UK new nuclear developers pay tribute to EDF

Monday, 19 September 2016
Vincent_de_Rivaz_Sym2016_(WNA)-48The UK government's approval of EDF Energy's Hinkley Point C project has "blazed the trail" for other nuclear new build developers at home and abroad, delegates at the World Nuclear Association's Annual Symposium heard last week.

The UK government's approval of EDF Energy's Hinkley Point C project has "blazed the trail" for other nuclear new build developers at home and abroad, delegates at the World Nuclear Association's Annual Symposium heard last week.

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 EDF Energy’s de Rivaz (Image: World Nuclear Association)


The French company plans to build two EPR reactors at the site in Somerset, with China General Nuclear (CGN) owning a 33.5% stake in the project. The two companies also plan to develop projects to build new plants at Sizewell in Suffolk and Bradwell in Essex, the latter using Chinese reactor technology.

Referring to the UK government's decision last week, Vincent de Rivaz, EDF Energy CEO, told the Symposium in London: "It is truly an historic moment. It marks the relaunch of nuclear in Europe and it will transform the prospects for our industry. It is excellent news for British consumers. Just as it is for British and French industry. And by reconfirming the role of nuclear in the battle against climate change, it has global implications."

Political risk


EDF Energy and its Chinese partner "understood" why the new government under Prime Minister Theresa May "took the time to review the project", de Rivaz said, even though the Hinkley project had received a long-awaited and positive final investment decision (FID) from the EDF board on 28 July.

He told the Symposium: "This process has strengthened UK industrial strategy and governance. These elements are good for this industry. They provide stability and clarity, which is precisely what investors need. We should all welcome the new legal framework for British critical infrastructure. It is entirely consistent with our views and it will benefit the projects under our partnership with CGN, as set out in the Strategic Investment Agreement signed last year in October 2015, including Sizewell C and Bradwell B."

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 NuGen’s Samson (Image: World Nuclear Association)

 

Unlike state-owned EDF Energy and CGN, the other UK new nuclear developers - Horizon Nuclear Power and NuGeneration - are private investor vehicles. But approval of Hinkley provides the confidence in the UK market that potential investors need, their chief executives said.

Duncan Hawthorne, CEO of Horizon Nuclear Power, which plans to deploy the UK Advanced Boiling Water Reactor (ABWR) at two sites - Wylfa Newydd and Oldbury-on-Severn - said: "If you're in the nuclear business, you're in a political business, so getting a positive decision means that the policy and support for nuclear is still there, which is good. And obviously Hinkley, to be fair, they have blazed the trail on this. The government had an idea of new build, but it really only comes to fruition when you negotiate conditions and EDF had to take the blows for a lot of us that are coming in behind them."

Established in 2009 and acquired by Hitachi in November 2012, Horizon aims to provide at least 5.4 GWe of new capacity, expecting the first unit at Wylfa Newydd, on the Isle of Anglesey, to be operating in the first half of the 2020s.

On the potential impact of the UK's referendum vote in June to leave the European Union, Hawthorne said free trade deals, foreign exchange rates and import tariffs "will be factored in" to new build projects "but not right now". He added: "These plants are a 60-year proposition, so you have to be able to withstand lots of twists and turns. Ultimately, if you've built a good project and you've got a good contract, you should be able to withstand those things."

Tom Samson, NuGen CEO, referred to the importance of the Contract-for-Difference (CfD) mechanism the government under the previous prime minister, David Cameron, had already agreed for Hinkley, as well as of the new government's decision that Hinkley would not be permitted to change ownership without its agreement. May's government has left unchanged the CfD strike price of £92.50 per megawatt hour.

Samson said: "Discussion of the golden share for the UK government stake in these projects going forward - this is welcome. It further improves our 'financability' chances [and is] a natural evolution."

NuGen, the UK joint venture between Japan's Toshiba and France's Engie, plans to build a nuclear power plant of up to 3.8 GWe gross capacity at Moorside, in West Cumbria, using AP1000 nuclear reactor technology provided by Westinghouse Electric Company, a group company of Toshiba.

Record to build on


Hawthorne, who was executive director of British Energy prior to joining AmerGen in the USA and then Bruce Power in Canada, as their respective CEOs, applauded EDF Energy's record with the UK's existing advanced gas-cooled reactor (AGR) fleet.

 

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Horizon’s Hawthorne (Image: World Nuclear Association)

He said: "It was 1996 when I left the UK and at that time it became obvious that we had to replace the existing nuclear plants, but we couldn't get a [government] decision taken then, so I thought I was leaving for three years and then I'd be back and it ended up being 20 years. There's still that very obvious gap to be filled and I have to say that we are all very fortunate that EDF has managed to extend the life of the existing fleet because I can tell you that, when I left, I thought all of the existing AGRs would be gone by 2012, so it's to their great credit that they've created this opportunity for us to respond."

 

As well as the government's go-ahead for Hinkley, de Rivaz was also able to announce the world record - 940 days of continuous operation – that has been achieved at EDF Energy's Heysham 2 AGR.

He said this is "just one example of the outstanding performance" of EDF Energy's 15 nuclear reactors in the UK. "Since the acquisition of the UK fleet in 2009 we have increased safety performance by 51%. We have increased output by 50% - a personal best we plan to beat in 2016. And we have safely extended the lives of our AGRs by 25% - eight years on average. The majority of our existing nuclear capacity will now still be operating in 2025 as Hinkley Point C comes online."

The two EPRs that EDF Energy and its Chinese partner will build at Hinkley Point C will be the fifth and sixth EPRs in the world. De Rivaz said they "already integrate all the lessons learnt" from its EPR projects under construction at Flamanville, in France, and Taishan, in China. Flamanville "is now on track" and Taishan "is a success". The testing program for the Taishan EPR is "running smoothly", he added, with cold testing complete and preparations for hot testing underway.

Four Chinese AP1000s are scheduled to be in operation by the end of 2017. Sanmen unit 1 is expected to be the first AP1000 to begin operating, followed by Haiyang 1. And four AP1000 reactors are being built in the USA - two each at Vogtle and Summer.

The ABWR design was developed jointly by GE, Hitachi and Toshiba, prior to the merger of GE and Hitachi, and is derived from GE's BWR concept. Four units - Kashiwazaki Kariwa units 6 and 7, Hamaoka 5 and Shika 2 - have been built and operated commercially in Japan. ABWRs are now offered in slightly different versions by GE-Hitachi, Hitachi-GE and Toshiba.

Funding strategy


The CfD element of new energy projects in the UK helps to provide a "level playing field" for nuclear, is aimed at "correcting the broken markets that exist" and its 35-year tenure "provides for stability" amid market volatility, Samson said.

The strategy of deploying the AP1000 in the UK and Toshiba's majority stake in NuGen is a "bold move" and reflects the Japanese company's confidence in the UK market as a place to invest, he said. NuGen is exploring "multiple options" on funding, which include export credit based lending "that can help provide a low cost of capital to allow these projects to go forward", he said. "We're definitely looking to add to that portfolio of investors and lenders and other equity providers in due course."

Samson joined NuGen from Emirates Nuclear Energy Corporation based in Abu Dhabi where, as chief operating officer, he helped develop the company delivering new nuclear units at Barakah, which will supply up to 25% of the Emirate's electricity by 2020.

To attract investors, new build developers need to demonstrate that projects will be delivered on time and to budget, Hawthorne said. Other parts of the funding equation include regulatory assessment of a reactor design.

UK regulators said in July they expect to complete the Generic Design Assessment (GDA) process for the Westinghouse AP1000 and Hitachi-GE's UK Advanced Boiling Water Reactor (UK ABWR) in March and December of 2017, respectively.

Completing the GDA process is "a kind of kitemark that you can take to other parts of the world because it is a good regulatory regime", Hawthorne said.

Horizon expects to have all the required licences and permissions in place for the Wylfa Newydd project by 2018.

National and local


The three CEOs stressed the importance of their projects to the UK supply chain as well as to the specific regions where their projects are based.

De Rivaz said: "We have worked with people and organisations across the South West for years to ensure they benefit, whether in terms of the local community, skills, education, jobs, the supply chain and the regional economy as a whole. We are on track to create 1000 apprenticeships during construction. We have awarded South West contracts with combined contract values of more than £435 million, creating 650 jobs.

"More than 2000 companies across the UK have registered an interest in supplying the project alongside the Somerset companies who have registered. They are now part of the nuclear supply chain and are winning contracts. Like Express Reinforcements from Swansea, preferred bidder to supply 200,000 tonnes of reinforcing steel. That's 25 times more steel than was used in London's Olympic stadium. Or Harris Pye from Cowbridge, winning a contract for steel tanks - their first nuclear contract for many years. The success of companies like this is the key objective for us. And today I can reconfirm that we expect 64% of the construction spend to go to UK companies."

Even though Hinkley Point C will be the first nuclear power plant to be built in the UK for a generation, Hawthorne said he is confident about the country's ability to provide the skilled workforce required for all future new build projects.

"I have no doubt that the supply chain will respond," he said. "People originally thought we would struggle to find the quality of stainless steel welders in the UK and I say: 'Well, have you seen the oil and gas industry, which is where those skills sets are?' If the oil and gas industry was in boom times and we were also doing our projects, well, that's not the case here. People will move where the work is." The 10,000 workers that are expected to be needed during peak construction at Wylfa Newydd "is a figure that has been bandied around, but it depends," he said.

"We might decide to build our reactors in component form and move them to the area, so there are lots of ways to do it as part of the plan that we’re looking at now."

With the Moorside site located near Sellafield - home to the UK's long-standing nuclear industry - NuGen will be able to draw on a skilled workforce "along the North West corridor", Samson said. NuGen plans to make a site licence application for Moorside "in the coming months", he added.

Similarly, the local community at Wylfa Newydd is mostly pre-disposed to nuclear power because it has experience of it already, Hawthorne said. Wylfa unit 1 - the world's last operating Magnox reactor - closed in December last year. The two units at Wylfa were both scheduled to shut down at the end of 2012, but Magnox Ltd - which manages and operates the plant on behalf of its owner, the Nuclear Decommissioning Authority - decided to shut down unit 2 in April 2012 so that unit 1 could continue operating in order to fully utilize existing stocks of fuel, which is no longer being manufactured.

Having led Canada's Bruce Power since its creation 15 years before, Hawthorne said he was familiar with establishing good relations with "first nation groups". Horizon is in the middle of the second stage of its public consultation at Wylfa Newydd.

"In my view there is nothing more important than the social licence. We're going to play a very active role in the community for decades to come, so it's entirely appropriate that you focus on the community you're going to impact most. You're going to build a big industrial facility generally in a rural community, so you're going to have a very impactful social, environmental and economic thing. If you look at the Welsh context, of course Angelsey are concerned about maintaining language and culture, but coming from Canada, I can tell you that first nation groups feel exactly the same, so there's nothing new to me in that," he said.

"The thing that people want here is that you're going to create economic opportunities in the community and be thoughtful to their environment and culture. I don't think people are really that concerned about nuclear safety because Wylfa has had a plant for a long time there and people have understood the high regulatory standards. It's more about bringing thousands of people into a community that is native Welsh speaking, and we have to be very mindful of that."

Legacy


Samson also noted the importance of respecting the natural environment - Moorside is on the edge of the Lake District, a national park that attracts thousands of tourists from the UK and overseas every year.

"With a project of this scale and with the lasting benefits it brings from climate change and security of supply perspectives, the quantum of the investment and the opportunity to create jobs is huge," he said. "But we've got to look beyond that and think how we can impact society and communities […] in a way that's sensitive to a beautiful area." Noting the architectural status of Battersea Power Station in London, Samson said, "It's incumbent on us to create something iconic".

Hawthorne, who had announced his retirement in March, prior to taking his new role with Horizon, said he felt a debt to the UK's nuclear engineering forebears for the 45-year long career he has enjoyed. Stressing the importance of their legacy in creating an industry that has for decades provided reliable and low-carbon electricity, he said: "We owe it to them to keep that market share and to deliver that same future, whether or not we get full recognition for it. We're not going to get unanimous consent; that's never happened. But we can all sleep at night knowing that we made a difference. So when I finish it will be on the basis of the fact this industry will outlive me and my grandchildren. That's what success looks like."

Written and researched
by World Nuclear News

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