Action Plan 1997-98

Financing and Technology Transfer for the Developing Countries

FINANCING ISSUES Installed Power Capacity Due to grid limitations and lack of cheap capital resources, the options for implementing power projects will be different for low- and high-income countries. Low-income countries will lean towards implementing lower capital investment projects and, with some exceptions, the introduction of nuclear power in their systems will be delayed. In the shorter term, these countries will tend to build mainly conventional power stations. Thus, global power needs are to be considered within the framework of the different economic conditions that will exist among high- and low-income countries. Using the estimates of the World Energy Council (WEC) [1] and the International Nuclear Societies Council (INSC) [2], forecasts of primary energy demand and estimates of the evolution of the electric power component, as part of primary energy needs, were determined for the period 1990-2020, for both high- and low-income countries. Estimates for installed power capacity and for nuclear power capacity were developed from them. These estimates are shown in Table I. World power capacity will increase from about 3,000 GWe in 1990 to 5,200 GWe in 2020. In this period, low-income countries will experience an increase of their power capacity by a factor of 3.3 -from about 650 to 2,100 GWe, and high-income countries by a factor of 1.3 from about 2,300 GWe to 3,100 GWe. The share of world power capacity among low- and high-income countries will change: In 1990, low-income countries held 20% of all installed power capacity; by 2020, their share will reach about 40%. Based on the fact that low-income countries will initially give precedence to less capitalintensive power projects, the distribution of nuclear installed capacity in low- and highincome countries will follow different patterns. Nuclear power in high-income countries will increase from about 300 to 450 GWe between 1990 and 2020 (dropping from 95% to 80% of world total nuclear installed capacity). For low-income countries, the corresponding values will increase from 22 to 120 GWe (rising from 5% to 20%). The increase of non-nuclear power capacity in low-income countries is going to be much higher. In the period 1990-2020, low-income countries will increase non-nuclear power installed capacity from about 630 to 1,980 GWe (about 3 times), and high-income countries, from 2,020 to only 2,660 GWe (1.3 times).

Investment Needs Estimate To illustrate the needs of capital involved in a power program of this nature, estimates were made based on thermal reactor nuclear power plant technology with a unit size equal to 1,000 MWe [3]. According to current experience, unit costs of nuclear power plants were taken between 1,500 and 2,500 US$/KW. These values include direct costs, interest during construction, decommissioning and first core loading. The amortization period was assumed to be 30 years and the annual discount rate, 5%. For other than nuclear power plants, the range of unit costs was assumed to be between 600 and 1,600 US$/KW, including direct costs, interest during construction and anti-air pollution devices. Fuel for these plants was considered to be coal and natural gas. The same amortization period and annual discount rates as with NPPs were assumed. Total cumulative investments for the installation, up to the year 2020, of the foreseen power capacity (nuclear and non-nuclear) are US$3,800 x 109 at the upper ranges of unit costs, and US$1,600 x 109 at the lower ranges (Figure 1). The ranges of investments for nuclear power plants that low- and high-income countries should make to satisfy their demand of electric power in the 1990-2020 period (Figure 2), are US$370-625 x 109. For non-nuclear power plants, the range of investments will lie between US$1,230 and 3,200 x 109. New Capital Needs The investments shown above do not necessarily represent new capital resources. In fact, amortization amounts, collected each year from the sale of electricity, may be used to finance new plants. In order to have an estimate of new capital required for implementing the power programs as mentioned above, amortization amounts were discounted each year from the total investment foreseen for that year. The result represents what is being called "new capital needs". Total new capital needs for the installation of the foreseen power capacity (nuclear and nonnuclear) up to 2020 will be much lower, of the order of US$940 and 2,200 x 109 (Figure 3). For the construction of NPPs, low-income countries will require, as new capital investment, US$100 to 170 x 109, and high-income countries will require US$150-250 x 109. For the construction of non-nuclear power plants, the range of new capital needs will be US$5001,300 x 109 in low-income countries, and US$200-500 x 109 in high-income countries (Figure 4). Taxation Of Gas Emissions An international protocol to limit the emission of CO2 and other greenhouse gases was established in December 1997 in Kyoto. The U.S., the European Union and Japan committed themselves to reduce emissions from 1990 levels by 7%, 8% and 6% respectively within 15 years. In 1990, CO2 emission was around 22 billion tons worldwide. The U.S., the rest of the OECD countries, and the low-income countries contributed almost equally 1/3 of this total. By 2025, a reduction of 5% of the 1990 amount -some 1 billion tons/yr- is expected to be achieved, and by 2050, the reduction should reach 10% of the 1990 annual emissions. Social pressure may accelerate the process to tax worldwide the emission of combustion gases (CO2, SO2, NOX, and other). Countries would receive emission quotas that, if

exceeded, should lead to a surtax on these countries. Unless emission rights are exchanged with other countries, the cost for producing excess fossil fuel power could become uneconomical [4]. Governments of low-income countries will face difficult times if they have to compete for money with high-income countries to implement low investment power plants and if, at the same time, they are induced to avoid installing such plants by selling their greenhouse gas emission quotas to high-income countries. Actions The energy supply problem in low-income countries should be of concern to everybody because of the political and social instabilities that might result from the failure to satisfy their populations' expectations for improving their quality of life. This is a new situation due to communications reaching the most remote regions of the world in real time. Initially, with few exceptions, low-income countries will adjust themselves to the use of non capital-intensive power plants until around the year 2030. After that, they will have to rely more and more heavily on nuclear power. High-income countries, on the other hand, may need to give great emphasis to nuclear power starting in the period 2015-2020, or if it proves economically feasible, to other renewable energy projects. Notwithstanding these high power requirements, the substantial expansion of energy demand up to 2050 does not seem to create disproportionate financial burdens when compared to current levels of expenditure in the world in other areas of activity. For instance, the present-worth value of global annual investments for power supply lie in the range of US$31.72-70.54 x 109, whereas world military expenditures amounted in 1993 to US$890 x 109, and world expenditures with education reached in 1994 a value of approximately US$1,200 x 109. There is an ethical problem that high-income countries will have to face in the near future related to conflicting interests with low-income countries for the installation of fossil fueled power plants. Low-income countries will need to construct some 5000 GWe, vs. some 450 GWe in high-income countries, of conventional energy plants in the next 50 years. Restraint among high-income countries with respect to fossil fuel use for power generation in favor of low-income countries will be a step forward towards easing potential tensions in low-income countries. In fact, this goal will be economically and socially beneficial to all parties because it will keep a peaceful framework around the world. This is a moral issue to be faced by highincome countries. International agreements to limit conventional thermal plants by highincome countries may be required in the near future. TECHNOLOGY TRANSFER Technology Transfer Process Technology transfer is a well established process involving the transfer of knowledge, knowhow and skills, and often hardware, through licensing and partnership agreements. This process enables a recipient company/country to design and build a facility without going through the stages of invention, conceptual design, research, development, and the design, building and testing of a prototype. The cost of technology transfer to the recipient country will depend upon the ability of the country to efficiently and effectively absorb and safely utilize the technology. This ability will depend upon the educated and trained manpower

available, and therefore on the educational system and the industrial tradition of the recipient country [5]. Technology is transferred through individuals. It is not enough to transfer instructions, procedures, technical specifications, software, computer programs, drawings, technical reports, or other types of documents. Technology has to be practiced by those who are to use it. Technology Transfer Conditions A successful technology transfer program depends on the existence of several prerequisites [6]:

timely availability of qualified local personnel involved in the process; full interest in the process by both the transferring and the receiving organizations; development of local industry to the quality standards required by the technology under transfer; access to facilities and documentation existing in the transferor's country; on-the-job training of recipient manpower under those who possess the know-how; technical assistance by those having the know-how for long periods in the recipient country; continuous professional practice by those using the technology in order to avoid losing the know-how.

Manpower Requirements An estimate was made of the annual increase of manpower for the installation of NPPs over the next 50 years. This estimate does not include manpower needs for associated fuel cycle facilities [3]. Manpower needs for the construction of a 1000 MWe single-unit NPP were used. These needs cover all required stages of a nuclear power project, from pre-project activities to full operation, including project management and engineering, procurement of equipment and materials, quality assurance and control, manufacturing of equipment and components, plant construction and commissioning, licensing and regulation, and plant operation and maintenance. The study estimates refer to professionals and technicians requiring specific knowledge and preparation to work in the nuclear area, including in the technicians category skilled workers specially trained for nuclear projects. Craftsmen were not included because they do not require special training to perform their duties in a nuclear project. They represent a workforce which will exist whether the project is nuclear or not. Considering the forecasts made for nuclear installed capacity, it is possible to determine annual increments of specialized manpower that will be required. By 2025, global manpower demand will peak at about 240,000 people/yr -90,000 professionals and 150,000 technicians. In high-income countries, a maximum demand of 190,000 people/yr will be attained around the year 2020 (60,000 professionals, 130,000 technicians) whereas, in low-income countries, the maximum will appear in 2030, reaching values of about 30,000 professionals/yr and 40,000 technicians/yr.

High-income countries have already all required manpower infrastructure dealing with nuclear projects, mainly in the regulatory, licensing and quality assurance fields. They have a long tradition for preparing large numbers of specialized nuclear manpower. Thus, there seems to be no foreseeable difficulty for these countries to satisfy their manpower requirements when necessary. For low-income countries, special care might be needed because in currently non-nuclear power countries, regulatory, licensing and quality assurance teams should be created locally, as responsibility for this type of activities cannot be delegated to foreign people. Also, care should be given to setting up education programs in nuclear science, technology, and engineering to develop local competence of local manpower in advanced technologies related to nuclear power. For those countries without industrial tradition in these areas, it will be necessary to introduce modern quality assurance and control programs for an infrastructure that would give the industry the required support for nuclear technology transfer. Actions It is important to promote the setting up of local structures for dealing with regulatory, safety, and quality assurance and control issues for the success of nuclear technology transfer. Special consideration should be given to the support of educational systems related to nuclear engineering and technology. These actions could be performed through both international or bilateral assistance. International assistance would make use of technical assistance programs that exist in nuclear, education and industrial development agencies of an international or regional nature, like IAEA, UNESCO, the World Bank, UNIDO, Euratom, etc. Bilateral technology transfer agreements between the technology possessor's country and the receptor's is a scheme that has proven to be extremely efficient and their implementation should be encouraged. Cooperation agreements among universities and educational institutions on both sides of the process will be needed to create the qualified local manpower for absorption of the transferred technology. REFERENCES [1] WORLD ENERGY COUNCIL (WEC). Energy for tomorrow's world. St. Martin's Press, New York, NY, USA (1993). [2] INTERNATIONAL NUCLEAR SOCIETIES COUNCIL (INSC). A vision for the second fifty years of nuclear energy: Vision and strategies. American Nuclear Society, La Grange Park, Ill, USA (1996). [3] J. SPITALNIK. Financial requirements and manpower needs for the next fifty years of nuclear power. Journal of Nuclear Science and Technology, Vol.34, No. 2, pp.222-225, Feb. 1997, Tokyo, Japan (1997).

[4] JOHN PALMISANO. How can the lessons learned from joint implementation help construct an international carbon offset regime. Journal WEC, Dec. 1996. London, U.K. (1996). [5] J. SPITALNIK, K.J. DURRANDS. Importance of Technician Training to Efficient and Effective Technology Transfer. Proc. ICONTT III, Madrid, Spain (1985). [6] C. SYLLUS, W. LEPECKI. The Genesis of the Brazilian Program of Nuclear Power Plants. Proc. CGEN VI, Rio de Janeiro, Brazil (1996) TABLE I - Estimates of near-term evolution of primary energy demand and total power and nuclear power installed capacity YEAR 1990 2000 2010 2020

PRIMARY ENERGY DEMAND Gtoe Low Income Countries 0.60 4.20 High Income Countries 2.00 6.80 World 5.30 6.91 6.50 7.20

2.60 11.00 12.21 13.70 TOTAL POWER GWe

Low Income Countries 656

967

1426 2103

High Income Countries 2315 2555 2819 3111 World 2971 3522 4245 5214 NUCLEAR POWER GWe Low Income Countries 22 High Income Countries 299 World 321 35 330 365 65 355 420 120 450 570

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