UK "must create right framework for nuclear investment"

17 January 2008

French utility EDF has said that it is ready to invest in four new nuclear power plants in the UK but has highlighted key issues that must be resolved before development starts.

In response to the UK government’s plans to support the construction of a new generation of nuclear power plants, EDF Energy Chief Executive Vincent de Rivaz pledged to “get on with the job” of building urgently-needed new capacity.

EDF’s support of the government’s announcement has been echoed by other companies, including Westinghouse, Areva and British Energy, but the plans have divided both industry and public opinion.

The announcement on 10 January by Secretary of State for Business and Enterprise John Hutton could pave the way for billions of dollars of investment in the UK’s energy sector. The government believes that new nuclear capacity is required to replace retired baseload plant and meet the twin challenges of climate change and security of supply.

Its policy also met with support from the main opposition Conservative party.

EDF says that it will now step up its plans to construct four EPR-based plants in the UK, and believes that the first could be on-line by the end of 2017.

“There is no time for delay in meeting the country’s energy challenges and the whole project now moves ahead,” said de Rivaz. “Contingent on a positive decision, we have been preparing the groundwork in all key areas. Now, we can get on with the job of delivering new nuclear in the UK over the next ten years.”

But EDF and the government’s political opponents have stressed that a framework for investment needs to be put in place that resolves a number of outstanding issues, including planning, site availability, carbon price and provisions for waste management.

Critics of the new policy include the Combined Heat and Power Association (CHPA), which said that the need to deliver security of supply and carbon savings in the use of heat remains a “glaring omission” in the UK’s energy policy. The fact that 60 per cent of the gas consumed in the UK is used for heating means that construction of new nuclear plants would have little impact on dependence on imported natural gas, it said in a statement.

The government is hoping to answer its critics over the coming months by undertaking a number of steps aimed at facilitating the development of new nuclear. In a broad timetable set out in the Nuclear White Paper, it plans to complete the Generic Design Assessment by 2012 and the planning process by 2013 so that construction can start by 2014.

A key area of reform is the planning process, which is being overhauled to be faster as well as improve transparency and participation for major infrastructure projects. A current Planning Bill aims to establish a new single consent regime, while the government plans to carry out a Strategic Siting Assessment (SSA) to identify possible sites for new nuclear plants.

In March this year the government plans to publish a consultation on draft SSA criteria. This would be used to rule out areas of the country in which there are no suitable sites and establish the framework for assessing the suitability of proposed sites.

The government expects that applications will focus on areas in the vicinity of existing nuclear facilities.

Nuclear generator British Energy owns eight sites next to existing licensed nuclear sites and is currently undertaking an assessment of these with a view to development. It has also secured transmission connection agreements with National Grid from 2016 onwards for four key sites in southern England and is currently working to establish potential partnerships for the development of new nuclear capacity.

“Government and industry must now work together to ensure that any remaining public concerns are addressed, and to define the framework for a new generation of nuclear units that will provide safe, reliable and affordable electricity,” said Bill Coley, Chief Executive, British Energy Group plc. “We are ready for new build and have the sites, people, skills and experience that are essential for its success.”

A key area of concern highlighted by critics and proponents of the nuclear policy is the current weak carbon regime. A stable investment environment for nuclear capacity requires a long-term stable carbon price but the current EU emissions trading scheme is insufficiently robust. The Conservatives have suggested the introduction of a carbon tax but the government says it will work with its EU partners to strengthen the ETS to provide investor confidence.

The government has made it clear that the financial costs of the complete lifecycle of any new nuclear fleet will be borne by the private sector, and that no subsidies will be available. To support this, the new Energy Bill contains clauses to ensure adequate funding provision is made by potential developers of new nuclear power stations for the full costs of decommissioning and their full share of waste management costs.

In addition it is starting to scope a new independent advisory body, the Nuclear Liabilities Financing Assurance Board (NLFAB). This will provide public advice to the government on all aspects of the financial arrangements operators plan to put in place to cover waste management and decommissioning.

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