MODELS
OLD MODEL
Emerging Model
CROWN
Crown Corp
Colonization
(occupation)
(exploitation)
FINANCE
Development
(transition)
(Investment / ROI)
1
Crown Corp. model vs. Pubic Enterprise
Crown corporation
Public Enterprise
Main Goal
Colonization / Occupation
Development / Transition
Governance
Crown / Parliament
Board / Gov’t Repr.
Economics
Cost-driven
Revenue driven / ROI
Finance
Profits to Crown; Crownfunded
ROI / Public-private capital.
Sovereign funds; Bond mkt
Organization
Top-down; Internal capacity
Top-down; some contracting
Scope
Often regional, by country,
cross-sectoral with Security
By function: water, energy,
comm, health (not military)
Enemies / Allies
Other “Crowns”
Other functional entities
Mediation
Foreign Ministries
Investment banks; Agencies
Skill sets
Setting codes, procedures.
Specific technical expertise
Project Mgmt.; Contracting
out; Performance metrics
Drawbacks
Crown fund limited  forces
private engagement for finance
Split goals: public vs. private.
Requires clear mandates
2
Example: TVA
FUNCTIONS
Planning
Project mgmt
Engineering (multiple)
Forestry
Hydro mgmt
Political liaison
Community engagement
3
Progress 
More International Engagement
National Intelligence Council: Scenarios to 2030
B) Stalled Engines
Economic stagnation in OECD.
Constrained investment.
Some rollback of globalization.
Less US involvement. EU turns
inward with fiscal crises.
Less entrepreneurship.
A) FUSION
USA-EU-China / P5 cooperation
maintains peace, and economic
growth recovers with demographic
surge in Asia, Africa, MidEast.
Energy alternatives, better water
management reduces conflicts.
Public-private partnerships.
D) Inequalities Dominate
“GINI-out-of-the-bottle”.
Free for all. USA withdraws
militarily. EU falters, China
more aggressive, nationalism
surges; conflicts ensue.
Volatile financial markets.
C) Non-State World
More private sector leadership.
States as regulators more than providers.
[States of Terror; States of Consent]
More Influence or Hegemony 
Stronger US engagement (multi-faceted)
4
Nuclear Sector restructured with lull (1990-2008)
Westinghouse Electric sold
Jan. 23, 2006
June 26, 1998: 3:07 p.m. ET
British Nuclear Fuels picks
Toshiba as preferred bidder for
Westinghouse Electric Co.
Morris Knudsen and UK's BNFL buy
nuclear power firm for $1.2 billion
NEW YORK (CNNfn) - Global engineering concern
Morrison Knudsen Corp. and British Nuclear Fuels
Ltd. said Friday they have formed a joint venture to
acquire CBS Corp.'s Westinghouse Electric Co. in
a $1.2 billion cash-and-debt transaction. Under the
deal, the venture partners will pay $238 million
cash and assume $950 million in debt. Morrison
Knudsen, as majority owner, will control 60 percent
of the new entity. BNFL, through a U.S. holding
company, will own 40 percent of the new company.
[MK reorganized as Washington Group in
1999, and after an ill-fated buyout of Raytheon
Constructors was sold to URS, leaving
Westinghouse Nuclear to BNFL.]
According to earlier reports, Toshiba
has offered $5 billion for Westinghouse,
which builds nuclear power plants.
GE, Hitachi Sign Formation Agreement for
Global Nuclear Energy Business Alliance
Wilmington NC (SPX) May 17, 2007
GE and Hitachi have signed a formation
agreement to proceed with plans to create a
global alliance of their nuclear businesses.
GE and Hitachi will form cross-shareholding
companies in U.S., Canada and Japan,
subject to government approvals.
3 Sept. 2013
FT: EDF looks for Chinese nuclear partners [UK investment]
By Guy Chazan and Anousha Sakoui
Sept 2008 (for ₤12.5B; 9GW)
EDF buys British Energy (nuclear)
EDF, the French utility, is trying to link up with a Chinese company to build
new nuclear reactors in the UK, amid growing concern about the rising cost of
nuclear energy. However, any deal to bring large-scale Chinese investment
into UK infrastructure, particularly the politically sensitive nuclear industry,
could prove controversial.
http://www.ft.com/cms/s/0/2a1207ee-f54a-11e1-b120-00144feabdc0.html#ixzz2hniwkDG7
5
© ADPaterson
Global Electric Nuclear Entities, P5 and “Next 5”
P5
P5
1946
2007
CHINA
1987
14 GW++
1988
Tai Power
P5
25 GW+
1994
5 GW+
7.3 GW+
2007
62 GW+
P5
UAE
21 GW+
JAPAN (47 GW)
USA (101 GW)
P5
10 GW
9 GW
18 GW
17 GW
6.7 GW
SMRs?
CANADA
13 GW
5.3 GW
5.6 GW+
9 GW
6
New construction of reactors is primarily a Sovereign decision, more than mere economics.
New Reactors: Where’s the Growth?… Asia, MidEast
Size of bubble =
Reactor GWs now
under construction
Gov’t
Owned
Sovereigns dominate new orders.
USA and Japan built their fleets of
reactors in smaller regional utilities,
rather than in national enterprises.
Private
Owned
Operating Capacity 
7
Leadership on Critical Issues: Government / Industry
Leadership on Key Issues: Government Ministries versus Industry
[ = leading role; O = support role; -- little or minimal role]
Gov't
Indr
Major Challenges (IFNEC Finance Workshop, May 2012)
1. Substantial construction cost escalation and risk of delays in construction -- some tied
to rising material costs, others to contingencies needed by construction engineering teams
2. Market pricing risk in liberalized electricity markets (versus territories with regulated
rates and long-term power purchase agreements), which then hinders lending terms.
[Government decides degree and pace of liberalization, or regulation of electric rates.]
3. Lack of market value for GHG emission savings with reactors vs. fossil-fired sources.
[EU and a few nations offer incentives but a global regime is lacking.]
4. Few financial incentives for “public goods” associated with nuclear power, e.g., lower
hazardous emissions near urban areas, domestic fuel sourcing, reliability in bad weather
5. Mismatch in timing between the asset life and commercial lending tenures: few lenders
will go out past 15 or 20 years on loans, but reactors run for more than 50 years.
[Short loan tenors on multi-billion projects may make projects uneconomic.]
6. Nuclear accident liability (in the USA this is covered by Price-Anderson; in others, the
national government takes on this risk.)
O


O

O

O
?
O

O

--
7. No real progress on addressing long-term spent fuel disposal and management
O
O
8. Currency risk in emerging markets and on electricity revenues if financed abroad


9. Uranium fuel supply and pricing [Gov’t engaged in licensing or owning mines]
O

10. Worker training and engineering capacity [Gov’t may subsidize schooling]
[ IFNEC: International Framework for Nuclear Energy Cooperation, a compact involving more than 60 countries
opting for commercial nuclear power. ]
8
9
Nuclear Leadership shift from Supply to Demand
Indexed value
Major shift from supply-side factors for
new reactors to demand-side factors.
Indexed value
10
END – Q&A
What happens when US policy goes to sleep ?
11
Energy Security: Strategic Options
STRATEGIC OPTIONS
Andy
[risk, funding]
Level of
Innovation
Level of
S1
S2
S3
S4
Supply-side actions
Alternative external fuel sources (e.g., Americas)
More domestic fuel production (fossil resources)
New clean energy generation (RE, nuclear, CCS)
Non-fossil fuels (biofuels)
Low
Medium
High (needs R&D)
High (needs R&D)
Low
Low
High
High
D1
D2
D3
D4
Demand-side actions
Bldg Efficiency / Better motors, engines
More mass transit (rail, bus)
Less driving or use (conservation)
Electrification of transport (less fuel use)
High (needs R&D)
Low
Low
High (needs R&D)
Medium
Medium
Low
High
Enhancing energy security with broad impact
GHG Savings
12
EU Energy Security: Strategic Options Matrix
STRATEGIC OPTIONS
Enhancing energy security
Level of
Level of
Physical
Availability
Economic
Feasibility
Importance
to security
Innovation
GHG Savings
to Europe
for Europe
for Europe
Low
Low
Medium
Medium
Medium
Medium
Low
Low
Low
Low
New clean energy generation
High
High
High
Medium
High
Non-fossil fuels (biofuels)
High
HIgh
Medium
Medium
Medium
Efficiency / Better engines or motors
High
Medium
High
High
High
More mass transit (rail, bus)
Low
Medium
High
Medium
Medium
Less driving or use (conservation)
Low
Low
Medium
Medium
Medium
Electrification of transport
High
High
High
High
High
Supply-side actions
Alternative external fuel sources
More domestic fuel production
Andy
Policy
Impact
Focus
Demand-side actions
13
Policy Recommendations (based on strategic options matrix)
While pursuing alternative gas supplies [Americas] as transition tactic –
•
GROUP
Reduces dependence on Russia, MidEast for fossil fuels; shift from coal
1. [S3] Continue development of clean energy options; allow nuclear
•
•
•
•
Nuclear is needed in some countries to curb GHG emissions and maintain
reliable electricity supply (France, E.Europe (Visegrad), Finland, Sweden)
Other countries (Germany, Italy) can expand wind, biomass
Promote solar from / in Mediterranean [e.g., Desertec]; Invest in R&D
Defer market liberalization (which favors gas); look at regional blocs
2. [D1] Expand energy efficiency further with codes, training and incentives
•
•
•
Consider shifting some RE incentives into efficiency measures (EE goal difficult)
A focus on buildings (restoration) supports sustainability goals, broad impact
Better use of biomass/CHP offers a “double-win”; some R&D funding needed
3. [D4] Accelerate electrification of transportation: vehicles, mass transit
•
•
•
Europe has already developed mass transit backbones  upgrade bus fleets
EU automakers are moving ahead on hybrids, electric cars
Complemented by progress in Clean Energy generation (including nuclear)
14
Bobbitt Themes / Market State Framework
Bobbitt on his constitutional diagnosis:
“Market States are not the ideal, but since 1990 they are emerging.”
“Market States seek roles to enable rather than provide, to expand or
optimize opportunities for their citizens, to reduce transaction costs
rather than provide services directly, in contrast to Nation-States
looking to maximize social welfare. They are umpires, not judges.
They set rules for market operators more than decide outcomes.”
“Mercantile Market States (Asia) are more consensual and
more protectionist, and keep control over capital both
monetary and human.” Less immigration. Cities drive policy.
“Managerial Market States (EU), Government planning,
more sensitive to egalitarianism, attempt through long-range
planning to give more weight to posterity, sustainability.”
“Entrepreneurial Market States (N.Am) reflect a broadly
libertarian view, tend to less intervention in markets, focused
on providing public goods, and favoring pluralism and
http://www.law.columbia.edu/fac/Philip_Bobbitt
innovation.” More functions
are privatized. Wealthy suburbs.
Threats to Nation-States (Bobbitt):
Triggering shift to Market-States
1) WMDs in hands of Terrorists
eroding force monopoly
2) International pressures for
democratization, human rights
3) Global trade, communications
(competitiveness pressures)
4) Global media encroaching on
cultural norms and narratives
5) NOW: Sovereign debt crisis,
fiscal strains, and dependence
on external financing
15
Nation-State
(1600-1990)
 Market State (1990 --
)
Market States seek roles to enable rather than provide – as Umpire, not Judge.
Funding for nuclear power may evolve toward more public-private financing.
NATION – STATE
[since Peace of Westphalia, 1638]
“MARKET STATE”
Culture
Welfare, security, Sovereignty
Provider, public function, Judge
[Judges determine outcomes]
Nationhood, a “folk”
Opportunity, access, growth
Limited functions; “Umpire”
[Referees ensure fair competition]
Less community; more Functionality
Organization
Institutions; Hierarchies
Networks; Project management
Communication
State media, TV / Radio
Open media, Internet
Political process
Limits on campaign contributions
Market donations, disclosure
Orientation
Regulation, compliance
Competitiveness, innovation
Military
Mandatory conscription, draft
Volunteer Army; Mercenaries
Labor
Industry, Public employee unions
Contractors; Privatization
Promotion
Seniority, social standing
Meritocracy, performance
Nuclear technology
Military power; State leadership
Reliable energy; Public goods
TRAITS
Main mission
Means
[since End of Cold War (Long War), 1990]
16
Asian Mercantile Market States Take the Lead
Asian Mercantile nations lead the nuclear “Renaissance” with >70% of reactor capacity under construction:
China, Russia, S.Korea, India. Growth of Mega-cities, “urban security”, poses a very large driver to 2050.
Category
Region
P5
USA
N.Am
Entrepreneurial
Restructuring
4,500
P5
Russia
EU/Asia
Mercantile
Renaissance
9,160
P5
France
EU
Managerial
Renaissance
1,720
P5
China
Asia
Mercantile
Renaissance
27,640
P5
United Kingdom
EU
Managerial
Restructuring
0
Next 5
Japan
Asia
Mercantile
Restructuring
2,755
Next 5
South Korea
Asia
Mercantile
Renaissance
3,800
Next 5
Canada
N.Am
Entrepreneurial
Renaissance
2,190
Next 5
Taiwan
Asia
Mercantile
Restructuring
2,700
Next 5
India
Asia
Mercantile
Renaissance
5,300
Ukraine
Germany
Sweden
Spain
Belgium
Czech Republic
SUBTOTAL
EU
EU
EU
EU
EU
EU
World
Managerial
Managerial
Managerial
Managerial
Managerial
Managerial
Mercantile
Renaissance
Rollback
Restructuring
Restructuring
Rollback
Renaissance
Renaissance
1,965
0
In Review
0
0
In Review
51,355
Planning
Closing
Replacing
Relicensing
Closing
Progressing
TYPE
STRATEGY
MWs in
Construction
COUNTRY
World Total
70,870
17
Nuclear Strategy: “Renaissance”, “Rollback”, “Restructuring” ?
“Renaissance”: Countries building reactors, relicensing the ones they operate,
and are addressing spent fuel issues with storage or reprocessing or recycling are
fully engaged in the “nuclear renaissance” after a global hiatus. Some are pursuing
next generation “small modular reactors” (SMRs; under 300 MWs each in capacity).
Their societies value the reliable, low emission electricity from reactors, particularly
for large urban loads, and have active safety programs in place.
“Restructuring”: In some leading nuclear countries, including USA, some
construction is underway, but not at a robust pace as seen in Asia. Liberal
democracies (particularly those manifested as Entrepreneurial Market States) are
more pluralistic, allowing more openings for interveners (e.g., anti-nuclear
stakeholder groups). Spent fuel disposal is not resolved either. Financial incentives
may be in flux, depending on political changes. Some merger or restructuring
activity in the electric sector may be needed to bolster utility balance sheets.
“Rollback”: Some EU countries currently operating reactors are not relicensing
them, or some are shutting down reactors early. With 185 reactors (162 GWe), just
five countries account for 75% of EU capacity (France, Russia, Ukraine, Germany,
UK). Nor are they pursuing alternative reactor technologies, such as SMRs, and are
not reprocessing spent nuclear fuel, except UK and France, both P5 countries.
18
Financings will also increasingly feature international partnerships and funding
Major Risks  Nuclear Strategies
Risk profiles vary by Region and bear on Strategies adopted (and vice versa).
[Strategy ]
Mercantile
Asia
Entrepreneurial
N.America
Managerial
Europe
"Renaissance"
"Restructuring"
"Rollback"
#
RISK CATEGORY
1
High system cost per KW (not competitive)
High risk
H
H
2
Higher borrowing / capital costs
Low risk
L
H
3
Lower fossil fuel prices (natural gas)
L
H
Medium
4
Uncertain permitting or licensing (delays)
L
M
H
5
Public opposition (local, social level)
L
L
H
6
Long construction cycle (possible delays)
M
H
H
7
Slower demand growth (lower revenues)
L
M
H
8
Spent fuel disposal problems (shutdowns)
M
M
H
9
Uranium fuel price increases (less profit)
M
L
M
10
Water use, restrictions (risk of shutdowns)
M
L
L
11
Accident (internal mishap), plant damage
M
L
L
12
Terrorist attack on plant site (sabotage)
L
L
M
100%
115%
177%
Rating scale -- [H = 5; M = 3, L = 1]
Rating of Risks (unweighted)
Adapted from “Using Federal Credit to Mitigate Critical Financial Risks for New Reactors”, ADPaterson at WNA 2003
19
Market States & Policy Approaches
Types of Market States and Policy Approaches to Key Risks and Issues
- Different market state types address risks and key issues differently…
- Dispatch priority or tariff regulation is a financial market oriented policy
TRAITS / RISKS
Mercantile
Managerial
Entrepreneurial
Political system
Stable (one-party)
Coalitions of Parties
Dynamic, Adversarial
Policy leadership
Administration
Parliament
Divided government
Capital cost risk
National ownership
Federal regulation
Federal loans, subsidies
Labor disruption
No / weak unions
Union agreement
Right to work states
Public opposition
Control of protest
Political compromise
Regional migration
Lower fossil prices
Market intervention
Taxes on fossil
Dispatch priority
Licensing risk
Few interveners
Federal rulings
Insurance; COL
Electricity rates
Federal rates
Feed-in tariffs, taxes
Delegated to states
U-fuel price risk
Stockpiling
Regional agreements
Domestic mining
Accidents
Federal takeover
Legislation, Rules
Public-private compact
Spent fuel
State stewardship
Reprocessing?
Regional compacts
20
Supply / Demand Factors and National Strategies
National
Nuclear
Strategies
21st Century, Post Cold War
DEMAND-SIDE INTENSITY 
HIGH • Strong nuclear infrastructure
Nuclear navy
Nat’l Labs
Engineering
Reactor
operations
Fuel cycle
•
•
•
•
Stagnant load growth
Already “developed” (OECD)
Low fossil fuel prices
Fragmented utility sector
Population growth, “Developing”
Unsatisfied energy demand
High fossil fuel prices, imports
Large, burgeoning cities
ROLL
BACK
LOW
Renaissance
“Heavy”
Renaissance
“Light”
Renaissance
“Heavy”
Restructuring
• Declining (aging) population
• Anti-nuclear politics / policy
• Not investing in nuclear
training, infrastructure
ADPaterson
•
•
•
•
•
•
•
•
•
Restructuring
Population growth
Renaissance
Lower fossil prices
“Light”
Growing cities
Need for desalination
No nuclear infrastructure
HIGH
LOW
DEMAND
ROLL
BACK
Population growth
Rising energy use
Urbanization / Pollution
21
Supply-Demand Factors and National Strategies
EXPORTERS
Nuclear navy
Nat’l Labs
Engineering
Reactor
operations
Fuel cycle
BOTH
Russia
HIGH
National
Nuclear
Strategies
21st Century, Post Cold War
DEMAND-SIDE INTENSITY 
Canada
France
[Import & Export]
S.Korea
Renaissance
“Heavy”
China
USA
Japan
Renaissance
“Light”
(2010, 2013)
UK
India
Renaissance
“Heavy”
Restructuring
Restructuring
Fukushima
Germany
Italy
LOW
DECOMMISSION
ADPaterson
Renaissance
“Light”
Japan
(2011)
ROLL
BACK
UAE
Poland
Begium
Turkey
S.Arabia
Vietnam
HIGH
LOW
DEMAND
ROLL
BACK
IMPORTERS
Population growth
Rising energy use
Urbanization / Pollution
22
23
Progress 
INTERNATIONAL COOPERATION
Outcome Matrix
B) Bounded Cooperation
Selective teaming with some
gains. “Conditional consent”
clauses in agreements.
Progress on safeguards
D) Teaming unwound
Joint agreements lapse.
Reduced opportunities
for US based firms
A) ENHANCED COOPERATION
Active teaming agreements. 123
Agreements renewed with bolstered
cooperative terms. More joint R&D.
Possible joint development on SMRs.
Could involve spent fuel take back or
US facilities overseas.
C) Hardening of “Gold Standard”
No broader cooperative terms.
Standardized agreements result in
little gain for US firms. Status quo.
More Influence 
US View or Position
24
Supply / Demand Factors and National Strategies
21st Century, Post Cold War
DEMAND-SIDE INTENSITY 
EXPORTERS
Russia
HIGH
Nuclear navy
Nat’l Labs
Engineering
Reactor
operations
Fuel cycle
BOTH
Canada
France
[Import & Export]
S.Korea
China
USA
Japan
(2010, 2013)
UK
India
Renaissance
“Heavy”
Restructuring
Fukushima
Germany
Italy
LOW
DECOMMISSION
ADPaterson
Renaissance
“Light”
Japan
(2011)
ROLL
BACK
UAE
Poland
Begium
Turkey
S.Arabia
Vietnam
HIGH
LOW
DEMAND
IMPORTERS
Population growth
Rising energy use
Urbanization / Pollution
25
Low Projection for Nuclear Capacity, 2000 – 2030
Conservative projection outlook shows Asia dominating new construction; EU sliding.
Global investment runs >$120B a year, with about $40B of global procurement.
IAEA for 2030:
LOW = 450 GWs
HIGH = 740 GWs
(depends on pace
of Asia build out)
600.0
500.0
Middle East
India
GWs OPERATING
400.0
China
?
300.0
S.Korea
Japan
Russia+Ukr+EE
200.0
Rest of W.Eur
UK+France
100.0
N.America
0.0
With all reactors relicensed
2000
2005
2010
Compiled from multiple sources: EIA, IAEA, IEA
2015
2020
2025
2030
26