Learning by Doing Overseas

This section reviews learning by doing in overseas nuclear power plant construction and considers the issue of transferring experience gained in recent overseas construction to future U.S. construction.

France’s nuclear energy program is known for its standardization. Thomas (1988) writes that France’s program was “the largest attempt at thorough-going standardization of power station design” (Thomas 1988, p. 195). The success of France’s program is widely attributed to its efforts to standardize and modularize its nuclear reactors. Theoretically, learning by doing should thus exist to a higher degree in France than in the United States. By producing identical nuclear plants in series, France ensured maximum relevancy of past experience. “Standardization… makes it easier to identify empirical irregularities that point to underlying structural conditions deserving further investigation. Therefore, it promotes the learning process directly and widens the sphere of application for what has been learned” (David and Rothwell 1996, p. 191). Although there is a near consensus that France’s

standardization was both a catalyst in learning by doing and the reason for the French nuclear industry’s success, capital cost studies on par with those focusing on the U.S. industry have not been found. This may be a result of lack of adequate data; Thomas writes that Electricité de France (EdF) releases data in a very global and aggregative form without specifying the extent of government subsidies: “This means that the absolute level of French construction costs must be treated with some care, if not suspicion, even for comparisons within France” (Thomas 1988, p. 232).

There is, however, evidence that France benefited from its standardization. Lester and McCabe (1993) used plant operation data and Thomas used construction times to evaluate the French nuclear program. Lester and McCabe found that “the equivalent availability factor”…increased more significantly in French plants than in U.S. plants, implying that the French learned how to effectively operate their plants sooner and to a greater degree than U.S. utilities learned to operate theirs (Lester and McCabe 1993, p. 435). "The equivalent availability factor is defined as the total amount of energy that a plant could have generated during the course of the year had it been called on to operated continuously at full power, divided by the maximum annual energy output at continuous full-power

learning (both within and among firms) is observed only when reactors of the same class are involved,” implying that learning effects are more significant when plants are similar or identical. Examining construction times of French reactors, Thomas noted that although construction times did not decrease from 1971 to 1980, “Even more striking… is the fact that construction times have not risen over time” (Thomas 1988, p. 229). That is, in contrast to the U.S. and German experiences, and despite the fact that the French industry was

undergoing “very rapid expansion,” French construction times remained relatively constant. “There is little evidence of learning leading to reduction in construction times but this is at least in part explained by the rather short schedules that the French programme established from the beginning” (Thomas 1988, p. 232). Furthermore, a 1984 article in Nucleonics Week cites a study by the Electric Power Research Institute (EPRI), which found that French plants required “50 percent or less of the electric and mechanical (craft) labor consumed by the U.S. plants studied” (MacLachlan 1984, p. 2). In summary, Lester and McCabe found that the French industry realized greater learning effects in operation and maintenance, while Thomas found that France was able to avoid significant construction delays; the EPRI study found that French plants required significantly less labor to construct. All the studies explicitly attribute their findings to France’s standardization and single-utility industry structure.

Japan’s nuclear industry has also been characterized as successful. In a 1988 article, Navarro attributes Japan’s success to standardization and a unique anti-trust policy. The Japanese Ministry of International Trade and Industry (MITI) guided Japan into a two-design reactor program. The program was designed to reap the benefits of both standardization (reduced costs, greater learning effects) and competition (pressure to keep costs down). Of standardization, Navarro writes, “Besides the benefits associated with construction time reductions, these programs are generally credited with helping Japanese utilities raise the aggregate nuclear capacity factor from a low of 37 percent in 1977 to close to 80 percent today” (Navarro 1988, p. 9). However, Navarro notes that in a statistical analysis, he was unable to find any firm-specific learning effects in Japan. Navarro attributes this lack of firm learning to the prevalence of industry learning: “This important result suggests that the various Japanese consortia have been able very quickly to assimilate and share the

technological stock of knowledge necessary to build nuclear plants” (Navarro 1988, p. 7). Navarro goes on to describe Japan’s unique anti-trust policy, writing that the Japanese government “encourages cooperation and concentration within industries and views resultant consortia as warriors in the international arena” (Navarro 1988, p. 9). Lastly, Navarro notes that Japan’s “open and shut” licensing process allows Japanese utilities to pay lower

insurance premiums on their capital (Navarro 1988, p. 10).

Although both the French and Japanese nuclear industries were relatively successful, a direct link between their success and their efforts to standardize remains unproven.

Nonetheless, there is evidence implying that standardization leads to greater learning effects. A study by Kouvaritakis et al. (2002) estimates a 5.8 percent learning rate for OECD nuclear construction over the period 1975-1993 (reported in McDonald and Schrattenholzer 2001, Table 1, p. 257).