{"id":4271,"date":"2019-01-30T09:27:36","date_gmt":"2019-01-30T00:27:36","guid":{"rendered":"http:\/\/www.cnic.jp\/english\/?p=4271"},"modified":"2019-01-30T09:27:42","modified_gmt":"2019-01-30T00:27:42","slug":"mitsubishi-heavy-industries-withdraws-from-the-npp-project-in-sinop-turkey-npp-makers-need-to-switch-to-realistic-track-in-the-age-of-decommissioning","status":"publish","type":"post","link":"https:\/\/cnic.jp\/english\/?p=4271","title":{"rendered":"Mitsubishi Heavy Industries withdraws from the NPP project in Sinop, Turkey ~NPP makers need to switch to realistic track in the age of decommissioning~"},"content":{"rendered":"\n

By Matsukubo Hajime, CNIC<\/em><\/p>\n\n\n\n

On December 4, 2018, the Nikkei Economic Newspaper published an article\nentitled: \u201cTurkish NPP: Government-private consortium, including Mitsubishi\nHeavy Industries, give up on construction.\u201d We were not surprised by this\nannouncement of the withdrawal.<\/p>\n\n\n\n

Mitsubishi Heavy Industries (MHI) had planned to introduce four 1,120\nMW-class ATMEA 1 reactors (pressurized water reactors developed by ATMEA, a\njoint venture corporation with the French Framatome, the former Areva) into\nscenic Sinop and was conducting a feasibility study. The estimated cost in\n2013, however, had been two trillion yen, which rose sharply to nearly five\ntrillion yen in April 2018, causing ITOCHU Corporation, which had formed the\nconsortium with MHI, to back out of the project. The power purchase price was\nfixed at 10.80 to 10.83 cents\/kWh for 20 years by the bilateral agreement\nconcluded between the Japanese and Turkish governments in 2013 (excluding fuel\ncosts). Taking into account operation costs and maintenance and management\ncosts, it was clear that it was going to be hard to recoup the original outlay.\nThe feasibility study scheduled to be completed in March 2018 was eventually ready\nin July. According to various reports, MHI had requested support from the\nTurkish government, including a hike in the power purchase price, but the\nTurkish government demanded a review of costs. The result appears to have been\nthat MHI decided that the project was unlikely to be profitable. If the planned\nATMEA-1 reactors had been constructed at Sinop they would have been the first\nof their kind in the world, but this turned out to be the second abandoned NPP\norder after Vietnam.<\/p>\n\n\n\n

The prognosis for MHI had not looked good from the outset. In 2017, the\ncompany pulled out of a project for a large-scale passenger ship, posting a\nloss of 250 billion yen, and development costs for a jet passenger aircraft\nproject had also ballooned to 600 billion yen, four times the original\nestimate. Mitsubishi-Hitachi Power Systems (MHPS), formed in 2014 through an\nintegration with Hitachi\u2019s thermal power generation division, has also seen its\nbusiness environment deteriorate, leading to stagnating earnings. To make\nmatters worse, Hitachi has requested the Japan Commercial Arbitration\nAssociation to arbitrate a payment of 774.3 billion yen from Mitsubishi due to\nmushrooming construction costs for a South African thermal power plant boiler\nfor which the order was received by Hitachi before the integration.<\/p>\n\n\n\n

The former Areva is also facing tough times over the development of\nATMEA-1, the reactor slated for construction at Sinop. France and Finland\nconstructed one each of the European\nPressure Reactor (EPR), but as a result of both experiencing long construction\ndelays and huge costs, Areva was forced into effective bankruptcy. With support\nfrom the French national \u00c9lectricit\u00e9 de France (EDF) and funding from MHI\nand others, Areva was restructured into Orano, which combines the nuclear fuel\ncycle with renewable energy, and Framatome, a nuclear reactor company. <\/p>\n\n\n\n

The situation in Turkey was not much better. The Turkish lira, which\ntraded at around 50 yen at the time of the Japan-Turkey agreement in 2013,\nslumped to around 20 yen in 2018, and the economy is faltering in the midst of the 2016 attempted coup\nd\u2019\u00e9tat and President Erdo\u011fan\u2019s\nincreasingly heavy-handed leadership.<\/p>\n\n\n\n

The environment surrounding nuclear power is also austere. According to a\nreport issued recently by the International Atomic Energy Agency (IAEA),\nnuclear power accounted for 10.3% (2,503TWh) of the world\u2019s total power supply\nin 2017, but the low forecast for nuclear power in 2030 drops to 7.9%\n(2,732TWh) and 5.6% (2,869TWh) in 2050. The IAEA\u2019s low forecast for nuclear\npower generation in 2008 was 12.4% (3,522TWh) for 2030. The generating capacity\nforecast in 2008 was at least 473GWe in 2030, but in 2018 that forecast has fallen\nto 352GWe, an enormous downward revision equivalent to 100 nuclear reactors.<\/p>\n\n\n\n

Even China, which has led global NPP construction, has relaxed the speed\nat which it is building NPPs due to power demand stagnation, rapid cost\ndecreases in renewable energies, as well as other factors such as rising safety\nmeasure costs in the aftermath of the TEPCO Fukushima Daiichi NPP accident. In\nthe latest, the 13th, 5-year-plan, the government has set the target for\nnuclear power generating capacity for 2020 at 58GWe, but this capacity\ncurrently stands at 38.2 GWe and the total capacity now under construction is\n15.4GWe. Even if all the NPPs under construction are completed, the country\nwould still be three to four NPPs short of attaining the target. The IAEA\ndatabase also shows that there have been no new NPP construction starts since\n2016.<\/p>\n\n\n\n

As new NPP construction in Japan declined, in the 2000s the Japanese\nreactor makers and Japan\u2019s Ministry of Economy, Trade and Industry (METI)\nsought overseas markets to which they could export NPPs. However, besides\nTurkey, failed NPP orders repeatedly occurred in Vietnam, Lithuania, Finland,\nUAE and the US. After coming within an inch of bankruptcy due to four reactors\nin the US, for which its affiliate Westinghouse had received orders, Toshiba also\ndissolved its UK affiliate in November 2018 and withdrew from the Moorside\nnuclear project in the UK. Most recently, Hitachi has also suspended work on the\nWylfa project in Wales. It’s not just finance and economics that is making it\nimpossible for manufacturers to pursue the nuclear export market. The capillary\ntubes in the steam generators at the San Onofre NPP in the US, the order for\nwhich had been received by MHI, ruptured due to pipe wall corrosion, finally\nleading to the decision to decommission the NPP. Again, with Taiwan\u2019s fourth\nnuclear reactor, for which Hitachi and Toshiba built the reactor and MHI\ninstalled the turbine, the political administration changed after massive\ndemonstrations by citizens, leaving the reactor unable to begin operation. Last\nyear the Taiwan Power Company began returning the unused nuclear fuel to the\nUS.<\/p>\n\n\n\n

Regarding the current state of the Sinop project, MHI\u2019s CEO Miyanaga Shunichi\nsaid in a media interview on December 12, 2018 that when asked a large number of\nextremely detailed questions about the feasibility study from the Turkish side,\nhe replied that \u201cWe are able to handle the situation within the scope of\neconomic rationality,\u201d and \u201cFirstly, there will be [consultations] between the\ngovernments, and then if something arises between the governments we still have\na certain amount of leeway and we will reply to you at that time.\u201d The current\nstage was therefore already \u201cbeyond the bounds where we are able to make\njudgments.\u201d These statements show very acutely the highly convoluted structure\nin which NPP exports cannot be finalized simply through a company\u2019s commercial\nacumen.<\/p>\n\n\n\n

2019 marks 63 years since the first civil NPP in the world began\noperation. What has become clear during this time is that nuclear power cannot\nbe run on a commercial basis without government support and that nuclear power\nis a power source that will cause a severe catastrophe if there is an accident.\nAt the same time, the average years of operation of the current world\u2019s 454\nnuclear reactors is 29.5 years, 95 of which have been operating for more than\n40 years. The age of massive numbers of NPPs lining up to be decommissioned is therefore\napproaching rapidly. Even in Japan, 23 NPPs are now awaiting decommissioning.<\/p>\n\n\n\n

The reactor makers now need to look TEPCO\u2019s Fukushima Daiichi nuclear\npower accident directly in the face, and based on the reality that the world\nnuclear renaissance is never going to happen, should withdraw from the\nconstruction of new NPPs.
<\/p>\n\n\n\n

<\/p>\n\n\n\n

<\/p>\n","protected":false},"excerpt":{"rendered":"

By Matsukubo Hajime, CNIC On December 4, 2018, the Nikkei Economic Newspaper published an article entitled: \u201cTurkish NPP: Government-private consortium, including Mitsubishi Heavy Industries, give up on construction.\u201d We were not surprised by this...<\/p>\n","protected":false},"author":2,"featured_media":0,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"footnotes":""},"categories":[90,40,92],"tags":[],"class_list":["post-4271","post","type-post","status-publish","format-standard","hentry","category-economics-of-nuclear-power","category-international","category-nuclear-exports"],"acf":[],"_links":{"self":[{"href":"https:\/\/cnic.jp\/english\/index.php?rest_route=\/wp\/v2\/posts\/4271","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/cnic.jp\/english\/index.php?rest_route=\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/cnic.jp\/english\/index.php?rest_route=\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/cnic.jp\/english\/index.php?rest_route=\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/cnic.jp\/english\/index.php?rest_route=%2Fwp%2Fv2%2Fcomments&post=4271"}],"version-history":[{"count":3,"href":"https:\/\/cnic.jp\/english\/index.php?rest_route=\/wp\/v2\/posts\/4271\/revisions"}],"predecessor-version":[{"id":4301,"href":"https:\/\/cnic.jp\/english\/index.php?rest_route=\/wp\/v2\/posts\/4271\/revisions\/4301"}],"wp:attachment":[{"href":"https:\/\/cnic.jp\/english\/index.php?rest_route=%2Fwp%2Fv2%2Fmedia&parent=4271"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/cnic.jp\/english\/index.php?rest_route=%2Fwp%2Fv2%2Fcategories&post=4271"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/cnic.jp\/english\/index.php?rest_route=%2Fwp%2Fv2%2Ftags&post=4271"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}