Exploring changes in the investment in nuclear power that will occur in the era of benchmarking prices

Following the introduction of wind power, photovoltaic and other renewable energy on-grid benchmark prices, the newly-established nuclear power unit implemented the benchmarking on-grid tariff policy. The nationwide nuclear power benchmarking price was finally approved at 0.43 yuan per kilowatt-hour. At this point, nuclear power "one plant at a price", the power plant "running price" history has come to an end.

After the significance of constraining investment in nuclear power plants and increasing investment efficiency, the problems that the benchmark electricity price will bring cannot be ignored. How to control nuclear power investment and construction costs has become a common problem faced by nuclear power companies. To this end, on August 23, China International Engineering Consulting Corporation convened a nuclear power engineering economic strategy seminar and invited nuclear power industry experts to discuss the future of nuclear power construction investment. The magazine invited Liu Jing, deputy general manager of China Nuclear Power Co., Ltd., who had participated in the seminar and spoke at the seminar, to write an article detailing the changes that nuclear investment will take place in the era of benchmark price.

Nuclear power ushered in the benchmark price era

Future nuclear power will develop steadily within the constraints of safety and economy

On June 15, the National Development and Reform Commission issued a notice to change the current on-grid tariff of nuclear power from individual pricing to the implementation of a uniform benchmark on-grid tariff policy for new nuclear power units. At the same time, it emphasized that the benchmark price of nuclear power remained relatively stable. In the future, the benchmark price of nuclear power will be regularly evaluated and adjusted according to progress in nuclear power technology, changes in costs, supply and demand conditions in the power market.

This measure indicates that China’s nuclear power has ended the "one plant and one price" electricity price mechanism, officially ushering in the era of benchmark price, and the pricing mechanism of nuclear power has also moved from a planned economy to a market economy.

In the long run, the introduction of nuclear power pricing policy is an inevitable and even more progress. It put forward higher requirements for the development of nuclear power safety, technology, standardization and marketization. In fact, given the supply and demand and price formation mechanism is the most basic mechanism of the market economy, we can say that the implementation of nuclear benchmark price and adjustment policy is an important milestone in the development of China's nuclear power market.

At the same time, the establishment of nuclear power benchmark price for nuclear power companies set a price ceiling standard, which will inevitably promote nuclear power companies to strengthen cost management, nuclear power company cost management is the most important control of project cost, thereby reducing costs and increasing efficiency, improve efficiency.

More importantly, the competition in nuclear power and technology in the future will tend toward benign development. Due to the different levels of economic development in different regions, the comparative advantage between regions leads to great differences in the economics of nuclear power. The setting of the benchmark price will enable the government, enterprises, and the public to make more scientific analysis and comment on the suitability of nuclear power in the region, so as to make scientific decisions, promote the rational distribution of nuclear power, and avoid blindly pursuing nuclear power projects in the region; at the same time, Market-oriented, users will be more autonomous in their choice of technology, and the enthusiasm of using independent innovation technologies to reduce cost will also gradually increase in the future.

Full process cost control

Nuclear power companies are hoping to establish a scientific and rational adjustment mechanism and a standardized subsidy mechanism at the same time, and they should establish a nuclear power management concept from the source to control the cost of construction, construction and operation. Both in terms of design and construction, including financing models, It is necessary to think in advance and adopt measures to reduce costs, reduce costs, and increase profitability under the premise of established revenue.

Project delay is a common and prominent phenomenon in nuclear power engineering. Due to the adoption of new technologies, delays in the manufacture of equipment, and other reasons, there are relatively common over-time and over-above phenomena in the construction of nuclear power projects, resulting in increased construction costs for nuclear power companies. After the country introduced the benchmark electricity price, it formed a cost-reducing mechanism for nuclear power, incentivized enterprises to restrain costs, and encouraged companies to continuously optimize project management mechanisms and upgrade project management.

In the past, nuclear power projects were completed by the same team from construction to operation, which is the so-called big owner management model. In the past, it was a relatively suitable management mode for nuclear power in the initial stage and no large-scale construction stage. As nuclear power has gradually become a pillar industry of energy, this “one-on-one” type of construction and operation will inevitably hinder the improvement of technology and management. The construction and operation of a specialized division of labor has become an important means of ensuring nuclear safety and reducing construction costs.

The history of the development of China's nuclear power has revealed the reality that the implementation of nuclear power technologies with high rates of introduction, digestion and absorption, and localization has lower construction costs and on-grid tariffs than imported nuclear power technology models. Under the pressure of cost, nuclear power companies are bound to increase the research and development of their own technologies. While accelerating the introduction, digestion, and absorption of advanced nuclear power technologies abroad, they will accelerate the development of autonomous models to lay the foundation for further reduction of nuclear power costs.

The situation of nuclear power construction is severe

Nuclear power project construction has its own characteristics, mainly including: safety, high quality requirements; high one-time investment; complex technology and management; strong professionalism, large project volume, long construction period, and high risk. In addition to these common characteristics, China's engineering construction projects have the following characteristics:

First, there are many types of existing engineering technologies and there are insufficient reserves

At present, China has at least six different types of engineering technologies, including Russian WWER technology, French M310 technology, US AP1000 technology, independently developed 650 MW PWR technology, and high-temperature gas-cooled technology. No matter whether it is design or equipment manufacturing, it highlights independent research. The lack of technical reserves, the number and ability of experienced personnel can not meet the requirements of the project.

Second, the depth of pre-project preparation is not enough to lay a hidden danger for the project construction.

Nuclear power engineering projects should have a project preparation time of at least 24 months. At present, the engineering preparation time for project approval after the state approval is far from enough. In addition, the company is not aware of the specific projects and time approved by the state. As a result, the preliminary preparation of the project is insufficient and the depth of work is limited. This poses hidden trouble for the follow-up project construction in terms of design change management, schedule, and investment control. The attention of nuclear power companies in project applications far outweighs the preparation of engineering, equipment, and other key links that play a decisive role in project construction.

Third, lack of strong foundation for engineering project management

Including the responsibility of participating in project management organizations, the qualification requirements of management personnel, mature and effective work processes, outlines, procedures and manuals, and personnel recruitment and training.

Fourth, the low degree of project general contracting is not conducive to the overall improvement of engineering construction.

To sum up the above reasons, China’s nuclear power projects under construction and project management have formed a bad cycle. All levels are struggling to cope with the problems arising from new projects or projects. There are frequent tardiness and oversimplifications in the existing project construction.

The estimated price exceeds the approved price, and the execution budget under some subjects exceeds the approved budget. Due to factors such as national policies and unpredictable environmental conditions, the actual investment in the project exceeds the total approved investment estimate and is collectively referred to as the three-super phenomenon. The common cause of unfavorable engineering investment control lies in the difference in concept: In the past, the price policy of one factory and one household led the owners to focus on winning better prices and neglecting construction cost control.

In addition, the understanding of operating costs is not uniform, resulting in the inconsistency between the electricity price model of the design institute and the owner's electricity price model, which affects the unified understanding of the construction cost. The Design Institute prepares qualified units for the budget estimates, and the design fee is the same as the project cost. It is directly proportional to the fact that the proposed budget is a necessity driven by interests; the fee collection standard is out of line with reality, the refinement ability of engineering management is not sufficient, and the technical solutions adopted are many. The accumulated engineering data under the same technical scheme is not enough, and design and equipment manufacturing are actually monopolized. The national requirements for equipment localization are all important factors that cause the construction costs to be uncertain.

From the perspective of the enterprise's own reasons, the lack of prior investment control in the field of engineering investment control, the incompleteness of the standard system in the field of investment control, the inadequacy of preliminary design and implementation budget management, the lack of information technology tools and management tools in the investment control process, general contracting management The degree of marketization is not high, investment control ability is weak, there is no guidance on the pricing mechanism of general contracting, and problems such as insufficient contract execution and management capacity are common.

New security and economic challenges

Nuclear power can only develop steadily within the constraints of the safety and economic lines. After the country implements the nuclear power benchmark price policy, the reasonable control of project cost has become the key to guaranteeing the economic benefits of nuclear power companies. Due to the objective reasons of the country's overall environment and the specific conditions for the low share of the nuclear power industry, it is impossible to achieve 100% construction cost refinement and control, but there is still a great deal to be done to improve the current status quo.

As far as the common issues of the industry are concerned, on the basis of the scale of nuclear power construction and the standardization of design, the methods for designing fee collection can be further improved; and equipment manufacturers that are important equipments that are not fully competitive in the market can analyze the production cost of equipment and give reasonable results. Appraisal of equipment manufacturing; joint construction of non-market competitive nuclear island Jianan contractors, analyzing cost components, giving reasonable construction valuations, analyzing operating costs, and unifying electricity price estimation models; strengthening rigid propaganda on 0.43 electricity price policies to form top-to-bottom Unified understanding; refine the analysis of policy boundary conditions, and confirm the reasonable part when estimating the project; fully consider the feasibility of estimation when the project estimate is reviewed and determined; improve and perfect the national nuclear power project approval method to ensure that the enterprise is rational Scientific preparation time and work content. At the same time, it meets the unified decision-making mechanism of “responsibility, risk, and return” of investors.

From the perspective of the internal construction of the enterprise itself, the first is to strengthen the preparatory work of nuclear power to ensure that relevant depth requirements and management procedures are met. According to the past experience in the construction of nuclear power projects, whether the preliminary work is sufficient and meets the content depth requirements is critical to the project's availability of starting conditions. In particular, whether or not the FCD's supporting resources can have effective protection conditions is also a necessary and sufficient condition for whether many projects can be smoothly promoted and ensure progress.

The second is to strengthen contract management and pre-set engineering acceptance criteria. At present, the nuclear power engineering construction sector as a whole lacks operability-based normative management measures for change (especially design changes). The change is an important risk factor that causes the increase of engineering investment. Therefore, nuclear power companies must integrate the actual changes in the project, and adopt corresponding management measures and measures in order to ensure the smooth completion and acceptance of the project in the future.

The third point is to review and sort out reasonable fees for the various costs of the project. According to the different unit selection and technology maturity, the scale ratio control coefficients for the important sub-items of the basic price in various model project cost estimates are formulated. According to the current evaluation method, in the basic composition of investment estimates, the research determines that the following relationship should be divided and controlled and evaluated: for example, the proportion of engineering fees (including pre-project costs) and other engineering fees, equipment, construction and commissioning fees. Contents such as mutual proportions.

Finally, it is necessary to scientifically and effectively determine the project project contract model to further improve the EPC project management model.

Although the development of nuclear power is affected by many factors such as safety, technology, equipment manufacturing capabilities, and talent supply, nuclear power companies should take the implementation of benchmarking price as an opportunity, pay attention to the technical and economic problems of nuclear power investment, strengthen the construction and operation management of nuclear power, and realize nuclear power investment. The transformation from scale to efficiency will promote the sustainable development of China's nuclear power.

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