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MZConsulting New Year’s Message 2017

By Milt Caplan
President
MZConsulting Inc.

Originally posted at http://mzconsultinginc.com/.

2016 was another tumultuous year for nuclear power. Decisions to close units in the USA early due to economic pressures in deregulated markets and the slow pace of restarting nuclear units in Japan continue to negatively impact the uranium market. However, the tide has now turned as the benefits to the environment and system reliability are being more broadly accepted with both New York and Illinois having taken decisions to keep marginal plants running.

Uranium producers continue to struggle due to low prices

The stock prices of Cameco in Canada, Energy Fuels and Ur-Energy in the US and Paladin in Namibia, along with uranium holder Uranium Participation are once again in negative territory in 2016. That is symptomatic of a current supply-anddemand imbalance. However, some Juniors such as Forsys, Mega and UEX, with highly prospective properties not in production, have done better in 2016. This is perhaps indicative that, while the immediate problem is falling uranium prices, the market recognized that new supply will be required in the longer term.

The spot price of uranium continued to fall throughout 2016 going as low as $18/lb in November before ending the year at $20.25/lb. Has the price finally hit bottom? Probably yes. The long-term price, only at around $30/lb, is finally in a place where even the low-cost producers are slowing production as they focus on cost cutting to remain viable. While more positive trends for the longer term continue, prices are likely to stay soft in the short to medium term until demand recovers.

Production in 2015 shows that of 19 producing countries, Kazakhstan (39%) is by far the largest uranium producer followed by Canada (22%) and Australia (9%). These three countries produce over two-thirds of the world’s uranium. Cameco’s McArthur River (12%) and Cigar Lake (7%) in Saskatchewan are the two largest uranium mines in the world, supplying some 19% of world production while eleven companies marketed 89% of the world’s uranium production with Cameco ranking second behind KazAtomProm.

Crisis creates clarity in the role of nuclear power

Economic pressures in dysfunctional US electricity markets as a result of very low gas prices and subsidized renewables, have put some 15 to 20 nuclear plants at risk of early closure. This has forced reluctant law makers to address the issue with many coming out in support of maintaining the nuclear fleet as an essential part of the mix based on nuclear’s low carbon footprint and its contribution to system reliability.

The result was an agreement in New York and in Illinois to keep struggling nuclear plants afloat. That being said, there is still more work to be done to solve the larger problem of markets that need reform. It was a pivotal year in the US, as the country’s first new nuclear plant in more than two decades, Watts Bar 2, came into service. Four more units are under construction, and NuScale has recently submitted the first application for design certification for an SMR. While support for nuclear is expected to continue, uncertainty remains as the new administration shows little interest in climate change and embraces fossil fuel development.

In Switzerland, the early closure for their nuclear plants was strongly rejected in a referendum while in Britain, there was a final commitment to the Hinkley Point C project with more new units to follow.

On the other hand, as another plant closed in Germany its carbon emissions continued to rise in 2016 as this plant was replaced with a combination of coal and gas. This was in spite of another 10% increase in new wind capacity and 2.5% of new solar capacity; and shows that trying to manage carbon while removing nuclear from the mix is extremely challenging.

Supply is finally responding to prices

One of the biggest issues facing the uranium market actually stems from the 2011 tsunami that resulted in the Fukushima reactor meltdown in Japan. That event caused Japan to shut all of its nuclear power plants and led Germany to accelerate its plan to shift away from the nuclear option. The swift shutdown of so many units pushed supply and demand way out of balance.

While it remains Japan’s intention to restart many of its shuttered nuclear facilities, progress continues to be very slow so that demand will be impacted for some time to come.

As a result, major producers like Cameco have been directing their efforts to cost-cutting and refocusing around its best mines. For example, the company reduced its capital spending projections for 2016 by around 10% and plans to cut operating costs further in 2017. Despite the downturn, it has continued to invest in its Cigar Lake mine because it’s relatively low cost to operate. The recent opening of that mine helped to cut Cameco’s cash costs of producing uranium by more than 20% through the first nine months of 2016.

Kazakhstan, the world’s largest producer, has been continuing to increase production year over year but now has announced it will cut production by 10% in 2017.

However, China will be entering the big leagues in uranium supply this year as the Husab mine in Namibia ramps up production. This elephant is expected to add about 15 million lbs to the market each year once it reaches full production. With mining costs above the current uranium prices and the world in oversupply, it will be interesting to see how China chooses to move forward.

Nuclear sector growth

In spite of all this apparent gloom and doom, the nuclear industry remains strong. 10 new units were completed in 2016, while three were closed. Of interest, only half of these completions were in China with the other half coming from Korea, India, Pakistan, Russia and the USA. With 60 reactors under construction world-wide; led by China, this is the largest nuclear new build construction in more than a quarter century. As China continues to meet their stated objective of 58GW by 2020, this period of weak uranium prices presents an opportunity to further build strong inventories for the future.

CNA2017

Op-Ed: Ontario’s Long-Term Energy Plan: Why Pickering Matters

Ontarians and their government are completing a review of the province’s Long-Term Energy Plan (LTEP) to guide energy decision-making over the next three years to 2019. As anticipated in the previous LTEP (2013-16), the government of Ontario announced in December 2015 plans for the refurbishment of 10 power reactors at the Darlington and Bruce Nuclear Generating… read more »

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NASA and Nuclear Power

marssoilviewNASA’s history with nuclear power dates all the way back to the early 1960s when the U.S. Navy launched a navigation satellite powered by nuclear energy.

Nuclear energy’s ability to withstand the most extreme conditions has made it an important part of space missions, including the Mars 2020 mission. The next journey to the Red Planet will focus on bringing back soil samples and exploring the atmosphere of Mars to determine its habitability for human life.

NASA recently highlighted the significance of nuclear energy stating, “Mars, Venus, Jupiter, Europa, Saturn, Titan, Uranus, Neptune, the moon, asteroids and comets.  A number of these missions could be enabled or significantly enhanced by the use of radioisotope power systems (RPS).”

A RPS works like this: Through the natural decaying process, isotopes produce a tremendous amount of heat. In the case of an RPS, as the isotope plutonium-238 decomposes the heat is converted into electricity which in turn is used to power travel through space. Plutonium-238 is an artificial element with a half-life of 88 years. The longevity of nuclear energy makes the RPS an ideal and reliable source of power generation even under the harshest of circumstances.

The challenging environment includes temperature extremes not known to earth. Take the moon for example. Temperatures on the surface of the moon can fluctuate between highs of 125 degrees Celsius and lows of -175 degrees. Another challenge with travelling to the outer reaches of the solar system, such as with the New Horizons missions, is being able to conduct research in the dark, requiring a power source that can still operate without the energy of the sun.

For the Mars missions, a big factor in power selection is dust. During its infamous dust storms, the red planet can kick up dust to last for weeks at a time, coating “continent-sized areas,” according to NASA.

Nuclear power has the added benefit of being compact.

“Solar would be too big and we’ve that learned dust in the Martian atmosphere accumulates on the solar cells, so unless you have wind storms to clear them off, you will kill the missions off by running down the batteries,” according to Dr. Ralph McNutt, principal investigator for the New Horizons Pluto Energetic Particle Spectrometer Science Investigation (PEPSSI), from the Johns Hopkins University Applied Physics Laboratory in Laurel, Maryland. “If you want to run rovers on Mars and do it accurately and if you want to go to the moon and really investigate in permanent shadows you need nuclear power.”

Compact size isn’t just beneficial, it’s required when working in outer space. Einstein’s theory of relativity (E=Mc2), essentially states that the further the distance you want to travel, the more speed is required, therefore the mass of the object travelling must decrease.

The Rover for Mars 2020 will be about the size of a car and will measure approximately 7 feet in height. The nuclear powered MARS 2020 mission will launch in the summer of 2020 and could provide new clues to past life on the not so distant planet.

CNA2017

CNA2017 Welcomes Laura Dawson as Keynote

CNA2017 is excited to welcome Laura Dawson to the stage as its lunch keynote speaker on Thursday, February 23.

Laura is the Director of the Canada Institute. Named one of Canada’s Top 100 foreign policy influencers by the Hill Times in 2014, Laura is a speaker, writer, and thought leader on Canada-U.S., NAFTA, TPP, and international trade issues. Previously, she served as the senior advisor on economic affairs at the United States Embassy in Ottawa and taught international trade and Canada-U.S. relations at the Norman Paterson School of International Affairs. Laura continues to serve as Emeritus Advisor at Dawson Strategic, which provides advice to business on cross-border trade, market access and regulatory issues. She is a Fellow at the Canadian Defence & Foreign Affairs Institute and serves on the board of the Council of the Great Lakes Region.

For more information about CNA2017 visit cna.ca/2017-conference.

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Setting the Record Straight on the Price of Electricity

By John Barrett
President and CEO
Canadian Nuclear Association

Environmental Defence has a new online campaign in which they are trying to pin the blame for Ontario’s electricity costs on nuclear, while at the same time ignoring nuclear’s role in helping Ontario’s landmark achievement of ending coal-fired electricity generation.

These alternative facts have been discredited by many, including the findings of Ontario’s Auditor General’s 2015 report on electric power system planning.

On electricity prices, the low cost of nuclear was recently highlighted in a news release from the Ontario Energy Board, which indicated nuclear accounted for only 38 per cent of the Global Adjustment while generating 59 per cent of the electricity.
In 2016, nuclear power generated 61% of Ontario’s electricity at well below the amounts paid to other generators. In fact, the average price of nuclear was 6.6 cents per kWh compared to the average residential price of 11 cents per kWh.

Wind and solar make up a small amount of Ontario’s electricity bill because they make up a small amount of Ontario’s electricity grid. Wind generated only six per cent of Ontario’s electricity in 2016 and solar less than one per cent. Despite this modest output, wind and solar nevertheless accounted for 26 per cent of the Global Adjustment.

There is a myth that, due to the capital investments required in nuclear power, the consequence is a high price of power. This simply isn’t true. That’s because nuclear facilities operate for decades and generate large volumes of electricity on a consistent basis. Ontario’s nuclear facilities have a demonstrated track-record of high reliability. That’s why the province is reinvesting in them now.

Environmental Defence has also failed to mention nuclear’s important role in Ontario’s phase-out of coal in 2014 and ending smog days across the province, suggesting it was new wind and solar alone that got the job done.

A fact check would show that between 2000 and 2013, nuclear-powered electrical generation rose 20 percent in Ontario, coinciding with a 27 percent drop in coal-fired electricity. During the same period, non-hydro renewables increased to 3.4 percent from one percent. This major transition to a cleaner Ontario could not have happened without nuclear.

During that period, Bruce Power doubled its fleet of operating reactors from four to eight, becoming the world’s largest nuclear generating station. While more renewable energy did come on line, Bruce Power estimates they provided 70% of the carbon free energy needed to replace the power from the shutdown of coal plants.

The long-term investment programs currently underway across Ontario’s nuclear fleet, including Pickering, Darlington and Bruce Power, will secure this low-cost source of electricity over the long-term, while meeting our needs today.

Nuclear-generated electricity was the right choice for Ontario decades ago. It remains the right choice today.

OPG and Bruce Power recognize the cost of electricity for Ontario families and businesses is an important issue across the Province. Both companies are committed to clean air and continuing to provide low cost electricity for Ontario homes and businesses in the short, medium and long-term.

CNA2017

CNA2017 Panel: Clean Tech and Power Politics

On Thursday, February 23, at 4:00pm, Joel-Denis Bellavance, Susan Delacourt and Timothy Powers will gather onstage at CNA2017 to discuss clean technology and power politics.

Joel-Denis Bellavance is the Ottawa bureau chief for La Presse. He has worked for the French-language newspaper since 2003 and has been reporting on the Hill for over 22 years. In June of 2016, Joel-Denis received the prestigious Charles-Lynch award, which each year recognizes a parliamentarian journalist for their professional accomplishments.

Susan Delacourt is a senior writer at the Toronto Star. Previously she was the senior political writer at the National Post, a columnist and feature writer at the Ottawa Citizen, and a parliamentary correspondent at the Globe and Mail. She received the Charles-Lynch award in 2011, was named one of “The Top 100 Most Influential People in Government and Politics” by the Hill Times in 2012, and has published four book on Canadian politics.

Timothy (Tim) Powers is the Vice-Chairman of Summa Strategies. Tim has served as an advisor to a national party leader and federal cabinet ministers, was an aboriginal affairs negotiator for the federal government, acted as a private consultant to groups involved in the Voisey’s Bay development, and has written extensively on the Innu of Davis Inlet, Labrador.

For more information about CNA2017 visit cna.ca/2017-conference.