When nuclear plants reach the end of their useful operation the process can be very lengthy and public due to many factors such as costs, public safety concerns, environmental implications and management expertise and effectiveness.
In the European Union alone, the European Commission estimates that approximately one third of the 145 power reactors currently operating in the EU will need to be shut down by 2025. According to the World Nuclear Association, the U.S. currently operates 100 commercial nuclear power plants, accounting for more than 30 percent of worldwide nuclear generation of electricity. Most were built in the 1970s and are scheduled for decommissioning in next three decades.
While there are all sorts of regulatory hurdles that a utility must surmount, ultimately decommissioning a nuclear plant is a project, and like any project, to be successful it must be prudently managed. As many nuclear power plants worldwide begin to reach the decommissioning stage, and as new plants are built, there are very fundamental considerations that will contribute to a successful decommissioning project. It all starts with the company developing a strategic plan in the early stages of a project; not when the plant is nearing its decommissioning phase.
This strategic plan should include:
- Performing significant due diligence to determine the path that best leverages its and the public’s needs.
- Employing management tools in the decommissioning process with the same rigor and project management techniques that have streamlined other large capital projects in the energy sector.
- Due the length of decommissioning projects and the strong likelihood their stewardship will pass to future generations, utilities need to establish control framework based on best practices in the industry so that these future hand-offs are seamless in nature.
- Because of the cost, length and need for transparency utilities would benefit from independent oversight of the decommissioning process.
More than at any prior time, the nuclear industry needs to succeed in gaining the public’s trust – that applies equally to maintaining, building or decommissioning its assets in safe and predictable manner.
Major Planning Elements to Successful Decommissioning Projects:
- Develop preliminary strategic plan and Post-Shutdown Decommissioning Activities Report (PSDAR)
- Investigate the adequacy of the Regulatory Trust Fund
- Implement and adjust the plan
Preliminary Strategic Plan
The first, and most important step, is for the company to develop a preliminary strategic plan that will evolve into the PSDAR. While all plants will eventually be decommissioned, and must complete the decommissioning stage within 60 years of the plant ceasing operations, there are a number of paths decommissioning can take. The strategic plan should consider program and communications planning along with comprehensive due diligence – this will go a long way to mitigate cost overruns, calm political and public safety concerns and help ensure that proper controls are in place prior to decommissioning. In addition, lining up a team of experienced managers and advisors must not be an afterthought. Risk identification and mitigation activities should always be part of the strategic plan.
As part of its planning, utilities must submit a PSDAR to the Nuclear Regulatory Commission (NRC) before or within two years following cessation of operations. Once accepted, the PSDAR becomes the utility’s “game plan” for decommissioning the site.
The PSDAR must include:
- A description and schedule for the planned decommissioning activities;
- An estimate of the expected costs; and
- A discussion that provides the means for concluding that the environmental impacts associated with the decommissioning activities will be bounded by appropriately issued environmental impact statements (EISs).
The PSDAR also acts as a reporting regime for senior management and external stakeholders and ensures compliance and reporting in accordance with guidelines and standards promulgated by the NRC and Code of Federal Regulations (CFR). It helps to develop documentation of cost estimates, schedules and tracking mechanisms including tracking human factors. Because of its importance, utilities could greatly benefit from vetting of the PSDAR by an independent set of eyes.
Regulatory Trust Fund
Every nuclear power plant in the United States is required, by the Nuclear Regulatory Commission, to set aside sufficient funds to decommission the plant when it reaches the end of its useful life. It is funded by money collected from electricity consumers as part of their electric bill and deposited in a trust fund.
Nuclear decommissioning trust funds are not the property of the electric utility. They are outside the electric utility’s control. With some notable exceptions, utilities commonly put off the decommissioning of nuclear sites as long as possible on the presumption that the trust funds will continue to grow. However, many of these assumptions should be challenged in light of current and projected economic climate and the industry’s history of cost overruns on major projects.
So it becomes imperative to review the fund in great detail. This includes looking at past cost estimates, earnings and return on the fund compared with historic projections. As well as reviewing and assessing all potential decision drivers –safe enclosure (SAFESTOR), immediate dismantling (DECON) – land reuse, length of decommissioning activities, etc.
Preliminary cost estimates can then be developed for the various project stages, and fund economics can be compared with the estimated costs of the viable options. Utilities will need to “live with” its cost estimates for, in some cases, decades, so there is a significant need to document how these estimates were derived and provide forward-looking reasonable projections for how the money will be used.
Lastly, companies need to identify and mitigate barriers to “success”. Success is defined as a safe, cost effective decommissioning process that is accepted and embraced by politicians and the public, and results in, at minimum, no negative reputational impact, and at best, an enhanced public and investor view of the organization and the industry at-large. Developing a communications plan and suite of performance metrics for public consumption can help ally public fears and opposition.
Plan Implementation
Considering the history of large nuclear project cost overruns and schedule delays, planning by project management and subject matter experts is absolutely essential. Mere extension of routine capital project management will not work. All decommissioning projects should follow best practices for large capital projects, which begins with a solid understanding of industry operational experience and lessons learned. As several plants over the past few decades have completed decommissioning; serving as good lessons learned sources for extracting best practices. The nuclear industry in the U.S. is committed to sharing its lessons from decommissioning, thus there is a wealth of information to mine in this regard. These projects would also benefit from lessons drawn from other large capital utility projects.
Once into the execution phase, decommissioning projects should be managed just as other projects in the nuclear industry. Robust planning that details current condition assessment and considers safety and stakeholder issues will greatly reduce many issues and barriers that could arise along the way. Successful implementation means that schedules are vetted with owners and other stakeholders and cost estimates are based on maturity of the plant. To keep the plan on track and allow for nimbleness, as needed, strong vendor and human resources management is imperative as well as constant documentation and reporting.
With supply and financial pressures on many of the U.S. nuclear plants and life extension not a given, utilities need to explore whether the current assumptions regarding the decommissioning of their assets still ring true. Public and politically scrutiny will continue to tighten, and companies’ stewardship of these assets will be under a microscope. Moreover, if there is a hope for U.S. nuclear renaissance, the industry must acquit itself well in the decommissioning of the older plants. To best accomplish these goals, utilities must employ proper due diligence, strategic planning, communications, controls and oversight of decommissioning projects.
