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.