Is there a market for
nuclear power pumps in North America? Too
often the answer to this question is a confusing welter of charts, statistics,
and qualifying statements. They take three months to prepare and even longer
for the board to understand them. Moreover, the conclusions are often
conflicting, designed to safeguard the analyst’s reputation and prove he was
right, whatever the outcome. So let’s take a look at this in simple terms and
try to reach a common-sense conclusion.
The past decade
Ten years ago North
American had an aging base of power plants, both fossil and nuclear. The
electrical transmission equipment was dated and inadequate to meet the changing
demographics in the region. Power generation capacity margins were falling and
yet power demand was growing. Renewable energy sources, such as wind, solar and
hydro, could not make up the difference, even for peak time demand in the
summer and winter.
Cheap available natural
gas was abundant then and less polluting than coal or oil. So, inevitably, new
power plants and technologies came into vogue to address the dilemma. As a
result, combined cycle and cogeneration, natural-gas-driven power plants began
to emerge. Moreover, the political atmosphere was supportive. Laws were enacted
for the entrepreneur to enter the market. He was freely encouraged to own and
operate a peaking power plant to supply electricity to the grid, or steam to
local industry, or both.
Naturally, pump equipment
manufacturers geared up accordingly and a boom ensued during the middle 1990s.
Who needed controversial nuclear power then was gas was the answer? No-one.
The market crash
So what happened when an
uncontrolled boom took off? Predictably, uncontrolled consolidation took off
too. Dominant independents emerged in the power supply industry, controlling
both generation and transmission. Greed and manipulation found its way into
business practice and spiraled out of control. Then, all of a sudden, the
newspapers were full of stories about California
experiencing blackouts and a shocked public asked the question: why?
Too late in the day,
investigators started probing for reasons. In the end, it was clear that an
endless chain of electricity brokers, bankers, accountants, energy companies
and others had all played a part in the deception. The biggest tragedy was the
collapse of Enron and its impact on thousands of employees, customers and
investors.
As a result, the North
American public lost faith in the power-generation industry as prosecutors and
politicians sought out the wrongdoers. The industry pulled back and projects
were canceled or delayed. Pump manufacturers faced empty order books.
Who needed controversial
nuclear power then, when the power industry was in shambles? No-one.
Infrastructure breaks down
Yet, the increase in power
demand was not delayed. The need for more environmentally friendly, safe and
inexpensive power became even greater. Surely, the pump industry could expect
their share of that increase in demand sooner rather than later?
But no, the power industry
infrastructure in North America continued to
break down. Existing generating plants continued to age and pollute the
atmosphere with greenhouse gases. Canada
was as much the recipient of this as the United States. It became
increasingly concerned and signed the Kyoto Accord. Electricity capacity
margins continued to fall in various regions. Yet still the continent’s power
industry sat on the sidelines, waiting to see what the politicians would do
next. Banks were reluctant to fund new projects and only companies with their
own capital could forge ahead with new generation [technology].
Obviously, it was only a
matter of time before a massive blackout occurred – and occurred it did, in
August 2003. Inadequate transmission safeguards and equipment reliability
resulted in a US/Canadian grid collapse during a high demand period.
At last this caused the
politicians to wake up and demand immediate answers. An independent
investigation ensued, followed closely by a climb in natural gas prices, slowly
at first. Reports of diminishing reserves were announced – this was not a spike
– yet oil and gas prices began rising too.
So, what was the root
cause? The problem was proclaimed to be rising world demand, allied with a
dependency on foreign oil. This inevitably struck at the domestic gas pump and
the public was not happy at all.
Who needed controversial
nuclear power now? A few people began to ask: “Isn’t this an overlooked
alternative?”
Tidal change
This was when changes
occurred at the US White House: the conservative Bush administration came to
the helm and energy policy moved to the forefront of attention. But still
decisive action was held off until the second-term outcome was known.
That is when
environmentalists joined the campaign. Support for nuclear power gained favor.
“It is at least clean power, maybe even safe.”
Meantime, the
profitability of running a natural gas power plant became disconcerting. Fuel
expense accounted for 80% of the operating cost. Yet, clean coal was getting
expensive to but and transport, while the cost of emission scrubbers for older
plants was too high to retrofit. Canada’s
government in Ontario
even set a timetable to shut down all coal-fired plants.
Clearly, the situation was
getting worse, not better. There seemed to be no end in sight for the upward
trend in natural gas and oil prices. So, knowledgeable voices began to talk
about a hydrogen economy. “It could be the next-generation fuel for
automobiles and other uses, and it can be produced without hydrocarbons via
nuclear reactor systems.”
Elsewhere, the US
Department of Energy (DOE) and the Nuclear Regulatory Commission anticipated
government action by speeding the site process and design approval for new
reactor builds. This was rewarded when the conservatives won a second term in
the White House. The energy bill was passed and signed into law with funding
provisions for new nuclear power plants in the USA. Canada
also saw the need for new nuclear power in Ontario and a decision on new plants is
expected soon. New technology from Atomic Energy of Canada Ltd (AECL) will be
ready for the next opportunity there.
So who needs nuclear
energy now? Almost everyone. The pump industry can plan with optimism.
Nuclear industry status
In reality, the nuclear
power industry has a critical need for new professionals and suppliers of
qualified equipment, such as pumps. There have been no new builds in the USA since the
middle 1970s, even though 20% of electricity comes from nuclear plants and
there are 102 operating reactors. Similarly, there have been no new builds in Canada since the early 1990s, although 80% of Ontario’s power comes
from nuclear with just 14 operating reactors.
These plants have an
expected design life of 30 days, so most of the US fleet is approaching
termination. Facilities have to apply for 20-year life extensions or lose their
operating licenses. These projects involve up-rates, restarts, upgrades,
replacements, parts, repairs and related services.
Yet many of their original
equipment manufacturers (OEMs) are no longer in business or no longer maintain nuclear
certification to supply equipment or service to the industry. Many
Architectural & Engineering Services (A&E) firms have downsized or
eliminated nuclear services work capabilities altogether. Operating personnel
and industry professionals are aging, have left or are retiring from the
industry. Colleges have not replaced these specialists and engineers fast
enough to keep pace. The supply industry has consolidated into a few
owner-operators and these include offshore interests.
At the same time, new
safer and more economical reactor designs are undergoing evaluation and
approval studies for the next generation builds in North
America. These include Westinghouse, GE, AECL and Framatone designs. So, additional
competent and qualified equipment suppliers are also desperately needed for the
next generation of nuclear power plants.
For the immediate future,
focus is on restarts and life extension of the aging plants. Qualified
equipment and foundry suppliers strain to keep up with project demands.
Industry expectation of pump equipment suppliers
At the heart of the
process in nuclear power generation is rotating equipment to move liquids for
safety applications and steam and condensate cycles.
Existing plants all have
equipment worn out over years of service. Issues arising from thermal cycling,
corrosion, stress corrosion, erosion and design standard changes have resulted
in the need for pump repairs, upgrades an replacements in plant systems.
Today, revamped, upgraded or reverse-engineered pumping equipment used in nuclear power generation must be:
- suitable for the application;
- proven design-certified to appropriate nuclear standards;
- reliabl, available and dependable.
In addition, the pump equipment manufacturer is expected to be:
- experienced in nuclear applications and processes;
- capable of providing rootcause analysis and related services for problem
identification and solution; - technically adept to design and build reliable equipment for the application;
- accredited with appropriate quality programs and certification to control
manufacturing proc-esses and technical design; - responsive to meet schedules around customer outages;
- with depth of product for both nuclear and commercial grade applications;
- capable of providing reverse-engineering capability and experience to replicate equipment no longer available from OEMs;
- equipped with testing capability to measure performance and reliability of the equipment;
- with service capability, including ability to work on contaminated equipment;
- staffed with dedicated personnel and with manufacturing facilities to meet industry needs;
- experienced in participating in alliances and partnerships to minimize equipment costs and manage life-cycle expenses;
- able to grow and meet the demands of new builds in the future.
Nuclear power is re-emerging with vigor. Now is the time for pumping equipment suppliers to prepare for the challenge.
Who can meet the challenge?
Despite all this, some pump companies are already prepared and ready for the upcoming opportunities, even though it is a very expensive business to enter into and maintain capability. They have to provide quality programmes, personnel and infrastructure to meet industry standards and inspection criteria, which are heavy expenses to manage.
However, one of the companies that has stayed the course and has been a founding supplier to the industry since its beginnings is Sulzer Pumps. In Canada and the USA, Sulzer has pumping equipment installed in nearly every nuclear plant. It has products for all reactor technologies and most applications. Pump equipment repairs, upgrades and replacements are ongoing business at these installations for the main reactor pumps, seals, safety related pumps, auxiliary pumps, BOP (balance of plant) pumps and other OEM pumps.
Sulzer Pumps has nuclear manufacturing and test facilities with reverse-engineering capability and decades of experience in both Canada and the USA. It has accreditation and quality programmes in place for the design and manufacture of pumps to Canadian and US nuclear standards. The company’s market focus is on the nuclear industry, anticipating future growth and having customer alliances/partnerships and other service provider agreements.
For example, the company is already building a new service centre in Chattanooga, TN, dedicated to safety-related, nuclear power business. The opening will be early in 2006. Engineering and product depth with global research capability, meeting the demands of new technology, is a Sulzer strength. The company is in the nuclear business for the long term and believes other pump companies might benefit from following its example.
The future
Going forward, nuclear owners and operators will seek out and align themselves with long-term quality, reliable, capable, service oriented equipment manufacturers for their pump equipment needs.
All indications point to the conclusion that nuclear power is coming back. Equipment suppliers must get ready now if they want to be part of the renaissance.
Author:
Doug Filker
General Manager, Nuclear Sales &
Marketing North America,
Sulzer Pumps (US) Inc
2800 NW Front Ave
Portland, OR 97210, USA.
Tel: 503.205.3640
E-mail: Doug.filker@sulzer.com
www.sulzerpumps.com