XIV CBE - MESA 4 - Yves Crommelynck - 24 outubro 2012

International IPP view on main
prerequisite issues when
considering an investment in
nuclear new build
XIV Congresso Brasileiro de Energia Elétrica
COPPE

Rio, Brazil Yves Crommelynck,
October 24, 2012 Vice President Strategy, Partnerships & International
Associations - Nuclear Development Division

CONFIDENTIAL

L 2012 10 24_GDFSUEZ_CBEE_Rio_YC

TABLE OF CONTENTS
 GDF SUEZ profile
and presence in Brazil
 Stress Tests and Long Term
Operation of Belgian NPPs
 GDF SUEZ landscape for nuclear
investment
 Conclusions

considering an investment in NNB

Rio, Brasil

October 24, 2012

2012 10 24_GDFSUEZ_CBEE_Rio_YC

GDF SUEZ, a world leader in the energy sector

 No.1 Independent Power Producer (IPP) in the world
 Active across the entire Energy value chain
 Answering the great challenges
• responding to energy needs
• fighting against climate change
• maximizing the use of resources
 Diversified supply sources
 Flexible and highly efficient power generation
 Innovative energy solutions to individuals,
cities and businesses
 Our History began in 1822

2012 10 24_GDFSUEZ_CBEE_Rio_YC 3

Key figures and breakdown of power generation

Capacity: 117.3 GW
€90.7 billion installed €11 billion in
in 2011 218,900 14.8 GW under gross investments
revenues employees construction in 2012

Breakdown by fuel Breakdown by region
at December 31, 2011 (in TWh)* at December 31, 2011*

254.7 Europe
Natural gas North
America
Biomass 41.2%
and biogas 2.6
464.7
Wind power 7 10.4% 20.1% Asia
TWh
Other 8.7 11%
Middle East
44.5 12.3% 5%
Nuclear 59.4
73,8 Hydro power** Latin Australia
Coal America
* Including 100% of the capacity of GDF SUEZ assets
regardless of the actual holding rate, exc. International Power.
** Including pumped storage.


GDF SUEZ is the largest private energy player in Brazil…
… through Tractebel Energia…

 Present in Brazil since 1998
 8.630 MW of total installed capacity managed, being 6,908 MW own
• 83% hydro or other renewable sources, 22(1) plants in operation all around the country;
 2.024 MW under construction
• 3,750 MW Jirau HPP (1,879 MW group’s share) and 145 MW from wind farms 100% own;

…and is well positioned to play a consolidating role
(1) 20, being one thermo power plant complex with 3 plants


GDF SUEZ in Brazil
A continental country…
… and a diversified portfolio of assets, with strategic location:


Estreito hydro power plant

1,087MW hydroelectric power plant at Estreito was inaugurated on
October 17th, 2012 by the President of Brazil, Dilma Rousseff and the
Chairman and CEO of GDF SUEZ, Gerard Mestrallet.

50 years of expertise in nuclear energy
mastering the whole nuclear value chain

 Stakeholder in Europe first commercial PWRs
 BR 3 (1962-1987)
 Chooz A (1967-1991)

 Operator of 7 reactors in Belgium
(3 at Tihange and 4 at Doel)
Tihange
 The Group capacities : 6 134 MW
 Belgium 4 226 MW
 France 1 208 MW (Chooz B and Tricastin)
 Germany 700 MW (Unterweser, Gundremmingen B&C, Grohnde)

 Strengths
 Independent from suppliers & vendors
 Reactors from several vendors (all of PWR design)

 Participations in Georges Besse II
(Uranium enrichment plant)
Doel
Nuclear Safety and Nuclear Security
are our overriding priorities


Our ambition in nuclear projects

Nuclear is part of the solution to face Energy challenges
• Energetic independence & Fuel security of supply
• Stable, predictable and competitive generation costs
• Low greenhouse gas emissions

 United Kingdom
• Ambition: 3 600 MW – COD 2023
• NuGeneration Ltd - Joint venture GDF SUEZ – Iberdrola
• Option on Moorside, nuclear land adjacent to Sellafield
• Preparing for selection of technology : AP1000 or EPR
 Other considered countries
• Europe : Poland, Turkey , The Netherlands,…
• Middle East : Saudi Arabia, UAE
• Asia : Thailand, …
• Americas : Brazil, USA/Canada

GDF SUEZ to develop Nuclear capacities
Based on international IPP developer experience,
as co-Owner and co-Operator of highest nuclear safety level nuclear reactors


TABLE OF CONTENTS
 Stress Tests and Long Term
Operation of Belgian NPPs
investment
 Conclusions


Rio, Brazil

October 24, 2012


Results of BElgian Stress Tests
and main short term improvements on Belgian NPPs

 Results have confirmed the robustness of Belgian
NPPs thanks to
 Double containment
 Bunkerised 2nd level of protection including emergency diesels
 Ultimate heat sink
 Most issues related to oldest NPPs (Doel 1 & 2 and
Tihange 1)
 Some improvements have already been implemented
at NPPs in order to increase the robustness of the
installations with regard to extreme scenarios
 to guarantee core cooling in case of total Station Black Out
 to refill the Spent Fuel Pools in case of total Station Black Out of
long duration

 Other improvements are in progress:
 to ensure power supply and cooling capacity from dry places in
case of beyond design flooding
 to guarantee correct operation in case of beyond design
earthquake


Long Term Operation of Belgian nuclear power plants

December 23, 2011
In parallel to the Stress Tests, Electrabel
submitted its Long Term Operation
reports
July 3, 2012
The FANC concluded that Long Term
Operation of 3 oldest units
(Doel 1 & 2 and Tihange 1) beyond 2015
was technically feasible if appropriate
identified investments would be carried out
in order to manage ageing and upgrade
safety level

July 4, 2012
Belgium Government decided
o To phase out Doel 1 & 2 units in 2015 and to shutdown all units by 2025
o To allow Tihange 1 to operate for 10 more years
o To force Electrabel to sell the electricity generated by Tihange 1 to the market
at cost (including safety improvements) with a reasonable margin
o To slightly reduce the existing nuclear tax

Further negotiations are on-going


Overview of the checks in progress
at Doel 3 and Tihange 2
The facts
 In addition to regulatory inspections, Electrabel and AFCN agreed to subject 7 active reactors to specific
additional inspections during ten-year review process
 These additional checks carried out on the full thickness of the wall and the entire surface of the vessel
 Inspections in Doel 3 and Tihange 2 revealed indications in the material of the reactor vessel 
apparently “hydrogen-related defects” (HRD),
• Flake-type indications
• Said to occur during manufacture of the vessel
• In the metallic mass in the inner 120 mm of the wall (itself 200 mm thick)

Guaranteed safety
 HRD not source of any radioactive release
 Reactors Doel 3 and Tihange 2 shut down
 Fuel removed from reactor

Next steps
 Analysis process on-going, in close collaboration with Authorities,
international experts and experts from the Group (Laborelec, Tractebel Engineering, ECNSD)
 Edition of justification file
 Review of the justification file by FANC and its external experts.


TABLE OF CONTENTS
 Stress Tests and Long Term Operation of
Belgian NPPs
 GDF SUEZ landscape for
nuclear investment
 Conclusions


Rio, Brazil

October 24, 2012


Business Model and Partnership

Based on international IPP developer experience,

Focus on large, complex projects to create value in
Development & Operation

Co-Owner & Co-Operator for highest safety level PWR
technology (not designer-constructor)

 Through sustainable partnerships to share risks
and costs
• to increase competition and reduce costs
• to meet clients requests/demands
• with adequate industrial scheme coping with local
situation
– At equity level : Utilities and/or giant Consumers
– At political level : local incumbent Utilities
– At contractual level : Suppliers
 Through Plant delivery contractual schemes with
affordable risks


GDF SUEZ landscape for nuclear investment

Further to Partnership approach and General Nuclear requirements
Main prerequisite issues when considering an investment in a specific
country are :
 Stable long term political commitment
 Clear and predictable long term legal and regulatory environment
 A suitable electricity market and a reliable High Voltage grid
 Site assessment
 Technology assessment
 Fuel cycle and radwaste management solutions
 Economics & Financing
 Local acceptance
 Reinforcement of local nuclear competences
 Risk mitigation measures

General Nuclear Requirements

 Nuclear operator = unique counter-part of the Safety Authorities
during the licensing process, the operation, the decommissioning
 Knowledge acquisition of targeted designs to facilitate build-up of the
“intelligent” Nuclear Operator
 Pre-licensing phase before the signature of the main contract
 Part of the detailed design before the signing of the main contract
 master the construction schedule
minimize risk of delay
serious basis for the pre-licensing process

10 -15 years 60 years

1 century

Technology : Highest safety level reactors

EPR Areva ATMEA1TM Areva-Mitsubishi AP1000 Westinghouse

 Internationally recognized Generation III Reactors
 Characterized by high level of nuclear safety, more than ever after Fukushima
 Pressurized Water Reactors (widespread worldwide & 50 year expertise)
 Actions
 Build-up expertise and experience feedback
 Assess competitiveness of the models (on technical and industrial point of view)
 Compare nuclear technologies to select the most suitable to the project, the
country and Utilities’ needs
 Keep open position versus other technologies


Financing Nuclear Projects

 Financing issues different and more challenging
than for conventional thermal plants
 Nuclear projects highly capital intensive: 2 to 4
times the cost of thermal plants
 Construction period 2 to 4 times longer than
thermal plants
 Technical life time 2 to 3 times longer than thermal
plants
 High fixed costs and low variable costs make
electricity price very sensitive to plant availability
and ability to operate in base load
 Capex are more front loaded
 Specific risks linked to nuclear : licensing, waste
management,
civil nuclear liability
 Will a contractor accept a lumpsum, fixed price
EPC contract ?

Extensive risk mitigation and allocation is necessary

Financing Nuclear Projects : Risk allocation

 Lenders :
• Are unlikely to assume licensing, development &
construction risk
– Governments and regulatory bodies to set adequate legal
framework
– Developers, Utilities and Contractors to assume construction
risks (delays, cost overruns)
• May take limited amount of market risk if coverage
ratios are robust
– Governments to offer clear environmental policy (Kyoto, CO2
allocation)
– Developers to opt for the most secure possible environment
(PPAs, regulated market, capacity fees, ...)
• Will require significant insurance before assuming
liability and safety risk
– National Energy Policies, International Conventions and National
Acts and Laws
• Unlikely to assume waste disposal costs and
decommissioning risk
– Government to commit to solutions for waste disposal
– Sharing of risk by industry players and/or Government


The challenge of local acceptance

Reason Feelings

 Nuclear energy image has been deeply damaged
 More than ever, communication to the public is of paramount importance
and nuclear industry needs to improve communication
 Need to meet public expectations :
 Main concerns: safety + proliferation + long-lived nuclear waste
 Aim : reassure & explain
 Tone : transparent, factual

 Our Objectives
 More than ever proactively assume an educational mission
 Promote nuclear energy as an acceptable and legitimate way of meeting energy
needs
 Build up GDF SUEZ image as an legitimate stakeholder in nuclear energy

 Examples of actions carried out in Belgium
 “Belgian Nuclear Forum” campaigns (2009, 2010, 2011)
 Surveys, barometers (SCK-CEN, BNF,…)


2009: no image campaign, but an invitation to
think about nuclear energy

NUCLEAR ENERGY.
ARE YOU FOR, ARE YOU AGAINST,
OR DON’T YOU USE ELECTRICITY?


2010: Rock festival Werchter
• raise awareness
• invite to participate to the debate


2011: Transparency campaign after Fukushima
Invite public to ask questions


Reinforce local nuclear competences

 Mobilization of local graduated and specialized people
 Set up of local manpower competency
 Concrete associations with research centres and Universities
 Bilateral support agreements with other nuclear countries
 Training programs
Typical staffing curve (COD 2023)


The Human Resources action plan

On the long term, we need:

5.300 people with skills and > 2.000 people (460 engineers
know-how in the nuclear energy 500 technicians – 1.000 workers) for
the on-going business

2013

Now Future

Action plan: Recruitment+Training+Dévelopment

Nuclear Training Programs
NTP-J  Nuclear Trainees Program for young engineers (J=Junior)
NTP-M  Nuclear Trainees Program for experienced engineers (M=Major)
NTP-S  Nuclear Trainees Program for support services (S=Support)
NTP-G  Nuclear Trainees Program for generation key staff (G=Generation)
NTP-T  Nuclear Trainees Program for technicians (T=Technicians)


TABLE OF CONTENTS
 Stress Tests and Long Term Operation of
Belgian NPPs
investment
 Conclusion


Rio, Brazil

October 24, 2012


Conclusion

GDF SUEZ to pursue operation of existing NPPs
and to develop new Nuclear capacities
as co-Owner and co-Operator
of highest nuclear safety level nuclear reactors
in key strategic countries, including Brazil
based on :
 international IPP developer experience,
 50 years expertise as Owner and Operator of NPPs
through :
 developing sustainable partnerships to share risks and costs
 opting for plant delivery contractual schemes with affordable risks
 choosing the most secure possible environment (PPAs, regulated,
capacity fees, etc.)
 relying on Pressurized Water Reactors with the highest level of safety

We definitely believe Brazil will take advantage of the long term experience of international
classic investors-operators, like GDF SUEZ, in partnership, in bankable schemes.


XIV CBE - MESA 4 - Yves Crommelynck - 24 outubro 2012

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XIV CBE - MESA 4 - Yves Crommelynck - 24 outubro 2012