Mainchallengestonuclearpower:financing

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GovernmentFunding/SupportIsEssential….

• Manyofthebenefitsofnuclearenergyaresovereigninnature• Energysecurity• Energydiversification• Climatechangemitigation• Industrialdevelopment• Promotinghighereducation,highlytrainedworkforces• Promotingresearchanddevelopment

• Onlygovernmentscanproperlyvaluethesebenefits

• Experienceshowsthatnonuclearprojectwillgoaheadwithoutsignificanthostgovernmentinvolvement

• Governmentinvolvementcantakedifferentforms,includinglongtermPPAs/sovereignguaranteesandinvestment

….However

Analyzingnuclearprojectsbasedonprojectfinancingmodelswillhelpidentifyandmitigatetherisksjustlikeaprudent/conservativefinancialinstitutionwould

Attractingprivatesectorfundingrequiresgovernments/developerstobeginplanningandthinkingasprivateinvestorswould

Governmentfundingandsupportshouldbeseenasabridgetoprivatesectorsupportwithgovernmentsupportdecreasingovertime

Purerelianceongovernmentfundingmayleadtolackoffiscaldiscipline/lackofaccountability/inefficiency

• Straightgovernmentprocurement• Governmentfinancing-Taishan• Utilitybalancesheet/corporatefinance-EDF-Flamanville• Vendorequity• ExportCreditAgency(ECA)financingandguarantees• Investorfinancing–TVO (Mankala)• BOOwithlong-termPPA-Akkuyu• ContractforDifference(CFD)-UK• USGovernmentLoanGuaranteeprogram• USConstructionWorkinProgress• UKRegulatedAssetBasedModel• CapitalMarkets-CGN

FinancingApproachesUsed

Irrespectiveofapproach,gobacktobasics

Answeringthesequestionswillallowyoutodevelopaplantoprocure/construct/financeandoperateanuclearpowerplant

• OnceyouanswerthesequestionsthenyoualsoneedtoanswerHOW:• Willyoubuildit?• Willyouoperateitand

generatethepower?• Willyoumaintainitin

thelongtermandcontinuegeneratingthepower?

• Willyoudecommissionitandcleanupthesiteattheendofitslife?

• Firstanswerthefollowing5questions:• Doyouneedanuclear

powerplant?• Doyouwantanuclear

powerplant?• Canyouaffordit?• Howwillyoupayforit?• Canyoumanageand

supportit?

Thenyouneedtoestablishclearobjectives

Reasonableandachievableprojectscheduleandbudget

Electricitytothegrid?Localindustry?

Longtermrelationship/partnership

7New Projects and Newcomer Countries-Lessons Learned

Complywithallregulatoryobligations– workwithregulatortoensureasafeproject

Speakingtoinvestorsearlyandintheirownlanguage

Industrysays…“Latesttechnology”

…BankhearsFOAKrisk

Industrysays…“Provensafetyrecord”

…BankremembersChernobyl,TMI,Fukushima

Industrysays…“Constructionschedule”

…BankworriesaboutHistoricaldelays/costverruns

Industrysays…“Consortium”

…BankthinksInternaldisputes

8New Projects and Newcomer Countries-Lessons Learned

Finallylearnfromindustrysuccessesandfailures

Industryturningacorner• FirstEPRinoperation• FirstAP1000in

operation• Westinghouseemerging

frombankruptcy• Increasingnumberof

technologyproviders(fromUS,Russia,France,Japan,Korea,China)

• GettingclosertocommercializationofSMRs

Profilerecentprojectsthathavebeendevelopedandfinancedwithoutserioussetbacksdrawoutthereasonsforthesesuccesses:focusonwheretheprivatesectorplayedarole

Profilerecentprojectsthathavebeendevelopedandfinancedwithserioussetbacksdrawoutthereasonsforthesesetbacksandavoidthesamemistakes

Conclusions

10New Projects and Newcomer Countries-Lessons Learned

• Successfulprojectshaveoccurredandarepossible• Withthesignificantlevelsofcommitmentbyallparties• Withtherightprojectpartner/s• Withexperienced,committedandinspiredadvisers

(butinasupportingrole)• Takingfullaccountofalllessonslearned• Willingnesstotakealongertermandholisticviewof“success”• Withtherightleadership

• Developingnewnuclearpowerplantsisacomplextask• Shouldbeundertakenwithinaclearhostgovernmentpolicywithclearmechanismsofgovernmentsupport

• Financingisaprimarychallenge– engageearly• MakeuseoftheIAEAGuidanceonNuclearPowerInfrastructureDevelopment(MilestonesintheDevelopmentofaNationalInfrastructureforNuclearPowerandINIRreviewprocess)whichcanhelpmitigatethefinancialrisks

Questions?THANKYOU!

Source:BloombergandENEC

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