“It is critical after the Hamaoka Nuclear Power Station restart that we reduce our cost and increase our capacity factor while becoming more economically competitive.” Ichiro Ihara, chief nuclear officer of Chubu Electric Power, made this observation recently when the Electric Power Research Institute visited the Japanese nuclear power plant for a strategy development session for plant modernization. EPRI’s team of five specialists spent four days at Hamaoka to investigate the feasibility of potential improvements—the third step of the EPRI modernization strategy planning process. It was a trip six months in the making—and the first time EPRI has applied its nuclear plant modernization process outside the United States.
Nuclear power plants have long operating licenses—and long life cycles. EPRI’s modernization process enables plants to apply work improvements and new technology, such as online monitoring and digital upgrades, that will reduce their operations and maintenance (O&M) costs and make them more economically efficient. Modernization can also address workforce challenges—making it easier to find, train, and retain employees who are accustomed to more modern technology. “Modernization can be part of our kaizen activity,” said Ihara, referring to the Japanese concept of continuous improvement in function and practice (kaizen means “change for the better”).
Given the magnitude of responding to climate change, as well as recent instability in energy markets, clean and reliable power is more important than ever. Existing nuclear plants are the single most cost-efficient means of securing the necessary electrical capacity,1 but many of the plants were built prior to the digital revolution. To extend their functional lives, the plants’ operational costs must be reduced.
EPRI recognized this need and so in 2018 launched the Plant Modernization Initiative with the nuclear industry. The program is built on other efforts such as the Nuclear Energy Institute’s Delivering the Nuclear Promise, and the goal is to determine new technologies and process improvements to reduce nuclear power plant costs. For existing nuclear plants, construction costs are already depreciated, and fuel costs are trivial, compared with the overall financial picture. However, nuclear plants are dependent on using a highly skilled labor force (as opposed to automation) for O&M. This approach was perfectly acceptable in the days of high natural gas prices and limited renewable generation, but with lower natural gas costs and more renewables coming on line, the nuclear business model is under strain from the resulting volatile electricity prices.
By applying its regional economy, greenhouse gas, and energy (REGEN) market model, EPRI determined the economic and technical feasibility of nuclear plant modernization, finding that it made business sense at most U.S. sites to invest large sums to obtain a 25–50 percent reduction in O&M costs.2 Interviews with operators outside the United States validated this finding for international nuclear plants. Furthermore, subject matter experts concluded that no breakthrough technology was required to achieve this reduction; reductions could be achieved through a combination of process automation, improvement, and application of known technologies. Breakthroughs in nuclear fuel or treatment of off-site radiological consequences, while welcome, would not be needed to achieve modernization goals.
The plant modernization process
Modernizing a nuclear power plant could be a big undertaking if it is approached as a traditional large-scale project that would take several years to complete. But plants need to be able to continuously adopt new cost-saving technologies, so EPRI developed its modernization process,3 a disciplined and repeatable series of steps that ensures the right decisions have been made and modernization money has been invested wisely.
Initially developed in 2020, the modernization process was piloted in 2021 with two EPRI members at Energy Northwest’s Columbia Generating Station and PSEG Nuclear’s Salem/Hope Creek stations, where the programs are still continuing today. These pilots emphasized that modernizing a nuclear plant is a large undertaking, requiring high-level management support and a dedicated lead. They also found many existing activities, such as innovation or continuous improvement programs, that could be leveraged into a larger modernization initiative. The findings of the program showed the overall value of the modernization process guide, which was revised in late 2021 to incorporate the lessons learned from the pilots.
The steps of the modernization process are shown in Fig. 1. The pilot projects focused on the first four steps:
Establish a charter.
Determine inputs and strategic concerns.
Investigate feasibility of potential improvements.
Select which improvements to develop into full business cases.
After these steps, a utility would develop the business cases and, if the improvements were still viable, implement and capture the savings. The process is an ongoing cycle: as improvements are implemented, the utility returns to earlier steps and selects more projects to implement and gain further savings.
Steps 1 and 2
It is important to have executive-level support and utility-wide alignment for a large undertaking such as a modernization initiative. Both companies in EPRI’s pilot established a high-level charter or policy statement on modernization that was ultimately signed by a member of the utility senior management team. At the same time, the team established strategic inputs and business risks for modernization. Inputs like the expected remaining operational time of the station were documented, as were other projects that could have synergies with a modernization effort. The pilots found other cost-savings efforts already under way, but they were not coordinated with each other. From the strategic inputs and business risks, key themes were developed to guide the modernization and ensure overall business goals were met. For example, one of PSEG Nuclear’s key themes was no large capital projects initially due to the uncertainty of Salem/Hope Creek’s future.
According to Jason Bergeron, manager of innovation at PSEG Nuclear, “The PSEG nuclear plant modernization policy that we adopted as a result of the pilot has allowed us to clearly understand our modernization strategy and select modernization candidates that would provide the highest return on investment (ROI) in alignment with our strategic business goals. We continue to use our policy as the basis for screening and selecting new potential modernization candidates and innovation ideas.”
Carl Golightly, a business process programs manager with Energy Northwest, is in agreement: “Creating and implementing a formal organizational charter is an essential step in guiding any program for nuclear plant modernization. In doing so, the modernization process can be streamlined, and the potential for human error reduced. A formal charter provides clear guidance on protocols and procedures for any changes or upgrades made to the plant and how modernization processes interface with already established programs. Developing a formal charter instills confidence in plant staff that modernization efforts are being taken seriously and that appropriate measures are being taken to reduce risks from long-term equipment obsolescence and reliability issues.”
When the pilot plants moved to the third step, investigating the feasibility of potential improvements, they quickly found that there was no shortage of good ideas on how to modernize. Both the pilots and subsequent utility adopters have easily found hundreds of potential improvements. At this stage, the only ideas excluded were those that were obviously not applicable. For example, there was no need for Columbia, which houses a boiling water reactor, to consider items related to steam generators (BWRs do not have this component).
One of the changes made to EPRI’s modernization process guide after the pilots was to create the “idea vault,” a repository of already screened, high-value improvements that were not quite ready to proceed to business case or implementation. For example, neither pilot site was ready to start major digital upgrades, but both acknowledged that with changing circumstances they would likely want to launch digital upgrades in the future. Hence, that plan went into the “idea vault.”
After the large list from step 3 was reduced, a more detailed review was done to determine which ideas were worth the effort to develop into a business case.
The pilot plants updated their site project selection criteria to take modernization and cost savings into account. “While the overall selection criteria have not significantly changed, the modernization program has introduced projects into the review and approval process that were not initially considered,” says Golightly. “These projects are subject to the same evaluations for risk, benefits, and the ability of the organization to implement the change. Plant modernization has helped to shift the focus of the long-range planning horizon to more holistically addressing the risk issues of future obsolescence for major projects.”
To make it easier to review ideas for applicability at any nuclear plant, EPRI developed a scoring system for a technology’s readiness and benefits for modernization (e.g., cost savings, payback). This system was then used to develop modernization technology assessments (MTAs), which are short (one- to two-page) summaries of process improvements or technologies, including order-of-magnitude costs and benefits as well as any special risks (Fig. 2). Nuclear plant personnel can quickly review these to determine applicability to and desirability for their plant. As of this writing, there are more than 70 MTAs in the Plant Modernization Toolbox.4
Utilities find the MTAs to be useful in screening potential projects. For example, Spain’s Asociación Nuclear Ascó-Vandellós II (ANAV), which operates the Ascó-1 and -2 and Vadellós-2 reactors, is using MTAs to find cost-savings projects and the references needed to implement them.5 According to José Ignacio Alútiz Ruisánchez, process digital systems engineering manager at ANAV, “In our digital transformation journey, MTAs provide us key insights to identify initiatives, pilot them, and have a framework supporting the business cases which finally drive our implementation decision-making process.” Additionally, Switzerland’s Axpo regularly reviews EPRI’s MTAs for project ideas, contact references, and cost-savings estimations as they begin steps of the plant modernization process.
Beyond step 4: Business cases
The modernization process with the pilot plants culminated in the selection of ideas to develop into business cases. Because of the amount of time it takes to prepare a robust business case, it is first necessary to screen ideas and pare them down to a manageable number. Nuclear plants can have a hard time quantifying the benefits of modernization projects with sufficient rigor for decision makers. To address this issue, EPRI developed the Business Case Analysis Model (BCAM), leveraging work done by the U.S. Department of Energy Light Water Reactor Sustainability (LWRS) program.6
The Excel-based BCAM provides a view of the economic feasibility of implementing nuclear plant modernization technologies. The model takes inputs from the user for the cost drivers impacted by the technologies, to what extent those efficiencies will be harvested, and other business case inputs (e.g., the cost to implement, the time frame over which the business case is to be modelled) to provide output that supports plant modernization decision-making. The output provided includes key financial metrics—such as cash flows, net present value, break-even, and internal rate of return—and operational metrics such as the headcount by functional area before and after the modernization effort is implemented. The model also can distinguish between “hard” savings, such as reduced contractor or parts costs, and “soft” savings, such as nuclear or industrial safety improvements.7
More significantly, EPRI developed example business cases for a variety of potential technology applications. These provide a guide for nuclear plants seeking to execute similar projects and help them determine at the outset what features a project must and must not have to achieve a benefit. Since the first BCAM in 2019, EPRI has developed or contributed to more than 20 example BCAMs, which are linked to the Plant Modernization Toolbox. Other programs, notably the DOE’s LWRS program, are now using BCAM and the Plant Modernization Toolbox links to those reports.8
To further assist the industry, EPRI recently has also developed an online BCAM tool, which several utilities, including PSEG Nuclear, have adopted as their standard for business cases. According to PSEG, having a consistent method to measure the value of projects has made the utility much more efficient in screening and selecting projects. They plan to use the online BCAM tool to screen more than 200 ideas each year.9
Bergeron says, “We have found that having accurate business cases for our potential modernization candidates is instrumental for two reasons. First, it ensures we are moving forward with modernization projects that are aligned with our fleet’s strategy and business needs. Second, once a project is implemented, it ensures we implement appropriate change management to capture the true benefits and metrics associated with the project. We have found the online BCAM tool to be efficient and simple to use, especially when dealing with a high number of incoming potential modernization candidates. For example, PSEG Nuclear has 53 active modernization projects selected for implementation starting in 2023. Without an efficient business case process, this would not have been possible.”
Through EPRI’s example business cases, the modernization efforts of member utilities had varying business or payback results when evaluated as a stand-alone project (see Fig. 3 for a summary). Some modernization initiatives such as business process automation, applied to planning and scheduling tasks associated with online work management, required moderate levels of investment but had a clear and quick ROI. Investments in artificial intelligence and machine learning tools for these tasks can then be applied at low marginal cost to other business processes that support plant operations.
Other modernization candidates showed that a longer-term view was needed to make the business case positive. This included monitoring and diagnostic (M&D) investments in sensors, predictive asset analytics software, and communications infrastructure to support continuous online monitoring for plant components. Digital instrumentation and control upgrades also require significant investment levels as they replace aging systems and address parts obsolescence issues but come at a significant cost—typically more than $100 million. Utilities considering these large-scale digital infrastructure upgrades typically must be committed to nuclear plant life extensions to see meaningful financial benefits over a 20- to 30-year horizon.
EPRI recently consolidated all of its business case examples to date in a new report, “Plant modernization business case: Consolidated business case analysis model.”10 During this R&D, EPRI found that business cases could fit in one of four categories that could aid selecting and sequencing (Fig. 3).
The results of the consolidated business cases show the importance of a holistic, utility-wide solution to modernization. There are efficiencies to be had from consolidating and coordination modernization projects.
What happens now?
Although the pilot projects have ended, both Energy Northwest and PSEG Nuclear will continue their journey by adopting the modernization process and using Plant Modernization’s guidance, MTAs, and BCAM examples and tools, along with modernization ideas developed within their organizations. Modernization is not a once-through process, but an overall change in how decisions are made and implemented at a nuclear station. All of these tools are available in EPRI’s Plant Modernization Toolbox, which is continually updated with new MTAs and BCAMs and is available at nuclearplantmod.epri.com/.
PSEG Nuclear has combined modernization with its Continuous Improvement group. The utility recently held an Innovation Showcase at their Salem/Hope Creek site, highlighting successful implementations. According to Bergeron, “The Innovation Showcase was an excellent opportunity for us not only to demonstrate some of our recent plant modernization and innovation successes but also recognize key contributors who made it all possible through an Innovation Awards ceremony that was part of the event. We also hosted 11 external vendors that provided demonstrations and information about what innovative technologies they can offer PSEG Nuclear. More than 400 fleet personnel participated in the showcase throughout the day, and we received more than 15 new ideas from attendees as a direct result of the event. We recognize the critical role that plant modernization and innovation will play in helping us meet our fleet strategic goals, and the Innovation Showcase is a key lever in building the innovation culture we need to be successful in the long term.”
EPRI is conducting its final pilot at Chubu Electric Power’s Hamaoka nuclear power plant in Japan. It is slated for completion in late 2023 and will validate how the process works in a non-U.S. business and plant culture. Although the pilot projects will end, EPRI is continuing to help utilities, including the large U.S. fleet, develop modernization strategies. EPRI is also assisting the DOE as they apply the business case methodology and tools to a U.S. plant performing a full digital upgrade.
For utilities that already have a modernization strategy or equivalent, EPRI has started a benchmarking group.11 After years of participating in the EPRI Plant Modernization subcommittee and other EPRI teams, the Tennessee Valley Authority thought a fresh look would be helpful in charting out next steps. Stephen Farlett, senior manager of risk and technology at TVA, says, “Over the last several years, TVA has made significant improvements in plant modernization, but we are pleased to have a team from EPRI come in and take a fresh look at where we are compared to our peers in the industry and compared to EPRI’s latest research. This is a great opportunity to gain insights that will help us chart our next steps. While executing enhancements and improvements to the physical plant, to the M&D Center, and to the processes, there is a risk of being so close to the day-to-day execution that you could lose some perspective. Bringing EPRI in for modernization benchmarking is a great opportunity to bring in fresh eyes and fresh perspectives.”
What’s next for EPRI Plant Modernization? “Along with kaizen activity, we see digital transformation as a key concept to make our Hamaoka Nuclear Power Station cost competitive,” said Chubu’s Ihara.
EPRI deliberately did not include digital in the original plan, but many of the proposed improvements had digital components. As a digital solution for work management is very similar to a digital solution for monitoring, the program focused on these common elements and proposed common solutions to issues like architecture, data interchange, and cybersecurity.
EPRI has started the Digital Transformation Research Initiative (DXRI) to examine these issues and develop common technical solutions.12 DXRI includes experts and utilities from across the spectrum of utilities, from nuclear to renewables to transmission and distribution, and will focus on enabling processes and technology common to all projects that apply digital technology. One goal of the Chubu pilot is to show how modernization can help set up a digital transformation strategy at Hamaoka. Then EPRI can update its process guide for other members. Most—if not all—of the work will be applicable to new nuclear plants currently in the design and construction phases.
Modernization and digital transformation offer a structured approach to selecting and implementing cost-saving improvements in a world of flashy and distracting technologies that may not live up to their promise. If you are interested in learning more, please visit nuclearplantmod.epri.com or send an e-mail to email@example.com.
Robert Austin is a senior program manager at EPRI responsible for plant modernization, digital transformation, and AI.
- S. Lorenzik and J. Horst Keppler, Projected Costs of Generating Electricity, International Energy Agency, Paris (2020); iea.org/reports/projected-costs-of-generating -electricity-2020.
- “The economics of plant modernization in U.S. markets,” Product ID 3002014737, EPRI, Palo Alto, CA (Jan. 2019); epri.com/research/products/000000003002014737.
- “Nuclear power plant modernization-strategy development and implementation process,” Product ID 3002020908, EPRI, Palo Alto, CA (Nov. 2021); epri.com/research/products/000000003002020908.
- “Nuclear plant modernization technology assessment,” EPRI Nuclear plant modernization toolbox (2022);
- “ANAV uses EPRI tools to improve its maintenance strategies,” Product ID 3002026261, EPRI, Palo Alto, CA (Mar. 2023); epri.com/research/programs/111344/results /3002026261.
- U.S. Department of Energy, Office of Nuclear Energy, “Light Water Reactor Sustainability (LWRS) Program,” energy.gov/ne/light-water-reactor-sustainability-lwrs-program.
- “Business case analysis model (BCAM),” version 2.0, Product ID 3002019454, EPRI, Palo Alto, CA (July 2020); epri.com/research/products/000000003002019454.
- “Nuclear plant modernization business case analysis models,” EPRI Nuclear plant modernization toolbox (2022); nuclearplantmod.epri.com/bcam.
- “EPRI tool helps determine financial feasibility of nuclear plant modernization projects,” Product ID 3002025448, EPRI, Palo Alto, CA (Sep. 2022); epri.com/research/programs/111344/results/3002025448.
- “Plant modernization business case: Consolidated business case analysis model,” Product ID 302025401, EPRI, Palo Alto, CA (Mar. 2023); epri.com/research/products/000000003002025401.
- “Plant modernization benchmarking and assessment,” Product ID 3002024058, EPRI, Palo Alto, CA (Mar. 2022); epri.com/research/products/000000003002024058.
- “Digital Transformation Research Initiative (DXRI),” Product ID 3002027598, EPRI, Palto Alto, CA (May 2023); epri.com/research/products/000000003002027598.