Cash injections to aid Japanese utilities

30 April 2014 Two Japanese regional power companies have secured capital support totalling ¥150 billion ($1.46 billion) from the state-owned Development Bank of Japan (DBJ). The move comes as they announced losses for the third consecutive year, while all of Japan’s nuclear power reactors remain offline awaiting. Kyushu Electric Power Company and Hokkaido Electric Power Company will take preferred stock investments from the DBJ of ¥100 billion ($975 million) and ¥50 billion ($487 million) respectively. Shareholders of both utilities must approve the DJB investments at their respective general meetings on 26 June. The payment for the preferred stock will then be made to Hokkaido on 31 July, while that to Kyushu would be made on the following day. Both companies have announced losses for the financial year ending March 2014. Kyushu said that it made a net loss of ¥96 billion ($937 million), while Hokkaido reported a loss of ¥63 billion ($615 million). Kansai Electric Power Company has also announced a loss of ¥97.4 billion ($952 million) for the past year. The announcements mark the third consecutive year of losses for all three companies. Japan’s other regional power companies have also reported losses over this period. Hokkaido said that with the continued shut down of its Tomari nuclear power plant, its net assets have decreased in value from ¥3.66 trillion in March 2010 to ¥92.9 billion and its equity ratio now stands at 5.4%. The company said that it would use the funds raised through the preferred stock issuance “for capital investment necessary for the continued stable supply of power.” Also citing the continued shut down of its Genkai and Sendai nuclear power plants, Kyushu said that the situation makes improving the company’s capital “appropriate and necessary.” It too said that it would use the funds to make necessary investments for the stable supply of electricity, including safety improvement measures at its reactors. Rising fuel costs as reactors remain idle All of Japan’s 48 operational nuclear reactors are currently off line pending clearance from the Nuclear Regulation Authority (NRA) under new regulations that came into force last July. To date, restart applications have been lodged for 17 of those reactors. The first reactors could restart later this year after completion of the NRA’s review process. Japan has seen its fossil fuel imports and greenhouse gas emissions increase since its reactors were idled after the Fukushima accident in March 2011....
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Buyers line up for Alstom

30 April 2014 General Electric (GE) has submitted a binding $13.5 billion offer to acquire Alstom’s power and grid businesses. Siemens has also said it intends to submit a bid for the French engineering company’s energy business. Alstom’s board has given its unanimous support to GE’s bid, and has set up a committee of independent directors to review the transaction. Boygues SA, which holds a 29% share of Alstom, has also pledged its support. In a broadcast presentation to investors, GE chiefs explained the rationale behind their offer to acquire Alstom’s energy businesses. Chairman and CEO Jeff Immelt described the transaction as a strategic move, playing to GE’s strengths and improving its position in the global power and grid businesses. According to Alstom, the transaction would bring together the two companies’ complementary offerings in the power and grid areas across thermal, wind and hydro power, service provision and grid. For example, the companies already have complementary offerings in steam and gas turbine technology; Alstom will bring balance-of-plant and turnkey capabilities to the mix. Combining the two companies’ energy activities would enable GE to bring in-house engineering, procurement and construction capability that currently it must out-source through collaboration with other suppliers. GE also anticipates gains from integrating the two companies’ supply chains, service infrastructures, commercial reach and new product development activities. Nuclear businesses Although the information materials surrounding the transaction focus on the two companies’ more general energy interests, both are major nuclear industry players. As well as reactor construction through the GE Hitachi alliance, GE Nuclear Energy offers a wide range of nuclear plant and fuel cycle services. Meanwhile, some 30% of the world’s operating nuclear power plants are already equipped with generator sets supplied by Alstom. Regarding areas of new build, Alstom cooperates with Dongfang Electric in China and has supplied turbine-generator sets to about half of the country’s currently operating fleet, including the VVER units at Tianwan. This cooperation also covers the both the EPRs at Yangjiang as well as future AP1000s after the initial four. It also has a cooperation agreement with Shanghai Electric for the manufacture of boilers and steam generators. In Russia, Alstom’s joint venture with Atomenergomash will see the pairing manufacture all the turbine-generator sets using the Arabelle technology for Rosatom’s future nuclear plant projects. The first manufacturing for this began in the middle of last year. Alstom Power claims that its portfolio of products...
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US emissions at mercy of economics

30 April 2014 The importance of preserving the existing US nuclear fleet was underlined by scenarios released by the US Energy Information Administration (EIA). Early retirement of nuclear, instead of coal, could see annual CO2 emissions 500 million tonnes higher by 2040. Contributing to the EIA’s Annual Energy Outlook 2014, which is being released in stages, Implications of accelerated power plant retirements looks at the effects of an accelerated rate of closure of both coal and nuclear plants going forward to 2040. As the EIA study points out, nuclear generation at four US nuclear power reactors – San Onofre 2 and 3, Kewaunee and Crystal River – has already been brought to an end because of operator decisions, with Vermont Yankee expected to end generation this year and Oyster Creek in 2019. “Retirements often are the result of unique circumstances, but some owners of nuclear power plants have voiced concerns about the profitability of their units, sparking discussion of possible additional nuclear retirements,” the study noted. The US Nuclear Energy Institute has said that “some of America’s electricity markets are failing to accurately value the commodity’s contribution to modern-day society. That is putting some nuclear energy facilities at risk of premature retirement despite excellent operations.” The organisation’s CEO, Marvin Fertel, said “Restructured, competitive markets can work effectively and efficiently, but today they are not producing price signals sufficient to stimulate investment in new electric generating capacity, with the exception of gas-fired plants, or to support continued operation of existing capacity.” In some markets gas generation is exceptionally competitive, while at the same time renewable operators enjoy subsidies great enough to make money even when power prices are below zero. At these times, continuously operating nuclear power plants sometimes operate at a loss. Although the EIA study did not address market issues, it presented an analogue in a scenario where some nuclear units close before the end of their 60-year operating life due to an assumed 3% year-on-year rise in fixed costs that would put stress on the competitiveness of older units. Including no additional nuclear capacity beyond the five units under construction today, the scenario indicates the resulting shortfall in generating capacity would primarily be met by a 13% increase in CO2-emitting natural-gas fired generation and a 5% increase in renewables, which are assumed to be non-CO2 emitting. This loss of some 42 GWe of nuclear units without a drop in older...
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Sogaz insures Russia's nuclear power plants

29 April 2014 Russian insurance group Sogaz has again won the annual tender to provide property insurance to all of the country’s nuclear power plants. It is also to insure the construction of Russia’s first floating nuclear power plant. Sogaz won the tender to provide insurance cover for buildings, structures, production equipment and other assets at ten nuclear power plants operated by Rosenergoatom. The ten plants – Balakova, Beloyarsk, Bilibino, Kalinin, Kola, Kursk, Leningrad, Novovoronezh, Rostov and Smolensk – are home to all 33 of Russia’s operating reactors. The insurance policy, which is valid for one year, will cover the properties against risks including fire, flooding and explosions. The total sum insured under the policy is RUB1.2 trillion ($33.7 billion). The reinsurance of risks under the policy will be carried out among the members of the Russian Nuclear Insurance Pool (RNIP), international nuclear insurance pools and Russian reinsurers. Coverage for civil liability for nuclear damage from Rosenergoatom’s plants has been provided by the Russian Nuclear Insurance Pool (RNIP) since 1998. Floating plant Last week, Sogaz announced that it had won the tender to again provide insurance cover for Russia’s first floating nuclear power plant, the Akademik Lomonosov. The plant is currently under construction at the Baltiysky Zavod shipyard in Saint Petersburg. It will be deployed near the port of Pevek on Russia’s Chukotka peninsula on the East Siberian Sea and is scheduled to be delivered in September 2016. The insurance provided by Sogaz will cover loss or damage suffered by Rosenergoatom, the shipyard, subcontractors and suppliers during the construction of the Akademik Lomonosov. The insurance contract also covers the risk of public liability in the event of injury to third parties. The total sum insured for the floating plant under the insurance contract with Rosenergoatom will be more than RUB22.6 billion ($634 million). The contract will expire in January 2016. Sogaz is traditionally focused on corporate sector insurance covering companies and corporations in industries such as fuel and energy, transport, chemistry, metallurgy, machine building, aerospace and banking. It has provided insurance cover for nuclear power plants since 2008....
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NDA attacked over Magnox contract

29 April 2014 The Nuclear Decommissioning Authority is facing legal action from Energy Solutions, which alleges it did not follow regulations when it awarded a huge decommissioning contract to a rival bidder earlier this year. At the end of March the Nuclear Decommissioning Authority (NDA) announced that a joint venture by Cavendish Nuclear and Fluor Corp had won the contract to decommission the UK’s ten Magnox nuclear power plants, as well as the Harwell and Winfrith research centres. The contract, worth up to £7 billion ($11.7 billion) over 14 years, attracted bids from several firms in various consortia, including Energy Solutions which teamed with Bechtel for the opportunity. Today a spokesman for Energy Solutions confirmed to World Nuclear Newsthat the company believes the NDA did not follow the UK’s Public Procurement Regulations and, as a result, “reached the wrong outcome when awarding the contract.” The company has submitted a legal challenge. The NDA began its dialogue with four bidding consortia in January 2013 in a process to select a parent body organisation (PBO) to take control of and decommission ten Magnox sites as well as Harwell and Winfrith. The sites are all owned by the NDA, which uses the PBO system to grant private companies the authority necessary to take charge of nuclear decomissioning. Successful contractors earn a fee that is a portion of the overall contract value, depending on performance. When Cavendish and Fluor were chosen in March the NDA said the contract had not been finalised and its formal award and transfer of the shares were scheduled to take place on 1 September, after a five-month transition period. It is not known how the legal action may affect this schedule. The consortia Four consortia entered bids to the NDA competition:   • Energy Solutions and Bechtel • CH2M Hill, Serco and Areva  • Rolls-Royce, Atkins and Amec • Cavendish Nuclear and Fluor   Apart from Energy Solutions, none of these companies confirmed today that they intend to contest the competition. NDA made no comment....
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