of the world’s commercial nuclear industry remains in government ownership.
The general trend in the past decade has been to move nuclear generation
and fuel cycle companies from government ownership to investor ownership
– privatisation in other words. Significant companies that have made that
transition include: USEC, British Energy, Endesa and AEAT. This movement
of ownership has not been all one way. The Westinghouse and ABB nuclear
businesses have been sold by investor-owned companies to the government-owned
BNFL, and Siemens’ nuclear business is now majority-owned by the French
government. In addition, difficulty and controversy seem to surround several
recent privatisation prospects:
privatisation of CEZ has been deferred after two abortive attempts.
potential privatisation now depends on a lengthy restructuring of the
company and the creation of a ‘new BNFL’, stripped of most of the current
start to the partial privatisation of EdF was delayed until after the
French presidential and legislative elections and is now facing the
delicate challenge of reaching an understanding with the EdF trades
the public/private ownership split of the world’s nuclear industry (generation,
fuel cycle and services);
the public/private ownership split by sector and looks at whether ownership
differences account for any differences in performance;
whether there are any ‘natural barriers’ to the introduction of private
ownership into any parts of the world commercial nuclear industry;
some national differences in approach to the ownership of nuclear companies;
about how the mix of public/private nuclear industry ownership might
evolve in the future.
paper takes as its working definition of the term privatisation as being:
transfer to private entities of a significant proportion of the company’s
equity and/or shareholder voting rights'.
some countries the word privatisation has become politically incorrect.
'Public–Private Partnership' is a term used now in the UK by the Labour
government. This term was devised principally to distance the Labour government
from the privatisations of the previous Conservative government. The name
may be different, but the result is the same.
than use euphemisms, and at the risk of offending the politically sensitive,
the term privatisation (defined as above) will be used throughout this
governments privatise assets or companies because they wish to achieve
one or more of the following aims:
relieve themselves of financing requirements or raise money for expenditure
in other areas;
step back from interfering (or being suspecting of interfering) in the
operation of (newly) liberalised markets;
distance themselves from potentially difficult decisions;
enable a better separation of management from regulation;
enable greater efficiency of operation and business development to be
undertaken by more commercially motivated (and international) management;
transfer risk to the private sector where it can be better managed.
as far as the nuclear industry is concerned, governments will continue
to have a major part to play in its future regardless of who owns it.
Governments will exert strong influences on the industry through many
explicit and implicit means. National and regional energy policies will
determine the framework within which nuclear generation competes. Environmental
regulation will set some of the most important boundary conditions for
shows how the total amount of nuclear electricity
generated in the world is split between utilities ultimately owned by
governments on the one hand, and utilities owned by private investors
on the other hand [Ref
Over the period 1990 to 2001, the split of nuclear electricity generated
between private and publicly-owned utilities has remained roughly constant
at around 55% to 45%. Over this period, the total amount of nuclear electricity
generated has increased by over 25%. Increases in private sector generation
improvements in US plant performance;
reactors coming into operation in Japan; and
utility privatisations in the UK and Spain
been balanced by increases in nuclear generation from government-owned
companies, principally through:
reactors coming into operation in France;
reactors coming into operation in South Korea; and
reactor performance in a number of government-owned companies including
the Russian nuclear generating company, Rosenergoatom, and TVA, the
US utility owned by the federal government.
present snapshots of the split between private and public ownership
of the output of the various parts of the fuel cycle [Ref
The period covered is 1990 to 2001. The following observations can be
made from examining these figures:
most segments of the fuel cycle there is long-standing competition between
publicly- and privately-owned companies;
enrichment segment features one company, Urenco, with hybrid ownership
– the company being a joint venture between two governments and two
privately-owned nuclear utilities: for the purposes of this paper, Urenco
is regarded as being a private sector company;
overall picture is one of increased public ownership of the output from
the various parts of the fuel cycle over the past 10 years;
ownership of output in the uranium industry has increased mainly as
a result of the increased sales by the FSU states and by AREVA not being
quite balanced by increased sales by Cameco;
USEC’s privatisation and the increased market share won by Urenco, government-owned
output predominated in the enrichment sector: this is due to Minatom
virtually doubling its share of the market over the period;
acquisition of the privately-owned nuclear businesses of Westinghouse
and ABB by BNFL and the acquisition of control of Siemens’ nuclear business
by AREVA have increased markedly the proportion of publicly-owned fuel
fabrication output over the period;
reprocessing output was publicly owned over the period under consideration.
the performance of the world’s PWRs in 2001 [Ref 1]. The figure presents
a 2 x 2 matrix splitting the PWRs on two dimensions: private or public
ownership and load factor for 2001 above or below the average (81%) for
the world’s PWRs. From the figure it can be seen that the publicly-owned
PWRs performed significantly worse (as measured by load factors) than
the privately-owned PWRs.
the same analysis, this time excluding the French PWRs. This exclusion
could be justified on the grounds that there is a large nuclear over-capacity
in France, so load factors would be expected to be low. Making this adjustment
does not, however, change the conclusion: privately-owned PWRs appear
to perform significantly better (as measured by load factors) on average
than publicly-owned plants. In saying this, it must, of course, be acknowledged
that the PWRs operated by the government-owned Korean Electric Power Company
achieve among the highest load factors of any reactors in the world.
introduces another variable, that of whether the reactor is operating
within a competitive electricity market or whether the market is still
heavily regulated. This figure shows:
a relatively small number of PWRs achieving lower than world average
load factors are operating in liberalised electricity markets;
a relatively large number of under-performing PWRs operate in regulated
in this analysis of PWR load factors, Figure
at the star performers – defined as those plants achieving a load factor
of over 90% in 2001 – and the laggards – defined as those plants achieving
a load factor of less than 75%. Each of these categories of reactors is
presented in a 2 x 2 matrix. One axis is ownership, the other is the nature
of the electricity market as in
Figure 9. These two figures show, not surprisingly,:
overwhelming majority of star performers measured by load factor in
2001 are privately owned, and operating in competitive electricity markets;
overwhelming majority of laggards are publicly owned and operating in
regulated electricity markets;
is a significant number of privately-owned reactors operating in competitive
markets that exhibited laggard performance on the basis of load factor
in 2001 (14 reactors on this analysis);
is a significant number of private and publicly-owned reactors operating
in regulated markets – particularly in South Korea and Japan – that
achieved star performance measured by load factor in 2001.
public information is available to analyse generation cost in the same
way that load factors were looked at above. However, an interesting piece
of analysis is to look at the production cost of the publicly-owned US
nuclear utility, TVA, and compare it with the costs of the US nuclear
stations as a whole.
that TVA’s production cost has been consistently below the average of
the US nuclear fleet over the past 10 years [Ref
3]. Over this period the average production cost of the US fleet has
fallen by some 35%; TVA’s average production cost has fallen by almost
25% over the same period.
how the industrial safety record of the world’s reactors has improved
over the past 10 years [Ref 4].
This overall improvement has in part been driven by the huge amount of
transfer of best practice and general benchmarking that has gone on within
the industry. Organisations such as WANO have been in the vanguard of
efforts to transfer best practice across country boundaries. Against this
background it is not surprising that no evidence can be found to suggest
that the safety record of privately-owned reactors is significantly different
from that of publicly-owned reactors.
barriers to private ownership
following observations can be made:
operations can and are successfully undertaken by privately-owned companies
and by government-owned companies;
understandable reasons, liberalised electricity markets tend to be populated
by privately-owned companies, including nuclear companies. There are
some examples – the UK and Scandinavia – of government-owned nuclear
companies competing in liberalised markets;
nuclear reactor construction has not yet been funded privately in a
liberalised electricity market: the planned 5th station in
Finland will set a precedent in this respect;
ownership combined with private operation – as with Bruce Power – could
be a business model of relevance to other parts of the world.
following points can be made:
mixture of ownership types is found in most segments of the fuel cycle;
recent enrichment trade case which examined whether Urenco and Cogema
received state aid in competing with USEC in the US market did find
limited evidence that the French government in particular was assisting
Cogema in a way that a private owner would not;
biggest two players (three, if the Russians are regarded as one company)
are government owned – BNFL and AREVA;
is slated to move into the private sector in the next few years;
is no current private involvement in reprocessing operations, but:
Japanese plant is under construction; and
the UK government’s plans to restructure BNFL, a privately-owned ‘New
BNFL’ may eventually operate Sellafield.
mainly part of the fuel cycle, there are some particular ownership issues
here worth noting:
of managing the US government’s nuclear clean-up programme has demonstrated
that private operation of most, if not all, activities is acceptable
and can be successfully carried out: where ownership-type risks have
been transferred to the private sector, or attempted to be so, problems
operation of waste disposal sites is common;
ownership of sites for spent fuel/long-lived reprocessing waste disposal
is the norm.
four main clusters can be identified that segment the ownership of nuclear
activities around the world:
Cluster: Mainly Privately Owned, Operating in a Competitive Market
Cluster: Mainly Privately Owned, Regulated Markets
Cluster: Mixed Ownership, Competitive Markets
Cluster: Public Ownership, Regulated Markets
none of these clusters is a perfect fit for the complex circumstances
of the individual utilities. However, they are a useful characterisation,
particularly when considering likely future changes to ownership.
following developments are considered likely.
will be a continuing trend to private ownership and/or investment in
nuclear activities. This will be driven more by governments wishing
to move things in this direction rather than by the private sector itself
initiating nuclear investments. This private sector involvement will
be despite equity returns on nuclear companies under-performing more
general stockmarket returns over the past few years. The 1 Nuclear
Place nuclear indices [Ref 5]
shown in Figure 14
that nuclear equity investments on average have under-performed the
Dow Jones by 25 to 35% over the past 4 years.
the fuel cycle, the trend over the past 10 years has generally been
to increase the proportion of output controlled by government-owned
companies. This trend will only reverse if BNFL’s (and/or AREVA’s) commercial
activities are privatised.
private sector nuclear contracting industry will continue to operate
large parts of the nuclear industry.
market liberalisation will continue in parallel with this nuclear ownership
friction can be expected to arise where government-owned companies are
competing in a liberalised market with privately-owned companies (e.g.
EdF’s expansion into liberalised European electricity markets).
eventual development of sites for spent fuel disposal and reprocessing
waste disposal is likely to see public ownership and private operation.