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

5  Supply chain and skills

86.  The last nuclear reactor built in the UK was Sizewell B, which was completed in 1995.[121] Since then much of the UK's nuclear supply chain has withered away. Similarly, the population of skilled nuclear workers is aging. This presents both a challenge and an opportunity for a nuclear new build programme. The lack of an established and experienced supply chain might lead to delays, as might a shortage of a skilled workforce. However, there is also the possibility of new business opportunities and job creation.

Potential for bottlenecks and delays

87.  There are some parts of the nuclear supply chain that are not available in the UK, for which we will be dependent on overseas suppliers. For example, there is no UK-based capability for fabrication of reactor pressure vessels, steam generators, large turbines and components from other large forgings.[122] Neither is there a UK-based reactor designer/vendor.[123]

88.  Since the number of suppliers of these components is limited, there is the risk that bottlenecks and delays could occur if other countries placed orders for nuclear reactors at the same time as the UK.[124] For example, in the case of the Areva EPR design, some very large forging for the reactor pressure vessel can only be made currently by Japan Steel Works.[125]

89.  One way to minimise the risk of delays is to ensure that orders are placed early, before other countries ramp up their own nuclear new build programmes. The NIA said "clearly it would help avoid potential bottlenecks if the UK were to be at the forefront of new build".[126] EDF was confident that orders for new UK EPR plants would be placed in advance of orders from other countries and would therefore avoid potential bottlenecks.[127]

90.  The Institution of Mechanical Engineers (IMechE) was concerned that the potential for peaks and troughs in the UK new build programme could lead to boom and bust for other parts of the supply chain. One consequence of this could be increased costs and/or delays if a several new build projects were to put simultaneous demands on the supply chain.[128] A possible solution would be for the Government to broker communication and dialogue between the companies involved in new build projects to help them to better co-ordinate activity so that delivery of different plants could be smoothed over time.[129]

91.  We recommend that DECC's Office for Nuclear Development (OND) investigates ways in which it might open a dialogue between the different consortia that are involved in nuclear new build in the UK. The OND should aim to facilitate a smoothing out of orders to supply chain companies in order to avoid crunch points and resultant delays.

Opportunities for UK businesses

92.  Even though some of the components of new nuclear reactors will have to be imported, there is still scope to develop a UK-based supply chain for the remaining components. Sir William McAlpine explained that "initially, EDF will build the thing [Hinkley Point C] but concrete is going to come from this country, the steel will come from this country, the welders will be here".[130] The industry has claimed that around 70% of a new build programme could be supplied by UK companies.[131] Vincent de Rivaz told us that "our ambition is clearly that more than half the value of our project [Hinkley Point C] will be sourced from the UK".[132]

93.  Obviously, if there are opportunities for local companies to win contracts with new build projects, this will help to boost support among the local community. Alyn Jones, New Nuclear Local Authoroties Group, told us:

If we are going to make new nuclear work, in our view as part of that renaissance we need to make sure that the local community, the regional community and the national community can all enter into that business opportunity. [...] There will be great concern, I am sure, in the local community if there is no supply chain benefit as well. Constructing the plant and owning the facility is one thing, but to have UK companies, local companies, not accessing the supply chain will be a very big concern.[133]

Similarly, if new job opportunities are created in the local area, this will help to enhance support too.

94.  Although there may be the potential for UK companies to benefit from supply chain opportunities, it is by no means guaranteed that contracts will go to domestic firms. One of the biggest barriers to domestic firms winning contracts is the rigorous safety culture associated with nuclear construction projects that they may not be familiar with. Dr Fox (Institution of Mechanical Engineers) told us "One of the key issues is that many of the individual firms that might like to get involved in the nuclear industry at the fitting level do not necessarily understand the cultural requirements of getting involved, and it is about transferring that understanding and that knowledge to them".[134] John Earp (Institution of Civil Engineers) explained further:

You will appreciate that there have been issues with concrete at both Olkiluoto and Flamanville, and indeed at some of the plants that are currently being built in the USA. The guys pouring the concrete, who were very good, had not worked on a nuclear power station for a number of years and had a mindset that, "Well, if we pour this and it's a road we can go back and dig it up". That simple mindset doesn't exist on a nuclear site, because once you have the nuclear material there, that concrete is there for good.[135]

95.  During our visit to Hinkley, we heard that the significant up-front costs that can be involved in gaining quality accreditations could prevent some potential supply chain organisations from bidding for contracts with nuclear new build projects. Potential suppliers need to strike a fine balance - proceed with accreditation too early, and there is a risk that a new build project might not go ahead, and the money will be wasted; wait too long, and the accreditation might not be in place in time to bid for work.

96.  We were pleased to see that DECC's Nuclear Supply Chain Action Plan (published after we had finished taking evidence) acknowledged that the costs involved in quality accreditation could be a barrier to entry into the nuclear supply chain.[136] However, we were disappointed by the timetable for action - the first meeting with industry to "understand issues" will be held in the first quarter of 2013 and further meetings were not mentioned. If, as is widely expected, EDF makes a final investment decision to go ahead with Hinkley Point C in the near future, potential suppliers for that project might miss out. We urge DECC to bring forward solutions to this challenge by summer 2013 in order to maximise opportunities for domestic supply chain industries.

97.  We asked the Minister whether the Government would provide assistance to businesses who wanted to access supply chain opportunities. He told us "I think we will look again at how the process we have already begun can be tailored to bring about exactly what you suggest, which is the opportunity for as many smaller businesses as possible to engage. When I have done that I would be more than happy to write to the Committee setting out what we have done already and what more we think we might be able to do to ensure that outcome".[137] We look forward to receiving the Minister's report on this matter.


98.  Many witnesses expressed a concern about a potential shortage of the skills that are needed to build, operate and regulate nuclear reactors in the UK.[138] The last UK nuclear new build project was completed in 1995. Many experienced nuclear engineers in the UK are now over the age of 50 and are likely to be retiring within the next decade. We heard that there was a need to train up a "new generation" of nuclear engineers if there is to be a renaissance in nuclear power in the UK.[139]

99.  Witnesses also suggested that there may be competition for skills at the international level, particularly for senior level specialists.[140] The Institute for Mechanical Engineers and Institute of Physics were concerned that if there was a hiatus in developing new nuclear projects in the UK, then engineers and skilled workers might be tempted abroad to work on international nuclear projects.[141]

100.  CITB-ConstructionSkills suggested that one area where training would be needed was the "nuclearisation" of the construction industry, which would mean "a change in culture, attitude, behaviour and compliance amongst the construction workforce, to support rigorous safety and security for workers on site and quality workmanship in the construction [of new nuclear]".[142]

101.  We were pleased to hear about the range of initiatives that are currently under way to help develop the requisite skills, including the National Skills Academy for Nuclear and the facilities around specific nuclear sites, such as the energy centre at Bridgwater College (which was funded by EDF).

102.  Alasdair Reisner (Civil Engineering Contractors Association) raised another potential barrier to delivering a skilled workforce: "If you don't have confidence that there is going to be a programme of new nuclear, you are a graduate coming out of university and you are making a career choice, are you going to make that choice if you can't be certain that there is something down the line?".[143]

103.  Significant training will be required for the UK to benefit from new job opportunities. Initiatives like the energy centre in Bridgwater College are encouraging, but stronger leadership from Government about the future role of nuclear could help to encourage more people into this area of work.

121   Ev w86, Ev 89, Q 154 [Mr Earp] Back

122   Ev 81, Ev w23 Back

123   Ev 81 Back

124   Ev 81, Ev 93, Ev 91, Ev w23, Ev w35, Ev w21 Back

125   Ev 93 Back

126   Ev w24 Back

127   Ev 93 Back

128   Ev 111 Back

129   Ev 111, Q 152-153 [Dr Fox] Back

130   Q 318 Back

131   Q 201 [Mr Anastasi] Back

132   Q 197 Back

133   Q 127 Back

134   Q 162 Back

135   Q 162 Back

136   DECC, The Nuclear Supply Chain Action Plan, December 2012, p 44, para 6.34 Back

137   Q 461 Back

138   Ev 93, Ev w11, Ev w23, Ev 118  Back

139   Ev 91, Ev w23, Ev 89 Back

140   Ev 91, Ev w23 Back

141   Ev 111, Ev w23 Back

142   Ev 89 Back

143   Q 174 Back

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Prepared 4 March 2013