For example, one new build project attracted only one bid likely due to highly punitive clauses in the contract. Our analysis unearthed several examples where the balance of risk in the contract is not optimal. Similarly, interface risk is often best held by a designated supplier our research shows that projects where the owner takes this “integrator” role tend to be less successful unless the owner has substantial and relevant prior experience. For example, design change and commodity price escalation are usually risks best held by the owner. Successful project owners recognize this and develop contracts that pass only the right risks to OEMs and contractors. ![]() The costs and risks of building a nuclear power plant are such that they can never be fully passed to the supply chain. We have seen examples of the licensing country applying export-country licensing principles to limit changes to design and documentation, while providing adequate assurance. Some OEMs have mitigated this risk by engaging early with regulators from the export country and the licensing country. However, OEMs are often forced to modify even well-established technologies when moving into a new geography, in order to comply with local regulations and license requirements. The first recommendation is therefore straightforward: avoid deploying first-of-a- kind technology without adequate justification or consideration of the execution risks. Conversely, first-of-a-kind units typically take at least one to two years longer to build than their more mature counterparts. Units built using a mature technology tend to get built closer to schedule and budget-such units in South Korea and China are being built in less than five years. For example, we found that projects with experienced contractor teams (that is, team members at frontline supervisor level with experience building identical technology) were delivered two to five years faster than those with teams that had only delivered projects based on different technologies. Similarly, picking an OEM with experience in building the technology is directly correlated to better project outcomes. Find an OEM that has built the same reactor technology elsewhereįorming an owner team with experience in building and operating nuclear power plants is a key success factor. If you would like information about this content we will be happy to work with you. We strive to provide individuals with disabilities equal access to our website. What we found were four factors that, while not guaranteeing success, must be in place if a nuclear new build has a chance of being on time and on budget. ![]() So we analyzed in depth many of the new nuclear units brought online since 2000 and interviewed experts involved in their delivery, to identify common reasons for success and reasons for failure. Generally, units in Asia are built faster and cheaper than those in Europe and the United States, but we wanted to find out why. Such escalation can quickly flip the business case of these units, leaving private investors and governments heavily exposed and countries short of generation capacity.īringing a multibillion dollar nuclear new build online on time and on budget is not easy, but some players are showing they can do it consistently. ![]() Increasingly, however, the viability of new nuclear is under threat from spiraling construction costs and delayed projects-with recent new builds seeing up to a threefold increase in cost and up to nine-year delays. That’s why many governments have said they see nuclear as a key part of the future energy mix. Fifty-eight nuclear power-plant units are under construction globally right now, with governments and energy companies typically attracted by the combination of stable, low-carbon base generation, enhanced grid stability, and energy security.
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