International Atomic Energy Agency Milestones for Nuclear Power

International Atomic Energy Agency: Milestones for Nuclear Power Infrastructure Development Opening Remarks - Finance PAUL M. MURPHY Senior Counsel Bechtel Power Corporation Vienna, Austria November 8, 2007 1

The Journey: 19 Milestones § § § National Position Management Legislative Framework Regulatory Framework Stakeholder Involvement Site & Supporting Facilities Environmental Protection Nuclear Fuel Cycle Industrial Involvement Procurement Funding & Financing § § § Nuclear Safety § § § Emergency Planning § Safeguards Radiation Protection Electrical Grid Human Resources Development Security & Physical Protection Radioactive Waste Role of Government Ø Leadership / Commitment Ø Legal Framework & Rule of Law Ø Institution Building 2

Key Motivations § Overall Growth in Demand for Energy Ø Linkage between energy and development § Energy Security / Self-Reliance § Energy Diversity 3

World Overview 1. 6%/yr for industrial world 3. 6%/yr for developing world 6. 4 ICAPP 04 demand to increase 50% by 2025 Billions (people) § Global electricity 9 1850 1900 1950 2000 Year 2050 2100 Trillion k. Wh 31 ICAPP 04 13 1850 1900 1950 2000 Year 2050 2100 4

World Overview Percent Growth (GWe) Percent Growth in Nuclear Capacity 137% in p lo a N g s n tio e v De Industrial Nations 5

World Overview Forecasted Nuclear Capacity GWe Capacityy Mature Market Economies (industrial nations) Asia Western Europe North America 6

World Overview Forecasted Nuclear Capacity Emerging Economies (developing nations) Other GWe Capacityy Asia Europe And Eurasia Other Asia Europe and Eurasia 7

World Overview U. N. Human Development Index 1. 0 UK France Germany 0. 6 China Russia Japan U. S. Canada Australia India Pakistan 0. 3 4, 000 8, 000 12, 000 Annual Electricity Use k. Wh/Capita 8

Key Motivations § Overall Growth in Demand for Energy Ø Linkage between energy and development § Energy Security / Self-Reliance § Energy Diversity § Economics Ø Low operational costs relative to other forms of power 9

United States Perspective Electricity Production Costs 1995– 2005 (averages in 2005 cents per k. Whr) 2005 Oil 8. 09 Gas 7. 51 Coal 2. 21 Nuclear 1. 72 Production costs = operations and maintenance costs + fuel costs Source: Global Energy Decisions 05 10

Key Motivations § Overall Growth in Demand for Energy Ø Linkage between energy and development § Energy Security / Self-Reliance § Energy Diversity § Economics Ø Low operational costs relative to other forms of power § Emissions / Global Warming 11

World Overview Quick Facts—Nuclear § § § 16% of world’s electricity Displaces 2. 5 billion metric tons of CO 2 /year 38 GW brought on line or under construction since 2000 12

World Overview Tonnes CO 2 -equiv/GWeh Life Cycle CO 2 Emissions Analyses Coal Natural Nuclear Hydro Biomass Wind Gas Solar Geo. PV thermal 13

Key Motivations § Overall Growth in Demand for Energy Ø Linkage between energy and development § Energy Security / Self-Reliance § Energy Diversity § Economics Ø § Low operational costs relative to other forms of power Emissions / Global Warming v Note: Drivers are different, depending on national situation 14

Financing Issues § § High Capital Costs Long Construction Periods Return on Investment is an Issue § First-of-a-Kind Risk § § § Supply Chain § Human Resources § Sustainability of Government Commitment § § Regulatory Uncertainty Commitment to International Regimes Fuel Cycle Operational Success & Safety Culture 15

What makes nuclear power unique? § Scale Ø Cost Ø Development / Construction Period § § Safety Public Perception / Public Relations 16

United States Perspective Increasing Public Support Important for our energy future 91% Favor use of nuclear energy 82% Keep the option to build nuclear plants Definitely build nuclear plants in future Accept new reactors at nearest plant 84% 77% 71% Summer 2007 survey of residents living near Nuclear power plants. Source: Bisconti Research Inc. 17

What makes nuclear power unique? § Scale Ø Ø § § Cost Development / Construction Period Safety § § Public Perception / Public Relations Regulatory Environment Fuel Cycle Site Security International Features Ø Treaty Regimes / Legal Framework Ø Cross-Border Ø Non-Proliferation ü Interdependence of the Nuclear Industry üImpact of Success/Failure üBeing Part of the “Nuclear Club” v. Commitment to Excellence 18

Parties Involved In a Nuclear Power Project Government ECAs Regulation & Licensing Commercial Banks Financing Entities Multilaterals Financial Commitments Government Treaty Commitments & National Law Spent Fuel Management Decommissioning NSSS Suppliers Public PROJECT Offtakers Fuel Supply Labor Equipment & Material Suppliers EPC Contractor Subcontractors Operators Owners Consultants Human Capital Risk Allocation? 19

Concluding Thoughts § There is no one, right way to achieve success § However, there are certain fundamental principles that will enhance the chances of success 20