Memorandum submitted by the Institution
of Civil Engineers
INSTITUTION OF
CIVIL ENGINEERS
The Institution of Civil Engineers (ICE) is
a UK-based international organisation with over 75,000 members
ranging from professional civil engineers to students. It is an
educational and qualifying body and has charitable status under
UK law. Founded in 1818, ICE has become recognised worldwide for
its excellence as a centre of learning, as a qualifying body and
as a public voice for the profession.
INTRODUCTION
The ICE welcomes the opportunity to present
the following statements and evidence as part of the inquiry.
A. The extent of the "generation gap"
Q1. What are the
latest estimates of the likely shortfall in electricity generating
capacity caused by the phase-out of existing nuclear power stations
and some older coal plant? How do these relate to electricity
demand forecasts and to the effectiveness of energy efficiency
policies?
1.1 The Supply and Demand Forecast for Electricity
shown in the Annex is taken from the JESS (Joint Energy Security
of Supply working group) report of November 2004. This is based
on Dti 2004 projections. It shows that by 2020-35 to 40% of electricity
supply will need to come from generation capacity which does not
exist at present. This capacity is needed to replace ageing nuclear
and coal generation stations. The estimate assumes that the government
target for renewables of 15% of electricity supply will be met
and that the balance of 25% of electricity supply will come from
new gas CCGT capacity. Please see the Annex.
B. Financial costs and investment considerations
Q2. What are the
main investment options for electricity generating capacity? What
would be the likely costs and timescales of different generating
technologies?
Q2.1 What are the likely construction and
on-going operating costs of different large-scale technologies
(eg nuclear new build, CCGT, clean coal, on-shore wind, off-shore
wind, wave and tidal) in terms of the total investment required
and in terms of the likely costs of generation (p/kWh)? Over what
timescale could they become operational?
2.1.1 The table reproduced below from the
Nuclear Industry Association "Energy Choices", website[198]
provides a comparison of capital and generating costs and construction
periods for nuclear, gas, coal, on-shore and off-shore wind. The
table identifies the relatively high capital cost for nuclear
compared to other generation options but that most of the studies
show that nuclear generating costs are competitive.
Q2.2 With regard to nuclear new build, how
realistic and robust are cost estimates in the light of past experience?
What are the hidden costs (eg waste, insurance, security) associated
with nuclear? How do the waste and decommissioning costs of nuclear
new build relate to the costs of dealing with the current nuclear
waste legacy, and how confident can we be that the nuclear industry
would invest adequately in funds ring-fenced for future waste
disposal?
2.2.1 As can be seen from the previous answer
there is a range of new build costs for which there is a consensus
of agreement from a range of different bodies. Confidence in the
robustness of the new build estimates will however depend on the
approach adopted for the implementation of a new build programme.
2.2.2 In the past UK nuclear power station
project experience was characterised by:
— "Cost plus" type contracts.
— Virtually every design is different
from its predecessors.
— Designs are all of "UK-origin"
(apart from Sizewell B).
— Designs often re-designed throughout
licensing and approvals process, leading to extra costs and delays.
— Lengthy and unpredictable licensing
processes and public inquiries.
2.2.3 New build cost estimates are realistic
and robust providing some straightforward and practical framework
for building new units is implemented.
— Consortia formed possibly from major
utility groups where risk is shared among the parties.
— "Turnkey" contractual arrangements
with reactor vendor and major constructors and equipment manufacturers.
— Adoption of a proven internationally
recognised design, implemented in the UK with minimum modification.
— A regulatory approach that takes
account of licensing approval obtained for the reactor design
in its country of origin and elsewhere.
— Implementation of the current UK
licensing and approvals processes in a way which ensures timely
and predictable delivery of regulatory clearances and planning
consents.
2.2.4 With regard to the "hidden costs"
referred to in the question, the position is as follows:
— Waste—nuclear waste management
costs are all included in the overall generation costs indicated
above. Irrespective of the final solution for the disposal of
power station wastes they only represent a small proportion of
nuclear generating costs. It is important to separate costs for
the small volumes of waste produced by the latest reactor designs
from the cost liabilities associated with the very large volumes
of "legacy" wastes produced the UK military programmes
and previous and less efficient reactor designs.
— Insurance—UK nuclear power
stations carry both material damage and liability insurance. This
insurance cover is in place for every civil nuclear site in the
UK. It is understood that there is an upper limit currently of
£140 million as set in the Nuclear Installations Act and
that this may increase to
700 million under EU legislation The UK insurance
industry should be able to provide this cover on a commercial
basis.
— Security—As any new stations
would be at least as structurally robust as existing stations
no new issues of principle or policy are anticipated. The security
costs are only a minor part (about 2%) of overall operational
and maintenance costs.
Q2.3 Is there the technical and physical capacity
for renewables to deliver the scale of generation required? If
there is the capacity, are any policy changes required to enable
it to do so?
2.3.1 No, it is un-realistic to suggest
that renewables could provide all the new capacity needed in the
timescale required. Many of the renewable technologies still need
many years of development. However mainstream incineration with
energy recovery is technically proven, the biodegradable fraction
of mixed waste is classified as a renewable, and this could generate
over 4% of the UK's power by 2020[199].
Wind energy and hydropower are also developed technologies. We
should make as much use of these as we can. However there are
limitations to what is feasible, especially for hydropower due
to our low topography. Therefore the rate of increase in generation
by renewables would have to be far greater than can be expected
in order to fill the gap which will be left by retirement of existing
nuclear and coal fired stations.
Q2.4 What are the relative efficiencies of
different generating technologies? In particular, what contribution
can micro-generation (micro-CHP, micro-wind, PV) make, and how
would it affect investment in large-scale generating capacity?
2.4.1 Micro generation should be seen in
the context of generation at the point of use of electricity,
and therefore some electricity transmission costs are reduced.
However there is a small increase in the additional costs of fuel
transport to the consumer's premises, (except in the case of micro
renewables). In the near to mid term, micro generation will not
make a significant contribution to the nation's generation capacity,
but in the longer term these advanced technologies, in conjunction
with energy efficiency measures might contribute up to 20% of
domestic energy consumption on an annual basis.
2.4.2 It is important to note the difference
between capacity (in MW) and energy (in MWh). Adding base load
power, operating efficiently, as part of a mixed generation portfolio
would substantially reduce emissions. Considered use of large
scale and distributed storage technologies would ensure that base
load plant and stochastic renewable generation were integrated
and operated efficiently.
Q3. What is the attitude of financial institutions
to investment in different forms of generation?
Q3.1 What is the attitude of financial institutions
to the risks involved in nuclear new build and the scale of the
investment required? How does this compare with attitudes towards
investment in CCGT and renewables?
3.1.1 The perceived risks (and therefore
obstacles) to investment in new nuclear build principally relate
to uncertainties over the timescales and costs associated with
the licensing and approvals processes and the current lack of
a long term waste management policy planning. Uncertainty in the
future power generation market is probably less of a factor than
these two areas.
3.1.2 The large-scale nature of the investment
required in a new nuclear programme (ie £1 billion plus per
station) should not be an overriding obstacle. Other major infrastructure
projects require and attract similar or greater levels of investment.
3.1.3 Investment in CCGT and renewables
are both subject to uncertainty. In the case of CCGT there uncertainties
surrounding future gas costs and gas supply availability that
is in direct contrast to nuclear, which has secure and stable
fuel costs, and availability. Renewables are subject to the same
planning process uncertainties which would potentially impact
on a nuclear programme, are also subject to investor concern over
the timescale and extent of financial support through the Renewables
Obligation and are also faced with technical uncertainty particularly
for offshore installation.
Q3.2 How much Government financial support
would be required to facilitate private sector investment in nuclear
new build? How would such support be provided? How compatible
is such support with liberalised energy markets?
3.2.1 Any decision by the private sector
to invest in new nuclear build will be subject to a detailed commercial
appraisal of capital and operating costs, current and long term
market conditions and the perceived risks to the success of the
programme. It will also be dependant on how risks are shared between
the parties to such a project. The exact scale and nature of any
Government support required is difficult to quantify without the
results of such an analysis. Depending on the structure of developer
and constructor consortia etc, Government financial support may
not be required, providing the key uncertainties of licensing
and approvals timescales and waste policy, are addressed by Government.
In this event the issue of compatibility with liberalised markets
would not apply.
Q3.3 What impact would a major programme of
investment in nuclear have on investment in renewables and energy
efficiency?
3.3.1 Government has made it quite clear
that any investment in a new nuclear build programme will come
from the private sector. If this is undertaken on a purely commercial
basis (with no subsidies) it should not impact on renewables and
energy efficiency providing Government support for these areas
remains unchanged.
C. Strategic benefits
Q4. If nuclear new build requires Government
financial support, on what basis would such support be justified?
What public good(s) would it deliver?
Q4.1 To what extent and over what timeframe
would nuclear new build reduce carbon emissions?
4.1.1 1GWe of nuclear power over its operating
life would reduce annual carbon dioxide emissions by:
Around 7.5 million tonnes if displacing coal-fired
generation,
Around three million tonnes if displacing gas-fired
generation.
If a new build programme replaced the current
nuclear power station fleet it would in total save around ten
times the above figures.
4.1.2 If a new build programme was initiated
immediately it should be possible to have commissioned the first
new station by 2015-16 with an additional new station commissioned
every 18 to 24 months. This would go some way to offsetting the
projected closure of the existing nuclear power station fleet
(particularly if potential life extensions are implemented) and
would ultimately replace and maintain the current contributions
made to carbon emission reductions by the UK nuclear power stations.
Q4.2 To what extent would nuclear new build
contribute to security of supply (ie keeping the lights on)?
4.2.1 Recent history has shown that reliance
on one fuel source (eg coal at the time of the miners strike)
makes the UK electricity supply vulnerable to the actions of individual
groups. If gas becomes as dominant a fuel source as coal was in
the 1980s the situation could be repeated with the added dimension
that that influencing factors could lie outside the UK. This can
be avoided by ensuring there is a diverse energy mix gas, coal,
renewables and nuclear which reduces the impact of the loss of
a particular fuel sector. This will require a construction programme
of new nuclear stations to be started soon otherwise nuclear will
be providing just 3% of UK electricity in under 20 years time,
compared with around 20% today.
4.2.2 A new nuclear programme would provide
reliable baseload generation using a fuel (ie Uranium) that is
plentiful as a raw material, and comes from stable countries such
as Australia and Canada. Furthermore, it is highly credible to
retain strategic stocks of nuclear fuel to offset the risk of
any sustained disruption to supply. The fabricated fuel to supply
a fleet of 10 new reactors (sufficient to replace the current
nuclear fleet) for a year would occupy only around 100 cubic metres.
4.2.3 A new nuclear programme would provide
reliable baseload generation using a fuel (ie Uranium) that is
plentiful as a raw material, and comes from stable countries such
as Australia and Canada. Furthermore, it is highly credible to
retain strategic stocks of nuclear fuel to offset the risk of
any sustained disruption to supply. The fabricated fuel to supply
a fleet of 10 new reactors (sufficient to replace the current
nuclear fleet) for a year would occupy only around 100 cubic metres.
4.2.4 In addition to supply reliability
a nuclear power fraction would also provide valuable cost stability.
This is because the cost of raw uranium ore accounts for only
5-10% of the overall generating cost of electricity from nuclear
stations. Any increase in the global market prices for uranium
fuel would therefore have a relatively small impact on nuclear
generating costs.
Q4.3 Is nuclear new build compatible with
the Government's aims on security and terrorism both within the
UK and worldwide?
4.3.1 It is the responsibility of the Government's
security regulator Office for Civil Nuclear Security (OCNS) to
ensure the security of all aspects of nuclear operations in the
UK. The OCNS Director in his 2004 annual report continued to confirm
confidence in the security provisions of the nuclear industry
and that the security measures applied are proportionate to the
threats faced.
4.3.2 Nuclear power stations are amongst
the most robust civil structures in the world and their design
and construction undergoes rigorous regulatory review. A key part
of the design process is to take account of impact from forces
generated by external events both natural and manmade including
terrorist attacks. The layout and structural design fully accounts
for these extreme events and impacts. In addition to the design
measures the operation of the stations are also subject to rigorous
security arrangements covering staff vetting, access control etc.
As a result the potential threat to nuclear power station from
external forces is minimised.
Q5. In respect of these issues [Q 4], how
does the nuclear option compare with a major programme of investment
in renewables, microgeneration, and energy efficiency? How compatible
are the various options with each other and with the strategy
set out in the Energy White Paper?
5.1 The nuclear option is not an alternative
to renewables. Both are needed as part of a balanced energy supply.
The generation gap will be too large to be filled by either one
alone. Microgeneration is at far too early a stage to judge what
contribution it may make in the future. Energy efficiency should
be a contributor to the energy supply equation but it seems unlikely
to make any more than a small contribution. Total electricity
consumption has increased from 382TWh in 1999 to 401TWh in 2004;
so energy efficiency appears, at best, to have limited the increase
in consumption.
D. Other issues
Q6. How carbon-free is nuclear energy? What
level of carbon emissions would be associated with (a) construction
and (b) operation of a new nuclear power station? How carbon-intensive
is the mining and processing of uranium ore?
6.1 Nuclear energy scores well on full life
cycle emissions of carbon dioxide when compared with other generation
sources. Nuclear is comparable with renewables and is considerably
lower than fossil fuel plants.
6.2 A recent International Atomic Energy
Agency (IAEA) report shows the results of assessments both direct
and indirect emissions for different generation sources. For nuclear
it provides figures for the full life cycle ie mining, fuel enrichment
and manufacturing and spent fuel treatment. The report concludes
that in general nuclear energy is almost a factor of 20 lower
than the best fossil fuelled plant (latest gas-fired technology)
and a factor of over 60 lower than older, coal-fired technology.
The latest nuclear power stations can achieve further improvement
by more than a factor of two on these figures.
Q7. Should nuclear new build be conditional
on the development of scientifically and publicly acceptable solutions
to the problems of managing nuclear waste, as recommended in 2000
by the RCEP?
7.1 The Committee on Radioactive Waste Management
(CoRWM) ongoing process to identify the most appropriate UK solution
for the management of radioactive wastes is scheduled to make
recommendations to Government in 2006. The depth and quality of
the work done to date by CoRWM, gives every confidence that an
effective and technically feasible solution will be identified
and the report will be delivered on schedule.
7.2 Once the recommendation has been made
and adopted by Government that should clear any perceived obstacle
to new nuclear build. The start of a new build programme should
not be conditional on further development of the preferred option.
Indeed there should be no reason to delay the start of early activities
such a review of energy policy and the potential future role of
nuclear whilst the CoWRM process is being finalised.
Annex
SUPPLY AND
DEMAND FORECASTS—ELECTRICITY[200]
Electricity generation by fuel type—UK
7.3 Context: The chart shows how electricity
demand is likely to be met by different forms of generation. It
is based on current DTI's projections and illustrates the potential
requirement for new investment.
7.4 Key points: Within the overall total,
changes are likely in the generation mix and new investment will
be needed to replace generation plant once closed. By 2010 gas
fired generation is modelled to be producing 18 TWh more than
was produced in 2000, rising to an additional 94 TWh in 2020.
A mixture of large-scale plant and CHP will meet this generation,
although the exact contribution of both, and of gas itself, will
be dependent on relative costs and availability of other sources.
In contrast nuclear's contribution is expected to drop from its
peak of 90 TWh in 1998 to 65 TWh in 2010 and 27 TWh in 2020. In
DTI's Updated Energy Projections renewables are modelled to reach
their 10% target in 2010 and their 15% target in 2015, remaining
at that level in 2020.
7.5 Background: The data presented are measured
in TWh, therefore improvements in efficiency and utilisation can
increase output without the need for new build.
22 September 2005
Projections: Current DTI Projections November 2004.
198 http://www.energy-choices.com/page.aspx?pageId=154 Back
199
Lee, P, Fitzsimons, D, & Parker, D "Quantification
of the Potential Energy from Residuals in the UK"; Report
commissioned by The Institution of Civil Engineers & The Renewable
Power Association, March 2005. Back
200
Historic: DTI, Digest of UK Energy Statistics 2004-Table 5.6
and corresponding tables in earlier editions. Back
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