British Energy prepares to partner

15 December 2007

A partnership between British Energy (BE) and a major European utility – most likely EDF Energy – looks set to be announced early in 2008.

Although BE is experiencing operational setbacks at its fleet of ageing AGRs, its near-monopoly of the best sites for new nuclear build in the UK would effectively prevent would-be competitors from building new nuclear plants without the involvement of BE. Referring to the fact that the limited number of suitable sites are shared between only two owners, namely BE and the Nuclear Decommissioning Authority, EDF Energy chief executive Vincent de Rivaz told a December workshop for investors: “This scarcity of sites should not become part of the problem. It is part of the solution, because it focuses everyone on the right target.”

De Rivaz said that his company’s preferred model “is to be directly engaged in the design and build stages – to have an architect-engineer role – as well as in the operation of the plant.” However, he added: “This naturally does not preclude any partnership. Just the opposite. As architect-engineers, both partners can contribute to and gain from being better informed investors. It allows partners to focus on the relevant means to achieve shared objectives.”

Earlier, on 27 November, BE had announced that it had entered into transmission connection agreements with National Grid at four sites in the south of England for grid access in the period from 2016 onwards. “Through these agreements British Energy has contracted the capacity needed for potential future nuclear development at these sites, subject to National Grid obtaining any necessary planning and other consents,” the company said.

The agreements are for new capacities of 1650MWe at both Bradwell B and Dungeness C, and 3300MWe at both Hinkley Point C and Sizewell C. EDF Energy’s reactor design of choice is Areva’s EPR, rated at around 1650MWe.

However, speaking at the Enabling New Nuclear Build 2007 conference (organised by London Business Conferences and held in London on 29-31 October 2007), National Grid system development manager Mike Lee pointed out that the UK transmission system is more sensitive to changes in load and generation than the European system. As a result, system operation costs for large units would be considerable – for example, these costs would increase by an estimated £50-80 million ($100-160 million) per year for 1600MWe units. Lee also noted that in the case of such large units, “planning consents for new transmission lines may delay a number of potential projects.” Lee concluded that, while transmission can be developed to accommodate new nuclear build, “major issues need to be addressed to accommodate new nuclear generation.”

Nevertheless, contingent on a positive decision from the government – expected on 7 January or very soon after – de Rivaz said his company would be “willing to invest in up to four new plants which will be EPRs.”

He added: “We propose to do this in partnership – as we have in China and the USA – combining our expertise with that of the experts in the UK.”

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