Utility Week - authoritative, impartial and essential reading for senior people within utilities, regulators and government
Issue link: https://fhpublishing.uberflip.com/i/541481
8 | 17TH - 23RD JULY 2015 | UTILITY WEEK Interview Fukushima disaster and Germany's decision to bring an abrupt end to its nuclear industry, triggering the sale of Horizon. "We were looking at both the AP1000 and the EPR," says Raymant. "We'd gotten to the point in late 2011/early 2012 where we really needed to make that decision in order to develop the permits." But step forward six months and the decision was made for it, giving "a major advantage" to Horizon's projects. Hitachi's nuclear power genera- tion business is a strong vertical within the global group whose 2014 annual report shows the segment's profits increased 409 per cent to yen (¥) 152.9 billion compared with the financial year ending 31 March 2013. Hitachi says this represents a contribution of 7 per cent to its global revenues of ¥9,616 billion (c£50 billion). However, with every upside there comes a downside, and Raymant allows that what Hitachi brought in terms of technology certainty has been countered to some extent by a lack of experience and knowledge about developing and operating nuclear plant – things which its German former owners had in abundance. This means that there's now a bigger job in terms of "developing the organisation". "We are a developer," explains Raymant, and Hitachi is a manufacturer – "we will have to build an organisation which will ultimately own and run a nuclear power station". This poses a challenge in terms of recruiting appropri- ate skills at a time when engineering generally and the nuclear industry in particular frequently complain of debilitating skills shortages. But Raymant is buoyant and says that, so far, Horizon has successfully – if not easily – attracted the people it needs, and lots of them. From around 90 employees in 2012, headcount has increased to just over 300 today. By March next year, another hundred people will be added and between 2019 and 2022 there will be a surge as operating staff are brought on, inflating the organisation to more than 1,000 people. "Deep", specialist nuclear skills unsurprisingly pose the biggest challenge in terms of recruitment, says Ray- mant, and can require a global trawl of the talent pool. Where possible, however, Horizon is looking to recruit, and build, skills locally in order to cement its place in the North Wales economy and build strong ties with the community in which its 2.7GW plant will sit. With a vocal global community of nuclear energy opponents always ready to leap on signs of adver- sity, nurturing relationships with communities around nuclear energy plants is an important part of any devel- oper's strategy and one that Horizon certainly takes seri- ously, says Raymant. In addition to bringing locals into the fold via employment, it runs a number of formal and informal stakeholder engagement groups through which it can keep people up to date on plans – not only for the plant itself but also Horizon's intentions for managing traffic flows, housing construction staff, and environ- mental mitigation – and gather feedback or concerns. Having this consultative mechanism in place will allow Horizon to prove it has taken the right steps to placate worry and act as a good neighbour to the Anglesey community should it find criticism or barriers being raised against plant progress in the future. It's a necessary safeguard, although on the whole, Raymant is not ruffled by the idea of opposition to nuclear power. He claims public opinion generally has been "net posi- tive" in favour of nuclear new-build for some years now and on Anglesey in particular Raymant says there has been "consistently strong support for what we are doing". In part, this is helped by familiarity with life in the shadow of a nuclear power station – Wylfa A has been in operation since 1971. In addition to public stakeholder engage- ment for Wylfa, the project has led to the creation of groups for collaboration with business and industry peers whose activities rub up against plant development. The Energy Island working group, for instance, includes National Grid, which is in the process of gaining permissions to upgrade the existing Wylfa power station's 1GW grid connection so that the new plant can operate to maximum capacity. Raymant says he's aware that there's ongoing dis- cussion about how much of this connection should run overground and how much underground. "National Grid will have to come to an accommodation which meets all the stakeholders' needs as well as their own from a regu- lated utility perspective," he comments, but clarifies that the approvals process is completely outside Horizon's sphere of influence. "The level of interaction and co-ordination is strong, but we are separate companies and it is a separate pro- cess. Formally, they are running their own show." The Energy Island stakeholder group, however, gives the opportunity for both parties to make regular presenta- tions to the other, ensuring that they are working appro- priately in parallel. "We don't have a role in their process, but clearly we are integrated with it because we have a connec- tion agreement with them. So it's very important for us to understand where they are in their process – and for them to understand where we are in ours," Raymant sums up. With the technology in place, the organisation coa- lescing, site technicalities being addressed and the red tape being studiously observed, Horizon's final task will be to put a commercial and financial framework around its whole package so that "we have a robust business case that we can attract investors into". This thought brings him full circle, back to the importance of forthcoming negotiations with government and setting Wylfa's strike price – an agreement that will be "funda- mental to attracting finance, whether that is debt finance or equity finance". "We'd like [the Hinkley] issue resolved as soon as possible, but it doesn't dent our confidence" Beyond replacing existing capacity Despite its high price tag and the persistence of environmental and safety concerns from groups such as Greenpeace, Alan Raymant is unequivocal in stating that nuclear power, as the "only low-carbon baseload technology that we have that is commercially available", must be an ingredient in the UK's future energy mix. For him, there is therefore no question about the necessity of the nuclear new-build projects currently being negotiated in the UK, since these are not projects that will expand the contribution of nuclear power to national genera- tion – but simply ones that will replace the ageing power stations which, on any given day, supply around 20 per cent of the energy we consume. Further than this, however, Raymant believes that the rise of new technolo- gies such as electric vehicles and electrified heat may increase demand for even more nuclear new-build in the longer term future. "If we are going to achieve the decarbonisation of energy, then we need to have an increase in low-carbon electricity," he reasons. "If you replace all our cars with electric vehicles then actually the demand for low-carbon baseload electricity might increase substantially – obviously offsetting other energy sources – and in that kind of scenario you can see the need for a massive ramp up in nuclear, beyond the current programme."