Utility Week

UTILITY Week 21st April 2017

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Page 13 of 31

14 | 21ST - 27TH APRIL 2017 | UTILITY WEEK Generation Review B ack in 1995, in the midst of the utility privatisation wave, the UK govern- ment sold its eight most advanced nuclear plants. It decided that the likes of Sizewell B and Torness would flourish under private ownership and would be joined by a fleet of new plants paid for and developed with private finance. That didn't happen. Despite a series of attempts and interventions to try and inspire a "nuclear renaissance", none was forth- coming. It took until Theresa May for a final go-ahead to be given, last year, for Hinkley Point C. Such indecisive progress is neither good for ensuring energy security, nor for ena- bling the ambition of total decarbonisation of the UK's electricity supply by 2050. With a new fleet of nuclear plants supposed to provide 35 per cent of the country's capac- ity, nuclear is vital to the achievement of decarbonisation goals. "We're trying to build a diverse source of energy projects and new nuclear is absolutely a core part of that," said then energy secretary Andrea Leadsom, to a committee of MPs last year. First new development in more than 30 years Scheduled to come online in 2025, Hinkley Point C is set to become the first plant for more than 30 years. But getting the green light for the project, which will have a capac- ity of 3.2GWh – enough to meet 7 per cent of total demand – has proved challenging. To secure the private backing of French- owned energy company EDF, the gov- ernment agreed a heavily criticised deal whereby it will pay a minimum of £92.50/ MWh for the first 35 years of its operational life. The government defended the strike price as being necessary to get EDF to com- mit to the estimated £18 billion cost of build- ing the plant. But with that rate currently standing at more than twice the current price on the wholesale market, it continues to be criticised as exorbitant. Such factors serve to maintain concerns over Hinkley Point C, but beg bigger ques- tions as to the proposed developments lying in its wake. The urgency of the situation is encap- sulated in the exodus of investors from the NuGen consortium supposedly building a new nuclear power plant at Mooreside in Cumbria. Already long since abandoned by found- ing members SSE and Iberdrola, NuGen has run into potentially terminal trouble this year. Financial difficulties at consortium partner Toshiba – the result of its reactor manufacturing subsidiary going bust – caused Engie to offload its 40 per cent stake in the venture. As the last standing member of the consortium, Toshiba was forced to pick up the £111 million tab, notwithstand- ing its desire to dial down its global new nuclear investments. With no replacement investment look- ing likely, government is under increasing pressure to intervene to save the Moorside project, and to protect other new nuclear schemes. Understood to be asking for new nuclear projects to clear strike prices 20 per cent lower than what was offered to Hinkley Point C, government is unlikely to take stakes in projects directly. Unions and trade groups argue, however, that it must provide stake-backed loans to ensure nuclear plants have a future in the UK. Euratom exit an obstacle Regardless of government's response to these calls, another major obstacle must first be overcome. When the UK exits from the European Union, it will also cease membership of industry regulator Euratom and face the threat of being barred from a wide range of arrangements critical to the sector's operation. Industry experts even suggest that exitign Euratom it could result in the UK being unable to purchase new fuel supplies. Past-present-future State of the nation Real progress on new-build nuclear depends on the political appetite for it. "We're trying to build a diverse source of energy projects, and new nuclear is absolutely a core part of that," Former energy secretary Andrea Leadsom "Our nuclear safeguarding and safety regime will continue to be forward-looking and our nuclear R&D expertise will remain pride of place." Greg Hands, trade and investment minister "SMRs promise all the benefits of nuclear but without the significant cost and schedule overrun issues." Anurag Gupta, director of nuclear, KPMG UK Rolls-Royce and SMRs The government is keen to see the develop- ment of small modular reactors (SMRs) and has drawn up a list of companies it would like to see do the work. Rolls-Royce is on the list. The firm's senior vice president for nuclear, David Orr, says: "We believe it's a once in a generation opportunity for UK companies to design and build the entirety of the plant." Rolls-Royce says it is "strongly placed to deliver the design and, together with a con- sortium of UK companies, the supply of almost all aspects of a new nuclear SMR plant". It has thrown its weight behind SMR technol- ogy which has a potential global market for approximately 65-85GW by 2035, valued at £250-£400 billion.

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