Perhaps the most interesting aspect of the nuclear track at the ELECTRIC POWER 2007 Conference & Exhibition (EP07) in Chicago last month was the attendance. For the most part, its sessions were jammed, leading session chairmen to mention how different this was from prior years.
Clearly, nuclear has buzz. The environment looks promising: The regulators are helpful, and there are multiple willing sellers and multiple willing buyers. Those folks filled the conference rooms.
The optimism was widespread. Several utilities said they planned to submit a combined construction and operating license (COL) application for a new plant to the Nuclear Regulatory Commission (NRC) by the end of this year.
Some of this is gamesmanship, however. Realizing that, session moderator Dennis Demoss, PE, a senior vice president and project director of Sargent & Lundy, took the temperature of the first session by asking how many of the announced applications will be on the NRC docket when the industry reconvenes at ELECTRIC POWER 2008 in Baltimore next spring.
The answers to Demoss’s question ranged from eight applications to none. These estimates, of course, are pixie-dust. Both the reactor vendors (the willing sellers) and the utilities (the willing buyers) are very careful not to betray their marketing strategies. Most want to be second, not first, to file with the NRC.
Surprisingly, the low-ball estimate came from General Electric’s Tom O’Neill. That was in the face of the announcement at the conference that GE and Virginia-based Dominion, parent of Virginia Power, have signed a contract for long lead-time equipment for a GE ESBWR (economical, safe boiling water reactor) at Dominion’s North Anna site in Virginia. The contract includes long lead-time items such as large forgings, reactor vessel fabrication, and the like.
Clearly, willing buyers are meeting willing sellers, regardless of the still-unsettled political and regulatory environment. That’s a basic definition of a market—where supply and demand can sort out price.
The weakest link
But there’s another, complicating, aspect to the power plant market, as the EP07 nuclear track demonstrated. Between the willing sellers and the willing buyers in such a complicated market sits the supply chain. Constituting it are firms qualified to provide major components such as forgings and nuclear-qualified pipe, pumps, valves, and flanges, among other gear. Millions of yards of concrete and miles of sheet metal and cable also will be needed.
Assembling all that material and equipment into a working nuclear plant—perhaps the world’s second-most-complex system, after the human brain—will take legions of skilled laborers, including carpenters, sheet metal workers, and concrete finishers. Supervising the construction work may not be easy, because there’s currently a severe shortage of nuclear engineers, radiation technicians, quality control and quality assurance workers, and the like.
In one session of the nuclear track, Mike Mosely of Zachry Construction Corp. gave a fascinating overview of just how complicated, and important, supply chain issues are likely to be as nuclear power seeks a rebirth with next-generation, safer reactors. He began with a quote from a recent Brookings Institution report: "nearly half of what will be the built environment in 2030 doesn’t exist yet."
As utilities that have committed to build new nukes consider supply chain issues, Mosely said, they need to remember that there will be competition for all the equipment and services they will need. New coal and natural gas plants also will consume large quantities of parts and labor, as will air quality upgrades at existing plants. And it won’t be just power projects on the hunt. Proposed liquefied natural gas terminal projects, of which there are dozens in the U.S., will need to access the same supply chain. Several new refinery projects also are on the books. And then there are ethanol plants, the new kids on the energy block.
According to Mosely, competition won’t be limited to the energy sector. He ticked off other, non-energy rivals for the same kinds of material and labor that the putative new nukes will require. This category includes cement and the material and equipment needed for big infrastructure projects such as roads, bridges, dams, airport expansions, and sewage treatment plants.
Intellectual capital costs
Workforce issues are a particularly daunting variable in the development equation, said Mosely. He noted that in 1978, the annual growth rate in the U.S. workforce was 3.5%. The U.S. Bureau of Labor Statistics estimates that by 2008, it will have fallen to 1%. The annual growth rate in the U.S. working population (those between 20 and 64 years old) is projected to average 0.3% over the next 75 years.
"One-fifth of the nation’s large, established companies," said Mosely, "will be losing 40% or more of their top-level talent in the next five years." That also applies to the U.S. NRC, which is experiencing a flood of retiring baby boomers who are experienced engineers and technicians.
The upside? It’s a market out there. Wage rates are increasing, drawing more workers into construction. "Current projects," said Mosely, "are providing experience in long-duration, complex projects." There is time, Mosely argued, "for a planned preparation for the next generation of nuclear plant erection."