Entering the age of the nuclear decommissioning renaissance

A sudden surge in nuclear decommissioning

According to the United States Nuclear Regulatory Commission (NRC), the US is seeing a surge of nuclear plant shutdowns for the first time since the late 1990s (when the initial wave of nuclear decommissioning took place). While some of these plants were nearing the end of their planned lives, at least eight recent decommissioning projects came ahead of schedule — a sign that the industry is changing. In fact, nuclear decommissioning is poised to be one of the fastest growing segments of the nuclear power industry.

19 US power reactor sites already undergoing decommissioning, with more expected

For more information, please visit the US Nuclear Regulatory Commission

What to know before closing a nuclear plant

Nuclear decommissioning is truly a first-of-a-kind industry project. To date, only a handful of US decommissioning projects have reached completion, and there is not yet a recognized industry model for success.

There are, however, some known pitfalls. Utilities can go a long way to better manage their decommissioning projects if they can avoid the following:

  1. Failure to shift project mindset. Embarking on a decommissioning project requires that the company switch from a maintenance-and-operation environment to a profit-and-loss environment typical of large-scale construction projects. Staff who have spent their careers operating nuclear reactors may or may not be able to adjust to their new roles as a construction team.
  2. Passive regulatory strategy. Nuclear decommissioning is a highly-regulated sector where, paradoxically, the regulations are still evolving. The Nuclear Regulatory Commission (NRC) released its draft regulatory basis for decommissioning rule in March 2017, and those companies that are actively participating in the commenting process are likely to have more influence on the future of decommissioning.
  3. Lack of sophisticated financial planning. Finance is perhaps the trickiest area because of its complex interdependencies with other project elements. For example, a company may choose SAFSTOR (deferred dismantling) over DECON (immediate dismantling), thinking that the former requires less funds upfront; in reality, the company needs to spend enough at the front end in order to help increase the availability of its Nuclear Decommissioning Trust Fund and meet IRS obligations for the balance of the decommissioning project.

As with any large-scale capital project, companies can also leverage technology to better manage finances, resources, and risks — and to drive project excellence throughout the decommissioning process. 

Financing nuclear decommissioning: 3 lessons learned

The finance aspects of a decommissioning project are particularly complex due to evolving NRC regulations, insurance requirements, trust funds and tax rules. In order to foster prudent financial management, manage emerging issues and mitigate risks, as well as to achieve annual financial targets while preserving Nuclear Decommissioning Trust growth and meeting NRC and IRS requirements, owners and operators should aim to:

  • Shift from a maintenance-and-operation to a profit-and-loss mindset
  • Adopt a holistic view of finance management
  • Build a cross-discipline team of finance, regulatory, and risk experts

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"Nuclear decommissioning projects are fundamentally large capital projects and require the same level of upfront planning, strategic assessment, legal review, and project discipline — facilitated through integrated project technology — that would be applied to any large nuclear construction project."

Daryl WalcroftPrincipal, US Capital Projects and Infrastructure Leader

Decommissioning planning: Six essential elements

Based on our industry experience working with clients, we have identified six essential elements that can help companies better plan and manage the complex decommissioning process.

  • Shift from an operating plant focused on operational excellence to a decommissioned plant focused on project management (e.g., cost control)
  • Check decommissioning program compliance with the company’s internal capital project requirements
  • Assign organization roles and responsibilities (e.g., a dedicated decommissioning team)
  • Create control environment to manage such elements as schedule, risk, scope, issues, and reporting
  • Integrate all control elements to forecast future resources needs accurately against the available resources over time (usually 20-30 years)
  • Always focus on safety first
  • Manage program budget and cost accounting in a profit and loss environment
  • Assess adequacy and proper expenditures of Nuclear Decommissioning Trust funds (NDT)
  • Develop NDT reimbursement process 
  • Know financial and accounting codes
  • Apply corporate shared services cost accounting   
  • Explore the interdependencies between finance, tax, real estate, IT, etc.
  • Develop a strong relationship with the NRC to smooth transition from an operating nuclear power plant to a decommissioned one
  • Acquire experience in managing NRC regulatory filings and testimony
  • Understand state and federal decommissioning regulations
  • Develop a license termination plan, if applicable
  • Regularly reevaluate regulatory strategy to ensure the company meets its commitments
  • For internal staff

- help them transition from working in an operations to a construction environment

- help them change careers, if necessary

  • For external vendors

- perform due diligence in contractor selection

- develop and formalize a contracting strategy

- Implement contractor oversight once a vendor is selected

  • Establish a risk culture early in the decommissioning planning phase to drive timely risk identification and management of, e.g. 

- transitioning resources

- delayed approvals for regulatory filings

- public opposition

  • Employ experienced technical experts to characterize risks
  • Capture risk sets within a framework that accounts for complex interdependencies to better inform decommissioning funding decisions
  • Identify key stakeholder groups and know who will present the greatest challenges 
  • Develop key messages to support stakeholder communications
  • Engage stakeholders early in the process
  • Define clear objectives for stakeholder management

"Why is nuclear decommissioning so complex? Because each station is so unique, from engineering and siting to stakeholder dynamics, and requires its own decommissioning blueprint. While there are certainly lessons learned that can be applied from one decommissioning project to the next, every owner faces a unique set of conditions and challenges that must be satisfied on a site specific basis.”

Brooke Traynham MorrisonCapital Projects and Infrastructure Director

4th Annual Nuclear Decommissioning & Used Fuel Strategy Summit

October 2-3, 2017

PwC is a silver sponsor of this summit, which will address complex economic, political, and regulatory hurdles to advance your decommissioning and used fuel strategy.

Click here to register

Contact us

Brooke Traynham Morrison
Director, Capital Projects & Infrastructure, Nuclear Energy
Tel: +1 (603) 717 4707
Email

Daryl Walcroft
Principal, US Capital Projects & Infrastructure Leader
Tel: +1 (415) 498 6512
Email

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