Sunday, August 06, 2006

Episode 24

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Iran Scolded at UN Security Council

Finally speaking with a unified voice, the UN security council on Monday adopted a resolution that demands Iran suspend its uranium enrichment and reprocessing work. Iran has 31 days, until to end of August to comply with the resolution.

This 31 day clock was the result of China and Russia's reluctance to agree to sanctions from the start. Instead the council will have to reconvene to determine punitive actions that could include economic, travel and communication sanctions. There is no allowance in the resolution for the use of military force.

The vote was 14 to 1, with Qatar, the Arab representative on the council, dissenting. No surprise there!

On the positive side, this is the first resolution by the council on the Iranian nuclear program that is legally binding and carries the threat of sanctions. But it was immediately clear that Iran will have no part of it.

Javad Zarif, the Iranian ambassador, speaking after the vote, rejected it, saying that the council was acting illegally. He chastised the council for its inability to act forcefully in the current war in Lebanon, saying, "You be the judge of how much credibility this leaves for the Security Council. Millions of people around the world have already passed their judgment."

The resolution demands the "full and sustained suspension" of nuclear activities, including research and development, by Aug. 31, to be verified by the International Atomic Energy Agency, the UN nuclear watchdog. It also bans any other nations from providing Iran with any materials that could be used in its enrichment or ballistic missile programs.

In the discussions that preceded the vote, several council members noted Iran's failure to respond to a robust set economic and technological incentives offered to them Iran on June 6 by Britain, China, France, Germany, Russia and the United States. It appears that the US strategy paid off in this respect. At the time Iran was demanding direct negotiations with the US, something prior US policy prohibited. In a surprise move, the USA shifted policy and agreed to direct negotiations. This essentially called Amadenajad's bluff and put the ball back in the Iranian's court. At that point the Iranians added other conditions saying they would not even temporarily suspend their enrichment while negotiating - something the other nations insisted upon as a goodwill measure on the part of Tehran.

US report on recycling used fuel.
A new report by the Boston Consulting Group for Areva Inc and based on proprietary Areva information shows that recycling used fuel in the USA using the Coex aqueous process would be economically competitive with direct disposal of used fuel. The Coex process has been developed by Areva from that used today in the four operating reprocessing plants in France, UK, Russia and Japan. A $12 billion, 2500 t/yr US plant was considered, with total capital expenditure of $16 billion for all related aspects. This would comfortably be covered by accumulated funds from electricity users, and would also have the benefit of greatly reducing demand on space at the proposed Yucca Mountain repository, and would extend its life considerably.

US utility to complete reactor?
With power demand growing 2% per year in their ser4vice territory, the Tennessee Valley Authority has begun a comprehensive evaluation about the feasibility of completing the partially built Watts Bar nuclear plant. Construction of the 1167 MWe plant was stopped in 1985 and it is about 50% complete. If TVA decided to undertake the project it could be online by about 2013. Watts Bar unit one started up in 1996.

Russia Boosts Nuclear Spending
The Russian government has approved spending up to US $25 billion between now and 2015 to build ten 1000 MWe units, then to begin building an additional ten units after that. Rosatom says that the balance of total $52 billion required for the program by 2015. In 2007 Russia will begin building a VVER designed plant, and by 2008 they will add two more units per year. Some these will be 1200 MWe versions.

In an interesting twist, Russia's President Putin made it clear that he was taking the BN-800 fast neutron reactor project under his personal control to make sure it is finished on time by 2012. I'm not quite sure what to make of that comment by president Putin. I'd be interested in hearing from some of my friends in Europe - drop me a line and let me know what you think!

New Russia-Kazakh agreements.
Russia and Kazakhstan have signed three nuclear joint venture agreements totaling US$10 billion for new nuclear reactors, uranium production and enrichment. The first Kaxakhstan unit will be a 300 MWe unit of the VBER-300 design. This will be followed by a uranium enrichment facility that is expected to start production in 2008 and will produce as much as 1000 metric tones of Uranium per year by 2012.

More New Nuclear Plants in China
China Guangdong Nuclear Power Group , China Power Investment Corporation and Guangxi Investment Group this week signed an agreement to build the first the first two 1000 MWe units at the Bailong nuclear power plant in southern China. The companies will invest US $3.1 billion for the first two of six units that will be built at the site. The first two units are expected to begin construction before 2010.

US House of Representatives Approves India agreement.
As I predicted, the US House of Representatives this week approved by a large majority the agreement with India to allow the exchange of technology and materials for nuclear energy production. However, Congress retains some oversight of the deal, and details remain to be worked out. The Senate is expected to vote on it in the next few weeks.

Nigeria to Build Its First Nuclear Plant
President Obasanjo of Nigeria said this week that his nation is set to join the race to build nuclear power plants. Speaking at the inauguration of the board of the Energy Commission of Nigeria, Obasanjo said they will use nuclear energy for electricity generation and improved agriculture. I'm not sure what he means by improved agriculture, but I presume he means electric-powered water pumping stations for irrigation.

The president stated they plant to have their first nuclear plant running in 10 to 12 years. Several analysts said existing electrical distributions systems will have to be upgraded before Nigeria could make use of a large generating station such as a nuclear plant. Apparently Nigeria's electrical grid is not well developed, and does not reach into the areas where it would be of most use in agriculture.

Constellation Has Begun Buying Long Lead-time Components for a New Nuclear PlantThe nuclear renaissance in the USA reached a new milestone on Thursday when Constellation Energy, in a bold sprint to the head of the pack became the first company to begin the process of procuring long lead-time components. Constellation, in their Unistar alliance with Areva, signed a deal to being manufacturing 44 heavy forgings needed to build a US EPR.

This is a brilliant move on the part of Constellation because it assures them of being at the head of the line for new parts. It's also capitalizing on lessons learned from Areva's recent experience in Finland where delays in getting parts to the construction site has contributed to a one year schedule push.

This also affirms Constellation's commitment to build a new nuclear plant. While the EPR is behind other designs in the US government approval process, this will give Constellation a huge advantage when it comes to actually building a new plant. It will do no good for other companies to have approved designs if they can't get the critical components to the construction sites in time to meet the projected 50 month schedules. Remember: delays = $Millions in additional interest!

I've spoken to several people in the industry about the supply chain - all the pieces of getting the materials to the parts manufacturers, and then the finished part to the construction sites - and there's a good deal of concern about whether or not there is sufficient manufacturing capacity around the world to meet the demand for new nuclear plants. For example, there's only one place in the world that has a foundry big enough to cast a reactor vessel and it's in Japan. If you want to build a nuclear plant then you have to buy it from them. And it takes a long time to forge a reactor vessel! IF more than a dozen utilities are going to build 18 to 20 new plants can you image the backlog at that foundry!

Hats off to Constellation for a gutsy tactical move that may well put them at the front of the line for the incentives in the Energy Policy Act of 2005!

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