Why Do Companies Join Multiple Nuclear Consortia?

[jhe1984]

I've got a question on these large consortiums (of US and some French firms) that have been formed to work on nuclear constructions in the US. I wasn't sure where exactly to post, so please feel free to move.

NuStart is an example of the type of consortium I'm wondering about. It appears to be made up of a lot of different companies - Constellation, GE, Entergy - which makes sense in itself for funding reasons. It has I think several new reactor construction propositions in the making for US.

But then you've got other consortiums (I can't recall their names) also working on US nuclear power plant proposals, and several of their members are also in the NuStart consortium.

I can understand why a consortium would be needed in the first place for funding, but why are companies part of two or more consortiums building the same things at different locations? Is there a change that one group will make more money than another? Does one company in a particular consortium tend to make more money than the rest? If the companies are all working together to an extent, why not just form one big consortium working on plenty of projects?

Thanks.

Oh, also I realize that different consortiums have both selected the GE simplified boiling water reactor (I might've murdered that one), but that's not my question.

 

[Morbius]

jhe1984],

Probably risk-sharing.

The energy companies are just like insurance companies; they engage in risk-sharing.

If Llloyd's of London underwrites the insurance for some big project - they will also sell
shares of that risk to other companies.

It's kind of like why you buy shares in a mutual fund instead of individual stocks.

There's more diversity. If you bought a single stock - and it went bad; then you could
lose everything you invested. If you are invested in a mutual fund, there's very little
chance that ALL the companies in the fund are going to go under.

Insurance companies do the same. They share risk for a many projects. That way,
if one big project has a very big insurance claim - then you don't want to have just
one insurance company on the hook - it could bankrupt a single company.

Likewise here. If a company invested in just one project, and funded the whole
cost of that project; and for some reason the project went under - the reactor couldn't
get the permits because an anti-nuclear Governor gets elected... whatever - then
the single company is left holding the bag for all the cost.

This way the companies share the risks. It's just due to the uncertaintly in the field.

Now years ago - back when all the protestors were protesting Vietnam and not
nuclear power - and there wasn't a big anti-nuclear movement; then single companies
could build their own plants. It was just like building any other big power plant.

If the company filed all the proper reports - they were pretty much assured that they
could build and operate the plant without unnecessary interference. Now - if a power
company seeks to build a nuclear power plant - who knows what will happen.

Dr. Gregory Greenman
Physicist

 

[jhe1984]

But would not this lead to situations where one company with a minority interest in one consortium and a majority in another ultimately attempt to sabotage negotiations in the minority one, everything else being equal?

It seems to me to be a lot like lions, who all hunt together and work together until they make the kill, upon which they literally fight each other to get the largest share. A correct metaphor? And if so, wouldn't this back and forth dampen the USG's resolve to proceed with any nuclear energy construction at all?

Thanks.

 

[Astronuc]

But would not this lead to situations where one company with a minority interest in one consortium and a majority in another ultimately attempt to sabotage negotiations in the minority one, everything else being equal?

It seems to me to be a lot like lions, who all hunt together and work together until they make the kill, upon which they literally fight each other to get the largest share. A correct metaphor? And if so, wouldn't this back and forth dampen the USG's resolve to proceed with any nuclear energy construction at all?

No not necessarily, although each indiviual utility will likely jockey for maximum benefit.

The consortia are aimed at getting new plants and sites approved under the new approach of Construction and Operating License (COL) applications, as opposed to the old two step process, which allowed for outsiders or intervenors to challenge the process.

See - USDOE - Office of Nuclear Energy, Science and Technology - http://np2010.ne.doe.gov/NP2010CurProjects.asp

In November 2003, the Department issued a solicitation inviting proposals from teams led by power generation companies to initiate New Nuclear Plant Licensing Demonstration Projects to demonstrate the COL process. As a result of the proposals received, the Department initiated the following three projects with the Tennessee Valley Authority (TVA), Dominion Energy and NuStart Energy Development, LLC. These new nuclear plant licensing demonstration projects or Construction and Operating License (COL) projects vary in scope and are being conducted on a cost-shared basis with industry providing a minimum of 50% of the total cost of their respective projects.

Nustart's website - http://www.nustartenergy.com/
Entergy Nuclear's website related to http://www.entergy-nuclear.com/new_nuclear/nustart.aspx.

http://pepei.pennnet.com/Articles/Article_Display.cfm?ARTICLE_ID=248614&p=6

DOE announced recently some additional limits on subsequent COL's, but I will have to dig around for that announcement.