Nuclear power is a proven, reliable, efficient, safe and low-carbon generation technology. Currently, there are approximately 440 commercially operating nuclear reactors in 30 countries. Additionally, according to the International Atomic Energy Agency (IAEA) there are approximately 21 countries in various stages of evaluating, planning, developing and constructing their first nuclear reactors in their counties or expanding their nuclear capacities. While nuclear power may not be an appropriate and feasible solution for every country, it does have a significant and ongoing role as one of the critical low-carbon technologies in many countries' generation mixes. DCS expert advisors are well-positioned to assist governmental, utilities and private sector clients assess the benefits versus costs/risks related to nuclear power. In addition to assisting our clients who are involved with new-build nuclear power plants (NPPs), we also assist clients evaluating the economics and cost recovery mechanisms associated with potential NPP life-extensions and re-starting of idled NPPs.
Development of nuclear generation facilities is undeniably a complex, time- and capital-intensive undertaking, irrespective of whether a country's first reactor is being contemplated or whether the country already has a number of operational reactors in service. The IAEA has developed the "Integrated Nuclear Infrastructure Review" (INIR) program to provide member countries developing their first reactor or expanding their existing nuclear power programs with a milestones based roadmap toward developing nuclear power programs. The INIR program consists of 19 critical infrastructure issues that should be addressed, and a series of 3 milestones covering the process, beginning at evaluation and planning stage and ending at the nuclear plant commissioning and commercial operations stage. The IAEA also provides INIR missions to help the member state in the INIR program assess their progress in achieving the various milestones. DCS experts are familiar with the IAEA INIR program. Accordingly, we can integrate our advice to IAEA member state clients that are currently enrolled or contemplating enrollment in the INIR program with respect to proposed new or expansionary nuclear power projects.
The nuclear generation segment is comprised of the nuclear generation businesses (government- or utility-owned or independent) and the assets related to the production of nuclear power (electricity), heat and/or cooling energy in the case of nuclear co-generation, and also desalinated water in the case of a nuclear plants providing water and power. Historically, since the first commercial reactors came on-line in the 1950's, nuclear power stations have been designed and built as increasingly large (often multiple reactor unit) plants that are extremely capital intensive and involve long and complex construction processes. One of the most recent and exciting development in the nuclear power industry has been the advent of small modular reactors (SMRs) and advance modular reactors (AMRs). Within the following links we discuss both large reactor and SMR/AMR technologies and our related services in greater detail. We also focus on the rapidly developing market for nuclear decommissioning services.
Given their large up-front capital costs and long operational lives (60-year or more for modern "Generation III+" reactors), most new-build reactors require long-term offtake agreements (such as Power Purchase Agreements - "PPAs" or Contracts for Differences - "CfDs" or similar contractual offtake structures) which provide fixed or minimum tariff (strike) prices, and also in many cases volume guarantees through "availability payment" or "take-or-pay" constructs. Unless a large integrated utility can fully absorb the significant capital costs (and risks of cost overruns and delays) on its own balance sheet, it is exceptionally difficult for a new-build nuclear plant to operate as a "merchant plant" under a de-regulated market regime. Engineering, Procurement and Construction (EPC) contracts with nuclear vendors also tend to have many unique characteristics (contrasting with EPCs seen in other thermal power segments). Given the very large contract volumes and unique nature and risks related nuclear construction, it is very difficult for nuclear EPC contractors to provide full fixed-price "turn-key" bids which are commonplace for other types of generators. In addition to offtake and EPC contracts, nuclear fuel supply, spent fuel processing & storage, operations & maintenance, and decommissioning / "back-end liability" contracts are all key contract that will need to be negotiated. DCS will assemble the all relevant experts who can assist our clients in negotiating all legal, commercial, financial and technical elements related to these contractual elements.
When it comes to financing, and unlike all other type of generation facilities, NPPs have not been able to be financed on a traditional non-recourse, "ring fenced" project finance basis (given the unique risk characteristics of nuclear power, commercial lenders and the capital markets have not been willing to provide such loans). Therefore, in order to make NPPs acceptable to lenders, it is necessary for the sponsor government (or government agency/instrumentality) to provide certain guarantees which mitigate nuclear specific risks acceptable to commercial lenders. Furthermore, the international financing institutions (IFIs) such as World Bank Group/IFC, EBRD, ADB and others, who have been so instrumental in in financing other infrastructure and energy projects in much of the developing world, have taken the policy position not to finance new-build nuclear power as a project class.
For many new-build cross-boarder NPP projects that are moving forward, there has been a recent tendency toward exclusive state-to-state agreements (in particular in relation to exported technologies from Russia and China, but more recently also including USA). These state-to-state agreements entail the obligation to utilize specific nuclear generation technologies originating from the exporting country and also typically provide significant levels of export financing. DCS experts have experience advising clients within the confines of negotiated state-to-state agreements as well as under negotiated commercial agreements and also under open and transparent international competitive tender procedures. Whether state-to-state arrangements, or contractual counterparties are selected through negotiated procurement or competitive tender, it is likely that financing from export credit agencies (ECAs) and Export-Import Banks (EX-IMs) (which are tied to the countries or origin of the exported nuclear technology, equipment and service providers) will play a key role in the financing arrangements for many new NPP projects.
Our advisory services can help our public and private sector clients optimize the life-cycle costs of the NPP (including plant decommissioning and "back-end liabilities"), and adhere to the objectives of most efficiently providing and ensuring safe, reliable, efficient and low-carbon generation to citizens and businesses at affordable prices (tariffs, fees and taxes). We can also assist our clients in identifying and procuring suitable nuclear technology, service and supply providers. Our experts have significant expertise in delivering nuclear generation assets under various development, financing, operating and ownership models, including Engineering Procurement and Construction (EPC), Engineering Procurement and Construction Management (EPCM), Operations & Maintenance (O&M), Design-Build-Own-Operate (DBOO), Design-Build-Own-Operate-Transfer (DBOOT), and similar variations. Our advisory experience involves regulated or deregulated/merchant tariff regimes, offtake agreements (such as various forms of PPAs and CfDs and similar contractual agreements).
Within the nuclear power subsector, DCS experts maintain relationships with numerous specialized project consultants and participants including: both international and local legal advisors; technical, engineering and environmental/social advisors, economic/market consultants; contractors, vendors and technology providers; strategic and financial equity sponsors; lenders (including commercial lenders, Export Credit Agencies and Export-Import Banks (ECA/Ex-IMs), institutional lenders, bond funds and investment banks) and credit rating agencies (if applicable). We are always prepared and highly experienced in taking on a lead transaction advisory and a project/program management role where we coordinate and manage (in some cases, procure and retain via subcontract) various technical, legal and other consultants required for the project. On behalf of our clients we are prepared and accustomed to leading and concluding negotiations with governmental/public sector or equity sponsors, contractors and venders, lenders, rating agencies and regulators, on behalf of our clients, as may be relevant for a given client project.
In many client cases, there may also be a significant nexus between nuclear power generation projects, assets and businesses and other sectors that we specialize in, such as the water sector (in the case of water desalination and power plants); energy transmission, distribution, sales and supply and trading (electricity, heat or cooling grid evacuation); and, industrials (E&C, heavy industries). We are prepared to bring our complementary expertise in these other relevant sectors to our generation sector clients, as their specific client project may benefit.
Please click on the below links to learn more about the specific services related to the nuclear power generation segment that DCS experts can offer:
DCS focuses on providing the above services in the nuclear power generation segment to the following categories of clients: