Investors in waiting12 October 2006
The UK’s recent energy review has got many people talking about new nuclear build. So when do we break ground?
Before the latest energy review in the UK commenced, there hadn’t been very much for the country’s nuclear industry to get excited about for quite some time. But now excitement is certainly in the air, especially after the 11 July 2006 release of the government’s report on the review.
It is virtually impossible to sit through a nuclear industry meeting without possible new build in the UK being discussed, and in the UK itself – particularly London – there has been an outbreak of conferences on the subject. NEI’s owner Wilmington Media is amongst those who have not been slow to get in on the act, as Chatham House’s Malcolm Grimston wryly commented when he addressed the delegates of Wilmington Conferences’ European Nuclear Power Debate, held in London on 4-5 September 2006: “The reason that there is a conference like this pretty much every other week – as I’m sure the organisers have worked out – is that for the first time seriously, I would guess, since the early to mid 1980s there is the prospect of a significant return to investment in nuclear energy within the UK.”
So, with so many conferences on the subject, is there any consensus on what the industry should do now?
Up to the government
A Mori survey of 63 Labour, 29 Conservative and 16 ‘other’ members of parliament carried out towards the end and soon after the review showed that 61% support new nuclear build (up 16% since a year ago) while opposition has substantially dropped to 22% (down 19%). Keith Parker, chief executive of the Nuclear Industry Association, which commissioned the survey, commented: “The results of the poll endorse the findings of the energy review.”
However, while this shift in opinion alone represents huge progress, there remain many significant hurdles to clear before there is any realistic chance of new units being built in the country. And it would seem that it is primarily up to these fickle (when it comes to nuclear matters) parliamentarians to surmount these hurdles.
At the European Nuclear Power Debate, British Energy (BE) CEO Bill Coley said: “There are some difficult decisions that government must make.” His company would not want to invest in new nuclear until “some of the uncertainty is taken off the plate about planning, permitting and licensing,” he said, adding that he hoped “government would be able to put some of those issues to rest.” Asked whether the industry was seeking similar incentives to those in the US Energy Policy Act of 2005, Coley answered: “I don’t believe subsidies are needed at all.”
Some reassurance on the issue of licensing was given by Dave Watson of the Nuclear Installations Inspectorate (NII), who said that the NII was proposing a two-phase licensing process. Phase one would be a design acceptance process consisting of: design and safety case submission based on generic principles; a fundamental safety overview; an overall design safety review; and detailed design authorisation assessment. Phase two would involve assessment of the plant, the site and the operating organisation. Phase one would take of the order of three years and phase two approximately six to twelve months. New NII guidance is planned to be issued by January 2007, Watson said.
EDF Energy’s wish list
While Coley appeared to be adopting a wait-and-see approach, EDF Energy’s CEO, Vincent de Rivaz, said that his company had begun meeting with the Department of Trade and Industry (DTI), and is “actively engaged with the government.” Speaking at The Energy Forum, held in London on 20 September 2006 and organised by Marketforce Communications, de Rivaz referred to his company as an “investor in waiting” and listed five areas – planning, licensing, availability of sites, waste storage and carbon pricing – which, if resolved, would enable EDF Energy to become an “active investor.”
On planning, de Rivaz said: “We need a clear, open and predictable process so that we know how long it will take and what the terms of reference will be.” He added that the government’s intention to develop a statement of strategic need for nuclear would help in this area.
The NII should draw upon international experience when licensing new plants, according to de Rivaz. “On the basis of what others have done it would be possible to deliver the form of prelicensing that shortens the time needed to choose and then license the technology for each specific site.” This was one of the issues that Watson had said (at the European Nuclear Power Debate) the NII was looking into.
The third factor mentioned by de Rivaz was siting. While this didn’t appear to be much of an issue for Coley, de Rivaz was clearly concerned about the fact that the most appropriate sites for new nuclear build are owned by BE. “We need a clear and fair mechanism,” he said, to enable investors to have commercial access to these sites.
On the fourth factor – waste management – de Rivaz called for clarity on choosing the funding mechanism and location of a waste site. And clarity was also what was required on the final point, the price of carbon dioxide emissions. “Once these key areas of consultation have been covered and if the conditions match both government policy objectives and our own list of objectives, then EDF Energy will certainly be ready to invest in new nuclear power stations in the UK.”
Such comments are not uncommon amongst would-be investors. There does appear to be a general consensus on what needs to be done but unfortunately, it is up to the government to provide the lead. The industry will therefore have to wait until the publication of the next energy white paper to see whether the government intends to translate its words into policies. Addressing The Energy Forum, Willy Rickett, director general of energy at the DTI, said the white paper would be published “sometime in the New Year,” following which, “we would like to legislate in the autumn.” At least a year then, before new nuclear might get the green light. For now, it is stuck on amber.
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