Brussels, 14 March 2002
Working document from the Commission services entitled: "The cost to Europe of ITER Joint Implementation according to various hosting scenarios". Cover note from Mr Sylvain BISARRE, for the Secretary-General of the European Commission to Mr Javier SOLANA, Secretary-General/High Representative, date of receipt 8 March 2002. Brussels, 12 March 2002 (document 7124/02 RECH 57 ATO 36). Full text
Delegations will find attached Commission document SEC(2002) 6. Brussels, 7.3.2002
Commission Staff Working Paper: The cost to Europe of ITER Joint Implementation according to various hosting scenarios.
1. At the last Research Council on 10 December 2001, the Commission undertook to submit to the Council at the beginning of 2002, a working document presenting the costs of ITER to Europe beyond the 6th Framework Programme, according to various hosting scenarios.
2. The present document summarises available information on the cost of the joint implementation of ITER according to three possible hosting scenarios: ITER in Europe, ITER in Canada or ITER in Japan. Unless otherwise specified, the cost estimates given in the following are those reported in the "Summary of the ITER Final Design Report" (FDR).
3. The ITER implementation includes a construction phase lasting about 10 years, an exploitation phase lasting about 20 years and a decommissioning phase.
Assumptions made in the following on possible cost sharing schemes between Parties during these phases should be taken at this stage of the negotiations as a first approximation, prejudging neither the EU's position in the negotiations nor their outcome.
It should be noted that the financial implications of the possible implementation of ITER in the period up to the end of 2006 are covered within the amount foreseen for fusion in the next Euratom framework programme. The possible financial implications beyond that date cannot prejudge the future financial perspectives of the European Union.
The Negotiation Process for the possible Joint Implementation of ITER
4. By Decision dated 16 November 2000, the Council of the European Union provided directives to the Commission to conduct negotiations on the establishment of an international framework allowing ITER EDA Parties and qualified third countries to prepare jointly for the future establishment of an ITER Legal Entity (ILE) for ITER construction and operation, if and when decided.
5. Canada, Euratom, Japan and the Russian Federation started official negotiations on the future Joint Implementation of ITER on 8-9 November 2001. At this meeting, the Delegations adopted the framework to prepare jointly for the future establishment of an ITER Legal Entity (ILE) as an international organisation under international law. They accepted a Work Plan and Milestones for the Negotiations Process, planned to terminate by the end of 2002. At this stage, if successful, the outcome of the Negotiations process will be submitted to the Participants in the Negotiations for their agreement/ratification.
Possible ITER hosting scenarios
6. The current situation with regard to the possible ITER hosting scenarios is as follows:
­ Canada has officially proposed a candidate site for ITER (Clarington- Ontario);
­ preparatory work is known to be underway in relation to the possibility for Japan to make proposal for (a) site(s) as soon as Japan's basic stance on ITER is decided; for the time being the sites known to be under consideration are Rokkasho-Aomori and Naka-Ibaraki;
­ In Europe, the French authorities have asked the European Union to consider Cadarache as a potential candidate site and another possible candidature may emerge from Spain;
­ The Russian Federation has declined to offer a site.
7. The working assumption for the present analysis is that there might be three scenarios for hosting ITER (one in Europe, one in Japan and one in Canada) and therefore three possible cost sharing schemes between participants have to be considered.
8. It should be noted that Canada would be a Party to the ITER Joint Implementation Agreement only if the construction site was Clarington, in which case Canada would only contribute to the construction phase (see 24 to 26 below).
THE CONSTRUCTION PHASE
ITER construction costs evaluation
9. The evaluation of ITER construction costs by the ITER Joint Central Team (JCT) was based on detailed studies of the means of implementing each stage of fabrication of each component, applying unit costs normalised for the project as a whole (e.g. hourly cost of labour; cost of materials on the international market). The cost estimate exercise has been the subject of a wide consultation of the Parties' industries.
10. The supply of these components and systems was divided into 85 procurement packages, each described in detailed specifications for a plausible contractual arrangement with an industrial supplier. Each ITER Party relied on one or more industrial suppliers to provide, in their national currency at the date of consultation, a costing for the proposed contract and an analysis in the technical terms defined in the specifications. The resulting direct capital cost of ITER construction3, expressed in ITER Units of Account 4, amounts to 2,755 kIUA.
11. For technical reasons, a number of spares, the cost of which would in principle be charged to the operation phase, will have to be ordered as part of the contracts for the main supply. The delivery of other items can be deferred a few years after the start of operations, as they need not to be commissioned at the start of operations. However, for simplicity, the capital cost considered in the following will include such spares and deferred items, the costs of which are estimated to be 258 kIUA.
12. In addition to the above, a certain amount of R&D will still be necessary during construction, estimated to fall in the range 60-80 kIUA.
13. Finally, to estimate the cost of management and support, assumptions were made by the JCT on the structure of the future organisation to execute the construction and on the manner procurement would be managed, which in turn have an effect on the size of the ITER Team. The management and support costs (largely manpower) would also depend on where ITER would eventually be sited. Assumptions were also made on the cost of professionals and support staff and on the ratio between these two categories. The total man-years for the ILE Team were estimated at 1,800 professional personnel.year and 2,760 support personnel.year. The total cost for management and support is estimated at 477 kIUA.
14. All included the cost for construction is thus estimated at 3,570 kIUA
15. Following the EU domestic assessment of the ITER Engineering Design Activities (ITER-EDA) Final Design Report, the CCE-FU5 concluded that the methodology followed by the ITER JCT in evaluating the cost of ITER is sound and provides the correct basis for entering into the negotiations concerning the sharing of contributions, percentage-wise, among the different components and systems of the ITER machine, based on the supply of components "in kind" among the Parties.
16. Costs will be shared between Parties according to sharing schemes that will result from the negotiations and which will reflect each Party's willingness to contribute equitably (see Point 21). To allow the Parties to estimate the possible budgetary effects of their participation into ITER, each of them must be able to estimate the cost in its own currency that it would incur to provide its contribution. Global conversion factors were calculated by the ITER JCT using exchange rates and standard inflation factors in each of the Parties. For Europe the ITER Unit of Account has been estimated by the ITER JCT to be equivalent to about 1.28 k euro at December 2000 economic conditions.
17. Using this factor, the total cost, including spares, deferred items, R&D, management and support is thus estimated at 4,570 Mio euro (see Table 1):...
THE OPERATION PHASE
31. The evaluations carried out by the ITER JCT include the cost of personnel located on- site for the functioning of the installations (plus general costs), energy and fuel (tritium) costs, the cost of some new capital investments (enhancement), spares and maintenance. As for the construction costs, these estimates are expressed in IUA and adjusted according to normalised costs.
32. According to the planning proposed in the ITER EDA Final Design Report, the exploitation phase would be sub-divided into two main sub-phases: the first 10 years corresponding to an experimental physics oriented programme, the following 10 years to an intensive, technology oriented, use of the facilities. It should be noted that the evaluation of the cost of operation after the first 10 years depends on the programme of work, which will be decided according to the results of the first sub-phase.
However, an estimate of the average expenditure over the whole exploitation period has been made by the JCT and results in about 240 Mio euro per year.
In addition, as explained below, yearly provision for decommissioning (not including the de- activation phase ­ see Point 35) will have to be made and shared among Parties according to the scheme used for the operation. This provision (including long-term disposal of waste) will depend on the Host country. Preliminary estimations in Europe indicate (Points 36-37) that it could be of the order of 25 Mio euro per year, bringing the estimated yearly funding to a total of 265 Mio euro.
33. The cost sharing scheme between ITER Parties during operation is a matter for negotiations. In the following, it is assumed that the sharing of the whole costs for operation would reproduce the scheme used for the common area during construction, as long as the Parties remain the same (i.e. about 42% for Europe). Accordingly the European contribution would be about 111 Mio euro per year, wherever ITER would be hosted.
34. The cost sharing between Euratom and its European partners would of course be different depending on whether ITER is hosted in Europe or not as the support expected from the Host would no longer exist. In the following it is assumed that the amount of the Associates' contribution would remain at the same level.
A possible cost sharing scheme for operation within/outside Europe (per year) between Euratom, the host Member State (if applicable) and all Associates is suggested in Table 4....
35. The plan described in the ITER Final Design Report assumes that, at the end of the exploitation phase, the ITER organisation will be responsible for starting the machine decommissioning through a de-activation period lasting about 5 years. The cost would depend on the site. Following the estimate given in the Final Design Report the yearly cost for this phase would be about 86 Mio euro.
36. The above cost estimate does not include the dismantling of the buildings and of the non-active components, or the disposal of wastes from the decommissioning, which again depends heavily on the host country regulations and practices. Therefore, at the end of this phase, the facility will be handed over to a new organisation in the ITER host country that will be responsible for the final phase of decommissioning after a dormant period for radioactive decay.
37. In the final report on the exploratory non-committal discussions held between ITER EDA Parties in 2000, it is proposed that the costs of this second phase of ITER decommissioning be shared among the Parties. The financial provisions for decommissioning and management of the activated materials which belong to the ILE should be made jointly by the Parties through a fund to be established under the agreement and built up during the period of the project in accordance with the licensing requirements. The conduct by the host of the final decommissioning phase would then be entirely funded from the reserve set up for this purpose during the preceding phases (see Point 32).
38. The following table provides a summary of the cost estimates for the various phases of the realisation of ITER according to two scenarios, ITER inside or outside of Europe. It provides also the costs to Europe and to Euratom according to the cost sharing schemes hypothesised in this paper. The yearly average costs are estimated assuming they are evenly distributed on the duration of the corresponding phase, i.e. 10 years for construction, 20 years for operation and 5 years for de-activation. It is recalled that the cost for decommissioning is provisioned during the operation phase and included in the cost of this phase....
39. Among the key issues to be addressed for a project of such scale is the rigorous control of costs over the long period of time considered for the joint implementation of ITER.
Over the more than 20 years of existence of the JET Joint Undertaking, Europe has gained a unique and successful experience on the methods to be used. During negotiations, the EU will use this experience to ensure that this objective will be met. It has been agreed during the negotiations that the sharing of the construction costs would be calculated on the basis of the cost estimates, percentage wise, presented in the ITER-EDA Final Design Report. Once the detailed list of the supplies to be contributed by Europe will be known, a final validation by independent experts of the cost for Europe could be considered before a final decision is taken regarding ITER construction.