Due Diligence Framework for Nuclear Industry Companies

A proposed due diligence framework for assessing companies in the nuclear industry emphasizes four critical areas. This framework is designed for stakeholders evaluating potential partners, suppliers, customers, investors, or employers within the sector. The author of the framework will present it at the ANS Winter Conference in Phoenix, AZ, on Wednesday, November 18th, during the Nuclear Energy Markets, Financing, and Economics ~ Session II.

The framework suggests that while the physics of a reactor determines its feasibility, its licensability depends on governance, and its deployability relies on institutional discipline. It argues that resources directed towards programs prioritizing narrative over actual power generation divert from teams capable of constructing reactors.

Key Due Diligence Areas

  • Regulatory credibility: This assesses whether the safety case for a project is developed by the technical organization or primarily by licensing departments.
  • Capital and supply chain: This evaluates the likelihood of a constructor bidding on a project, indicating the project's financial and logistical viability.
  • Organizational maturity: This examines whether leadership effectively manages financial resources and employee time, beyond just technical charisma.
  • Operations and maintenance: This scrutinizes the seriousness and robustness of the plan for long-term reactor operation, comparing it to the construction plan.

Capital and Supply Chain Constraints Impact Nuclear Reactor Builds

The financial and industrial readiness for nuclear reactor construction are closely linked, particularly following the experiences with Vogtle 3 and 4. These projects highlighted the significant risks involved in large-scale nuclear builds.

On March 29, 2017, Westinghouse filed for Chapter 11 bankruptcy due to extensive schedule delays and cost overruns associated with its AP1000 reactor projects at Vogtle and V.C. Summer. This event demonstrated the potential for such projects to lead to the collapse of the companies involved in their construction.

The bankruptcy of Westinghouse served as a critical lesson for firms globally that are involved in building reactors. The market absorbed this event as a consequence of underpriced risk in project planning and execution. This has subsequently influenced how engineering, procurement, and construction (EPC) firms approach new nuclear projects.

Currently, requests for proposals (RFPs) submitted to EPCs for new reactor developments are frequently met with no-bids, rather than shared-risk term sheets. This trend indicates a heightened level of caution among these firms. Companies that witnessed a competitor's bankruptcy on a first-of-a-kind nuclear build are now more selective, prioritizing projects that appear more feasible and less risky.

India's Renewable Energy Capacity Targets 800 GW by 2035-36

India's data center capacity is projected to increase significantly, from less than 2 GW to between 24 GW and 26 GW. However, the Central Electricity Authority (CEA) Chairperson Ghanshyam Prasad stated that this growth is not expected to substantially impact the overall electricity demand. Future power demand projections already account for this expansion, with generation capacity being adjusted accordingly.

Prasad emphasized the importance of maintaining sufficient power generation capacity to meet consumer demands. He also noted the progress in renewable energy expansion, with the country's installed capacity reaching 308 GW. The target for renewable energy capacity is approximately 500 GW by 2030, with a further goal of around 800 GW by 2035-36.

The development of energy storage infrastructure is gaining momentum, and smart meter adoption is being accelerated to enhance visibility of electricity consumption and generation across the power network.