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


2  Nuclear new build in the UK

13.  Before exploring the potential barriers to nuclear new build in more detail, we start by examining the significance of failing to deliver new build projects as they are currently envisaged. In this section, we set out some of the key risks and challenges that will be encountered should planned new reactors not materialise. We also examine the likelihood that programmes will not deliver as planned.

Plans for nuclear new build in the UK

14.  The Government does not have targets for the deployment of particular electricity generation technologies. However, DECC is clear that it believes that a mixed portfolio containing nuclear, renewables and fossil fuels with CCS will deliver a cost effective route to delivering on our climate change and energy security goals.[10]

15.  The Government's Low Carbon Plan cites industry intentions to bring forward 16 GW of new nuclear power stations by 2025, with the first new power station beginning operation in 2019.[11] The 16 GW consists of:

  • proposals from EDF and Centrica to build four new reactors (with a total capacity of 6.4GW) at Hinkley Point;
  • plans from NuGen (a consortium of GDF SUEZ and Iberdrola) to build up to 3.6GW of capacity at Moorside near Sellafield; and
  • the Horizon Nuclear Power scheme to develop around 6GW capacity at Wylfa and Oldbury, now owned by Hitachi Ltd.[12]

Consequence of failing to deliver new build

16.  The primary major consequence of failing to deliver new nuclear would be the impact on the UK's ability to reduce carbon emissions and thereby tackle climate change. [13] The impacts on energy security are likely to be less severe (see paragraph 19). Mr Earp (Institution of Civil Engineers) told us that it might be impossible to meet the UK's climate change targets without new nuclear.[14] However, environmental NGOs Greenpeace and WWF-UK (who do not support the use of nuclear power) claimed that the targets could be achieved without new nuclear.[15] Nick Butler (author of a blog on energy and power for the Financial Times) believed that "nuclear could be part of the story if the price is reasonable but it is not absolutely essential [for meeting carbon targets]".[16]

17.  Whether or not it is possible, it would certainly be much more difficult to achieve in practice. If there is little or no new nuclear, then much tougher action to reduce electricity demand will be needed, along with greater use of other low-carbon technologies. The scale of the challenge can be seen by comparing the difference between DECC's "low cost" scenario as part of its 2050 pathway analysis, with the alternative scenario provided by Friends of the Earth.[17] Under the "low cost" scenario, there is more than 40GW of nuclear power in 2050, along with 1,400 offshore and 4,400 onshore wind turbines in 2025, which fall to zero in the longer term as decommissioned sites are not replanted.[18] Friends of the Earth's scenario has no new nuclear but requires more than 10,000 offshore and 8,000 onshore wind turbines in 2050 (as well as greater effort on insulating homes).

18.  Furthermore, DECC preferred a mixed energy portfolio including renewables, nuclear and fossil fuels with carbon capture and storage (CCS). Given the lack of progress that has been made to date in bringing forward CCS technology in the UK, the role for new nuclear in delivering on our decarbonisation goals seems likely to become even more significant.

19.  If new nuclear capacity is not delivered as expected, some other measures will be needed to make up the resulting gap between demand and supply. Professor Steve Thomas (University of Greenwich) noted that gas, renewables and energy efficiency were all potential candidates for this task.[19] Since any of these options could be delivered more quickly than a new nuclear power station, failure of the nuclear programme should not pose an immediate threat to energy security.[20] However, greater use of gas could introduce new challenges for energy policy. Most obviously, increased use of unabated gas would make it much more difficult to meet carbon targets.[21] There may also be energy security implications if the UK was to become more dependent on imported gas (but this risk could potentially be mitigated by increased use of domestically produced shale gas).[22]

20.  DECC argued that if offshore wind and CCS were used to make up for any shortfall in nuclear delivery, there would be adverse cost implications for consumers. It estimated that the cancellation of the nuclear programme would lead to a welfare reduction of £22 billion relative to a baseline scenario where plants are deployed in line with lowest cost in order to meet renewables targets, decarbonisation and energy security objectives.[23]

21.  We conclude that while the cancellation or reduction of the UK's new nuclear programme may cause challenges for energy security, it would have a much more significant impact on the UK's ability to meet carbon reduction goals, making our legally-binding long term targets extremely challenging, if not impossible to meet.

22.  Failing to deliver the first tranche of nuclear new build could also undermine confidence among potential investors and make it much more difficult to secure funding for further rounds of new build (this is explored in more detail in chapter 3).[24]

23.  We also conclude that failing to deliver the 16GW new build that is currently under development could undermine any hopes of developing new funding models for subsequent nuclear new build. This would make it likely that future projects would not be able to raise the necessary capital, raising the prospect that it would not be possible to build any further nuclear plant without state funding (see paragraph 45).

Will the new nuclear programme be delivered?

24.  Despite the Department's apparent confidence that the 16GW figure will be delivered, a number of witnesses suggested that the Government was overly optimistic. The Civil Engineering Contractors Association told us that the Government's indicative timeline for new nuclear was "unrealistic", while Greenpeace believed it was "increasingly unlikely that any nuclear reactors will be built before 2025".[25] The Institution of Mechanical Engineers said that the Government was taking "a courageous approach to its policy" by relying entirely on the market to deliver new nuclear capacity to its preferred timescale.[26]

LESSONS FROM OTHER COUNTRIES

25.  Many witnesses thought that experiences elsewhere in Europe could give an indication of how new build in the UK might progress. New EPRs (European Pressurised Reactors) are being constructed at Flamanville in France and Olkiluoto in Finland. Both projects have suffered significant delays and cost overruns.[27] EDF is planning to use the same reactor design for its project at Hinkley Point C and some witnesses had little confidence that similar delays would be avoided in the UK.[28] On the other hand, representatives from the nuclear industry pointed out that a new EPR was also being built in China and that this project was currently running on time and to cost (although EDF did acknowledge the significant differences in the regime in China compared with those across Europe). [29]

26.  EDF argued that the Flamanville reactor is "first of a kind" and that "it is not unusual for such projects to incur additional costs, and take longer, than follow-on plants built to the same design".[30] EDF claimed it will incorporate learning from other EPR projects (including those in Finland and China) into any UK construction projects. [31] NuGen said it was also "committed to learning lessons from other programmes as we develop our project towards a final investment decision".[32] Horizon told us in written evidence that "should Horizon develop reactors in the UK that have been deployed elsewhere in the world, a high priority will be placed on incorporating detailed lessons learned from specific projects to minimise first of a kind design risks".[33] Horizon was acquired by Hitachi during the course of our inquiry, and now plans to use the Hitachi-GE Advanced Boiling Water Reactor (ABWR) design for its UK new build projects. The design has already been built in Japan and Taiwan and is licenced in the USA. We note that the ABWR reactors in both Japan and Taiwan were built on time and to budget.

27.  Engineering the Future (the alliance of professional engineering institutions) published a report "Nuclear Lessons Learned", which sets out detailed lessons that can be learnt from current and recent nuclear new build projects. It includes studies of the Flamanville and Olkiluoto projects, as well as projects in China and the UK. [34] Witnesses from engineering institutions told us that these lessons had so far been adopted in plans for new nuclear build in the UK, in particular through the development of guidance documents for the industry on concrete, welding and safety culture.[35]

28.  The introduction of the Generic Design Assessment (GDA) process also demonstrates that lessons from overseas have been taken on board. In France and Finland, construction began before the regulatory design and safety case assessment had been fully completed. [36] This resulted in modifications being introduced during construction in order to meet regulatory requirements, which in turn led to delays. The GDA process is a voluntary process that allows the Office for Nuclear Regulation (ONR) and the Environment Agency to carry out an early assessment of the safety, security and environmental aspects of nuclear reactor designs before their consideration of licence and permit applications.[37] This enables issues to be identified and corrected at the design stage, rather than during construction.[38] The UK EPR reactor design is the first to have completed the GDA process and was granted a Design Acceptance Confirmation in December 2012.[39] The Hitachi-GE ABWR design has recently begun the GDA process, which is likely to last four to five years.[40]

29.  Although Hinkley C will not be the first EPR reactor in the world and nor will Horizon's projects at Wlyfa and Oldbury be the first ABWR reactors, they will nevertheless be the first of these reactors in the UK context. While there may well be lessons that can be learnt from experience overseas, these projects will still encounter challenges that are unique to the UK. Differences in working cultures, geography and regulatory regimes between countries mean that these projects should still be considered quasi "first of a kind" developments. As Hitachi told us, it is unlikely that the first ABWR reactors in the UK will be built as quickly as they have been in Japan because it will take time to identify the implications of the differences between the UK and Japan.[41] Vincent de Rivaz (EDF) also told us:

We are starting a new first of a kind project in Somerset, taking into account all the elements that we have to take into account—what the safety authority is asking for, the regulations that you have in this country and the site specifications. The project in Somerset is not the same project as elsewhere.[42]

30.  We commend both the Government and industry in their efforts to date to learn lessons and adopt best practice from nuclear new build projects in other countries. It is still early days for new build projects in the UK, so it will be important to keep monitoring developments elsewhere in the world for emerging lessons and ideas that could be adopted in the UK.

31.  We note that the first new nuclear power plants in the UK are likely to take longer to build than subsequent plants of the same design. This is because while some lessons can be learnt from experience overseas, differences between the UK context and other countries will mean these projects should still be considered "first of a kind" initiatives.

32.   In the rest of this report, we look at some of the principal challenges for the nuclear new build programme and how these might be mitigated in order to ensure the best possible chance of delivering 16GW by 2025 as planned.

IS A PLAN B NEEDED?

33.  The Government does not appear to have any contingency plans in place in case new build is not forthcoming.[43] Although we asked the Minister whether there were any such plans, he merely proclaimed his confidence that the new build programme would be delivered.[44]

34.  Several witnesses suggested what a "Plan B" might consist of. Greenpeace recommended that it should be based on the four principles of "demand reduction and management, expansion of renewable generating capacity, flexibility and an integrated power and heat policy, especially in the industrial sector".[45] Energy and Infrastructure Project Finance thought it could consist of a short- to medium-term programme of gas turbines, combined with increased funding for research into next generation nuclear technologies (see chapter 6).[46]

35.  The Government is taking steps to facilitate and encourage new build nuclear in the UK but the final decisions to go ahead or not will be taken by boardroom executives rather than Ministers. Given that ultimately these decisions are beyond the Government's control, it is worrying that DECC does not have any contingency plans in place for the event that little or no new nuclear is forthcoming. Crossing one's fingers is not an adequate or responsible approach when the UK's legally binding climate change commitments and energy security are at stake. For a department whose principal priorities are to ensure energy security and carbon reductions, DECC appears to be overly reliant on aspiration and hope. While we share the Minister's hope that new build will be delivered as planned, we nevertheless recommend that DECC begins exploring contingency options as a matter of urgency.


10   EV 81 Back

11   HM Government, The Carbon Plan: Delivering our low carbon future, December 201, pp 75-77 Back

12   EV 81, Ev 93, Ev 118, Ev w21 Back

13   EV 81, Ev w24, Ev w35, Q 173 [Mr Earp, Dr Fox], Q 328 [Mr Butler] Back

14   Q 173 [Mr Earp] Back

15   Ev w86, Qq 323-327 [Mr George] Back

16   Ev 118 Back

17   Other example pathways include: "doesn't tackle climate change", "maximum demand, no supply", "maximum supply, no demand", "analogous to MARKAL 3.26", "Higher renewables, more energy efficiency", "Higher nuclear, less energy efficiency", "Higher CCS, more bioenergy", "Campaign to Protect Rural England", "Mark Brinkley", "National Grid" and "Atkins".  Back

18   http://2050-calculator-tool.decc.gov.uk  Back

19   Ev w30  Back

20   Ev w30, Ev 111  Back

21   Ev 81 Back

22   Q 173 [Mr Earp, Dr Fox] Back

23   Ev 81 - DECC explained that: "These results are influence by three targets: (i) meeting the renewables obligation target of 110TWh of renewable generation in 2020; (ii) meeting an assumed decarbonisation target of a grid intensity of 100gCO2/kWh by 2030 (it is recognised that this target is not agreed across Government); and (iii) keeping the de-rated capacity margin above 10% by using a strategic reserve capacity mechanism." Back

24   Ev 91  Back

25   Ev 102 Back

26   Ev 111 Back

27   NAO, The nuclear energy landscape in Great Britain, April 2012 Back

28   Ev w30, Ev w86, Ev 102 Back

29   Ev 93, Ev w8, Ev w24,  Back

30   Ev 93 Back

31   Ev w24 Back

32   Ev 118 Back

33   Ev w21 Back

34   Engineering the Future, Nuclear Lessons Learned, October 2010; Ev 111, Ev 109 Back

35   Q 176 [Mr Earp] Back

36   Ev 122, Ev 109, Ev 100 Back

37   NAO, The nuclear energy landscape in Great Britain, April 2012, Ev 100 Back

38   Ev 122 Back

39   "UK regulators confirm acceptance of new nuclear reactor design" Office for Nuclear Regulation press release, 13 December 2012  Back

40   "Regulators to assess new nuclear reactor design" ONR press release, 15 January 2013; Qq 368-378; Annex 1  Back

41   Annex 1 Back

42   Q 248  Back

43   Ev 111, Ev 102  Back

44   Qq 51, 444 Back

45   Ev 105 Back

46   Ev w11 Back


 
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Prepared 4 March 2013