Nuclear Renaissance and the Global Supply Chain


Avoiding pitfalls, realizing benefits.

Avoiding pitfalls, realizing benefits.

Fortnightly Magazine - December 2010

Increasing demand for clean, affordable, base load electricity, combined with rising public support for nuclear generation, presents utilities with the opportunity to build new nuclear plants for the first time in more than three decades. But unlike the birth of the nuclear generation industry, domestic suppliers of many critical nuclear plant components and skilled workers are scarce. And with some internationally sourced component delivery times increasing, the situation is getting worse. Subsequently, the risk of nuclear generation construction project delays will persist and might increase unless participating company supply chains can effectively reach across international borders.

Power generators seeking to build new nuclear generation face a protracted construction timeline and an estimated $10 to $18 billion 1,2,3 up-front capital investment, making the economic attractiveness of nuclear generation largely dependent on the plant’s construction timeframe and capital financing structure. Therefore, factors slowing new nuclear plant construction significantly impact the overall financial viability of the project and demand preemptive executive action to prevent occurrence.

Long lead times associated with many major nuclear plant components necessitate procurement well in advance of the plant’s licensing; the high-volume, global sourcing challenge might not be immediately evident to utility supply chain organizations. Until now, a deep understanding of global markets hasn’t been essential for most utilities. Subsequently, supply chain methods and experiences center on conducting business at the national or regional level. Successful utilities will minimize schedule delay risks, manage project costs, and realize the often significant supply chain benefits associated with large capital projects (see Figure 1) .4,5


Supply Chain Challenges

Utilities seeking to construct new nuclear generation face a significantly different marketplace than existed during the initial build within the United States. No longer are component and personnel resources domestically available in large quantities. Today, barriers to collaboration with global suppliers on the engineering of major nuclear plant replacement components have been observed to hinder procurement of these parts. Given the much larger procurement need associated with construction of a new nuclear plant, utilities pursuing these projects will face a far more complex supply chain management challenge that will likely include:

• Global Sourcing : Utilities seeking to build nuclear plants will encounter few domestic nuclear component suppliers, requiring the supply chain to source components from international vendors (see Figure 2) .6,7

• Sufficient Codes and Standards : Differences between the product codes and production standards issued by the NRC and international agencies necessitates additional time spent to ensure appropriate standards are available 8 and to certify internationally sourced components. For example, in its inspection procedures, the NRC references a number of standards that vendors and applicants frequently don’t reference in their designs and license applications.