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« Australian Uranium Policy: A Queenslanders view! | Main | Laramide Resources: Up 8.32% yesterday! »

Incentives for a Boom in the construction of nuclear reactors!

BBC Logo 11oct07

There is an interesting article by Laura Smith-Park of BBC News, Washington, regarding the possible boom in the construction of nuclear reactors today.

The flood of applications now being generated for the construction of new nuclear power plants is gaining momentum and generating interest in this sector. This article lists a few of the factors behind the renewed enthusiasm as follows:

“The introduction of a new fast-track combined construction and operation permit, making new reactors easier and cheaper to build

A tax credit, introduced in the 2005 Energy Policy Act, of 1.8 cents per kilowatt hour for the first 6,000 megawatts generated by nuclear plants

Risk insurance adding up to $2bn for the first six plants to be built, protecting companies against the cost of delays in construction

Multi-billion-dollar loan guarantees

A likelihood that the cost of emitting CO2 will rise as the battle against climate change intensifies”

The risk insurance for delays in construction is one that caught our eye. We have mentioned in previous articles that delays in construction put millions of dollars at risk and could break a construction company not acquainted with claims resolution techniques, hence the proliferation of consultancies professing to have such skills. In a competitive bidding environment it is difficult for the contractor to make a provision for such delays, as their price will be rejected as too expensive. The more knowledge that you have about a project the more expensive your bid becomes and so on some occasions the ‘uninformed’ are awarded the contract. We think that such ideas serve as good incentives and will hopefully advance the process of getting this nuclear programme up and running.

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Reader Comments (2)

As a life long construction project manager/estimator I can tell you your comments about cost overruns are spot-on . In a competative bidding enviornment there is no way you can put one thin dime in your bid to cover unexpected delays and have any hope of winning. These funds have to be an allowance put equally into all the bids . Further,engieering costs are a staggering percentage of costs . We have to reinvent the wheel each time we build a new plant . I understand the French have a few standards and they just duplicate these . Gee,I wish we were that smart . Thank you .

October 12, 2007 | Unregistered CommenterWilliam R. Radcliffe

We see the delay bubble starting with Engineering and then going into Procurement where long lead items will take on a new meaning with each contractor trying to buy improved delivery times. Finally to Construction where we already have shortages of skilled labor in other sectors such as Oil and Gas and Mining, etc. The time delays and cost overruns for these new projects will set world records if we are not extremely diligent.

October 15, 2007 | Unregistered CommenterUranium Stocks

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