UK's energy review backs nuclear

17 July 2006

As expected, the long-awaited UK Energy Policy Review, which outlines a series of proposals designed to combat climate change and improve security of energy supply, supports the development of new nuclear stations in the UK, saying: “We have concluded that new nuclear power stations would make a significant contribution to meeting our energy policy goals.”

Measures to facilitate new nuclear power stations include streamlining the licensing and planning processes and clarifying the strategy on decommissioning and waste. However, the government is clear that it will be for the private sector to make commercial decisions on investment in nuclear generation and, furthermore, will assume the full cost of decommissioning and waste disposal.

The review points out that the economics of new nuclear build depend future gas and carbon prices and consequently now look more positive than at the time of the 2003 Energy White Paper. With nuclear generation costs estimated at £38/MWh ($66/MWh) as a central case, for the central gas price scenario of 37p/therm (¢67/therm) and a carbon price of €36/tCO2 the economics of nuclear remain robust for generating costs up to £43/MWh ($73.4/MWh), the review says, well above the forecast cost of power generated from the Olkiluoto 3 project under development in Finland.

Regarding waste disposal costs, the review identifies the need to share the burden between existing legacy wastes and those arising from nuclear new build, although the private sector will “pay a charge covering the full and equitable costs of managing the waste generated over the expected life of each new power station,” and will be responsible for the provision of interim storage over the life of the plant.

Nonetheless, the review also points out that modern nuclear plants produce significantly less waste than early generations of nuclear reactors, suggesting that if the UK’s current nuclear capacity were replaced with new build, existing waste stocks would only increase by about 10% by volume. In addition, the commercial nature of the arrangements in relation to waste disposal will provide an incentive for operators to seek an optimal balance between performance and waste generation.

While the private sector will be responsible for any investment decisions, the government has pledged to act to address regulatory barriers such as those associated with the planning and licensing process. The review acknowledges that the current planning system creates delays and uncertainties for all large energy infrastructure projects, pointing out that, on average, in England and Wales since 1990, large electricity projects have taken 36 months to secure planning consent while the inquiry for Sizewell B, the most recent nuclear plant to be built in the UK, took a whopping 73 months, with the direct inquiry costs reaching £30 million ($51.6 million). Furthermore, at the Sizewell B inquiry only 30 of the 340 inquiry days were devoted to local issues.

While the most viable sites for new build are likely to be adjacent to existing nuclear power plants, and the government is expected to undertake further assessment to identify the most suitable sites, in a bid to rationalise the planning process the government intends to develop a policy framework for new nuclear build. This would include a nuclear “Statement of Need” and set out that national strategic and regulatory issues are most appropriately discussed through processes other than the planning inquiry. The planning inquiry, says the government, should focus on the relationship between the proposal and the local plans, and local environmental impacts and should address these issues in the context of the national strategic or regulatory material considerations.

The proposed framework for new nuclear build and the context in which planning inquiries should be held are to be set out in a White Paper to be published around the turn of the year and the government has launched a consultation due to close on 31 October. The government will also appoint a high-powered inspector whose role will be to ensure that planning inquiries are run to clearly defined timescales.

A major strategy measure to facilitate the planning process will see the Health and Safety Executive, the Nuclear Installations Inspectorate (HSE/NII) and the Environment Agency introduce a pre-licensing, design authorisation procedure that would allow potential developers to apply for prelicensing approval for a generic reactor design before committing significant sums of capital to planning and construction. Providing the subsequent development and construction followed this standard design, potential developers could be confident that the site licence application would be approved by HSE/NII without significant design modifications.

HSE will develop guidance for this new process to be in place by the start of 2007.

Over the next two decades it is likely that the UK will need around 25GW of new generation capacity; and the energy policy review aims achieve this while moving the government a significant distance forward on its major energy policy goals of cutting carbon dioxide emissions by some 60% by about 2050 while maintaining reliable energy supplies and a competitive energy market.

Setting out the framework within which the energy market will operate for the coming 30 to 40 years, Trade and Industry Secretary Alistair Darling said: “We face two big challenges, climate change and the need to provide secure cleaner energy at affordable prices.” Environment secretary David Miliband commented: “Nuclear power already accounts for almost a fifth of our electricity but this is likely to drop to just 6% by 2020. Our analysis suggests that, alongside other low carbon generating options, a new generation of nuclear power stations could make a contribution to reducing carbon emissions and reducing our reliance on imported energy.”

Nuclear generator British Energy supports the review’s conclusions with chief executive Bill Coley saying: “Nuclear energy is a near-zero carbon source of base load electricity generation, and can play a significant role in combating climate change and contribute to security of supply for the UK.” He added: “We very much welcome the continued emphasis on carbon reduction, and the need to address planning and licensing requirements, which should help remove uncertainty and encourage investment in new generating capacity. I am also pleased to see government action on tackling the legacy issue of long term storage of radioactive waste. EDF Energy’s chief executive Vincent de Rivaz, further commented: “It is a major step towards providing a clear and stable framework, allowing companies like ours to make the right investment decisions for the long-term.”

The full document is available from the Energy Review website at www.dti.gov.uk/energy/review


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