Fleet approach could double UK contribution to nuclear new build

13 November 2012

Building multiple nuclear reactors in the UK with a single technology could almost double the level of UK supplied parts and labour generated to support the nuclear industry according to a new report by PwC.

“The fleet effect: the economic benefits for the UK in adopting a fleet approach to nuclear new build”explores scenarios whereby investors in the UK’s new nuclear programme would build between four and eight reactors relying on the same technologies, built at regular intervals in the period to 2030. The study, commissioned by Areva, and independently researched and written by PwC, examined the direct and indirect impacts of a fleet approach in terms of both jobs and GDP.

It found that commissioning a nuclear fleet of four to eight reactors could increase the opportunity for UK content in the new build programme from 44% in a non–fleet approach, to over 80% because of the volume of work and certainty it would provide investors.

The report estimates the additional economic value in terms of goods and services provided at between £6.5bn-£11.1bn, and 5,100 to 9,400 jobs for fleet sizes of four to eight reactors.

It shows that a significant proportion of the fleet effect benefits accrue with a second pair of reactors, emphasising the important of commitment to multiple plant to enable a technology to achieve the critical mass needed to increase levels of localisation and economies of scale.

Orders for four or more reactors of a single technology would be a ‘game changer’ for many supply chain companies according to companies interviewed for the report, with the volume of work lowering barriers of entry for companies in the supply chain, and justifying investments in new facilities, skill enhancement and nuclear training.

Depending on the scale of the new build programme, the report estimates that at its peak, almost 15,000 people could be employed to meet the demand for UK support to the new nuclear programme, generating additional economic value in terms of goods and services of £1.6bn in 2022.

In the absence of a fleet approach the value of UK content is estimated to remain below 50%, with over half of the available work undertaken by companies outside the UK. The scope for UK content under a fleet approach increases as the size of the fleet increases, with the greatest localisation potential for a fleet of eight reactors estimated at approximately 85%.

The report concludes that the benefits of a fleet approach needed to be underpinned by a clear industrial strategy that incentivises localisation in the UK through the supply chain, allowing the proportion of work undertaken in the UK to increase significantly. For non – UK suppliers, greater volume and certainty in the UK, would increase the viability of transferring manufacturing operations in to the country.

Jonty Palmer, Partner, PwC energy, said:

“The certainty and volume brought about by a fleet approach has the potential to affect the investment and planning of companies in the new nuclear supply chain, increasing the scope for UK skills, parts, jobs and economic impacts.

“Many smaller firms with the capability to deliver in the nuclear supply chain are currently opting to apply themselves to other sectors such as oil and gas, where the barriers to entry are lower and the certainty of orders is greater.”

Examining the wider impacts of a fleet approach to nuclear new build the report also found that building eight nuclear reactors in the UK using one technology could deliver additional 1% of GDP in benefits – valued at up to£17bn in terms of jobs, local business, lower build costs, energy security and energy pricing. Benefits identified included:

· Build costs: a reduction in total design and build costs of approximately 11% between the first and second pairs of reactors built, and an incremental saving of approximately 4% between the second and third or third and fourth pairs of reactors.

· Jobs: between 5,100 and 9,400 jobs during the design and build period.

A fleet approach to nuclear also provides the potential for enhanced industrial benefits over the long term including the opportunity to increase nuclear-related exports by significantly more than 140% by 2030, and enabling the UK supply chain to apply its learning to other safety-intensive, highly regulated industry sectors such as other renewable generation, oil and gas or chemicals.

Karen Dawson, Director, PwC said:

“The opportunities offered by a strategic fleet approach to nuclear are significant, but so too are the scale and timing of the build programme in the UK. It could also put the UK in a strong position to compete for nuclear new build contracts globally.”




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