Why Advanced Offshore Nuclear is crucial to deliver the 2050 decarbonization targets?
Paraphrasing Milton Friedman “The winners of our free economic system are the ones that satisfy the needs with a profit”. The winners of the race to decarbonize with profits are very likely to be the winners of the consumers and investors. This article describes why we concluded that Advanced Offshore Nuclear technology (New Nuclear), like the one proposed by the OEGS Offshore Energy Generation System from OEGS Technology is crucial to deliver in the net zero commitments from most of the world's governments and business leaders. This analysis focuses on the Net Zero Nuclear initiative, from COP28 UAE , which calls for unprecedented collaboration between governments and industry leaders, to at least triple global nuclear capacity, to achieve carbon neutrality by 2050 endorsing the pledge (updated 28 February 2024) including cases like the UK pledging to quadruple their nuclear capacity.
The Business Case
There should not be any doubt that from the business perspective, the market size is very attractive as it is greater than most countries and industries, Wood Mackenzie, among others, reported on October 2023 that "Decarbonizing operations and product offerings presents many companies with the most significant opportunity in a generation: a potential $9 trillion to $12 trillion in annual sales by 2030 as capital and customer demand shift toward a low-carbon economy".(Decarbonize and Create Value: How incumbents can tackle the steep challenge, Oct 2023).
The speed of decarbonization can have a very consequential impact in the gross margin for the companies; effective decarbonization technologies provide the possibility to shape positively the demand from their customers and investors. If these technologies can also reduce their energy costs the gross margin is increased even more. And on top of that if the new technology offers the possibility to optimize the use of the existing assets recovering more resources like hydrocarbons or minerals from their operations the positive impact is even greater. On the cost side of the decarbonization equation, the companies that achieve it faster will reduce their costs of capital from insurances, banks, and investors, and in some cases decarbonization could be the differentiator not only to get higher returns but to have access to the capital.
The race for decarbonization is expected to continue accelerating driven by the digital revolution with sensors, drones, satellites, machine learning etc. that provides greenhouse emissions and carbon intensity timely information to the Financial Industry, Retailed Investors and Consumers. Exchange traded funds (ETFs) continue increasing influence and participation of the total global financial market in both equities and fixed income, On June 2024 ETFs are ranging from 4.6%-13% of equities and 0.4%-2.8% of fixed income assets by region.
The OEGS Technology solution is 100% aligned with the Global Decarbonization Accelerator (GDA) from @COP28. GDA is focused on three key pillars: rapidly scaling the energy system of tomorrow; decarbonizing the energy system of today; and targeting methane and other non-CO2 greenhouse gases (GHGs). For the oil and gas industry Methane reduction is achieved not only with the Zero Flaring initiatives but use of other sources of energy. https://www.cop28.com/en/news/2023/12/COP28-Presidency-launches-landmark-initiatives-accelerating-the-energy-transition
The OEGS Technology solution could enable the Oil and Gas Decarbonization Charter (OGDC) signatures to meet their goal of Net Zero Methane. The Oil and Gas Decarbonization Charter (OGDC) includes more than 40% of Global Oil Producers and more than 50 major National Oil Companies and International Oil Companies. Signatories have committed to net-zero operations by 2050 at the latest, and ending routine flaring by 2030, and near-zero upstream methane emissions
The Technical Case
The following analysis is based on historical durations and different sensitivity analyses for the USA; based on current nuclear regulatory licensing durations including The Code of Federal Regulations Title 10, Part 50, and Part 52, as well as the upcoming new Part 53 that is expected to reduce the overall duration. We have all witnessed faster nuclear power plant deliveries in other parts of the world but the differences presented below remain constant in favor of offshore.
As of June 2024, the US Energy Information Administration (EIA) listed 94 nuclear power reactors in the USA. https://www.eia.gov/energyexplained/nuclear/nuclear-power-plants.php
The map shown in figure 1 below is dated June 2023 and provides a general idea of the nuclear power plant's location in USA.
Figure 1. Location of US Nuclear Plants
On December 2, 2023, the US Department of State Joined the Declaration to Triple Nuclear Energy Capacity by 2050 to Support Global Climate and Energy Security Goalshttps://www.state.gov/the-united-states-joins-multinational-declaration-to-triple-nuclear-energy-capacity-by-2050-to-support-global-climate-and-energy-security-goals/
Then based on the above it will be necessary to provide additional 188 Nuclear Power Plants in operation by 2050. To simplify the analysis, it is assumed that each nuclear power plant has a nominal capacity of 1 GWe. Considering that there are some plants already schedule to be retired plus others that will need to be replaced during this period this for this analysis is estimated that we need 193 additional reactors. There are recent statements from the Department of Energy that indicates that this number could be 198 additional Nuclear Power Plants that will put even more pressure on the speed of deployment.
Nuclear Power Plants on land are subject to inherent limitations that increase the project schedule and costs risks substantially when compared with offshore projects and that will be presented in a separate future article.
The Gant chart below summarizes the simulation of all this nuclear plant projects on land.
Figure 2. Onshore nuclear power plants timeline
Based on the same premises the Gant charts below summarizes the simulation of all these nuclear plant projects offshore based on the actual history of major oil and gas offshore projects combined with the nuclear regulatory constraints and components.
Figure 3. Offshore nuclear train 1 timeline
Figure 4. Offshore nuclear timeline trains 2 and 3
Conclusions:
Based on the analysis shown above Advanced Offshore Nuclear can deliver this pledge of triplicating nuclear meanwhile it is unlikely that the Onshore Nuclear be able to deliver the pledge for the USA. We consider that at the end a combined solution might be the most appropriate with onshore and offshore nuclear plants in constructions simultaneously based on the conditions needed by the energy mix.
The Gant charts schedule for Onshore nuclear plants illustrate that the maximum number of reactors completed by 2050 is estimated to be 74, therefore it is not likely to deliver the pledge without the participation of offshore units. This onshore program is under a very aggressive assumption that the country could be able to support the construction of 22 onshore projects simultaneously and the program completion is estimated by 2097. This is very challenging considering the large transportation of materials across the roads and railroads of the country.
The Gant charts schedule for 1GWe Offshore nuclear plants illustrate that the pledge can be completed by 2050, this is based on historical build in the offshore industry using shipyards. This schedule shows one train delivering 107 units by 2050 with a second fabrication train starting at year 7 and a third fabrication train starting on year 10.
The construction on shore has many limitations including the transportation of loads using the existing roads and railroad system, this challenges the idea of large Small Modular Reactors of 300 MWe and less. This could be the driver why we are seeing that the Micro Nuclear Reactors that can be transported using the existing road and railroad system seems to be prevailing in the market offering of advanced nuclear. Offshore the transportation limitation is inexistent; there is limitations on the size, equipment, and operational draft of shipyards; but the oil and gas offshore nuclear have witness the operations of floaters up to 400 meter long.
Another technical aspect that deserves an entire article is the seismic design onshore vs offshore. The authors have already delivered the design of one build-many delivery model in oil and gas floater dreamed by investors and operators, one highly regulated and complex new technology design was replicated more than 19 times with floaters. The seismic requirements on land can push the customization of each specific design with the current regulations and technology.
Many other technical drivers led the authors to go for Offshore Nuclear once nuclear key performance indicators where established for its selection.
The oil and gas industry has witnessed very large opposition of community residents along the roads when they must be subject to a very large number of trucks passing in front of their properties, as well as very large construction camps that could be even larger than the surrounding communities. The nuclear industry has faced even stronger opposition from the local communities along the road for projects.
There is a very long list of projects around the world that have not seen the Final Investment Decision because of communities’ opposition like the NIMBY (Not in my backyard) movement, in which residents oppose new developments or changes in their neighborhood. The NIMBY has not only impacted oil and gas or nuclear there are multiple examples of Solar Photovoltaic Projects, Wind Power Projects, Hydroelectric Power where the demands of land are even greater.
With more than 70% of the surface of the earth covered with water, with more than half of the world population living within 200 km (124 miles) of the coastline plus all the other inherent advantages of advanced offshore nuclear it seems unavoidable that this new Offshore Nuclear Industry could become one of the most prevalent solutions. And all the other technical advantages for Advanced Offshore Nuclear it is our recommended Ultimate Solution for Energy, Decarbonization and Water Security.
