UK government backs nuclear......provisionally

25 May 2007

UK trade and industry secretary for the UK, Alistair Darling, has released the long-awaited energy white paper – titled Meeting the Energy Challenge – setting out government energy strategy for the coming decades.

In a statement to the House of Commons, Darling said: “We face two big challenges – climate change and maintaining stable and affordable energy supply in an increasingly unstable world,” adding that the document sets out a long-term framework for action to address these challenges.

The government said it had reached the “preliminary view that it is in the public interest to give private sector energy companies the option of investing in new nuclear power stations.” A consultation on this “preliminary view” was launched at the same time as the white paper on 23 May and runs for 20 weeks until 10 October 2007.

The government was forced into the consultation following a February High Court ruling that the consultation process leading to the the decision to support new nuclear build as part of the 2006 energy review was procedurally flawed.

In the consultation document, titled The Future of Nuclear Power – The Role of Nuclear Power in a Low Carbon UK Economy, the government said it believes “it is likely that energy companies will come forward with proposals for new nuclear power stations.”

A key factor in government thinking is the conclusion that not allowing energy companies the option of investing in new nuclear would increase the risks of not achieving long-term climate change and energy security goals or of reaching the targets “at higher costs.”

According to the consultation paper, under central gas price and central nuclear cost cases, and with a future carbon price of €36/tCO2, the net present value over 40 years of adding 10GWe of nuclear capacity would be of the order of £15 billion ($30 billion). Nuclear power also becomes the cheapest generation technology by around 2023.

Conversely, in the period from 2020-2030, not allowing investment in new nuclear power stations would increase the risk to security of energy supplies because between 2 and 4GWe less new capacity would be built and would put upward pressure on wholesale electricity prices. At the same time, UK carbon emissions in the period between 2020-2030 could be around 4MtC higher, on average, than if nuclear was included.

The consultation paper adds that, in the view of the government, there are no environmental or fuel supply issues that should prevent a new generation of reactors from being developed.

However, particular concerns that have been raised with regard to reprocessing of spent nuclear fuel have led the government to conclude that any nuclear power stations that might be built should proceed on the basis that spent fuel will not be reprocessed and that accordingly waste management plans and financing should proceed on this basis. Spent fuel would be held in interim storage before transport to a long-term geological repository.

The government sees its role in providing a policy framework that encourages the development of a “wide range of low carbon technologies.” While it is clear that nuclear is one of these technologies, the government does not want to be seen to be undermining the nuclear consultation process by prejudging the conclusions of the consultation. However, it is proceeding with a range of actions to reduce regulatory and planning risks “to prepare for the possibility that the government concludes that it is in public interest to allow private sector companies the option of investing in new nuclear power stations.”

Among these measures is the planning white paper, Planning for a Sustainable Future, which was launched two days before the energy white paper, and sets out radical changes to the planning system to enable timely, efficient and predictable decisions on key national infrastructure. The government plans to introduce the necessary legislation as soon as possible with the aim of introducing a reformed system in 2009. The proposals include three key elements in which ministers set a clear national case for important energy infrastructure; a streamlined and efficient decision making process which allows decisions to be taken by an independent body; and a new obligation on developers to consult before they submit applications.

The government’s Department of Trade and Industry has also published a new report setting out possible siting decisions for new nuclear developments. Siting New Nuclear Power Stations – Availability and Options for Government by Jackson Consulting concludes that existing nuclear sites would be the most appropriate for new developments, followed by sites on which existing large scale, conventional generators are currently installed such as Didcot A. Several existing nuclear sites in the south of England appear to be strong candidates as potential locations for new nuclear build funded by the private sector with the top four British Energy-owned sites – Hinkley, Sizewell, Bradwell and Dungeness.

Predictably, the nuclear industry welcomed the energy white paper with the Nuclear Industry Association (NIA) chief executive Keith Parker saying: “Nuclear provides large-scale, low-carbon, stably priced power. Without it, the UK will come to rely on imported fossil fuels, meaning less secure supplies, volatile prices and more carbon emissions.”

Parker added that the major utilities were ready to support new nuclear build.

First out of the blocks was Westinghouse, which submitted its AP1000 design for UK design acceptance to the Nuclear Installations Inspectorate. Meanwhile, Electricité de France has said it is determined to be a major player in new plans for nuclear power in the UK and will, “at the right time,” submit a request for certification of an EPR design in conjunction with Areva.

Robert Pitcher, partner at law firm Eversheds, commented: “While there were no real surprises in the energy white paper, what is clear is that nuclear remains very much part of the government’s plans for the future of energy supply in the UK. Together with the planning white paper issued earlier in the week, the proposals, if adopted, will help bring nuclear new build closer to reality.”

Pitcher added: “The new consultation process will have to comply with the requirements set out following the judicial review, therefore it cannot prejudge the conclusions of the process.”

New nuclear power stations are unlikely to make a significant contribution to new capacity before 2020 but because of the long lead times associated with new nuclear developments, without “clarity now we will foreclose the opportunity for nuclear power,” the government concluded in its consultation document.


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