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:
A. THE EXTENT
OF THE
"GENERATION GAP"
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.
B. FINANCIAL
COSTS AND
INVESTMENT CONSIDERATIONS
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.
Non-options
— 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.
C. STRATEGIC
BENEFITS
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.
D. OTHER ISSUES
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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