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Nuclear energy strategy in the environment of utility business deregulation
Progress
Pergamon www.elsevier.com/locate/pnucene
in Nuclear Energy, Vol. 37, No. l-4. pp. 25-30.2000 0 2000 Elsevier Science Ltd. All rights reserved Printed in Great Britain 0149-1970/00/$ - see front matter
PII:SO149-1970(00)00019-6
NUCLEAR ENERGY STRATEGY IN THE ENVIRONMENT OF UTILITY BUSINESS DEREGULATION
AKIYOSHI
MINEMATSU
Nuclear Power Engineering Department & Engineering R&D Division Tokyo Electric Power Company l-l-3 Uchisaiwai-cho, Chiyoda-ku, Tokyo 100-0011 Japan Phone: (+81) 3-3501-8111; Fax: (+81) 3-3596-8544 e-mail: t0361402Qpmail.tepco.co.jp
ABSTRACT Nuclear power has contributed to the reduction and stabilization of electricity rate in Japan. However, its economic competitiveness has been eroding since mid 80’s. Deregulation is hitting nuclear power just at the time its competitiveness is declining, and it poses a threat to drive short-sighted market orientation and precludes long term focus on achieving a balance between “environmental agenda” and “competitiveness in market”. Lowering the electricity rate is one of the important agenda to improve the nation’s industrial competitiveness in the global market. However, it will be very difficult to win the competition of gas and oil prices with other developed countries in Europe and North America due to a handicap of long transportation distance. Only nuclear power and natural energy have no relation to such a handicap of economic distance from resources. Without securing economic superiority of those energy sources, Japan will not be able to clear the handicap of energy costs. The Japanese utilities are trying hard to regain the competitive edge of nuclear power. We have established short-term sirategies for both existing and new LWRs as well as a long-term strategy for technological development. With these strategies we will be able to regain the competitiveness of nuclear power. 0 2000 Elsevier Science Ltd. All rights reserved. 25
26
A. Minematsu
1. CURRENT
STATUS OF NUCLEAR
POWER IN JAPAN
In fiscal year 1998, nuclear power supplied 36.8% of the total electricity in Japan. Use of nuclear power as a part of the programs for diversifying power generation sources has been the energy policy agenda in this resources-poor country, and it has contributed to the increased energy self-sufficient rate as shown in Figure 1. Now it is nuclear as well as gases that is the TEPCO’s major source of electric power (Figure 2). Figure 3 shows the trend of TEPCO’s electricity rate. For the past 20 years, consumers have been benefited from the reduced electricity rate owing to declining oil price, appreciation of Yen and increased share of nuclear power.
100 90 80
g
70
;
60
u”
50
.g
40 30
E L2
20
z
10 0
Fig. 1.
Trend of primary energy supply in Japan.
TWhr 350
so
300
g '2 250 b
40
_: yxYen/US$ ‘/ J
Oil($/barreO *d
j
_
*fC.
Share
of Nuclear
power
in kwh$%)
t*,
1 *
*
’
’
E200 5 950 .i! e 100 z? w 50 0 70
72
74
76
7.9
60
62
Fiscal
Fig. 2.
64
86
66
90
92
94
96
96
Year
Power generation
sources (TEPCO).
Fig. 3.
Electricity
rate and relevant factors (TEPCO).
Nuclear power also contributes to the reduction of greenhouse-effect gas emission. Figure 4 shows life cycle average of the greenhouse gas discharge, which includes emissions not only from fuel combustion but also from construction and other activities throughout the plant life. It is clearly shown in this estimation that nuclear power is one of the lowest sources of greenhouse gases. We have a commitment to the Kyoto Protocol of greenhouse-effect gas reduction adopted at the COP3 in 1997, and nuclear power should play a key role to fulfill this commitment. However, as shown in Figure 5, the economic competitiveness of nuclear power has been eroding since mid 80’s due to declining oil price, appreciation of Yen and advent of high-efficient Combined Cycle Gas Turbine technology. Utility business deregulation is hitting nuclear power just at the time its competitiveness is declining.
27
Nuclear energy strategy g-CO,lkWh 300
NCilUd Gas
Fig. 4.
Oil
CiXd
Hydra
Wind
Solar
Nuclear
.‘_
S?
X3
84
85
86
87
88
89
90
91
Year
Life cycle average greenhouse gas emission from various power systems. (Uchiyama, 1995)
2. UTILITY
BUSINESS
Fig. 5.
Change in power generation (Yuasa, 1992)
cost.
DEREGULATION
The utility business deregulation in Japan has two steps. The first step became effective on December 1, 1995 with an overhaul of Utility Business Law in which utilities opened wholesale market to Independent Power Producers and cost-plus rate-making method was modified. The second step is scheduled to start in March 2000. This step will include the opening of new thermal power capacity to competition and liberalization of the retail market of large industrial customers with more than 20kV contracts. This market accounts for around 30% of the total electricity consumption. The deregulation poses a threat to drive short-sighted market orientation and precludes long term focus on balance between “environmental agenda” and “competitiveness in market”. On the energy policy level, a in market” to co-exist. scheme is needed to allow both “energy policy agenda” and “competitiveness Contemporary market dynamics do not effectively account for the global environmental concerns and the need to prevent a negative legacy left over to later generations. We may be able to think about schemes such as enacting “Energy law” to secure long-sightedness, introducing “Externality” evaluation to decision making, and institutionalizing “Tradable rights”.
3. IMPLICATIONS
OF THE DEREGULATION
FOR NUCLEAR
SAFETY
Although we are entering the new era of severe economic competition, there will be no change in the basic policy of nuclear safety. That is because reliability and safety is pre-requisite to higher availability and better economics. Availability is the most critical element for the economics of operating plants. Generally speaking, failure of components leads to a loss in economics through the availability loss and also results in socio-political difficulty. In today’s environment, the public’s allowance for any type of malfunction is extremely narrow, and miner deviation from normal operating condition may cause a plant shutdown even though it is within the level defined in Operational Technical Specifications. Consequently, there has been no change in the basic policy of preventative maintenance, in the component reliability management programs and in the safety procedures for maintenance outages even though the outage duration has recently been reduced for higher availability. Compromise on reliability and safety under economic pressure will most probably results in reduced availability.
A. Minematsu
28
In order to attain both goals of safety/reliability and economy, a realistic approach will be the continued operation of existing plants for 60 years with proper Plant Life Management (PLM) programs in place. The capability of typical BWR and PWR plants for 60 years of operation was confirmed through a recent study by MIT1 and the electric utility companies in Japan. This plant life management program includes programmatic renewal and modernization of the plant, which will enhance reliability and safety. For example, the BWR core shroud has been replaced with low carbon stainless steel in FY 1998 for the first time in the world at Fukushima Daiichi #3, and subsequent programs for other units are in place. Even reactor vessel replacement is under study. Such large-scale maintenance works are also being undertaken at some PWR units in Japan. With such longevity under appropriate PLM programs, existing nuclear plants with well-progressed asset depreciation can become a “corporate profit center”.
4. STRATEGY
FOR REGAINING NUCLEAR
THE COMPETITIVENESS POWER
OF
As mentioned above, the deregulation is hitting nuclear power just at the time when its competitive edge is eroding. In this section, our response strategies will be discussed. Before that, however, let us think about economic competition in the world and what is the role of nuclear power. With reduced trade barriers and liberalization of markets, we are now in the era of the global market, where the industrial competition becomes severer than ever. Lowering the electricity rate is one of the important agenda to improve the nation’s industrial competitiveness in the global market. Competition among different energy sources certainly encourages the power industry in such efforts. However, it will be very difficult for Japan to win the competition of gas and oil prices with other developed countries in Europe and North America due to a handicap of long transportation distance. Only nuclear power and natural energy have no relation to such a handicap of economic distance from resources. Without securing economic superiority of those energy sources, Japan will not be able to clear the handicap of energy costs. The Japanese utilities are trying hard to regain the competitive term and long-term strategies.
edge of nuclear power. There are both short-
The short-term strategy for operating LWRs is to achieve higher availability through reduced outage duration, O&M cost reduction and fuel cost savings. As shown in Figure 6, operating plants are showing good progresses in reducing the power generation cost owing to asset depreciation and high availability. In the past, a typical refuelingmaintenance recently to about 35 days by the followings; -
outage period was about 90 days. However,
it has been reduced
Enhanced productivity of outage work by reducing idle time of workers and by intensive preplanning, and “Package replacement and later overhaul” policy on such components as Safety Relief Valves and Control Rod Drives.
The fuel cost savings have become reality by a high burn-up program, competitive bidding and in-house core management. Further reduction of power generation cost should be pursued in the fuel cycle area, especially through back-end cost reduction.
Nuclear energy strategy
29
a 0.8 0 Y ‘2 0.6 s d 0.4 0.2 0
Current
Fig. 6.
Change in power generation (TEPCO).
cost
Fig. 7.
FMCRD
Seal-less
FMCRD
An example of ABWR design improvement (FMCRD).
In order to alleviate financial risks associated with plant construction, capital investment should be lowered by reducing the cost of new plants. An investment saving of 30% is expected to be realized by the followings. Firstly, design standardization has been pursued by a cooperative action of the BWR utilities in Japan. The standardization is estimated to reduce the cost of the ABWR by about 15% through the reductions in equipment costs and engineering fees. The second factor is the procurement through competitive bidding.
from more competitive
markets.
More components
will be purchased
The third one is the assessment of the experience of the first ABWR units, Kashiwazaki-Kariwa #6 and #7, on which design improvement of the ABWR is made. Of course, the basic policy on new plant projects is design standardization to minimize engineering costs as mentioned above. However, if certain change in the design has a large benefit enough to compensate the engineering fees, such design change should be adopted. An example is shown in Figure 7. On the left side is the current Fine Motion Control Rod Drive (FMCRD). As a drive mechanism for normal reactivity control, this CRD is equipped with a motor. A stepping motor is used for this purpose, and packing is installed at the penetration of the drive shaft. In the design of new FMCRD, the stepping motor is replaced by an induction motor, and a magnet coupling is introduced to eliminate the penetration. These new features have benefits of lower cost and improved reliability. As for the long-term strategy, development of the next generation ABWR (ABWR-II) is under way. We envision that the ABWR-II design will be available in 2010’s so that we will be able to use it for the replacement of the oldest nuclear units. Our goal is to realize an operator-friendly, consumer-friendly (good economic performance) and neighbor-friendly (safety-improved) plant, and its major features are as follows. Figure 8 shows candidate technologies for the ABWR-II. The fuel assembly size will become larger than conventional one for increased design flexibility and short refueling time. The diversity of ECCS will be increased for increased safety and on-line maintenance capability. The on-line maintenance capability has been investigated to enable very short maintenance outage. Passive heat removal system will give a diverse ultimate heat sink, which will promise better Accident Management (AM) capability. “No evacuation and no soil contamination” is one of the targets of the AM capability, of which meaning has become more important after the accident at a fuel re-conversion facility of JCO in Tokai-mura. The plant rated power will be increased to 1700MWe, which will ensure scale merit in equipment cost and O&M cost.
A. Minematsu
30 Utility requirements Consumer-friendly Economic performance) Operator-friendly
Flexibility to socioeconomic changes
Fig. 8.
Utilities’ requirement
and candidate
technologies
for the ABWR-II.
5. CONCLUSION The utility business deregulation poses a threat to drive short-sighted market orientation and precludes long term focus on achieving a balance between “environmental agenda” and “competitiveness in market”. However, reliability and safety is pre-requisite to higher availability and better economics. Therefore, there will be no change in the basic policy of nuclear safety even in the competitive environment caused by the deregulation. Although the deregulation is hitting nuclear power just at the time when its competitive edge is eroding, nuclear power must play a key role in reducing the greenhouse gas discharge and in securing the Japanese industrial competitiveness in the global market. We have established short-term strategies for both existing and new LWRs as well as a long-term strategy for technological development. I am sure with these strategies we can regain the competitiveness of nuclear power.
REFERENCES Life Cycle Analysis of Power Generation Systems, Central Research Institute of Electric Power Industry, Socio-Economic Research Center, Rep. No. Y94009, March 1995. Yuasa, Future Prospect of Power Generating Cost, Institute of Energy Economics, August 1992. Uchiyama,
Pergamon www.elsevier.com/locate/pnucene
in Nuclear Energy, Vol. 37, No. l-4. pp. 25-30.2000 0 2000 Elsevier Science Ltd. All rights reserved Printed in Great Britain 0149-1970/00/$ - see front matter
PII:SO149-1970(00)00019-6
NUCLEAR ENERGY STRATEGY IN THE ENVIRONMENT OF UTILITY BUSINESS DEREGULATION
AKIYOSHI
MINEMATSU
Nuclear Power Engineering Department & Engineering R&D Division Tokyo Electric Power Company l-l-3 Uchisaiwai-cho, Chiyoda-ku, Tokyo 100-0011 Japan Phone: (+81) 3-3501-8111; Fax: (+81) 3-3596-8544 e-mail: t0361402Qpmail.tepco.co.jp
ABSTRACT Nuclear power has contributed to the reduction and stabilization of electricity rate in Japan. However, its economic competitiveness has been eroding since mid 80’s. Deregulation is hitting nuclear power just at the time its competitiveness is declining, and it poses a threat to drive short-sighted market orientation and precludes long term focus on achieving a balance between “environmental agenda” and “competitiveness in market”. Lowering the electricity rate is one of the important agenda to improve the nation’s industrial competitiveness in the global market. However, it will be very difficult to win the competition of gas and oil prices with other developed countries in Europe and North America due to a handicap of long transportation distance. Only nuclear power and natural energy have no relation to such a handicap of economic distance from resources. Without securing economic superiority of those energy sources, Japan will not be able to clear the handicap of energy costs. The Japanese utilities are trying hard to regain the competitive edge of nuclear power. We have established short-term sirategies for both existing and new LWRs as well as a long-term strategy for technological development. With these strategies we will be able to regain the competitiveness of nuclear power. 0 2000 Elsevier Science Ltd. All rights reserved. 25
26
A. Minematsu
1. CURRENT
STATUS OF NUCLEAR
POWER IN JAPAN
In fiscal year 1998, nuclear power supplied 36.8% of the total electricity in Japan. Use of nuclear power as a part of the programs for diversifying power generation sources has been the energy policy agenda in this resources-poor country, and it has contributed to the increased energy self-sufficient rate as shown in Figure 1. Now it is nuclear as well as gases that is the TEPCO’s major source of electric power (Figure 2). Figure 3 shows the trend of TEPCO’s electricity rate. For the past 20 years, consumers have been benefited from the reduced electricity rate owing to declining oil price, appreciation of Yen and increased share of nuclear power.
100 90 80
g
70
;
60
u”
50
.g
40 30
E L2
20
z
10 0
Fig. 1.
Trend of primary energy supply in Japan.
TWhr 350
so
300
g '2 250 b
40
_: yxYen/US$ ‘/ J
Oil($/barreO *d
j
_
*fC.
Share
of Nuclear
power
in kwh$%)
t*,
1 *
*
’
’
E200 5 950 .i! e 100 z? w 50 0 70
72
74
76
7.9
60
62
Fiscal
Fig. 2.
64
86
66
90
92
94
96
96
Year
Power generation
sources (TEPCO).
Fig. 3.
Electricity
rate and relevant factors (TEPCO).
Nuclear power also contributes to the reduction of greenhouse-effect gas emission. Figure 4 shows life cycle average of the greenhouse gas discharge, which includes emissions not only from fuel combustion but also from construction and other activities throughout the plant life. It is clearly shown in this estimation that nuclear power is one of the lowest sources of greenhouse gases. We have a commitment to the Kyoto Protocol of greenhouse-effect gas reduction adopted at the COP3 in 1997, and nuclear power should play a key role to fulfill this commitment. However, as shown in Figure 5, the economic competitiveness of nuclear power has been eroding since mid 80’s due to declining oil price, appreciation of Yen and advent of high-efficient Combined Cycle Gas Turbine technology. Utility business deregulation is hitting nuclear power just at the time its competitiveness is declining.
27
Nuclear energy strategy g-CO,lkWh 300
NCilUd Gas
Fig. 4.
Oil
CiXd
Hydra
Wind
Solar
Nuclear
.‘_
S?
X3
84
85
86
87
88
89
90
91
Year
Life cycle average greenhouse gas emission from various power systems. (Uchiyama, 1995)
2. UTILITY
BUSINESS
Fig. 5.
Change in power generation (Yuasa, 1992)
cost.
DEREGULATION
The utility business deregulation in Japan has two steps. The first step became effective on December 1, 1995 with an overhaul of Utility Business Law in which utilities opened wholesale market to Independent Power Producers and cost-plus rate-making method was modified. The second step is scheduled to start in March 2000. This step will include the opening of new thermal power capacity to competition and liberalization of the retail market of large industrial customers with more than 20kV contracts. This market accounts for around 30% of the total electricity consumption. The deregulation poses a threat to drive short-sighted market orientation and precludes long term focus on balance between “environmental agenda” and “competitiveness in market”. On the energy policy level, a in market” to co-exist. scheme is needed to allow both “energy policy agenda” and “competitiveness Contemporary market dynamics do not effectively account for the global environmental concerns and the need to prevent a negative legacy left over to later generations. We may be able to think about schemes such as enacting “Energy law” to secure long-sightedness, introducing “Externality” evaluation to decision making, and institutionalizing “Tradable rights”.
3. IMPLICATIONS
OF THE DEREGULATION
FOR NUCLEAR
SAFETY
Although we are entering the new era of severe economic competition, there will be no change in the basic policy of nuclear safety. That is because reliability and safety is pre-requisite to higher availability and better economics. Availability is the most critical element for the economics of operating plants. Generally speaking, failure of components leads to a loss in economics through the availability loss and also results in socio-political difficulty. In today’s environment, the public’s allowance for any type of malfunction is extremely narrow, and miner deviation from normal operating condition may cause a plant shutdown even though it is within the level defined in Operational Technical Specifications. Consequently, there has been no change in the basic policy of preventative maintenance, in the component reliability management programs and in the safety procedures for maintenance outages even though the outage duration has recently been reduced for higher availability. Compromise on reliability and safety under economic pressure will most probably results in reduced availability.
A. Minematsu
28
In order to attain both goals of safety/reliability and economy, a realistic approach will be the continued operation of existing plants for 60 years with proper Plant Life Management (PLM) programs in place. The capability of typical BWR and PWR plants for 60 years of operation was confirmed through a recent study by MIT1 and the electric utility companies in Japan. This plant life management program includes programmatic renewal and modernization of the plant, which will enhance reliability and safety. For example, the BWR core shroud has been replaced with low carbon stainless steel in FY 1998 for the first time in the world at Fukushima Daiichi #3, and subsequent programs for other units are in place. Even reactor vessel replacement is under study. Such large-scale maintenance works are also being undertaken at some PWR units in Japan. With such longevity under appropriate PLM programs, existing nuclear plants with well-progressed asset depreciation can become a “corporate profit center”.
4. STRATEGY
FOR REGAINING NUCLEAR
THE COMPETITIVENESS POWER
OF
As mentioned above, the deregulation is hitting nuclear power just at the time when its competitive edge is eroding. In this section, our response strategies will be discussed. Before that, however, let us think about economic competition in the world and what is the role of nuclear power. With reduced trade barriers and liberalization of markets, we are now in the era of the global market, where the industrial competition becomes severer than ever. Lowering the electricity rate is one of the important agenda to improve the nation’s industrial competitiveness in the global market. Competition among different energy sources certainly encourages the power industry in such efforts. However, it will be very difficult for Japan to win the competition of gas and oil prices with other developed countries in Europe and North America due to a handicap of long transportation distance. Only nuclear power and natural energy have no relation to such a handicap of economic distance from resources. Without securing economic superiority of those energy sources, Japan will not be able to clear the handicap of energy costs. The Japanese utilities are trying hard to regain the competitive term and long-term strategies.
edge of nuclear power. There are both short-
The short-term strategy for operating LWRs is to achieve higher availability through reduced outage duration, O&M cost reduction and fuel cost savings. As shown in Figure 6, operating plants are showing good progresses in reducing the power generation cost owing to asset depreciation and high availability. In the past, a typical refuelingmaintenance recently to about 35 days by the followings; -
outage period was about 90 days. However,
it has been reduced
Enhanced productivity of outage work by reducing idle time of workers and by intensive preplanning, and “Package replacement and later overhaul” policy on such components as Safety Relief Valves and Control Rod Drives.
The fuel cost savings have become reality by a high burn-up program, competitive bidding and in-house core management. Further reduction of power generation cost should be pursued in the fuel cycle area, especially through back-end cost reduction.
Nuclear energy strategy
29
a 0.8 0 Y ‘2 0.6 s d 0.4 0.2 0
Current
Fig. 6.
Change in power generation (TEPCO).
cost
Fig. 7.
FMCRD
Seal-less
FMCRD
An example of ABWR design improvement (FMCRD).
In order to alleviate financial risks associated with plant construction, capital investment should be lowered by reducing the cost of new plants. An investment saving of 30% is expected to be realized by the followings. Firstly, design standardization has been pursued by a cooperative action of the BWR utilities in Japan. The standardization is estimated to reduce the cost of the ABWR by about 15% through the reductions in equipment costs and engineering fees. The second factor is the procurement through competitive bidding.
from more competitive
markets.
More components
will be purchased
The third one is the assessment of the experience of the first ABWR units, Kashiwazaki-Kariwa #6 and #7, on which design improvement of the ABWR is made. Of course, the basic policy on new plant projects is design standardization to minimize engineering costs as mentioned above. However, if certain change in the design has a large benefit enough to compensate the engineering fees, such design change should be adopted. An example is shown in Figure 7. On the left side is the current Fine Motion Control Rod Drive (FMCRD). As a drive mechanism for normal reactivity control, this CRD is equipped with a motor. A stepping motor is used for this purpose, and packing is installed at the penetration of the drive shaft. In the design of new FMCRD, the stepping motor is replaced by an induction motor, and a magnet coupling is introduced to eliminate the penetration. These new features have benefits of lower cost and improved reliability. As for the long-term strategy, development of the next generation ABWR (ABWR-II) is under way. We envision that the ABWR-II design will be available in 2010’s so that we will be able to use it for the replacement of the oldest nuclear units. Our goal is to realize an operator-friendly, consumer-friendly (good economic performance) and neighbor-friendly (safety-improved) plant, and its major features are as follows. Figure 8 shows candidate technologies for the ABWR-II. The fuel assembly size will become larger than conventional one for increased design flexibility and short refueling time. The diversity of ECCS will be increased for increased safety and on-line maintenance capability. The on-line maintenance capability has been investigated to enable very short maintenance outage. Passive heat removal system will give a diverse ultimate heat sink, which will promise better Accident Management (AM) capability. “No evacuation and no soil contamination” is one of the targets of the AM capability, of which meaning has become more important after the accident at a fuel re-conversion facility of JCO in Tokai-mura. The plant rated power will be increased to 1700MWe, which will ensure scale merit in equipment cost and O&M cost.
A. Minematsu
30 Utility requirements Consumer-friendly Economic performance) Operator-friendly
Flexibility to socioeconomic changes
Fig. 8.
Utilities’ requirement
and candidate
technologies
for the ABWR-II.
5. CONCLUSION The utility business deregulation poses a threat to drive short-sighted market orientation and precludes long term focus on achieving a balance between “environmental agenda” and “competitiveness in market”. However, reliability and safety is pre-requisite to higher availability and better economics. Therefore, there will be no change in the basic policy of nuclear safety even in the competitive environment caused by the deregulation. Although the deregulation is hitting nuclear power just at the time when its competitive edge is eroding, nuclear power must play a key role in reducing the greenhouse gas discharge and in securing the Japanese industrial competitiveness in the global market. We have established short-term strategies for both existing and new LWRs as well as a long-term strategy for technological development. I am sure with these strategies we can regain the competitiveness of nuclear power.
REFERENCES Life Cycle Analysis of Power Generation Systems, Central Research Institute of Electric Power Industry, Socio-Economic Research Center, Rep. No. Y94009, March 1995. Yuasa, Future Prospect of Power Generating Cost, Institute of Energy Economics, August 1992. Uchiyama,