Select Committee on Environmental Audit Written Evidence

Memorandum submitted by Sir Robert McAlpine Ltd

  Memorandum by Sir Robert McAlpine Ltd a major civil engineering contractor with experience of building six of the existing nuclear power plants and of ongoing nuclear work at Sellafield.

  Our responses to the questions published are as follows:


1.   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?

  No response, because not our area of expertise.


2.   What are the main investment options for electricity generating capacity?

  The investment options must be environmentally clean to be acceptable, thus they should not emit CO2. They are:

Good options

    —  Wind, proven for small amounts, but susceptible to absence of wind.

    —  Tidal barrages use proven technology, eg at La Rance in France: the Severn Barrage, could produce 17TWh, -6% of UK needs.

    —  Tidal Stream: promising technology, but not yet proven in commercial service.

    —  Nuclear, for base load generation.


    —  PV is too expensive for base load generation.

    —  Micro CHP is unproven and still produces CO2.

Bad options

    —  Gas powered generation emits CO2 and is thus much less desirable than the "carbon-free" generation. More gas plants are probably inevitable to some extent, but should be minimized. Security of supply is an issue if a high proportion of generation comes from gas, as much of our gas will be imported.

    —  "Clean coal" is an aspiration rather than proven technology, and is thus not an option. Sequestration of carbon dioxide, as would be necessary for a new clean coal power station, is not possible in the foreseeable future. The only CO2 so far sequestrated has already been captured and separated from other gases at the well head, and the process relies on a small number of suitable existing oil/gas fields to receive the CO2. Separating CO2 from flue gas emissions is more difficult, and receiving sites for sequestration have not been identified.

What would be the likely costs and timescales of different generating technologies?

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?

  Costs were investigated by the Royal Academy of Engineering: "Costs of generating electricity" March 2004. We consider these figures to be a good indication of real costs. This showed nuclear as the cheapest carbon-free source of power, and the least susceptible to variation in fuel costs.

  Nuclear plant and tidal barrages require a long timescale to implement, partly due to the long planning/ public inquiry process they need. Gas is much faster to build. Thus unless strategic decisions are taken in good time, gas plant will be built as the only option that can be achieved in time then available.

  Thus a strategic decision in favour of some nuclear and tidal barrage generation is needed quickly.

With regard to nuclear new build, how realistic and robust are cost estimates in the light of past experience?

  A new nuclear station is not dissimilar to any other major civil engineering project or power station, so estimates are realistic and robust. Cost estimates have been proven in South Korea for new nuclear stations and are being confirmed in Finland.

  An important lesson has been learned that we need to build a series of virtually identical nuclear power stations to reduce risks and costs. The previous UK experience was to change the design each time to improve it, but this increased costs enormously. A standard international design must be adopted and the Regulator (NII) should not re-examine plant design for each site, rather restrict examination to site-specific issues only, such as foundations and seismic risk.

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?

  The waste and security costs are not hidden.

    —  Waste costs for keeping waste safely on the power station site are known, because this is what is currently done. "Final disposal" costs can only be known if and when Government makes a decision.

    —  Security costs currently are known. For new build adjacent to existing nuclear sites, the additional cost of providing security at a slightly larger site will be small.

  The best option for funding waste disposal is to follow the US practice where the utility pays the Government an amount for each unit of electricity generated, and the Government is then responsible for disposal of the waste after an agreed date. This means the utility's liability is not subject to potential major variation as a result of political decisions, and the public can have increased confidence that the organization most likely to endure in the very long term, ie the government, is responsible for the waste.

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?

  No. Tidal barrages could provide perhaps 7% of power requirements; wind power, the other sizeable, proven renewable generator, needs too much back up for when the wind stops blowing (and this has happened across the entire UK at the same time). Also the cost would be too high. Few non-governmental observers believe that even the Government target of 10% renewables by 2010 will be met, never mind the higher targets for later years.

  A policy change in favour of carbon-free base load generation is needed, ie nuclear and tidal barrages.

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?

  No response—not our area of expertise.

3.   What is the attitude of financial institutions to investment in different forms of generation?

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?

  We have spoken to financial institutions. Their view is that the planning risks must be taken by Government because of the high risk of a late political decision canceling new nuclear build, as happened before in the UK.

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?

  Following from the previous response, Government will, initially, have to fund the planning stage, but these costs could be recovered from the first few new power stations when they start operating.

What impact would a major programme of investment in nuclear have on investment in renewables and energy efficiency?

  There need be only minor effects. Renewables are needed alongside new build. Renewables will continue to rely on long term subsidy, and if subsidy continues then so will investment. 40% of generation by carbon-free nuclear power would still leave 60% generation available from renewables, which is in line with the 2050 aspiration and a long way from being achieved.


4.   If nuclear new build requires Government financial support, on what basis would such support be justified? What public good(s) would it deliver?

  Financial support would be justified on the basis that new nuclear build requires political will over a period of year during the planning process. It would be unreasonable for the private sector to carry this risk as a change in political will might reverse support at a late stage through no fault of the promoters, as happened before. The financial support during the planning and development stage could be recovered during the operation of the new plant.

  It is also justified in terms of security of supply which ultimately is a government responsibility.

  It would deliver:

    —  economical base load generation;

    —  reduced CO2 generation, and thus potentially reduced climate change;

    —  a good climate change example to the developing world;

    —  security of supply; and

    —  a continuing influence in the management of nuclear power worldwide as a result of current state-of-the-art experience, which would assist global security, eg in Iran.

To what extent and over what timeframe would nuclear new build reduce carbon emissions?

  This would depend entirely on how much new build is undertaken. Replacement of existing nuclear generating capacity should be the minimum, but twice that level would be a better target. New nuclear plant is expected to generate for 60 years.

To what extent would nuclear new build contribute to security of supply (ie keeping the lights on)?

  Significantly. It is the only form of generation where the fuel is brought to the UK a long time ahead of use. It is also comes from politically stable countries. Even gas supply from friendly countries can be disrupted by terrorist activity at any point over a long supply line. New build would be distributed over several independent sites, each of which is compact and subject to high level security, so supply is much more robust.

  Even the most optimistic estimates only aspire to 60% renewable by 2050, so security of supply of fuel for the other 40% necessitates nuclear plant.

Is nuclear new build compatible with the Government's aims on security and terrorism both within the UK and worldwide?

  Following from the previous response, new build is the most compatible. Regarding security of nuclear materials, they are available in many parts of the world. The security we provide at our power stations is quite sufficient to ensure that they are not the softest targets for any potential theft of radioactive materials, and they therefore will not add to the global security risk.

  Regarding terrorist attack, new generation plants have been designed to resist aircraft impact, and they will have good security against attack, as is the case now.

5.   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?

  Nuclear power compares favorably with other sources of generation in terms of cost and proven technology. It requires, however, a long timescale to implement.

  It is compatible with the White Paper objectives in that the White Paper specifically kept the nuclear option open. Since the White Paper was published, the decisions in Finland and France to procure new build and the strong moves in that direction in the US mark the increasing appreciation in the Western world that the new generation of nuclear power is safer, produces less waste, and is economically competitive with gas and other forms of generation. The UK should also recognize the changes in public perceptions: according to a MORI poll, more people now favour new build than oppose it.

  There is no incompatibility between different forms of generation. The UK needs diversity of supply to guard against circumstances changing adversely. New build is an important part of this diverse supply.


6.   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?

  Nuclear energy is effectively carbon free in operation. The carbon produced in mining, operation and waste disposal is trivial compared with burning fossil fuel, and similar to renewables.

7.   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?

  No. Nuclear waste is currently managed in a scientifically and publicly accepted way.

  If new nuclear plants are built adjacent to existing nuclear sites, then there is no reason to move the existing ILW waste stores off the site. The security for the new build plant will cover the "old" waste store. This will eliminate unnecessary movement of radioactive waste around the country, and save money. Note that Scotland has forbidden the movement of LLW from Dounreay to Drigg, and a new LLW store will be built at Dounreay.

  A clear plan for "final disposal" of nuclear waste should be prepared. This might consider what to do with the ILW in 60+ years time when the new fleet of nuclear plant is to be decommissioned.

23 September 2005

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