May 27th, 2016, Published in Articles: EE Publishers, Articles: Energize
by Pierre Potgieter and Chris Yelland, EE Publishers
On his recent trip to South Africa, EE Publishers met up with Peter Prozesky, CEO of the World Association of Nuclear Operators (WANO), to discuss the state of nuclear energy operations locally and international, and what South Africa nuclear future might look like.
Peter Prozesky was appointed the Head of Nuclear at Eskom during his final year at the utility, after serving as power station manager at Koeberg for several years. He has been in charge of both Koeberg and the Pebble Bed Modular Reactor project (from an owner point of view), before taking a retirement package from Eskom and leaving for the UK to work for British Energy. British Energy were looking to turn its operations around. At the British utility Prozesky served as the chief nuclear officer and ran half of the utility’s fleet for eight years, also serving as Head of Continuous Improvement. In 2015 he applied successfully for the CEO position at the World Association of Nuclear Operators, and is now based in London, at one of the organisation’s four global head offices.
What is the mission and role of WANO, and who are its members?
WANO was created after Chernobyl, and includes every operator of nuclear reactors globally as its membership. It acts as an industry-controlled, self-regulator of nuclear operations. The organisation’s mission is to drive the highest level of safety standards in all of the world’s nuclear plants, and it does this through a number of programmes, including its peer-review and corporate-review programmes. These programmes review performance, processes, conduct of operations, and business aspects of nuclear operations, to produce insightful and confidential reports that assign scores and make recommendations to maintain high operating standards. Having access to experts from all parts of the world, WANO also function as platform for knowledge sharing to achieve high performance and safe operations.
What is the current state of the global nuclear industry? A recent presentation by Mycle Schneider, author of the renowned annual World Nuclear Industry Status Reports, painted a rather gloomy picture of the financial state of nuclear companies such as Areva and Rosatom, and the declining share of nuclear in the global energy mix.
Because of the low coal and gas prices driving down energy costs, all big base load generation, including nuclear, is struggling. Any large new-built project, nuclear or otherwise, require a lot of capital investment that is currently difficult to obtain. This is resulting in the likes of the US shutting down plants, and Europe struggling with the lower energy prices. However, other parts of the world with more regulated economies, like China and India for example, are areas of major growth. Russia has just signed a financing agreement with Egypt, and Bangladesh and Poland also hold promise for nuclear project development. A country’s market system and regulation model therefore either favours building new infrastructure, big baseload plant, or it doesn’t. On the whole, WANO expects the number of units that come into operation over the next 20 years to be constant or increasing, but there’s a definite migration from West to East in terms of where the plants are located.
Taking into account nuclear accidents such as Chernobyl, Three Mile Island and Fukushima, just how safe is nuclear power, and what are the real risks, noting that risk is a combination of the (low) probability and the (high) consequential cost of an accident?
Risk is a relative concept, and the actual risk of nuclear to society is low. The kind of lessons learned from Fukushima has also led to additional protection measures against high-consequence but extremely low-probability events.
Are nuclear power plants and their owners in a position to take out insurance against the cost of nuclear power plant accidents? Do insurance companies offer such insurance, and if not, why not? Is this just left to governments and tax payers to take the risk and foot the bill?
There is nuclear damage insurance, but it focuses on the loss of the facility, rather than consequential loss. Consequential loss is covered largely by the International Atomic Energy Agency (IAEA) agreements, and with all member countries contributing to it, all can draw on these agreements for clean-up costs, or any consequential damages. Governments often hold operators liable, completely, and in addition to that, there’s the IAEA special drawing rights. Some governments have limited the liability of the owner, while other countries hold the operator fully liable for accidents and damages. In cases of damage, special drawing rights from IAEA conventions, which have been signed to help with the clean-up costs and the like, also come into play.
How is the future cost of decommissioning nuclear reactors and nuclear power plants handled financially? In South Africa? Globally? And why is there some dispute about such costs in South Africa, for example between NECSA and the Auditor General in respect of making provision for the decommissioning cost of the Pelindaba reactor?
Again, different countries have different systems set up. Most countries today require decommissioning funds be raised during the the operation life-time of a plant. Decommissioning funds have to be part of the financial provisions, and should be sufficient to decommission the plant. At Hinkley Point C, which is a new-build, the operator had to put in place some financial guarantees for the initial years of operation, in case it has to decommission the plant early without having built up decommissioning funds. This is a separate financial agreement, like an insurance policy to cover the decommissioning costs. Such an agreement was part of the negotiations to get planning permission to build the reactors.
What is Koeberg’s record in terms of safety, radiation emissions, unplanned outages, planned outages, energy availability factor and other key performance indices?
Koeberg has a good track record and reputation in the international community. In fact, the plant draws strongly on the services of WANO, exposing themselves freely to external scrutiny. Koeberg is an active and responsible member in the international nuclear community, they operate transparently.
What do you consider is the state of South Africa’s preparedness in terms of procurement processes, engineering skills, localisation ambitions, construction skills and operating skills for the proposed 9,6 GW nuclear new-build programme in South Africa?
It would depend on the pace. Trying to build it all in one shot is very difficult – it would be challenging for anyone. South Africa would be challenged, but it’s not insurmountable. With the right preparation and international support, and provided you don’t try to do it all at once, it is possible. I certainly don’t have major concerns, but it needs the right kind of management, it needs time, and it needs a long-term strategy.
Is Eskom ready to take on the responsibility for building, owning and operating a 9,6 GW nuclear new-build programme in South Africa, in terms of its financial resources, engineering and project management skills, and operating skills and resources?
Again, I don’t know what Eskom’s plans are. That’s part of the reason for my visit, to talk to Eskom about their plans for the future built. WANO offers a new unit assistance service, with 17 discreet modules of support, typically phased over an 8-year period, to help an organisation prepare itself for the construction and operation. It provides a tailor-made programme of support from the international community. WANO membership is a joined charter, with everyone jointly and severely accountable for the performance of all units in the world. WANO also works hand-in-hand with the IAEA. The IAEA operates at a government level, with a focus on a country’s nuclear regulator, while WANO focuses on operational aspects.
What is your message to South Africa and the powers that be in the Department of Energy, Department of Public Enterprises and Department of Finance as the country considers a massive nuclear new-build programme at this time?
Any power infrastructure project of this magnitude is of national interest and requires cooperation and a long-term strategy. The ownership model is critical. Whatever you do, it’s not simply a finance or affordability decision – there is long-term energy sustainability, liability, responsibility, accountability issues that you have got to think through very carefully. There is the ownership model where the operator raises the finance internationally, builds, owns and operates the plant, pays the loans, and is held fully responsible. On the other end of the spectrum, which is where Turkey is with Russia at the moment, there is a third party build-own-operate agreement. Now that is much more complex. It might be easy from a financial point of view, but it comes with trade-offs: who owns it, who operates it, how does the regulator regulate it, who is liable if something goes wrong? If it is being operated by a third party, and there is a falling out in political relations, it now affects part of the energy infrastructure, and suddenly becomes a lot more complex. So you can position yourself anywhere, but do it carefully, do it in a thinking and a responsible way. There are also a lot of other things you have to think about.