Antinuclear

Australian news, and some related international items

The nuclear industry’s financial crisis deepens

The four AP1000 reactors are the only ones under construction in the US. “There’s billions and billions of dollars at stake here,” said Gregory Jaczko, former head of the US Nuclear Regulatory Commission. “This could take down Toshiba and it certainly means the end of new nuclear construction in the US.”

Toshiba’s demise would not greatly concern the nuclear industry if it was an isolated case, but it is symptomatic of industry-wide problems. Nick Butler from Kings College London wrote in a Financial Times online post: “Toshiba is just one company in the global nuclear industry, but its current problems are symptomatic of the difficulties facing all the private enterprises in the sector.

nuclear-costs1

Nuclear power’s rapidly accelerating crisis, REneweconomy, By  on 22 February 2017   A fire-sale is underway as the punch-drunk nuclear power industry tries to stop the rot.

The French government is selling assets so it can prop up its heavily indebted nuclear utilities.  Électricité de France (EDF) announced in 2015 that it would sell A$13.8 billion of assets by 2020 to rein in its debt, which now stands at A$51.8 billion.

EDF is purchasing parts of its bankrupt sibling Areva, which has accumulated losses of over A$14 billion over the past five years. French EPR reactors under construction in France and Finland are three times over budget ‒ the combined cost overruns amount to about A$17.5 billion. Bloomberg noted in April 2015 that Areva’s EPR export ambitions are “in tatters“, and now Areva itself is in tatters.

Meanwhile, Japanese industrial giant Toshiba would like to sell indebted, US-based nuclear subsidiary Westinghouse, but there are no buyers so Toshiba must instead sell profitable assets to cover its nuclear debts and avoid bankruptcy.

Engie reportedly wants to sell its stake in the consortium, and the French government has already sold part of its stake in Engie … to help prop up EDF and Areva! Deck-chairs are being shuffled.

The latest dramas occur against a backdrop of deep industry malaise, with the receding hope of even the slightest growth resting squarely on the shoulders of China. A February 15 piece in the Financial Times said: “Hopes of a nuclear renaissance have largely disappeared. For many suppliers, not least Toshiba, simply avoiding a nuclear dark ages would be achievement enough.”

Toshiba and Westinghouse are in deep trouble because of massive cost overruns building four AP1000 reactors in the US ‒ the combined overruns are about A$14 billion and counting. The saga is detailed in Bloomberg pieces titled ‘Toshiba’s Nuclear Reactor Mess Winds Back to a Louisiana Swamp‘ and ‘Toshiba’s Record Fall Highlights U.S. Nuclear Cost Nightmare‘.

Toshiba said on February 14 that it expects to book a A$8.2 billion writedown on Westinghouse,(on top of a A$3 billion writedown in April 2016. These losses exceed the A$7.1 billion Toshiba paid when it bought a majority stake in Westinghouse in 2006.

Bankruptcy looms for Toshiba, with the banks circling and the risk heightened by the likelihood of further delays and cost overruns with the AP1000 reactors in the US, and unresolved litigation over those projects.

Toshiba says it would likely sell Westinghouse if that was an option ‒ but there is no prospect of a buyer. The nuclear unit is, as Bloomberg noted, “too much of a mess” to sell. And since that isn’t an option, Toshiba must sell profitable businesses instead to stave off bankruptcy.

Toshiba planned to make nuclear operations and microchips its two growth areas. But now the company plans to sell most ‒ perhaps all ‒ of its profitable microchip business to prop up the nuclear carcass and avoid bankruptcy. The company might get A$17‒22 billion by selling its entire stake in its microchip business, said Joel Hruska from ExtremeTech. “That would pay off the company’s immediate debts,” Hruska said, “but would leave it holding the bag on an incredibly expensive, underwhelming nuclear business with no prospects for near-term improvement.”

Plans for three AP1000 reactors at Moorside in the UK are in doubt. Toshiba hopes to sell its 60% stake in the project consortium NuGen. Cumbrians will be glad to see the back of corruption-plagued Toshiba ‒ but corruption-plagued South Korean utility KEPCO might take its place. Cumbrians Opposed to a Radioactive Environment (CORE) commented: “KEPCO is itself still emerging from a major scandal that surfaced in 2012 involving bribery, corruption and faked safety tests for critical nuclear plant equipment which resulted in a prolonged shut-down of a number of nuclear power stations and the jailing of power engineers and parts suppliers.”

Plans for six AP1000 reactors in India may not survive the Toshiba / Westinghouse meltdown. The project is now almost impossible according to Reuters’ sources. India is said to be one of the countries leading the ‘nuclear renaissance’ but hasn’t seen a single reactor construction start since 2011.

Toshiba’s demise would not greatly concern the nuclear industry if it was an isolated case, but it is symptomatic of industry-wide problems. Nick Butler from Kings College London wrote in a Financial Times online post: “Toshiba is just one company in the global nuclear industry, but its current problems are symptomatic of the difficulties facing all the private enterprises in the sector.

Civil nuclear power involves huge up-front capital costs, very long pay-back periods and high risks that are compounded by a lack of experience, especially in managing nuclear construction projects after a long period with few new plants. For all those reasons, private investors avoid the sector and prefer to put their money where they see faster and safer returns.”………….http://reneweconomy.com.au/nuclear-powers-rapidly-accelerating-crisis-26711/

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February 22, 2017 - Posted by | Uncategorized

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