Nuclear Dismantlement Timelines

Options for DPRK Energy Sector Engagement Options for DPRK Energy Sector Engagement Peter Hayes

[email protected]

at

DPRK Energy Expert Study Group Meeting

Four Seasons Hotel, East Palo Alto, California, USAJune 26 – June 27, 2006

mailto:[email protected]

Nuclear Dismantlement Timelines

• Energy security critical in any breakthrough and dismantlement

• Rejoin the NNPT immediately• Dismantlement: 6 weeks – 6 months• IAEA recertifies compliance with

safeguards agreement 1-3 years• Missiles?• Must have energy cooperation options in

same timelines

Options for DPRK Engagement with Options for DPRK Engagement with Energy Sector RedevelopmentEnergy Sector Redevelopment

A Rough Initial $100M/yr Assistance Program• Energy planning/capacity building: $5m/y• Rehab grid: $30m/y (about 6 PJ/yr cost eq.)• Rehab coal supply $10m/y (~ to 2.1PJ/y)• Rehab generation: $20m/y (~ to 4.2 PJ/y)• Reduce end-use waste: $20m/y (~ 4.2 PJ/y)• Small-scale, rural and renewable energy:

$15m/y (~ to 3.2 PJ/y)• 2 constraints: absorptive capacity of

DPRK; and diminishing returns• Note that KEDO 500,000 te/y HFO = 21 PJ/y


• PRIORITY #1 Assistance for Internal Policy and Legal Reforms to Stimulate and Sustain Energy Sector Rebuilding in the DPRK– Reform of energy pricing practices, and the

physical infrastructure to implement them– Careful energy planning to base aid on need and

rational objectives – Training for energy sector actors – Strengthening regulatory agencies and

educational/research institutions in the DPRK– Involving the private sector in investments and

technology transfer• Who? APEC EWG; bilaterals; IBRD, ADB, UN, NGOs


PRIORITY #2: The Decaying Grid• WHAT WILL IT TAKE TO REHAB THE GRID?

– New conductors, substation equipment, switching equipment, modern control facilities, new towers or poles in many existing right-of-ways

– Labor, rebar, channel iron, cement can be supplied locally, but grid-quality conductor, even nuts and bolts may be unavailable in the DPRK without significant retooling of manufacturing industries

– Regional tie lines RFE/CH to ROK via DPRK (rent)• Nautilus estimates: to rehabilitate ~6000 km of transmission

lines, distribution system and 8000 MW of generation: $5.5 – 7.5 B

• Who? IBRD with Japanese reparations and ROK financing, possibly implemented by KEDO


PRIORITY #2: The Decaying Grid• DO NOT TRY TO REHABILITATE THE WHOLE

GRID IN ONE MASSIVE PROJECT!• INSTEAD, START REBUILDING THE T&D

SYSTEM PIECEMEAL NOW– Work with DPRK engineers to identify, prioritize list

of T&D sector improvements and investments– Provide limited funding for pilot installations in a

limited area—perhaps in the Tumen River area– Engage the World Bank as a leader in DPRK power

sector refurbishment (with Japanese funding?)– Focus on projects that would help the DPRK earn

foreign exchange in acceptable manner, such as grid repairs to allow key mines to operate


PRIORITY #3: Redevelopment Priority: Help to Rehabilitate Coal Supply and Coal Transport Systems

• Couple with boiler rehabilitation, especially small-medium sized boilers for winter heat

• Assist with evaluating and upgrading coal mines in the DPRK, including:– Improvements in mining technologies, mine

ventilation systems, mine safety– Evaluation of coal resources– Rehabilitation of the coal transport network: Rail

infrastructure/parts, fuel supply for trains• Who? Japanese Reparations, ADB/IBRD


PRIORITY #4: DPRK Power Plant Rehab • Total installed capacity <10,000 MW (10 GWe),

approximately half hydroelectric, half thermal, mostly coal-fired

• About 10 large thermal plants, 20 large hydro plants account for over 60 percent of capacity

• Lack of spare parts, maintenance difficulties, fuel supply constraints, damage from natural disasters have reduced actual operable capacity to ~2 to 3 GWe at present, leaving 7-8 GWe to be refurbished

• THE DPRK DOES NOT NEED NEW COAL-FIRED POWER PLANTS

• Who Refurbishes Grid? ROK, IPPS


PRIORITY #5: Reduce the Vast Waste of Supplied Energy (Energy Efficiency Impr.)– Domestically-produced electric and electronic devices

often use 1940s, 50s, and 60s technologies– Coal-fired boilers efficiency less than 50 percent– Industrial plants even less efficient than Soviet

counterparts on which they were based– Steam distribution systems likely porous

• THE FASTEST WAY TO INCREASE EFFECTIVE POWER, COAL SUPPLY IS BY REDUCING WASTE– Energy efficiency improvements—lighting, motors, coal

stoves/boilers, controls, building improvements…

• Who? Technical assistance from China, ROK, Japan, RFE; Financing: PNL, IBRD/ADB


PRIORITY #6: Alternative Sources of Small-Scale Renewable Energy coupled with Energy-efficiency Measures

• DPRK has a keen interest in renewable energy, and in energy-efficiency technologies

• Focus on fast, small, cheap technologies– Couple appropriate technology, humanitarian assistance;

provide services in areas poorly served with energy now

• Small hydro turbine-generator manufacturing, Wind power/water-pumping windmills

• Agricultural equipment efficiency measures to help North Koreans to feed themselves

• Who? EU aid program; NGOs


PRIORITY #7: Begin Transition to Gas Use in the DPRK with LPG Networks

• LPG=Liquid Petroleum Gas (propane/butane)– More expensive than natural gas (NG), but much easier,

cheaper infrastructure to import in smaller quantities– Clean burning, limited military diversion potential

• Setting up LPG networks can be a first step toward use of natural gas in the DPRK – Start of experience with operating gas distribution

systems, developing gas use infrastructure

• Natural gas pipelines and LNG terminals as a step toward economic development coupled with regional integration

• Who? Transitional energy aid, ROK, NG consortia

South Korea’s Power Play at the Six-Party Talks

East Asia Science and Security Collaborative

Special Report July 21, 2005

Athttp://www.nautilus.org/napsnet/sr/2005/0560ROK_Energy_Aid.pdf

North North Korea’s Korea’s

GridGrid~ 1GWe ~ 1GWe

todaytodaySouth Korea South Korea

has offered to has offered to send 2 GWe send 2 GWe to DPRK to to DPRK to

kickstartkickstartthe 6PTs and the 6PTs and

replacereplaceKEDO 2 GWe KEDO 2 GWe

LWRsLWRs

South South Korea’s Korea’s

GridGrid

Table 1: ROK Electrical Generating Capacity, Megawatts, 2004Generation Type MWe %Hydro 3838 6.4Domestic coal 1139 1.9Bituminous coal 16309 27.2Oil 6176 10.3Gas 15770 26.3Nuclear 16729 27.9Total 59961 100Source: Korea Electric Power Corporation, KEPCO in Brief, 2004.12.31 , at www.kepco.org

South Korea’s Electric SystemSouth Korea’s Electric System

Table 2: Rough Cost Estimate of South Korea’s Power Offer

Item Cost Estimate, US billion $

Capital Costs

2.12 GWe of gas-fired power plant 1.06 billion

100 km of cross-DMZ, 400 km of high voltage transmission line to Pyongyang area (including reserve line)

0.58 billion

Half DPRK existing transmission & distribution refurbished in order to use the 2 gigawatt of delivered power

1.8 billion

Operating Costs

Annual Gas cost for 2.12 GWe of power plant

0.84 billion/year

Initial and annual cost is underestimated greatly by ROKInitial and annual cost is underestimated greatly by ROK

How could 2 GWe be supplied?

1. Options: build power plants north of Seoul to better balance supply and demand in the ROK grid

2. Build unconnected power plants that supply power directly to the DPRK

3. Reduce demand in the Seoul area by two gigawatts in order to free up generating and transmission capacity to send the same amount of power to the DPRK

Risk to South Korean Grid

Due to reactive power losses incurred in large-scale power transfer by long-distance transmission lines, there are physical limits on the south-north flow inside South Korea of electrical energy to this demand center from the power plants, which, if exceeded, can cause the grid to shut down due to the tripping of circuit breakers in response to voltage collapse.

In 2001, that transfer was 10,886 MW in normal operation.

In 2001, ROK experts estimated that the maximum DPRK load that could be added to the existing grid system without exceeding these limits was 0.5 GWe

Political and Institutional Problems

• high front-end transaction costs in negotiating system connection and distribution of gains from cross-border trade;

• operating standards such as frequency and voltage fluctuations, reserve capacity, and engineering design considerations arising from system connections;

• and achieving the trust needed to share dispatch and control authority across the DMZ between enemy states

• Political Sustainability in South Korea• Coordination with Other Parties at the Six-Party Talks • Slow Delivery • Regional versus North-South tieline?

Light Water Reactors at the Six Party Talks:

The Barrier that Makes the Water Flow

Policy Forum Online 05-78A: September 21th, 2005

http://www.nautilus.org/fora/security/0578LWR.html

September 19, 2005 Joint Statement

The Joint Statement amounted to

• a DPRK committal to “abandoning all nuclear weapons and existing nuclear programmes”, and

• the United States expressing its “respect” for the DPRK’s claimed right to “peaceful uses of nuclear energy”.

What if breakthrough?• US LWR technology politically impossible to

transfer due to Congress• DPRK will insist on LWR as litmus test of

American intention, to be co-equal in some nuclear dimension at regional level, because it was blessed by Kim Il Sung, and to gain energy and economic benefits

• Use instead VVER Russian LWR technology supported by tieline from Russia-South Korea?

• Chinese reactor technology (but NK want to avoid more dependence on China)

Convergence LWR Timing

DPRK: LWR “as early as possible” but before dismantlement

versus

US: “after dismantlement” then we’ll talk about LWR

=

Talk while dismantling but after declaration

+

Construct after re-certify (1-3 years) by IAEA

Energy Aid Lessons from 1994-2004

• Select small, fast, cheap, incremental and many energy projects, delivered by NGOs and private companies on short timelines that related to dismantlement (< 6 months) and IAEA re-certification (1-3 years)

• Aim to do projects in provincial towns, most at-risk population, greatest contribution to increased political stability in DPRK (and thereby, avoided loss-of-control of fissile material and/or warheads due to DPRK collapse)

Energy Aid Lessons from 1994-2004• Work in coalitions with Australia, EU, Canada, South Korea to

coordinate and deliver immediately, based on respective strengths• Implement these coalition projects in collaboration with Chinese

counterparts—much higher success rate, builds relationship with the great power that matters in Korea, China.

• Avoid simply transferring capital items; needs are training at enterprise-level; funds for rotating credit facilities to support consumers and proto-markets

• Avoid line agencies and old bad habits in DPRK• Train DPRK counterparts in international norms and standards for

projects, e.g. IBRD or ADB project norms• Do not start from scratch; immense but diffuse experience in all

sectors working in DPRK; track down and review past work, contact past implementers

Documents

Nuclear Dismantlement Timelines