Building New Nuclear: the challenges ahead - Energy and Climate Change Contents


Summary

As a low-carbon technology, nuclear power could play an important role in helping the UK to meet climate change and energy security goals. However, all but one of the existing power stations are due to close by 2023. New build is therefore crucial if nuclear power is to remain part of the UK's energy mix in future decades.

If the projects currently under development are all delivered as planned, 16GW of new nuclear capacity will be added to GB's electricity system by 2025. Without these power stations, it will be extremely difficult to meet our low-carbon obligations, and potentially more expensive too. A failure to deliver new nuclear would have a lesser impact on energy security, but could result in an increased use of gas to make up the shortfall. This could bring indirect security concerns if the UK were to become more dependent on imported gas as a result. Finally, if this tranche of new nuclear projects is not successful, it could undermine investor confidence in the sector, making it difficult (or impossible) to finance any subsequent attempts at nuclear new build.

Many stakeholders consider the plans to build 16GW by 2025 as "ambitious" at best and "unrealistic" at worst. Given the delays and problems that have dogged nuclear new build projects in neighbouring European countries it is worrying that the Government does not have any contingency plans in place for the event that little or no new nuclear is forthcoming. These should be developed as a matter of urgency.

Raising finance remains one of the biggest potential barriers to nuclear new build. We hope that the introduction of Contracts for Difference will help to reduce the policy and revenue risk associated with nuclear new build projects and thereby lower the cost of capital. Construction risk remains a problem for the nuclear industry and it was not clear to us exactly who will bear this risk in the UK; consumers, taxpayers or project developers. We seek to gain clarity on this aspect.

Public opposition to new build projects could also present a barrier. While there is overall support for new nuclear at the national level, attitudes at the local level can be more polarised. During our visit to Bridgwater, we discovered that local concerns focused much more on the disruption that would be caused by the construction process than on the risk of a nuclear accident.

There is scope to improve engagement with members of the public on issues regarding risk. The Office for Nuclear Regulation conducts some public engagement work, but this is separate from the planning process, although that is the process through which most members of the public will tend to engage with any new development. In addition, it is "one-way" in nature, rather than a two-way dialogue, which is a more effective method of risk communication. We would like to see better coordination between the ONR, Environment Agency and developers in their public engagement. We also believe there might be merit in establishing an independent advice service for communities living near to nationally significant infrastructure projects, since permission for these projects is granted by the Secretary of State, rather than local planning authorities. This service could support local communities in interpreting complex planning documents and improving understanding of the process for obtaining planning permission.

The UK's nuclear supply chain industry and skills base has withered significantly since Sizewell B was completed in 1995. A nuclear new build programme presents an opportunity to rebuild this industry and to create new job opportunities in the UK. However, potential suppliers to nuclear new build projects need to have a proper understanding of the safety and quality requirements associated with nuclear projects in order to take advantage of these opportunities. Stronger leadership from Government will help to build confidence and to attract workers into this sector of the economy.




 
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Prepared 4 March 2013