UK nuclear industry confident of future but facing issues

Finance and political will remain a problem for nuclear power, but there are opportunities in the supply chain

EDF Energy/PA Wire Undated handout artists impression issued by EDF of the how the new Hinkley Point C station will look
Undated handout artists impression issued by EDF of the how the new Hinkley Point C station will look

Despite 400 construction jobs losses at the UK’s first new nuclear build for 20 years its supporters remain confident this is the dawning of a new era for the industry in the UK. Peter McCusker reports

There still remain a number of hurdles to overcome before the final go-ahead for construction of the UK’s first new nuclear plant since Sizewell B in Suffolk in 1995.

French state-owned business EDF Energy hoped to have signed off on the deal to build two new reactors at Hinkley Point in Somerset by late last year.

But progress on the £24bn project has stalled, with EDF still to make a final investment decision – and these delays led to the redundancy of 400 of the site’s 600 construction staff earlier this month.

Difficulties over assembling the financial package and on-going concerns over the robustness of the technology lie at the heart of the delays.

However EDF, the Government and the Nuclear Industry Association (NIA) remain confident the UK is at the dawning of a new nuclear era.

A spokesman for EDF told Journal Energy: “EDF Energy and the UK Government have made good progress on the work to finalise the agreements which will enable a final investment decision in the coming months for the proposed Hinkley Point C nuclear power station. There has also been continuing positive progress with future investment partners in the project.”

EDF Energy has already spent hundreds of millions of pounds on extensive preparatory work and with this nearing completion 400 of the 600 on-site construction staff are being laid off.

Newcastle-born Keith Parker, chief executive of the NIA, told last month’s NOF Energy annual conference in Gateshead that will be some major opportunities in the nuclear industry for the North East supply chain in the coming years (see panel).

Speaking to Journal Energy this week he said: “A final investment decision is expected by the autumn. We understand discussions between the Government, EDF and its Chinese finance partners are going well.

“The Chinese partners have shown their commitment to the UK. They hope this will pave the way into making them a leading nuclear nation. Investing in the UK will provide a foothold for China to introduce its own technology into Europe.”

It is understood that in return for their financial support the two Chinese companies - China General Nuclear Power Corp and the National Nuclear Corp - want UK Government approval to develop their own nuclear plant in Essex.

Discussions on this are still taking place with one sticking point said to be the access this deal will give Chinese state-owned companies to the workings of the National Grid.

EDF has its own multi-billion pound debts and its technology partner, fellow French majority state owned firm Areva, recently announced record losses, and speculation has mounted it will struggle to find the 10% of investment it has committed to the development.

The financial package should be proving attractive to investors with the Government agreeing to pay a strike price £92.50 per MW/h for electricity - twice the current wholesale price - for 35 years.

Hinkley Point will be using new technology developed by Areva; known as European Pressurised Reactor (EPR).

This technology is not in operation anywhere in the world and two new build schemes using it have ran into some major delays and cost overruns.

The plant under construction at Flamanville, near Cherbourg, in North West France, had been due to open in 2012 but is not expected to open until 2016 with the budgeted cost of just under £3bn rising to more than £7bn. It was in the news again last week due to problems with the construction of the reactor core.

There have been similar delays with the construction of a plant in Olkiluoto, Finland, and it is now not due to open until 2018.

Mr Parker said: “It is undeniable that there have been some significant problems. Construction will have been started before the designs have been completed and this has led to changes in the design and building delays.

“The regulators will have scrutinised the Finnish and French schemes and the lessons will have been learnt when they are built in the UK. I have every confidence they will proceed.”

EDF said it was not in a position to comment on speculation with the uncertainty over the outcome of the General Election believed to be adding to the delay. No-one from DECC was prepared to comment saying it is in purdah due to the election.

Prof Ian Fells, emeritus professor of energy conversion at the Newcastle University, has formed Penultimate Power which aims to build its own UK nuclear reactors.

He said: “We will need large scale nuclear programme if we are to hit our decarbonisation targets and maintain energy security.

“The Government appears desperate. They seem to be throwing money at it to ensure it will happen.”

He added: “It’s very worrying that we are going to have to rely on the Chinese investment for programme to go ahead.”

He believes the Government chose to go with French technology as it has almost 60 operating reactors but he says we may live ‘to regret it’.

“The inaction is such a worry. We need more nuclear power, and quickly,” he added.

As well as EDF Energy, two further consortia want to build new plants in the UK. Horizon, a wholly owned subsidiary of Hitachi is looking at sites in Anglesey and Oldbury near Bristol.

NUGen, a joint venture between Toshiba and GDF SUEZ wants to build up to three nuclear reactors at Sellafield, with a combined capacity of 3.4 GW.

By 2023 there could be just one nuclear power station operating in the UK but this £60bn of slated new investment would boost the nuclear fleet by the middle of the decade.

Mr Parker added: “We are confident EDF will proceed with their plans even if there is a change of Government after the election.

“We have had a missed decade but we have made significant progress in such a short time. This is the dawning of a new era for the UK nuclear industry.”

Prime Minister David Cameron at Hinkley Point C in Somerset
Prime Minister David Cameron at Hinkley Point C in Somerset

Supply Chain

The 16GW programme of new nuclear build proposed by the three consortia – EDF Energy, Horizon and NUGen – entails an investment of £60bn creating up to 40,000 construction jobs, say the Nuclear Industry Association.

At Hinkley Point the £24bn construction of two new reactors will create 25,000 jobs during the construction phase and 900 when operating.

This massive pipeline of work is set to create some major opportunities for the North East and UK supply chain.

EDF, which hopes to have the first plant operating by 2023, initially promised that 57% of the contracts would be placed with UK companies but has recently raised this to 60.

Keith Parker, chief executive of the Nuclear Industry Association (NIA) said: “The scale of investment in nuclear will create huge opportunities for companies in Britain with long experience and expertise in construction, in manufacturing, in advanced engineering, in project and programme management, in consultancy and in financial and legal services.

“The industry is working hard to build on its strengths and develop the skilled workforce and the capable nuclear supply chain that can deliver both at home and overseas, and progress is being made in improving the manufacturing and skills base to further enhance the UK’s capability and expertise across all aspects of the nuclear business.”

He went on to say that despite the current problems in the industry the supply chain need to get involved before EDF makes it final investment decision which will be the ‘trigger for an increase in momentum’.

North East companies wanting to know more about the nuclear industry are being invited to an NOF Energy event next month.

What’s Happening in Nuclear in 2015 takes place at Rockliffe Hall, where Phil Vaughan, chair of the North East branch of the Nuclear Institute and Director of Nuclear Systems at Darchem Engineering will give an update on supply chain opportunities.


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