AEIC Presentation October 19

1
The Resurgence of Nuclear PowerBriefing to the
Nuclear Science and Engineering Department at
Massachusetts Institute of Technology
Admiral Frank L. (Skip) BowmanUSN
(Retired)President and CEONuclear Energy
InstituteDecember 3, 2007
2
Todays Briefing

• Nuclear Power
• Today and Tomorrow
• Opportunities
• Challenges Yes we need more nuclear, but
• what about safety?
• what about used fuel?
• what about proliferation?
• what about the infrastructure?
• what about the cost?

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NuclearPower Today and Tomorrow
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Sources of U.S. Electricity
(2006)
20.0 Natural Gas Low construction cost Volatile
fuel cost Combined cycle capacity factor
39.9 Steam plant capacity factor
17.2 Emissions NOx, CO2
1.6 Oil Volatile fuel cost Capacity factor
14.9 Emissions SO2, NOx, CO2
19.4 Nuclear High construction cost Stable
fuel cost Capacity factor 89.6 Emissions None
7.0 Hydro Large-scale opportunities gone No fuel
cost Capacity factor 31.8 Emissions None
49 Coal High construction cost Capacity factor
71.1 Emissions SO2, NOx, CO2, particulates,
mercury, toxic metals
3.1 Renewables (and Other) Very high
construction cost No fuel cost Capacity factor
26.8 Emissions None
Source Global Energy Decisions / Energy
Information Administration
5
Nuclear Power in the United States Today

• 104 operating commercial reactors (102 operating
  naval reactors)
• Stable and affordable production costs
• 1.7 cents/KWh
• 90 average capacity factor
• 20 of US electricity supply with 12 of the
  installed capacity
• Used fuel safely stored on 64 sites
• Zero emissions during electricity production
• Valuable business assets
• Safe and secure operations
• No proliferation risk from commercial nuclear
  fuel

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Whats Driving the Interest in New Nuclear?

• Growing need for baseload generation
• Near-term need for new generating capacity
  (e.g., Northeast, mid-Atlantic, Southeast,
  South, Texas)
• Increasing environmental concerns and potential
  controls on carbon emissions
• Chronic volatility in natural gas prices
• Nuclear power safety record

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Nuclear Power in the United States Tomorrow

• Evolutionary advances of light water reactors in
  use today
• Westinghouse AP 1000
• General Electric - Hitachi ESBWR
• General Electric ABWR
• Areva EPR
• Mitsubishi US APWR
• 17 companies (or groups), 31 reactors
• 3 COLs for 5 reactors submitted to the NRC, 1 or
  2 more COLs expected in 2007

8
Opportunities
9
Policymakers Support Nuclear Power

• Growing appetite for clean, safe, affordable
  energy
• Governors and other state and county officials
  express desire for new plants in their districts
• Energy Policy Act of 2005 bipartisan support for
  new nuclear plant construction
• Grassroots support CASEnergy clean and safe
  energy

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National Leadership Leaning Toward Nuclear Energy

• We also need to take advantage of clean safe
  nuclear power. Nuclear power is the one existing
  source of energy that can generate massive
  amounts of electricity without causing any air
  pollution or greenhouse gas emissions.
• President Bush
• September 28, 2007
• Nuclear power is almost the only answer for
  clean electricity to meet our growing needs. When
  I look at all the options, I think nuclear is the
  leading technology.
• Sen. Lamar Alexander (R-TN)
• January 28,2007

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Strong Public Support Near Existing Plants
81 Utility protecting environment
82 Favor nuclear energy
86 Favorable impression of nearest plant
71 Willing to see new reactor built near them
86 Give nuclear high safety rating
Source Bisconti Research Inc. August 2007 poll
of 1,152 U.S. adults margin of error is /- 3
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Challenges
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Yes, We Need Nuclear Energy, But

• The vast majority of the members on my
  committee support nuclear power, and so do the
  majority in the Senate. I dont think there is
  any question that we are going to be seeing new
  plants.
• Sen. Barbara Boxer (D-CA)
• Chair, Environment and Public Works Committee
• December 17, 2006
• The technology has changed, and I bring a more
  open mind to that subject now because I think we
  should look at this technology, and compare it to
  the alternatives.It has to be on the table.
• House Speaker Nancy Pelosi (D-CA)
• February 8, 2006
• Nuclear power faces some difficult problems
  theres the waste problem the cost problem
  there are continuing safety issues
• Sen. Hillary Clinton (D-NY)
• November 10, 2007

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Yes, But What About Nuclear Safety?
Nuclear critics say Inherently dangerous
technology no independent oversight no way of
knowing whether nuclear plants are safe.
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Nuclear Safety

• Safety is our highest priority
• Operating practices and process
• Government/industry oversight
• Outstanding safety performance shown by safety
  related metrics
• Unplanned shutdowns are at near-record lows
• Lost-time accident rates at record low levels
• Forced plant outage rates and unplanned
• safety system actuations all are down

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Defense in Depth Safety Approach

• Dedicated, talented, and professional workforce
  receives comprehensive integrated training and
  education and is fully qualified within rigorous
  standards
• Plant design includes redundant, reliable safety
  systems
• Strict knowledgeable procedural compliance
• Industry-wide database to catalog plant operating
  experience so that the entire industry can learn
  from each plants operations
• Multiple barriers to accidental radiation release

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Nuclear Safety Process

• Nuclear Regulatory Commission
• Resident and regional inspectors
• Baseline inspectionsat least 2500 man-hours per
  year
• Key Performance Indicators
• Routine resident inspector walk-arounds
• GAO gave positive assessments of the NRC reactor
  oversight process
• Institute of Nuclear Power Operations
• On-site inspections once every two years, lasting
  two weeks
• INPO team and industry peers inspect
• Exit interviews conducted by INPO
• Formal out brief with CEO, CNO, Site VP and
  General Manager
• INPO CEO discusses evaluation score with utility
  CEO

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Yes, But What About Used Fuel?
Nuclear critics say Used fuel is a threat to
public safety and to the environment Nuclear
plants have been operating for decades so there
must be lots of used fuel piling up Neither the
industry nor the government know what to do with
used fuel Theres no plan
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Simple Facts About Used Nuclear Fuel

• Uranium is a highly concentrated source of
  energy
• After 50 years of nuclear plant operation, only
  small volume of used nuclear fuel
• Would cover one football field 7 yards deep
• Solid, ceramic material Easy to manage, store,
  monitor and secure
• In 50 years of commercial operation, zero impact
  on public health or the environment

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Deep Repository Plan

• Once through fuel cycle
• Technically sound, secure and safe
• Most countries with used nuclear fuel use this
  plan (some with partial reprocessing)

21
Straight Talk About the Yucca Mountain Project

• International scientific consensus (including
  U.S. National Academy of Sciences) Optimum
  approach is underground disposal in stable
  geologic formations
• 9-billion of independent research by Americas
  top scientists has demonstrated Yucca Mountain is
  suitable site for nuclear waste disposal
• Before construction and operation, Yucca Mountain
  project must be licensed by the Nuclear
  Regulatory Commission

22
Three-Part Integrated Plan for Used Nuclear Fuel

• Consolidated interim storage at centralized sites
• Conduct research and technology development to
  demonstrate techniques to recycle used nuclear
  fuel
• Extract additional energy from used nuclear
  fuel
• Reduce volume and radiotoxicity of waste
  by-products requiring permanent disposal
• Consolidate used nuclear fuel at future
  recycling centers
• Build and operate permanent disposal facility for
  waste by-products
• Repository monitored for 100-300 years to
  ensure safety

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Yes, But What About Nuclear Proliferation?
Nuclear critics say We cant have developing
nations have access to nuclear power its like
giving them nuclear weapons
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Preventing the Proliferation of Nuclear Weapons
The commercial use of nuclear technology is vital
for generating clean electricity, diagnosing
diseases and treating cancer, sterilizing medical
equipment, irradiating food products, and
hundreds of other purposes.

• Global mission that requires the transparent
  participation and cooperation of all nations
• Material accountability, physical security and
  monitoring is the basis of international
  nonproliferation policy
• IAEA safeguards program verifies a country is
  living up to the agreement not to use commercial
  nuclear programs for nuclear weapons purposes

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Misuse of Uranium Enrichment or Recycling
Facilities

• Uranium used in nuclear power plants CANNOT be
  used to make a nuclear weapon
• Uranium enrichment or reprocessing used fuel can
  yield sufficient material for nuclear weapons,
  however
• International protocols ensure facilities are
  not used as covers to disguise production of
  highly enriched uranium
• Reprocessing can be conducted in a way that
  does not result in a pure plutonium byproduct
• The IAEA monitors and inspects fuel cycle
  facilities

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Ensuring Non-Proliferation Today

• Nations and companies that already have
  enrichment and reprocessing capabilities can
  provide an assured supply of fuel to other
  nations seeking to develop commercial nuclear
  technology
• Additional expensive and exploitable uranium
  enrichment and reprocessing facilities would not
  have to be built
• U.S. nuclear plants already make a significant
  contribution to nonproliferation
• Megatons to Megawatts program is a 20-year, 8
  billion government/industry partnership
• Since 1993 uranium from the equivalent of 11,000
  Russian warheads has been used to produce
  electricity
• Fuel is used to produce 10 of all of the
  electricity in the United States

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Yes, But What About the Infrastructure?
Nuclear critics say We stopped building nuclear
power plants 30 years ago there are no U.S.
manufacturers to supply materials and no skilled
workforce to build the new plants
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Infrastructure Workforce

• Resurgence of interest in nuclear careers most
  notably evidenced by the rapidly increasing
  enrollments in nuclear engineering programs
• Undergraduate enrollments grew from just 470 in
  1998 to 1,933 in 2007
• Graduate enrollments also climbed from 220 in
  1998 to 1,153 in 2007
• America Competes Act creates the framework for
  addressing challenges in the Science, Technology,
  Engineering and Math workforce
• Each new plant that is built will require between
  1,400 and 1,800 workers for construction and
  between 400 and 700 workers for operation these
  are great jobs!
• Repatriating jobs in the manufacturing sector

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Infrastructure Manufacturing

• 17 companies or consortia have announced that
  they are developing combined license applications
  for up to 31 new nuclear reactors
• Major investments are underway in long-lead
  procurement items and should force expansion of
  U.S. manufacturing capability
• More vendors and manufacturers are expressing
  interest in entering the commercial nuclear
  industry and some have taken the next step and
  applied for and/or received their N-stamp
• Recently Babcock Wilcox and Peter Kiewit
  renewed their nuclear accreditation

30
Yes, But What Aboutthe Cost of Nuclear Power?
Nuclear critics say, Nuclear power costs too
much Nuclear power can only survive because
its heavily subsidized New nuclear power
plants are too costly and cannot compete
31
Fast Facts About Nuclear Power Economics

• 104 operating nuclear power plants are
  lowest-cost source of baseload (24-by-7)
  electricity
• Stable fuel costs
• Higher (90 average) availability than any
  other source of electricity
• Nuclear power plants are immune to
• Volatility in fossil fuel prices
• Increasingly stringent controls on air
  pollutants and carbon dioxide emissions
• New nuclear power plants will be competitive with
  other sources of clean electricity
• All energy sources are subsidized (because energy
  supply is a public good)
• Nuclear energy is not the most heavily
  subsidized

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Operating Nuclear Plants
Average nuclear plant production costs have
declined more than 30 percent over past 10 years
U.S. Electricity Production Costs 1995-2006
cents per kwh (2006)
Production Costs Operations and Maintenance
Costs Fuel Costs Source Global Energy Decisions
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New Nuclear Power PlantsCompetitive with Other
Sources

• All baseload technologies have high capital cost
• Capital cost less important than lifetime
  operating cost
• Total nuclear operating cost comparable to
  advanced coal- based plants and better than
  gas-fired plants
• Renewables do not compete with nuclear
• Nuclear Baseload 24-by-7 (90 availability)
• Wind Intermittent (30 availability)
• New nuclear benefits justify use of investment
  support
• Federal government Support for debt financing
  through loan guarantees
• State governments Assurance of investment
  recovery through rates

A portfolio of fuels, technologies is essential
to meet U.S. energy security, environmental goals
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All Energy Sources Are Subsidized

• Since energy crises of the 1970s, federal
  government spending on RD (1976-2006)
• Nuclear 4.2 billion
• Coal 5.9 billion
• Renewables 7.3 billion
• Federal expenditures on energy (RD, tax
  benefits, etc.) since 1950
• Oil and natural gas 435.9 billion
• Coal 93.4 billion
• Hydro 80.5 billion
• Nuclear 64.7 billion
• Renewables 43.9 billion
• Geothermal 6.4 billion

Management Information Services, Inc., Federal
Expenditures on Energy 1950-2006, November 2007
35
Energy Policy Act of 2005Investment Stimulus
for New Plants

• Federal loan guarantee
• Not nuclear-specific All clean energy sources
  qualify
• Reduces cost of capital and cost of electricity
• Federal delay insurance
• 2 billion of coverage for first six new nuclear
  plants
• Covers delays beyond the private sectors control
• Production tax credit
• Provides emission-free nuclear power with similar
  tax treatment as renewables
• Price-Anderson Act renewal
• Over 10 billion industry-funded accident
  insurance protecting the public

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Subsidy or No Subsidy?Sub-si-dy (subsi dé). n.,
a direct financial aid furnished by a government
to a private commercial enterprise
Incentive in Energy Policy Act How the Program Operates Subsidy or No Subsidy?
Loan Guarantee Program is self-financing Private sector pays cost to federal government of issuing loan guarantee, plus all administrative fees No subsidy
Delay Insurance Program operates like commercial insurance Private sector pays Department of Energy a premium to receive coverage No subsidy
Production Tax Credit Unlike production tax credit for renewables, nuclear tax credit is limited to 6,000 megawatts of capacity, is not indexed for inflation Limited subsidy
Price-Anderson Insurance Federal government has never paid a claim under Price-Anderson. Insurance program is financed by nuclear industry. No subsidy
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Return on Investment The True Measure of a
Subsidy

• 2005 Energy Policy Act provides 6 billion of tax
  credits to new nuclear plants Is it worth it?
• Benefit of a typical nuclear power plant over its
  40-year operating lifetime 27.5 billion to 32
  billion
• Local, state and federal taxes
• Salaries to personnel who operate the plant and
  indirect employment that results
• Value of the electricity produced by the plant
• 6 billion investment by the taxpayer produces
  165 billion to 192 billion in value

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Subsidies A Rational Perspective
It is the interest of the society to submit
to a temporary expense, which is more than
compensated by an increase of industry and
wealth, by an augmentation of resources and
independence, and by the circumstance of eventual
cheapness Alexander Hamilton, Report on
Manufactures, December 1791

• Subsidies are an essential part of American life
• (subsidy is not a pejorative)
• Subsidies encourage production of goods and
  services that serve the public interest and
  general welfare
• For example, federal government manages a 1.1
  trillion loan guarantee portfolio
• Loan guarantees widely used to ensure development
  of critical infrastructure

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Conclusions
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Whats in Our Future? "The future ain't what it
used to be." Yogi Berra

• Solid base of political and public support
• Nuclear is recognized as essential part of U.S.
  electricity supply
• Industry must address challenges/preconceived
  ideas
• 15 to 20 COLs by the end of 2008
• 6 to 8 plants start construction 2010 - 2011
• 4 to 6 more start construction 2012 - 2015
• 10 to 14 plants on line by 2020

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An Energy Policy forAn Energy Secure Nation

• Implement energy efficiency and conservation in
  all phases of electricity generation and use
• Employ renewable energy sources to the full
  extent possible
• Rely on proven, large-scale, emission-free energy
  sources for baseload generation

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Questions ?