UK: New nuclear build

The build-up towards the UK’s first new reactors in decades was discussed at Marketforce’s recent conference. IFandP brings you the details.

As the United Kingdom continues to press on with its programme of new nuclear build, Marketforce’s annual Nuclear New Build Forum comes at an opportune time given the recent announcement of 10 approved sites by the UK’s Energy Secretary, Ed Miliband. The one-day event took place at the Radisson Blu Portman Hotel in November 2009 and was extremely well attended, to the extent that speakers were addressing a fully-packed banquet hall, indicating the growing interest in this key industry.

The forum was chaired by James Varley, Group Managing Editor of Nuclear Engineering International. He opened by commenting that many of the measures the nuclear industry had requested from government have been implemented, but a few clouds over the horizon remain, particularly that of financing, which will be crucial, if new build is to become a reality.

Alan Raymant, Chief Operating Officer of Horizon Nuclear Power, the recently formed joint-venture between arch rivals RWE and E.ON, explained that his company is aiming to provide 6GW of nuclear power by 2025, enough to supply the whole Greater London area. He also highlighted the two companies’ nuclear expertise in the form of over 20 reactors currently being managed. The point was made that Horizon has yet to select the reactor technology, which will be provided by either Westinghouse or Areva. Mr Raymant made it clear that the lack of a long-term price signal was a major concern for investors and that regrettably, calls for the government to provide this in the form of a price floor for carbon are often labelled as a clamour for subsidies. He discussed the major benefits of new build, indicating that if Horizon’s projects were to go ahead they would generate 10,000 construction jobs at their peak and 800 permanent positions once the plants were operational.

“The problem can’t be solved by nuclear alone, but it can’t be solved without it.” – Alan Raymant, Chief Operating Officer of Horizon Nuclear Power

Paul Rorive, Group Senior Vice-President – Nuclear of GDF Suez, reaffirmed his company’s commitment to UK nuclear build and mentioned its goal of establishing its first new reactor by 2020 as part of a consortium with Spain’s Iberdrola and Scottish and Southern Energy. Construction is expected to start by 2015 and the consortium has already succeeded in securing an option to purchase land from the Nuclear Development Agency (NDA), adjacent to Sellafield in Cumbria.

Paul Spence, EDF Energy’s Director of Strategy and Regulation, was next to speak, indicating that his company’s target of building the UK’s first new reactor by 2017 remains unchanged. The site will be at Hinkley Point in Somerset and it, along with its sister site at Sizewell, will use APR reactors. EDF’s longer-term aim is to have four new units up-and-running by 2025 in the UK, “subject to a robust investment framework.” Mr Spence echoed Mr Raymant’s comments about the need for a clear carbon price, but added that he wanted to see a level playing field for all low-carbon technologies. He also indicated that there are positive signs that the UK government is moving forward on this issue, primarily in terms of altering the CO₂ market in the UK above and beyond the EU ETS. Another concern raised was the possibility of changes being made to the process by a future Conservative government and the fact that delays and uncertainties cannot be afforded if the current targets for the completion of new build are to be met.

During a panel discussion, the question was asked by IFandP as to what would be an acceptable rate of return for investors. No direct answers were forthcoming, highlighting the sensitivity surrounding the future profitability of any new nuclear projects. A related question regarding long-term price signals bore more fruit, with Mr Rorive commenting that generally-speaking, energy will be more expensive in the long term and that the problem in terms of investment is demonstrating that the UK is a worthwhile proposition, given the recent fluctuations in energy demand and prices, resulting from the financial crisis and the global economic downturn.

An insightful question regarding what could be done to minimise the impacts on host communities was answered by Paul Spence, who said that in the case of Sizewell, there was a clear need to think creatively regarding logistics, particularly in terms of the movement of men and material due to the site’s remote location and the fact that it is served by small country lanes.

Perhaps most telling was Mr Spence’s response to a question from a delegate asking whether EDF would press on with the investment programme: “If it looks like financial suicide, we won’t do it.”

Figure 1: Approved sites for UK new nuclear build. Source: Department of Energy and Climate Change

After a short break for refreshments, Mark Higson, CEO of the Office for Nuclear Development, DECC, gave a presentation on the recent developments in planning reform and the National Policy Statements, which will dictate the nature of the UK’s planning system for years to come. Some key points from his presentation included the expectations that the generic design process will be complete in mid-2011, at which point construction is predicted to begin, culminating in commercial operation at the start of 2018.

Mr Higson explained that the government’s current commitments in terms of renewables, coupled with the phasing out of old nuclear and coal-fired power plants, will require the construction of 60GW of net new capacity by 2025, of which 35GW will have to be in the form of renewables, with a further 25GW coming from conventional capacity. He also stated that “the government expects that a significant proportion of the 25GW will in practice be filled by nuclear power.”

He went on to indicate that “the government is satisfied that effective arrangements will exist to manage and dispose of the waste that will be produced from new nuclear power stations.” He also said that this was an ongoing requirement, rather than a simple one-off checkpoint.

Sir Michael Pitt, Chairman of the Infrastructure Planning Commission (IPC) then spoke regarding the nature of the UK’s new planning regime, which as currently envisaged, will involve the IPC making all major decisions regarding large-scale developments of national strategic value in accordance with 12 National Policy Statements, each relating to a different type of project. The consultation for the NPSs relating to energy policy (including nuclear) are to close on February 22, 2010. Sir Pitt explained that the IPC commissioners in charge of implementing policy will be independent, selected for their professional knowledge and judgement and will be required to operate to a strict ethical code. The IPC is expected to process applications for eight power stations, eight windfarms, 15 upgrades to the national grid, a rail freight depot and 13 large highway improvements over the course of 2010.

Figure 2: Indicative timeline for first new British nuclear power stations. Source: Department of Energy and Climate Change

Julia Pyke, Partner at Herbert Smith, gave a high-level overview as to how industry funding for decommissioning could best be arranged, focusing on the use of a fund and its status in both English and Scottish Law.

Charles Henry MP, Shadow Secretary of State for Energy, also took to the stand. The majority of his speech primarily focused on reassuring the nuclear industry that there would be continuity in the event of a Conservative government come the general election scheduled for the summer of 2010. However, he made the point that he and his colleagues feel that although the current planning reforms are a welcome step in the right direction, they lack democratic accountability and therefore if elected, the Conservatives would ensure that the final decision would rest with the secretary of state followed by a vote in parliament. In his view, this would prevent the need for judicial review.

Mr Henry also commented that energy security is the most important concern as without it, low carbon emissions or cheap electricity are unattainable and that given the country’s shift to being a net importer of oil and gas, it was imperative to explain as to why companies should invest in the UK. He made the observation that “all too often communities don’t seem to gain [from new developments]” and vowed that a Conservative government would increase the proportion of business rates retained locally for the first five years, together with reductions in local electricity bills.

He added that the issue of waste could still be a major stumbling block and reiterated calls for a stable carbon price, suggesting that the existing carbon levy should be scratched in favour of a price floor for the European Union’s ETS, “otherwise investors will turn their heads and walk away.”

During a subsequent Q&A session, one of the delegates commented that the need for local communities to receive additional incentives may be somewhat overblown, given that during the site approval process, there was only one complaint and that was apparently from Michael Howard, MP, as a site in his constituency of Dungess failed to receive approval.

Kevin Allars, Director for Nuclear New Build Generic Assessment of the Nuclear Installations Inspectorate, was pleased to report that stage three of the generic design assessment process had been completed for Westinghouse’s AP1000 and EDF/Areva’s UK EPR reactor designs. He also indicated that step four, the detailed design assessment and licensing assessment is expected to be complete by June 2011.

Figure 3: Time scale for the construction of overhead high voltage transmission lines. Source: National Grid

After a brief introduction to The Adam Smith Institute by its director, Eamonn Butler, Nick Winser, Executive Director of transmission for the National Grid warned that significant challenges lie ahead in terms of getting the UK’s transmission networks ready for the future, particularly given that it can potentially take in excess of five-and-a-half years (see Figure 3) to bring new high-voltage lines off the drawing board and into reality. He said that one of the issues that had not received much attention was that all 10 approved sites for new nuclear build are a substantial distance from the country’s main load sectors, creating the need for extensive new transmission lines.

Frank Lopez, Vice President of commercial nuclear projects at CH2M HILL, put the UK’s efforts into a global perspective and made the point that from a project management standpoint: “we’re already on the critical path,” suggesting that there is little if any “float” to absorb any unforeseen events or delay in the processes currently under way. He showcased a number of advantages the UK possesses in terms of bringing new build to fruition, but warned that much was still needed to be done to improve the country’s indigenous supply chain if Britain is to reap the full economic benefit of new build.

Aled Morris-Jones of the Wylfa Site Stakeholder Group then spoke in some detail about the support for nuclear power among his local community and the possible economic benefits it could bring.

Neil Crumpton, an energy specialist from Friends of the Earth, followed, delivering a courageous (given the audience) talk on the theme of why nuclear power is not the best solution for Britain. His argument was largely based on the maturity of current renewable technologies and the potential for a combination of a North African/European supergrid coupled with large-scale solar plants in the Sahara to provide clean energy (as championed by the Desertec initiative). Another technology which he believes could be part of a green alternative to nuclear would be the widespread use of CHP/district heating, in a manner to that currently employed by Denmark. Mr Crumpton also highlighted the proliferation issue and potential flaws in the public consultation process, including the fact that the British public had not been presented with a non-nuclear option.

John Mead, a purchase and supply chain engineering expert from Davis Langdon gave a high-level talk on the important lessons being learned from the UK’s efforts to prepare for the 2012 Olympics and the methods used to handle large and complicated supply chains.

Afterwards, Graham Honeyman, CEO of Sheffield Forgemasters focused on the potential new nuclear build represents for the UK’s heavy industries and his company’s intention to invest GBP140m in a 15,000t press, which will enable the forging of the largest components of both Westinghouse and Areva’s reactor designs.

Clive Smith, Director of Nuclear Skills, Cogent subsequently gave an overview of the UK’s civilian nuclear power workforce and explained how the nuclear skills passport is working to reduce unnecessary retraining that typically occurs when nuclear workers are transferred to different sites.

I think that nuclear power is a necessary evil, but it is nonetheless, necessary.” – Stephen Tindale, Climate Answers, former Greenpeace director

The day was brought to a close by a speech by former director of Greenpeace, Stephen Tindale, on why he has changed his position in favour of nuclear power. His main arguments were the danger to civilisation represented by climate change and the need to use every available technology as rapidly as possible. He also made the point that nuclear power is well positioned to be a key bridging technology towards a scenario in which renewables generate the majority of the UK’s power.

Mr Tindale also suggested that the nuclear industry had been its own worst enemy in terms of making overly high claims such as electricity “would be too cheap to meter” and that this means that it has to be as honest as possible regarding future costs. He argued that the “no subsidiary” angle was “a bit of a get-out” given that a price floor for CO₂ emissions would still result in higher electricity prices for consumers, and while not defined as a subsidiary, the exact definition means little to those suffering from fuel poverty. Mr Tindle said that proliferation and waste concerns would be reduced if an internationally-controlled fuel cycle was implemented and if there was an immediate halt to the reprocessing of waste.

Overall, the forum provided an excellent mix of insight and informed discussion, coupled with considerable opportunities for networking, mixed in with the very best of British hospitality and cuisine.

For more information on this topic, consider visiting the following websites:
www.marketforce.eu.com/Conferences/eunuclear10/
www.hse.gov.uk/newreactors
www.independent.gov.uk/infrastructure