challenge: investment in new manufacturing capacity to serve the wind industry is hindered by the lack of a clear policy framework. Even at wind’s current growth rates and with the resulting pent-up domestic demand for parts, the U.S. manufacturing sector is understandably reticent to invest in new production capacity.

The cause for this reticence is depicted graphically in Figure 1. With the stop-and-go nature of the PTC regarding U.S. wind development, and the consistent demand for their products in other end-use sectors, American manufacturers have strong disincentives to invest in new capital projects targeting the wind industry. It can take two to six years to build a new factory and 15 or more years to recapture the investment. The one- to two-year investment cycle of the U.S. wind industry is therefore only attractive to players who are comfortable with the risk and can manage wind as a marginal customer rather than an anchor tenant. This means that over the long haul, the United States could be legislating itself out of the “renewables” space, which arguably has a potential of several trillion dollars of global infrastructure.

The result in the marketplace: the United States ends up importing many of the large manufactured parts that go into a modern wind turbine – translating to a missed opportunity for domestic manufacturers that could be claiming a larger chunk of the underdeveloped U.S. wind market. As the largest consumer of electricity on earth, the United States also represents the biggest untapped market for wind power. At the end of 2007, with multiple successive years of 30 to 40 percent growth, wind power claimed just 1 percent of the U.S. electricity market. The raw potential for wind power in the United States is three times our total domestic consumption, according to the U.S. Energy Information Administration; if supply chain issues weren’t a problem, wind power could feasibly grow to supply as much as 20 to 30 percent of our $330 billion annual domestic electricity market. At 20 percent of domestic energy supply, the United States would need 300,000 MW of installed wind power capacity – an amount that would take 20 to 30 years of sustained manufacturing and development to achieve. But that would require growth well above our current pace of 4,000 to 5,000 MW annually – growth that simply isn’t possible given current supply constraints.

Of course, that’s just the U.S. market. Global wind development is set to more than triple by 2015, with cumulative installed capacity expected to rise from approximately 91 gigawatts (GW) by the end of 2007 to more than 290 GW by the end of 2015, according to forecasts by Emerging Energy Research (EER). Annual MW added for global wind power is expected to increase more than 50 percent, from approximately 17.5 GW in 2007 to more than 30 GW in 2015, according to EER’s forecasts. [4]

By offering the wind power industry the same long-term tax benefits enjoyed by other energy sources, Congress could trigger a wave of capital investment in new manufacturing capacity and turn the United States from a net importer of wind power equipment to a net exporter. But extending the PTC is not the final step: as much as any other component, a robust wind manufacturing sector needs skilled and dedicated people.

PEOPLE: RECLAIMING OUR MANUFACTURING ROOTS

In 2003, the National Association of Manufacturers released a study outlining many of the challenges facing our domestic manufacturing base. “Keeping America Competitive – how a Talent Shortage Threatens U.S. Manufacturing” highlights the loss of skilled manufacturing workers to foreign competitors, the problem of an aging workforce and a shift to a more urban, high tech economy and culture.

In particular, the study notes a number of “image” problems for the manufacturing industry. To wit: Among a geographically, ethnically and socio-economically diverse set of respondents – ranging from students, parents and teachers to policy analysts, public officials, union leaders, and manufacturing employees and executives – the sector’s image was found to be heavily loaded with negative connotations (and universally tied to the old “assembly line” stereotype) and perceived to be in a state of decline.

When asked to describe the images associated with a career in manufacturing, student respondents offered phrases such as “serving a life sentence,” being “on a chain gang” or a “slave to the line,” and even being a “robot.” Even more telling, most adult respondents said that people “just have no idea” of manufacturing’s contribution to the American economy.

The effect of this “sector fatigue” can be seen across the Rust Belt in the aging factories, retiring workforce and depressed communities being heavily impacted by America’s turn away from manufacturing. Wind power may be uniquely positioned to help reverse this trend. A growing number of America’s young people are concerned about environmental issues, such as pollution and global warming, and want to play a role in solving these problems. With the lure of good-paying jobs in an industry committed to environmental quality and poised for tremendous growth, wind power may provide an answer to manufacturers looking to lure and retain top talent.

We’ve already seen that you don’t need a large wind power resource in your state to enjoy the economic benefits of wind’s surging growth: whether it’s rolled steel from Louisiana and Oklahoma, gear boxes and cables from Wisconsin and New Hampshire, electronic components from Massachusetts and Vermont, or substations and blades from Ohio and Florida, the wind industry’s needs for manufactured parts – and the skilled labor that makes them – is massive, distributed and growing by the day.

UNLEASHING THE POWER OF EVOLUTION

The wind power industry offers a unique opportunity for revitalizing America’s manufacturing sector, creating vibrant job growth in currently depressed regions and tapping new export markets for American- made parts. For utilities and energy consumers, wind power provides a hedge against volatile energy costs and harvests one of our most abundant natural resources for energy security.

The time for wind power is now. As mankind has evolved, so too have our primary sources of energy: from the burning of wood and animal dung to whale oil and coal; to petroleum, natural gas and nuclear fuels; and (now) to wind turbines. The shift to wind power represents a natural evolution and progression that will provide both the United States and the world with critical economic, environmental and technological solutions. As energy technologies continue to evolve and mature, wind power will soon be joined by solar power, ocean current power and even hydrogen as cost-competitive solutions to our pressing energy challenges.

ENDNOTES

  1. “American Wind Energy Association 2007 Market Report” (January 2008). www.awea.org/Market_Report_Jan08.pdf
  2. Energy Policy Act of 2005, Section 1323-1329. www.citizen.org/documents/energyconferencebill0705.pdf
  3. Aileen Roder, “An Overview of Senate Energy Bill Subsidies to the Fossil Fuel Industry” (2003), Taxpayers for Common Sense website. www.taxpayer.net/greenscissors/LearnMore/senatefossilfuelsubsidies.htm
  4. “Report: global Wind Power Base Expected to Triple by 2015” (November 2007), North American Windpower. www.nawindpower.com/naw/e107_plugins/content/content_lt.php?content.1478

Growing (or Shrinking) Trends in Nuclear Power Plant Construction

Around the world, the prospects for nuclear power generation are increasing – opportunities made clear by the number of currently under-construction nuclear plants that are smaller than those currently in the limelight. Offering advantages in certain situations, these smaller plants can more readily serve smaller grids as well as be used for distributed generation (with power plants located close to the demand centers and the main grid providing back-up). Smaller plants are also easier to finance, particularly in countries that are still in the early days of their nuclear power programs.

In recent years, development and licensing efforts have focused primarily on large, advanced reactors, due to their economies of scale and obvious application to developed countries with substantial grid infrastructure. Meanwhile, the wide scope for smaller nuclear plants has received less attention. However, of the 30 or more countries that are moving toward implementing nuclear power programs, most are likely to be looking initially for units under 1,000 MWe, and some for units of less than half that amount.

EXISTING DESIGNS

With that in mind, let’s take a look at some of the current designs.

There are many plants under 1,000 MWe now in operation, even if their replacements tend to be larger. (In 2007 four new units were connected to the grid – two large ones, one 202-MWe unit and one 655-MWe unit.) In addition, some smaller reactors are either on offer now or likely to be available in the next few years.

Five hundred to 700 MWe. There are several plants in this size range, including Westinghouse AP600 (which has U.S. design certification) and the Canadian Candu-6 (being built in Romania). In addition, China is building two CNP-600 units at Qinshan but does not plan to build any more of them. In Japan, Hitachi-GE has completed the design of a 600-MWe version of its 1,350-MWe ABWR, which has been operating for 10 years.

Two hundred and fifty to 500 MWe. And finally, in the 250- to 500-MWe category (output that is electric rather than heat), there are a few designs pending but little immediately on offer.

IRIS. Being developed by an international team led by Westinghouse in the United States, IRIS – or, more formally, International Reactor Innovative and Secure – is an advanced third-generation modular 335-MWe pressurized water reactor (PWR) with integral steam generators and a primary coolant system all within the pressure vessel. U.S. design certification is at pre-application stage with a view to final design approval by 2012 and deployment by 2015 to 2017.

VBER-300 PWR. This 295- to 325-MWe unit from Russia was designed by OKBM based on naval power plants and is now being developed as a land-based unit with the state-owned nuclear holding company Kazatomprom, with a view to exporting it. The first two units will be built in Southwest Kazakhstan under a Russian-Kazakh joint venture.

VK-300. This Russian-built boiling water reactor is being developed for co-generation of both power and district heating or heat for desalination (150 MWe plus 1675 GJ/hr) by the nuclear research and development organization NIKIET. The unit evolved from the VK-50 BWR at Dimitrovgrad but uses standard components from larger reactors wherever possible. In September 2007, it was announced that six of these units would be built at Kola and at Primorskaya in Russia’s far east, to start operating between 2017 and 2020.

NP-300 PWR. Developed in France from submarine power plants and aimed at export markets for power, heat and desalination, this Technicatome (Areva)- designed reactor has passive safety systems and can be built for applications of from 100 to 300 MWe.

China is also building a 300-MWe PWR (pressurized water reactor) nuclear power plant in Pakistan at Chasma (alongside another that started up in 2000); however, this is an old design based on French technology and has not been offered more widely. The new unit is expected to come online in 2011.

One hundred to 300 MWe. This category includes both conventional PWR and high-temperature gas-cooled reactors (HTRs); however, none in the second category are being built yet. Argentina’s CAREM nuclear power plant is being developed by CNEA and INVAP as a modular 27-MWe simplified PWR with integral steam generators designed to be used for electricity generation or for water desalination.

FLOATING PLANTS

After many years of promoting the idea, Russia’s state-run atomic energy corporation Rosatom has approved construction of a nuclear power plant on a 21,500-ton barge to supply 70 MWe of power plus 586 GJ/hr of heat to Severodvinsk, in the Archangelsk region of Russia. The contract to build the first unit was let by nuclear power station operator Rosenergoatom to the Sevmash shipyard in May 2006. Expected to cost $337 million (including $30 million already spent in design), the project is 80 percent financed by Rosenergoatom and 20 percent financed by Sevmash. Operation is expected to begin in mid-2010.

Rosatom is planning to construct seven additional floating nuclear power plants, each (like the initial one) with two 35- MWe OKBM KLT-40S nuclear reactors. Five of these will be used by Gazprom – the world’s biggest extractor of natural gas – for offshore oil and gas field development and for operations on Russia’s Kola and Yamal Peninsulas. One of these reactors is planned for 2012 commissioning at Pevek on the Chukotka Peninsula, and another is planned for the Kamchatka region, both in the far east of the country. Even farther east, sites being considered include Yakutia and Taimyr. Electricity cost is expected to be much lower than from present alternatives. In 2007 an agreement was signed with the Sakha Republic (Yakutia region) to build a floating plant for its northern parts, using smaller ABV reactors.

OTHER DESIGNS

On a larger scale, South Korea’s SMART is a 100-MWe PWR with integral steam generators and advanced safety features. It is designed to generate electricity and/or thermal applications such as seawater desalination. Indonesia’s national nuclear energy agency, Batan, has undertaken a pre-feasibility study for a SMART reactor for power and desalination on Madura Island. However, this awaits the building of a reference plant in Korea.

There are three high-temperature, gas-cooled reactors capable of being used for power generation, but much of the development impetus has been focused on the thermo-chemical production of hydrogen. Fuel for the first two consists of billiard ball-size pebbles that can withstand very high temperatures. These aim for a step-change in safety, economics and proliferation resistance.

China’s 200-MWe HTR-PM is based on a well-tested small prototype, and a two-module plant is due to start construction at Shidaowan in Shandong province in 2009. This reactor will use the conventional steam cycle to generate power. Start-up is scheduled for 2013. After the demonstration plant, a power station with 18 modules is envisaged.

Very similar to China’s plant is South Africa’s Pebble Bed Modular Reactor (PBMR), which is being developed by a consortium led by the utility Eskom. Production units will be 165 MWe. The PBMR will have a direct-cycle gas turbine generator driven by hot helium. The PBMR Demonstration unit is expected to start construction at Koeberg in 2009 and achieve criticality in 2013.

Both of these designs are based on earlier German reactors that have some years of operational experience. A U.S. design, the Modular helium Reactor (GT-MHR), is being developed in Russia; in its electrical application, each unit would directly drive a gas turbine giving 280 MWe.

These three designs operate at much higher temperatures than ordinary reactors and offer great potential as sources of industrial heat, including for the thermo-chemical production of hydrogen on a large scale. Much of the development thinking going into the PBMR has been geared to synthetic oil production by Sasol (South African Coal and Oil).

MODULAR CONSTRUCTION

The IRIS developers have outlined the economic case for modular construction of their design (about 330 MWe), and it’s an argument that applies similarly to other smaller units. These developers point out that IRIS, with its moderate size and simple design, is ideally suited for modular construction. The economy of scale is replaced here with the economy of serial production of many small and simple components and prefabricated sections. They expect that construction of the first IRIS unit will be completed in three years, with subsequent production taking only two years.

Site layouts have been developed with multiple single units or multiple twin units. In each case, units will be constructed with enough space around them to allow the next unit to be constructed while the previous one is operating and generating revenue. And even with this separation, the plant footprint can be very compact: a site with three IRIS single modules providing 1000 MWe is similar to or smaller in size than one with a comparable total power single unit.

Eventually, IRIS’ capital and production costs are expected to be comparable to those of larger plants. however, any small unit offers potential for a funding profile and flexibility impossible to achieve with larger plants. As one module is finished and starts producing electricity, it will generate positive cash fl ow for the construction of the next module. Westinghouse estimates that 1,000 MWe delivered by three IRIS units built at three-year intervals financed at 10 percent for 10 years requires a maximum negative cash flow of less than $700 million (compared with about three times that for a single 1,000-MWe unit). For developed countries, small modular units offer the opportunity of building as necessary; for developing countries, smaller units may represent the only option, since such country’s electric grids are likely unable to take 1,000-plus- MWe single units.

Distributed generation. The advent of reactors much smaller than those being promoted today means that reactors will be available to serve smaller grids and to be put into use for distributed generation (with power plants close to the demand centers and the main grid used for back-up). This does not mean, however, that large units serving national grids will become obsolete – as some appear to wish.

WORLD MARKET

One aspect of the global Nuclear Energy Partnership program is international deployment of appropriately sized reactors with desirable designs and operational characteristics (some of which include improved economics, greater safety margins, longer operating cycles with refueling intervals of up to three years, better proliferation resistance and sustainability). Several of the designs described earlier in this paper are likely to meet these criteria.

IRIS itself is being developed by an international team of 20 organizations from ten countries (Brazil, Croatia, Italy, Japan, Lithuania, Mexico, Russia, Spain, the United Kingdom and the United States) on four continents – a clear demonstration of how reactor development is proceeding more widely.

Major reactor designers and vendors are now typically international in character and marketing structure. To wit: the United Kingdom’s recent announcement that it would renew its nuclear power capacity was anticipated by four companies lodging applications for generic design approval – two from the United States (each with Japanese involvement), one from Canada and one from France (with German involvement). These are all big units, but in demonstrating the viability of late third-generation technology, they will also encourage consideration of smaller plants where those are most appropriate.

The Power of Prediction: Improving the Odds of a Nuclear Renaissance

After 30 years of disfavor in the United States, the nuclear power industry is poised for resurgence. With the passage of the Energy Policy Act of 2005, the specter of over $100 per barrel oil prices and the public recognition that global warming is real, nuclear power is now considered one of the most practical ways to clean up the power grid and help the United States reduce its dependence on foreign oil. The industry has responded with a resolve to build a new fleet of nuclear plants in anticipation of what has been referred to as a nuclear renaissance.

The nuclear power industry is characterized by a remarkable level of physics and mechanical science. Yet, given the confluence of a number of problematic issues – an aging workforce, the shortage of skilled trades, the limited availability of equipment and parts, and a history of late, over-budget projects – questions arise about whether the level of management science the industry plans to use is sufficient to navigate the challenges ahead.

According to data from the Energy Information Administration (EIA), nuclear power comprises 20 percent of the U.S. capacity, producing approximately 106 gigawatts (GW), with 66 plants that house 104 reactor units. To date, more than 30 new reactors have been proposed, which will produce a net increase of approximately 19 GW of nuclear capacity through 2030. Considering the growth of energy demand, this increased capacity will barely keep pace with increasing base load requirements.

According to Assistant Secretary for Nuclear Energy Dennis Spurgeon, we will need approximately 45 new reactors online by 2030 just to maintain 20 percent share of U.S. electricity generation nuclear power already holds.

Meanwhile, Morgan Stanley vice chairman Jeffrey Holzschuh is very positive about the next generation of nuclear power but warns that the industry’s future is ultimately a question of economics. “Given the history, the markets will be cautious,” he says.

As shown in Figures 1-3, nuclear power is cost competitive with other forms of generation, but its upfront capital costs are comparatively high. Historically, long construction periods have led to serious cost volatility. The viability of the nuclear power industry ultimately depends on its ability to demonstrate that plants can be built economically and reliably. Holzschuh predicts, “The first few projects will be under a lot of public scrutiny, but if they are approved, they will get funded. The next generation of nuclear power will likely be three to five plants or 30, nothing in between.”

Due to its cohesive identity, the nuclear industry is viewed by the public and investors as a single entity, making the fate of industry operators – for better or for worse – a shared destiny. For that reason, it’s widely believed that if these first projects suffer the same sorts of significant cost over-runs and delays experienced in the past, the projected renaissance for the industry will quickly revert to a return to the dark ages.

THE PLAYERS

Utility companies, regulatory authorities, reactor manufacturers, design and construction vendors, financiers and advocacy groups all have critical roles to play in creating a viable future for the nuclear power industry – one that will begin with the successful completion of the first few plants in the United States. By all accounts, an impressive foundation has been laid, beginning with an array of government incentives (as loan guarantees and tax credits) and simplified regulation to help jump-start the industry.

Under the Energy Policy Act of 2005, the U.S. Department of Energy has the authority to issue $18.5 billion in loan guarantees for new nuclear plants and $2 billion for uranium enrichment projects. In addition, there’s standby support for indemnification against Nuclear Regulatory Commission (NRC) and litigation-oriented delays for the first six advanced nuclear reactors. The Treasury Department has issued guidelines for an allocation and approval process for production tax credits for advanced nuclear: 1.8 cents per kilowatt-hour production tax credit for the first eight years of operation with the final rules to be issued in fiscal year 2008.

The 20-year renewal of the Price- Andersen Act in 2005 and anticipated future restrictions on carbon emissions further improve the comparative attractiveness of nuclear power. To be eligible for the 2005 production tax credits, a license application must be tendered to the NRC by the end of 2008 with construction beginning before 2014 and the plant placed in service before 2021.

The NRC has formulated an Office of New Reactors (NRO), and David Matthews, director of the Division of New Reactor Licensing, led the development of the latest revision of a new licensing process that’s designed to be more predictable by encouraging the standardization of plant designs, resolving safety and environmental issues and providing for public participation before construction begins. With a fully staffed workforce and a commitment to “enable the safe, secure and environmentally responsible use of nuclear power in meeting the nation’s future energy needs,” Matthews is determined to ensure that the NRC is not a risk factor that contributes to the uncertainty of projects but rather an organizing force that will create predictability. Matthews declares, “This isn’t your father’s NRC.”

This simplified licensing process consists of the following elements:

  • An early site permit (ESP) for locations of potential facilities.
  • Design certification (DC) for the reactor design to be used.
  • Combined operating license (COL) for the certified reactor as designed to be located on the site. The COL contains the inspections, tests, analyses and acceptance criteria (ITAAC) to demonstrate that the plant was built to the approved specifications.

According to Matthews, the best-case scenario for the time period between when a COL is docketed to the time the license process is complete is 33 months, with an additional 12 months for public hearings. When asked if anything could be done to speed this process, Matthews reported that every delay he’s seen thus far has been attributable to a cause beyond the NRC’s control. Most often, it’s the applicant that’s having a hard time meeting the schedule. Recently, approved schedules are several months longer than the best-case estimate.

The manufacturers of nuclear reactors have stepped up to the plate to achieve standard design certification for their nuclear reactors; four are approved, and three are in progress.

Utility companies are taking innovative approaches to support the NRC’s standardization principles, which directly impact costs. (Current conventional wisdom puts the price of a new reactor at between $4 billion and $5.5 billion, with some estimates of fully loaded costs as high as $7 billion.) Consortiums have been formed to support cross-company standardization around a particular reactor design. NuStart and UniStar are multi-company consortiums collaborating on the development of their COLs.

Leader of PPL Corp.’s nuclear power strategy Bryce Shriver – who recently announced PPL had selected UniStar to build its next nuclear facility – is impressed with the level of standardization UniStar is employing for its plants. From the specifics of the reactor design to the carpet color, UniStar – with four plants on the drawing board – intends to make each plant as identical as possible.

Reactor designers and construction companies are adding to the standardization with turnkey approaches, formulating new construction methods that include modular techniques; sophisticated scheduling and configuration management software; automated data; project management and document control; and designs that are substantially complete before construction begins. Contractors are taking seriously the lessons learned from plants built outside the United States, and they hope to leverage what they have learned in the first few U.S. projects.

The stewards of the existing nuclear fleet also see themselves as part of the future energy solution. They know that continued safe, high-performance operation of current plants is key to maintaining public and state regulator confidence. Most of the scheduled plants are to be co-located with existing nuclear facilities.

Financing nuclear plant construction involves equity investors, utility boards of directors, debt financiers and (ultimately) the ratepayers represented by state regulatory commissions. Despite the size of these deals, the financial community has indicated that debt financing for new nuclear construction will be available. The bigger issue lies with the investors. The more equity-oriented the risk (principally borne by utilities and ratepayers), the more caution there is about the structure of these deals. The debt financiers are relying on the utilities and the consortiums to do the necessary due diligence and put up the equity. There’s no doubt that the federal loan guarantees and subsidies are an absolute necessity, but this form of support is largely driven by the perceived risk of the first projects. Once the capability to build plants in a predictable way (in terms of time, cost, output and so on) has been demonstrated, market forces are expected to be very efficient at allocating capital to these kinds
of projects.

The final key to the realization of a nuclear renaissance is the public. Americans have become increasingly concerned about fossil fuels, carbon emissions and the nation’s dependence on foreign oil. The surge in oil prices has focused attention on energy costs and national security. Coal-based energy production is seen as an environmental issue. Although the United States has plenty of access to coal, dealing with carbon emissions using clean coal technology involves sequestering it and pumping it underground. PPL chairman Jim Miller describes the next challenge for clean coal as NUMBY – the “Not under my back yard” attitude the public is likely to adopt if forced to consider carbon pumped under their communities. Alternative energy sources such as wind, solar and geothermal enjoy public support, but they are not yet scalable for the challenge of cleaning up the grid. In general, the public wants clean, safe, reliable, inexpensive power.

THE RISKS

Will nuclear fill that bill and look attractive compared with the alternatives? Although progress has been made and the stage is set, critical issues remain, and they could become problematic. While the industry clearly sees and is actively managing some of these issues, there are others the industry sees but is not as certain about how to manage – and still others that are so much a part of the fabric of the industry that they go unrecognized. Any one of these issues could slow progress; the fact that there are several that could hit simultaneously multiplies the risk exponentially.

The three widely accepted risk factors for the next phase of nuclear power development are the variability of the cost of uranium, the availability of quality equipment for construction and the availability of well-trained labor. Not surprising for an industry that’s been relatively sleepy for several decades, the pipeline for production resources is weak – a problem compounded by the well-understood coming wave of retirements in the utility workforce and the general shortage of skilled trades needed to work on infrastructure projects. Combine these constraints with a surge in worldwide demand for power plants, and it’s easy to understand why the industry is actively pursuing strategies to secure materials and train labor.

The reactor designers, manufacturers and construction companies that would execute these projects display great confidence. They’re keen on the “turnkey solution” as a way to reduce the risk of multiple vendors pointing fingers when things go wrong. Yet these are the same firms that have been openly criticized for change orders and cost overruns. Christopher Crane, chief operating officer of the utility Exelon Corp., warned contractors in a recent industry meeting that the utilities would “not take all the risk this time around.” When faced with complicated infrastructure development in the past, vendors have often pointed to their expertise with complex projects. Is the development of more sophisticated scheduling and configuration management capability, along with the assignment of vendor accountability, enough to handle the complexity issue? The industry is aware of this limitation but does not as yet have strong management techniques for handling it effectively.

Early indications from regulators are that the COLs submitted to date are not meeting the NRC’s guidance and expectations in all regards, possibly a result of the applicants’ rush to make the 2008 year-end deadline for the incentives set forth in the Energy Policy Act. This could extend the licensing process and strain the resources of the NRC. In addition, the requirements of the NRC principally deal with public safety and environmental concerns. There are myriad other design requirements entailed in making a plant operate profitably.

The bigger risk is that the core strength of the industry – its ability to make significant incremental improvements – could also serve as the seed of its failure as it faces this next challenge. Investors, state regulators and the public are not likely to excuse serious cost overruns and time delays as they may have in the past. Utility executives are clear that nuclear is good to the extent that it’s economical. When asked what single concern they find most troubling, they often reply, “That we don’t know what we don’t know.”

What we do know is that there are no methods currently in place for beginning successful development of this next generation of nuclear power plants, and that the industry’s core management skill set may not be sufficient to build a process that differs from a “learn as you go” approach. Thus, it’s critical that the first few plants succeed – not just for their investors but for the entire industry.

THE OPPORTUNITY – KNOWING WHAT YOU DON’T KNOW

The vendors supporting the nuclear power industry represent some of the most prestigious engineering and equipment design and manufacturing firms in the world: Bechtel, Fluor, GE, Westinghouse, Areva and Hitachi. Despite this, the industry is not known for having a strong foundation in managing innovation. In a world that possesses complex physical capital and myriad intangible human assets, political forces and public opinion as well as technology are all required to get a plant to the point of producing power. Thus, more advanced management science could represent the missing piece of the puzzle for the nuclear power industry.

An advanced, decision-making framework can help utilities manage unpredictable events, increasing their ability to handle the planning and anticipated disruptions that often beset long, complex projects. By using advanced management science, the nuclear industry can take what it knows and create a learning environment to fi nd out more about what it doesn’t know, improving its odds for success.