The Future of Fuel: AREVA NP's Outlook

Fuel Business Unit’s Klaus Al Usta sheds light on the global fuel industry and reveals AREVA NP’s position in this evolving market

Fuel Contract Signed

AREVA NP congratulates the Fuel Business Unit for its recently signed contract with longstanding client, Eskom, a South African electricity company operating two nuclear power plants. AREVA has been supplying Eskom’s reactors for over fifteen years, and today will continue supplying the Koeberg 2 reactor. The contract entails three firm reloads and three optional reloads for the unit throughout the 2015-2019 period. In light of this major achievement, AREVA NP’s Klaus Al Usta agreed to share his thoughts on the future of the fuel industry—explaining the obstacles and opportunities that the Fuel BU will likely face in the next few years. Mr. Usta has been with AREVA for sixteen years, and is the new organization’s Fuel Business Unit Sales Director.

Future Obstacles to Fuel

Mr. Usta doesn’t deny that the international fuel industry today faces a series of challenges. Despite growth in the rapidly developing Chinese market, which presents significant opportunities for fuel, the global market itself has encountered setbacks in several major nations. Germany, for instance, will phase out of the nuclear energy market by 2022. Meanwhile, Japan’s market continues to struggle in the aftermath of Fukushima, awaiting activities to resume. The United States is currently reducing the volume of certain nuclear plants to offset economic downturn. Global calls for environmental awareness by nations’ leaders, along with recent advances in the development of green energy, have further affected the market. Fuel overcapacity has created an inevitable “global pressure on the market,” admits Mr. Usta. As global demand for fuel stands at 50-60% in comparison to available capacity, competition between suppliers is tight.

A Positive Outlook

Regardless, AREVA NP’s outlook for the future of fuel is bright. Mr. Usta assures that “globally, for us, it’s rather stable at this moment” and AREVA NP has obtained new commercial opportunities. The company is expanding its business in the United States by introducing new products. Despite the closure of certain plants in this region, AREVA NP’s position both commercially and technically remains strong, and it aims to gain market shares from other businesses. Fortunately, the impact of Germany’s phase out will not be felt for several years. Mr. Usta states confidently that the 2020-2030 period will see new builds starting up, “compensating for part of the German phase out.”

Asia

Japan’s market this year has witnessed optimistic signs, but is nevertheless struggling to restart and may not recover to its market size before Fukushima. AREVA NP will continue to sell some products to the Japanese market, but Mr. Usta claims that there are no strong developments in comparison to what can be expected of other countries. AREVA NP’s participation in the AREVA 2008 joint venture with Mitsubishi has thereby been reduced to 5%. China’s “key nuclear program” is more promising for AREVA NP. In 1995 the unique concept of locally fabricating fuel was introduced and today AREVA NP continues to be the “main supplier of fuel technology used in China,” Mr. Usta explains. Taishan 1&2 are two new builds that are currently under construction in China, to which AREVA NP will supply fuel. Mr. Usta confirms that the development of Taishan 1 is on track and will hopefully start in 2017, with Taishan 2 expected to start up only one or two years later.

Innovations

Despite the shifts and changes taking place in the international market, Mr. Usta resolves that “the fuel business has very long term stability” and “the future looks reasonably positive.” Mr. Usta mentions a number of innovations underway today, as well as development opportunities. Currently GAIA and ATRIUM 11 are being introduced to the market— GAIA is dedicated to the PWR market, while ATRIUM 11 to the BWR market. AREVA NP is also working with NuScale in the United States, to develop fuel for their first small and medium sized reactor (SMR). The reactor is not yet on the market, but has substantial potential in the United States and the UK. AREVA NP must similarly face its “industrial reality.” Mr. Usta distinguishes the fuel industry’s three principal challenges and threats as:

• Fuel overcapacity

• Political situations, such as the risk of phasing out

• Product and market competition

In the forthcoming years, the Fuel Business Unit and AREVA NP will depend on new build programs, as well as future developments in the global market. With each obstacle in the fuel industry, Mr. Usta hopes a new opportunity will arise. In the meantime, the Fuel Business Unit will continue to supply existing programs, while attracting new clients.