The future of nuclear power in Wales Contents

Conclusions and recommendations

Wylfa Newydd: Cost and scheduling

1.We received conflicting evidence on the potential cost of new nuclear build and Wylfa Newydd in particular. Whilst nuclear power may not be the cheapest source of energy available, it does have the added benefit of providing value for money for a secure and reliable source of low-carbon power. We are also reassured that the taxpayer will be protected from excessive costs, as the risk of the investment is placed on the developer. (Paragraph 22)

2.The UK Government is in favour of new nuclear build, but not at any price. Energy policy should balance cost against energy security and environmental concerns. We recommend that the Government negotiate a strike price for Wylfa Newydd below that agreed for Hinkley Point C and seek a price that would be competitive with renewable sources, such as on-shore wind. The Government should not continue with the project if the price is too high. (Paragraph 23)

3.We were told by witnesses that some of the costs of nuclear power are hidden. When we questioned the Minister, she said that this was not especially the case for nuclear power, but it was the case for all energy sources. As a result, energy pricing is often difficult to understand and can seem opaque to experts, let alone the general public. Without access to all the necessary information it is difficult to compare and to critique decisions that have been taken. We recommend that the Government provide a clear and comprehensible explanation of how the lifetime cost of energy sources are compared. In particular, it should show how it compares new nuclear with renewable alternatives. The Government should also be transparent about all the costs related to new nuclear build, including the eventual cost of decommissioning and waste disposal. (Paragraph 24)

The track record of the Advanced Boiling Water Reactor

4.We received conflicting reports on the track record in Japan of the Advanced Boiling Water Reactor that will be used at Wylfa Newydd. We received evidence to explain why lower than expected levels of output were seen in Japan, but it seems likely to us that Horizon Nuclear Power will be able to achieve a load factor similar to its commercial assumptions in the different operating conditions in the UK. (Paragraph 29)

Potential delays and their impact on cost and Government policy

5.While the evidence we received from a number of witnesses, including Horizon Nuclear Power, show that they are trying to minimise the possibility of delays, recent experience suggests it shouldn’t be assumed the Wylfa Newydd project will stay on schedule. We have heard that nuclear power projects have a history of cost and schedule overruns and while the ABWR has a better construction record than most, it is unlikely to be wholly immune to this. Moreover, there are a number of specific factors that could cause delays and rising costs at Wylfa Newydd. These include the lack of experience in building an ABWR in the UK and a potential labour bottleneck for large infrastructure and nuclear projects. Horizon Nuclear Power should be planning to mitigate potential delays, and the Government should work with them to find solutions to these potential obstacles. (Paragraph 36)

6.New nuclear build is a major part of the Government’s plans for the UK’s future energy supply. Wylfa Newydd is scheduled to begin operation when Britain’s remaining nuclear power stations close in 2025. Although the Government told us that it is committed to a mix of energy sources, Wylfa Newydd is set to provide electricity to 5 million homes. It would be difficult to replace this provision. We recommend that the UK Government devises a contingency plan for a delayed start to the Wylfa Newydd project. It will be essential to have a back-up plan to fill the gap in the energy supply in the case that Wylfa Newydd is delayed. (Paragraph 37)

The potential impact on Anglesey from construction and preparatory works

7.As a major infrastructure project, Wylfa Newydd will have a significant impact locally. A number of concerns have been raised by local stakeholders, including local authorities, in relation to the local environment. Horizon Nuclear Power will have to address these concerns, to mitigate the impact of construction and retain the goodwill of the local community. Additionally, there are concerns about the impact of the project on the region’s status as a Welsh language area. An influx of workers from outside the area could reduce the proportion of Welsh speakers. However, as the local authorities pointed out, without jobs, Welsh speakers will leave the area. (Paragraph 47)

8.The impact on the local environment needs to be minimised as much as possible if Wylfa Newydd goes ahead. This should include work to minimise the impact of construction work, for example from increased traffic to the site and from temporary workers’ accommodation. Horizon Nuclear Power should work proactively with the local authorities, local stakeholders such as the National Trust, and the local community to take mitigating actions to minimise impacts, and to ensure that concerns are addressed. We therefore recommend that Horizon establish a local forum, whereby they can engage with the community to address their concerns, and keep them updated with the project. Furthermore, we recommend that Horizon provide Welsh language courses to its employees, so they can immerse themselves in the local culture. (Paragraph 48)

The environmental impacts of nuclear power stations

9.Members of the public and environmental groups often pointed to the recent Fukushima accident as a reason to question the safety of nuclear power and abandon plans for new nuclear build. While the main causes of the Fukushima incident (earthquake and tsunami) are unlikely to occur in the UK, we were pleased to hear that the ONR conducted a major review following Fukushima and that the most significant recommendations have been implemented. Therefore, we conclude that the ONR will be able to regulate nuclear power in the UK to ensure its safety. We were particularly impressed by their professionalism and their ability to prepare for worst case scenarios. (Paragraph 56)

10.However, the disparity of views should not be ignored. To meet the concerns of the public, it is important that the Government generally, and Horizon Nuclear Power more locally, inform the population about how nuclear power is regulated so that it operates safely. Information on the environmental impact should also be made widely available and easily accessible. Horizon Nuclear Power have done some work on this, and more information should be made available if the final site licence is granted. (Paragraph 57)

The safe operation of nuclear power at Wylfa Newydd

11.The diligent and professional approach taken by the Office for Nuclear Regulation (ONR) should ensure that any new nuclear power plant will be as safe as possible. The Generic Design Assessment (GDA) for approving any new nuclear power plant is rigorous and that communication between Hitachi-GE, Horizon and the ONR has been clear and candid. We hope that the process will continue to proceed quickly while ensuring the safety case is thoroughly examined. The ONR have also reassured us that there are clear and detailed emergency plans for any possible accidents at Wylfa and Trawsfynydd, and that preparations are in place to deal with such contingencies, coordinated with the local authorities. (Paragraph 64)

Contributions of Trawsfynydd and Wylfa A to the North Wales economy

12.The nuclear industry has made a major contribution to the economy of North Wales, and Wylfa Newydd would make a strong contribution in the future. Without the nuclear power industry, there is little prospect of many high-quality, well-paid jobs in the area, which will negatively affect the local economy. Furthermore, we are concerned that without these opportunities, young Welsh-speakers will emigrate from the area. (Paragraph 72)

The economic impact of construction of Wylfa Newydd

13.The construction of Wylfa Newydd will have a large impact on the North West Wales economy, with thousands of people being hired and opportunities being provided to hundreds of businesses. The construction of Wylfa Newydd will also support the Energy Island programme and is a major part of the economic policy of the area. (Paragraph 80)

14.We heard that Wylfa Newydd is the backbone of the Energy Island programme. However, it is important that the region is not dependent on one industry, and that it has a diverse economy. Therefore, we recommend that the UK and Welsh Governments should work with Anglesey and Gwynedd County Council to progress other aspects of the Energy Island programme and to find alternative economic strategies for the area. (Paragraph 81)

15.Local businesses and people in North Wales will need assistance to be ready for the Wylfa Newydd project. We heard that programmes are in place to provide training, but that many people needed more detail on what skills would be required in order to take advantage of the opportunities provided by the project. (Paragraph 90)

16.The local authorities, and Welsh and UK Governments should all be working together to ensure that there is a large Welsh contribution to the construction and operation of Wylfa Newydd. We recommend that they work with Horizon Nuclear Power to ensure that the local population is well trained and is able to take up opportunities at Wylfa Newydd. (Paragraph 91)

17.We welcome the work that Horizon Nuclear Power are already undertaking with local businesses and training providers. However, we recommend that they provide greater clarity as to what they require from the workforce. This will enable education and training to be provided, to give local people the skills they will need. Furthermore, we recommend that Horizon seek to retain the skills of workers leaving Wylfa A. This is a ready source of skilled individuals, who will be able to transfer to the Wylfa Newydd project, either directly or with some re-training. (Paragraph 92)

18.As well as helping local individuals to gain from Wylfa Newydd, the Government should make sure that businesses in Wales and the UK are able to join the supply chain for Wylfa Newydd. We recommend that the UK Government enable businesses to take advantage of the resources of the National Nuclear Laboratory, the National Nuclear College and the Nuclear Advanced Manufacturing Research Centre, so that they are able to prepare to be part of the supply chain for Wylfa Newydd. (Paragraph 93)

19.We find it surprising that, in light of Wales’s proud role in the history of the UK nuclear industry, that the Government’s plans for nuclear skills development did not have a Welsh dimension. We recommend that the UK Government correct this oversight by setting out plans to create a North Wales campus for the National Nuclear College. (Paragraph 94)

The economic impact of job losses at Trawsfynydd

20.The number of employees at Trawsfynydd is scheduled to fall by 75% by 2028. This will have a severe impact on the economy of Meirionnydd and Gwynedd, as Trawsfynydd is a major employer for the area and one of the only sources of well-paid, highly skilled jobs. It is essential that the economic impact of job losses is mitigated. Therefore, we recommend that the UK and Welsh Governments work with Gwynedd County Council to find ways to maintain nuclear industry skills and to attract other high-value jobs to the area. (Paragraph 100)

Decommissioning at Trawsfynydd

21.Progress on decommissioning at Trawsfynydd has been good and demonstrates how decommissioning can take place quickly, efficiently, and safely. We were impressed by the determination of the management and staff at Trawsfynydd to find creative solutions to challenges on site. Their work has helped to improve decommissioning plans and save jobs. (Paragraph 106)

22.Under current plans, Trawsfynydd will lose most of its jobs within the next ten years. We heard there is a realistic plan for continuous decommissioning that could keep more jobs on site, which would be a major benefit to the local area. We recommend that, so long as that plan ensures that the high standards of safety continue, the NDA should implement it so that more people are employed for longer. We further recommend that, should additional funding be necessary, the UK Government should endeavour to make this available. (Paragraph 111)

Future decommissioning at Wylfa A

23.We welcome the fact that the process for decommissioning Wylfa A will be simpler and quicker than at Trawsfynydd. This should allow the site to be ready for the construction of Wylfa Newydd, and enable a smooth transition to take place. (Paragraph 115)

Management of nuclear waste in Wales

24.The evidence we received is that nuclear waste is currently well-managed. The professionalism of staff on site, the technology deployed, and the flasks and storage facilities all support the view that nuclear waste is disposed of, transported and stored safely in Wales and the UK. Nonetheless, not enough has been done to enable the permanent disposal of the UK’s nuclear waste. While the temporary arrangements are both of a high standard and capable of storing the waste for a long time, progress on the geological disposal facility (GDF) and finding a final site is necessary. Without a site for the GDF, it is not clear that the UK Government has a permanent solution for waste. This is a concern, as we found that members of the public want reassurance that nuclear waste is dealt with appropriately.
(Paragraph 121)

25.We recommend the UK Government accelerate progress on identifying the site for the GDF, and make the necessary decisions. Speeding up the process would not only help the UK to begin dealing with waste more quickly, it would also make the future for nuclear power clearer. (Paragraph 122)

The UK Government’s policy on SMRs

26.The evidence we received made it clear that while SMRs are not certain to be a source of low-cost power, they are an option worth exploring. It is possible that SMRs will be price competitive with both large nuclear reactors and renewable sources, but that case is not proven. Similarly, until a first reactor is developed, it is difficult to be sure whether a large enough customer base exists. Nonetheless, we did receive evidence from experts such as the National Nuclear Laboratory that suggested that SMRs could be a viable option and there are potential customers. (Paragraph 131)

27.We support the UK Government’s objective of developing SMRs in the UK. We believe that successfully developing an SMR would be a major opportunity for the UK. However, in light of the reservations of some witnesses and the potential risks of the project, the Government’s competition must carefully consider the potential cost of any SMR project and determine whether there could be sufficient demand for SMRs. The UK Government must be sure that any decision to support an SMR developer offers value for money and a relatively high chance of successful delivery. (Paragraph 132)

The benefits of manufacturing SMRs in the UK

28.Developing a Small Modular Reactor in the UK could support the creation of a nuclear supply chain in the UK. With the National Nuclear Laboratory (NNL) and Nuclear Advanced Manufacturing Research Centre (NAMRC) located nearby in the north west of England, North Wales could take advantage of this. This will only be possible if the UK Government makes the right decision when choosing which SMR model to back through its SMR competition. Buying an off-the-shelf SMR design with no intellectual property or opportunity to partner would limit the economic opportunities to the UK. (Paragraph 135)

29.For the SMR competition, the potential for partnership and job creation should be a major factor in the Government’s decision. While this must be balanced with cost, we recommend that the Government should enable either the creation of UK-based SMR developer or a partnership with an international vendor that will deliver UK involvement in manufacturing and jobs. The Government should do this by creating the appropriate regulatory and business environment. We also believe that progress has to be made soon, if the UK wants to be first to market for SMRs. Greater clarity on the potential for SMRs to be built in the UK would also help firms with nuclear and advanced manufacturing skills to prepare for opportunities in the supply chain. (Paragraph 136)

30.When the UK has made its decision on the SMR competition, it should work with local authorities and the Welsh Government to deliver jobs where they are needed. North Wales is well positioned near centres of nuclear excellence in north-west England and needs investment to stimulate the economy. If SMR manufacturing can be brought to the UK, we recommend the Government should consider bringing it to North Wales, where it could link up with existing nuclear sites and the NNL and NAMRC. (Paragraph 137)

The use of Trawsfynydd as a site for a first-of-a-kind SMR

31.It is clear that Trawsfynydd would be an ideal site for a first-of-its-kind SMR. The availability of cooling water and the grid connections mean it would meet the technical requirements, and its history as a nuclear site and its ownership by the Government mean that it would be easy to designate it as a site for SMR development. The presence of a skilled workforce, which is strongly in favour of the project, would also be a major boost to SMR development. (Paragraph 146)

32.The location of Trawsfynydd also makes it useful for a first-of-its-kind SMR. An SMR at Trawsfynydd would provide a good test case of whether SMRs can deliver value for money electricity without needing to sell large amounts of excess heat. (Paragraph 147)

33.It is also clear that SMR development would be the best option for the future use of Trawsfynydd. It would be the most favourable economic option for Gwynedd, providing an economic stimulus to the area, and many-quality jobs. It would also help to keep skilled workers in the area and would provide clarity on the end status of the site, reducing the cost of decommissioning. (Paragraph 148)

34.We recommend that Trawsfynydd should be designated as a site for a first-of-its kind SMR. The Government has told us that it will set out site criteria later this year for SMRs. In order to support the development of SMRs and the region of Gwynedd, the Government should move fast to make it clear what needs to be done for Trawsfynydd to meet these criteria and be designated as a site. That said, we are strongly of the view, based on the expert evidence we have received, that Trawsfynydd is a standout candidate for locating a first-of-its-kind SMR. (Paragraph 149)





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21 July 2016