Patrick Fragman: In 2026 we will have a cost estimate for the new units of Kozloduy NPP

What are the next steps and what's the timeline?

The engineering ESC is going to take us until more or less around the end of next year. After that, the normal schedule, the ideal schedule, and this is something that is still in flux, but is to go either on an EPC contract or a pre-EPC contract, which is really going to be the full definition of the work to be done. There is something which is important, which is the long lead items.

And why is it important? You're probably aware that many countries are restarting nuclear programs and there are a certain number of suppliers which are either unique - or there are two or three in the world. Everybody is going to them and the way they manage that is they give slots.

So having a long lead item type of contract enables us to take a slot. If you don't have a slot, you go to the end of the queue and then your schedule shifts to the right. So it's a way to secure the schedule. The long lead item is a way to secure the schedule.

So you have the slot?

No, because we haven't placed the long lead items yet.

How big is this project compared to the other projects that you have going on there right now?

Westinghouse has been very committed to Bulgaria for many years. It's not only one project where we do a plan suddenly with a country or with a customer that we don't know. We have been working along with this customer for decades and this has accelerated recently in addition to the fuel side with working to help them strengthen energy security on the fuel.

In addition, we already have a presence in the country, as you know, with quite a few skilled people. It is an important project and definitely it has a lot of attention and priority inside the organization.

What are the main difficulties then? You surely know Bulgaria has a history of failed nuclear projects.

First of all, in the big picture, what do you need for such a project to succeed? You need a ready design which is demonstrated. We are at this stage because we already have six units in operation. The technology AP1000 is very advanced and proven. It's not a reactor "on paper."

The second piece is you need a supply chain. We already have an active supply chain for the existing AP1000. We are going to complement this existing supply chain with suppliers here in the region and in Bulgaria. And that's something which typically we will do in the next two to three years.

What else do we need? A stability of commitment on the side of the customer. And this has several dimensions. You could say it's a matter of stability of political decision-making and right now it's true that in the past few years we have had very, very constant support from the Bulgarian government on this project.

But it's also a continuity of public support. And it's a fact that worldwide, including in the EU and in Bulgaria, the image of the nuclear industry has kept improving. So there is fairly strong political support.

And it's important for us to run the project because it spans several governments, across many years. And so you need to have public support throughout.

And what I would say is for us, this project is just the start. I usually say when we design such a plant, it's a marriage for a century that we have with the customer. And it starts with the construction of the plant, but after that we are around during the whole operation and maintenance of the plant to support the customer.

So, two points there. First, the supply chain. How do you see Westinghouse strengthening the Bulgarian side of the supply chain? And second, are you worried, as all other businesses are, about the political instability in Bulgaria?

I might surprise you. I would start with the second part. The answer is clearly no, because we have already been in Bulgaria for so many years. We know Bulgaria is a nuclear country. It's not a country which is new to those technologies. We know that we can find very skilled people, contractors and companies here. So for us, there is no real concern there.

Unlike some of our competitors, Westinghouse is not very integrated. We buy a lot and usually we buy where we build. You may be aware that we have a certain number of competitors worldwide, and most of them are state-owned. And they are very integrated. So when they do a project in a country, they bring their own suppliers and so on. This is not us. We have a certain amount of core equipment that we bring, but we buy a lot of the rest.

And that's going to happen in Bulgaria.

And that's absolutely what is going to happen in Bulgaria.

Can you respond to the political question? You said you are not bothered by it, but I was also wondering why.

I'm going to tell you why. Because I think Bulgaria, like many other countries, has a majority, which is favorable for nuclear energy. And at the end of the day, the politicians are also reflecting the mood of the population.

How are you going to find the workforce needed for such a project? Because every business that you speak to in Bulgaria these days has been saying that there is a lack of workforce.

There are two ways to answer that. There is the part, which is on our scope, that I'm not too worried about. We will find a way because our scope is a mix of things we do in Bulgaria and things we do outside of Bulgaria. And there will be enough people, suppliers and so on to do it.

And there is another part, which might be the scope of our partner on the construction side, where I think you're correct. The workforce is probably insufficient. In which case, you know, the EU is a region. There will be other workers from other countries.

And in the same way, because there are also other programs that we do in other countries, the people that we train in Bulgaria and that we work here with will have the ability also to go to other EU countries and to work on other projects. So it works both ways.

Is this going to be a boost for the Kozloduy region? It seems to me we've been speaking about the prospect of new roads, and new people coming in.

We should do at some point what we have done in other cases, which is we asked an external consultant to do an analysis of what would be the impact on the GDP of the country and those types of things. We did that in other cases. But in any case, it's a huge amount of investment coming to those regions. These are projects, which, by their magnitude, transform areas.

What do you think will happen to the total cost of the project? I ask this because the last time we had a project for a new nuclear power plant, the price first went up several times and then the project completely collapsed.

The Engineering Service Contract, the ESC, is precisely the stage where we refine the cost estimate and the schedules and the execution plan. And the three are connected because the longer it takes to execute a plan, a project, the more expensive it is. And that's why you need to put all of this together.

We should have much more narrow estimates about the project cost around the end of 2025. We will start the financing analysis and those types of things then. When you have the financing analysis, you go to banks and you say, "OK, this is the cash flow I need for the years. This is what the customer will do." And then the financing institutions, the banks, but also the export credit agencies like US Exim, will say, OK, this is the cost of financing. And then you have a total estimate of the cost of the project. This is the way all the projects are done, not only nuclear.

The big question everyone has about nuclear projects is that they take a long time in a dynamic market like energy. How will they be successful and cost-effective for all sides?

The drivers of such projects are the following: One, you want to have access to cheap and cost competitive and stable electricity. Look at the forward on the electricity prices. I don't know of any institution in Europe that tells you that electricity prices in the long term are going to go down drastically. They are going to keep on increasing, because geopolitics are at play, because electricity is becoming the fuel of choice.

You have more and more electrification. It's true in transportation. It's true in many processes.

So the use of fossil fuels is declining and the use of electricity is increasing. And lots of countries are going to come to the limits of their current infrastructure, which is why you have lots of projects to upgrade it. So electricity prices are going to continue to go up in the long run.

And if you want to avoid variability and provide a boost to your economy by having cheap electricity, baseload nuclear power is one of the best answers. And it's not Westinghouse saying it. Look at the International Energy Agency reports. They tell you existing nuclear, along with large hydro, are the two cheapest sources of electricity, even before wind and solar and so on.

The second piece is energy security. Geography is a given. Energy security concerns today are not going to change overnight. It's a good move for Bulgaria to have its destiny in its hands.

And the third piece, obviously, is decarbonization. There is still some carbon-based type of generation in Bulgaria that can easily be replaced by the new units on the generation side.

So when you put all those three together, which is cost-competitive electricity and stable electricity, energy security and decarbonization, that's why so many countries want to have nuclear programs.

Do you see the same thing happening across Eastern Europe?

There is another dimension in Eastern Europe. It is not the most completely politically correct thing to say, but given the mess of the energy system in Germany, the countries around will have a real nice level playing field in a few years when they will be able to sell electricity at a very high price to the Germans. As France does now.

This is sort of a geopolitical question. Bulgaria has been in the Russian sphere of influence for nuclear for decades, as have other countries in the region. And with Russia shooting itself in the foot and withdrawing from all the markets, do you see this as an opportunity to enter their markets?

We have proposed our services to all the countries in the region which effectively want to get out of the control of the Russians. And look at, for instance, what we do on fuel diversification, what happened in Bulgaria (replacement of Russian with American fuel at Kozloduy) also happened in Czech Republic, Slovakia and Finland, and obviously happened in Ukraine as well. But we started the process there more than 10 years ago. So I think all of those countries really want to also have their destiny in their hands.

And the other question that obviously is popping up in Bulgaria also is the nuclear waste management. What are the plans there?

Nuclear waste management in all European countries is not done by the provider of the technology. It's the customer working with the governments. But we are involved in some project to support the governments in putting this in place. I would give you a simple answer. Nuclear waste management is not a technical issue. It's not a safety issue. There are technologies to do it right. It's a political issue.

Look at Finland. Finland is environmentally friendly, but is putting in place everything so that they can manage nuclear waste - the medium level, the low level and the high level radioactive waste. Sweden, the same. Switzerland as well. The technologies exist. It's a matter of political decisions. And I believe Bulgaria is moving in the direction of putting this in place. But you're right to say this has to be also put in place so that we have a complete system.

Up to now, Bulgaria has not faced this issue because the other deal we had with the Russians was they just take it. So now it's a new situation for us.

I believe that these mentalities will need to evolve also at European level. Because you have very small countries who have, for instance, one or two plants. I don't believe that we need to put in place waste management in each and every one of those countries.

I know it's a sensitive topic because populations say we don't want the waste and so on. The reality is we have to explain that there is, frankly, very little risk. I wouldn't care, frankly, about living next to a waste repository because I know that the risks are extremely minimal and unlikely. You take a much bigger risk when crossing the street or driving your car or taking a plane than having an issue with waste.

You were talking about the new AP-1000 reactor. What is it about it that makes you confident that this is the future of nuclear energy?

Its simplicity. You might think nuclear is complex, but the reality is, it's an extremely simple reactor due to the passive safety system. It's about making sure that in case there is a lack of power supply around the plant, it can continue to cool itself and be in a safe mode without any human intervention. AP-1000 does that purely by using the laws of physics. In all other reactors, you have the very complex redundant systems that do it, that add a lot of complexity to the plant. The AP-1000 is the only advanced reactor in the world to have those features.

And that's why when you compare the footprint of the AP-1000, or to the footprint of the other reactors, it is very small. You could even say it's modular. In fact, it's 1.1 GW in a very concentrated footprint. For instance, it's about a third of the footprint of the EPR (pressure water cooled reactor) with 70-75% of the power.

So it's hugely compact and simple. And that drives, at the end of the day, what drives the cost of a plant and therefore the cost of electricity.

The company is involved in a whole range of interesting projects, and one of them is the Arctic Circle. I think you have a microreactor that seems to be a solution for remote communities. How does it work?

It's a different technology. It's what we call heat pipe technology. It's transportable by truck or you can even drop it from an airplane from a C-17.

Hopefully you are not dropping it from one.

You can drop it. It's safe. It's designed to be like this. It's going to remote communities where it can work without interruption for at least eight years at full load. And power, let's say, a small city of 30,000 people.

Today, such remote communities rely on diesel generators. And it's extremely costly and complicated in, say, winter conditions. You have those trucks with gasoline or diesel that have to go all the way to those remote communities. It's a nightmare. So with those solutions, you can really power up those communities in a cheap and environmentally friendly way.

Do you have a test project already?

So we actually already have a pilot model. We are now moving to the next stage. The eVinci is designed for five MW and we are putting a one MW full scale in two years from now into an installation in the US where it will run for two years. And that is more or less the end of our licensing. After that, we will launch it on the market because we have already done a lot of engineering, a lot of R&D.

Are you also working on a moon base power project?

This is the same technology that we negotiated with NASA and the US Air Force. And it's actually already in the lunar program - as a power supply for the Artemis program (NASA plans to establish a lunar base by 2030 - b.r.). And the idea is that it will serve as an experiment to power the Mars base later.

Are you in talks with Musk already?

Maybe.

Do you have a timeline of when this will happen?

No, because it depends. It's called the surface fission program. It's a multi-year program. We're not alone. We are also working with aerospace, other aerospace contractors. But it's a stage program. We are at the definition stage. For eVinci, the Earth program, the idea is a commercial operation before the end of the decade. And we are also developing a version for ships.

I think safety will be the main issue for all these programs.

We use the safest fuel on Earth. It's called TRISO fuel (uranium-centered, multilayered fuel). Do your research and you'll see - its super safe.