The UK needs new nuclear power and there are projects beyond Hinkley Point C (HPC) that will also ensure the country meets future demand for this affordable, low-carbon baseload source of electricity, a parliamentary committee heard yesterday.
Giving evidence to the Energy and Climate Change Committee, Tom Samson, CEO of NuGeneration (NuGen), and Alan Raymant, COO of Horizon Nuclear Power, said they were learning from EDF Energy’s experience with HPC. The Committee grilled them and EDF Energy CEO Vincent de Rivaz on progress with their respective new nuclear projects. De Rivaz said the £18 billion HPC construction project in Somerset, will “categorically” go ahead and that a final investment decision (FID) would be made “very soon”.
Samson said the UK’s nuclear new build industry is “larger than just Hinkley” and that NuGen “understands the need” for the country to bring online 18 GWe of new capacity in the mid-2020s.
“We believe that is consistent with the government objectives for climate change, we believe it’s necessary to replace the existing aging fleet of nuclear assets, and to overcome the impacts of the shutdown of the coal assets by 2025. And we think it is essential for security of supply to have a domestic source of baseload power here in the UK that we can depend upon for the following 60 years,” he said.
NuGen – a 60%/40% joint venture between Toshiba and GDF Suez – in 2014 confirmed plans to build three Westinghouse AP1000 pressurized water reactors with a total capacity of 3.4 GWe at Moorside in northwest England by the end of 2026. The first unit is expected to begin operating by the end of 2024. An FID is expected to be taken by the end of 2018. The UK’s Office for Nuclear Regulation said in January that there had been some program “slippage” in a number of topic areas for the generic design acceptance (GDA) of the AP1000 nuclear reactor design.
Samson said: “We have a deliverable technology, a fleet of AP1000s currently being built, in China and the US, and in fact NuGen will have the 17th, 18th and 19th AP1000s to be delivered. We have a single consortium approach to deliver the project in Cumbria and we believe we have the right technology and the right team and right location to bring this online.”
In a company statement following the Committee meeting, Samson said: “It is no secret that financing these internationally-significant projects, which have huge up-front costs, is a major challenge – it is complicated, but not impossible. The Contracts for Difference regime and access to UK Government loan guarantees are vital features of UK policy that supports towards new nuclear in attracting investors, and this in turn will result in developers building new nuclear power stations for the first time with a combination of both debt and equity.” He added: “We are working closely with Government to take Moorside forward, which will be Europe’s largest new nuclear power station.”
The NuGen CEO told MPs that the company was confident EDF would achieve an FID soon and that it was “keen for that to happen”. Postponements to that decision on HPC are “not a barrier” to NuGen’s progress with its Moorside project, he added. NuGen’s aim to reach an FID by the end of 2018 is a “realistic path”, he said.
NuGen has completed stage one of the Development Consent Order process and will start stage two in May, he said. The company expects to receive a design acceptance confirmation (DAC) and statement of design acceptability (SoDA) from UK regulators in the first quarter of 2017, he added. In the same quarter, it plans to submit a site licence application.
It plans to develop a financing strategy over the next 12 to 15 months and is in talks with “a number of players”, he said. “The current shareholders we have are committed to take us through to FID. We need to attract debt and we need to make a deal attractive for equity investors. We will need additional equity investors to come in at FID to commit to the funding required along with debt and equity,” Samson told the Committee.
Asked about Toshiba’s financial health, Samson said: “Toshiba’s commitment to nuclear remains, Toshiba’s commitment to Westinghouse remains and Toshiba’s investment in NuGen is still a top priority. We are working very closely with Toshiba and the recent [financial] challenges they faced have not changed their commitment to nuclear or Westinghouse or the UK. They are on the course to recovery.”
Tried and tested
Like NuGen, Horizon “is not dependent” on the progress of HPC, Raymant said, adding, “We are bringing tried and tested technology”.
Horizon Nuclear Power, a 100% subsidiary of Hitachi Ltd, plans to deploy the UK Advanced Boiling Water Reactor (ABWR) at two sites – Wylfa Newydd, which is on the Isle of Anglesey, and Oldbury-on-Severn, in South Gloucestershire. Hitachi-GE Nuclear Energy in November last year reached a regulatory milestone in its progress towards deployment of the UK ABWR, following confirmation that British regulators will move to the final step of the GDA. The GDA process for the UK ABWR is on schedule for completion by the end of 2017.
Hitachi “has made huge investment in the project already”, he said, but Horizon will be looking for “the widest pool of investors” to support the project. “Our target is to get to a final investment decision in early 2019,” he said.
As with Samson and Toshiba, the Committee asked Raymant about the financial health of its shareholder, Hitachi, which is funding the NuGen project through to an FID.
Raymant said: “Hitachi’s financial situation is fine and it is continuing to fully support the plans.” He added: “Ultimately, we have to create the right project structure and investment case to attract the external finance that’s required. Not just for our project but for the whole new nuclear program. We have to think of it in terms of a program as well as an individual project.”
Nuclear’s essential role
Earlier in the session, Simon Taylor, lecturer in finance at Cambridge University’s Judge Business School, and Peter Atherton, managing director at US investment bank Jefferies, said the UK’s carbon emission reduction targets alone made new nuclear an essential part of its future energy mix.
Taylor said: “In the context of the country’s carbon emission targets and in the light of all the information I’ve seen on both the practicalities and the economics, I think it’s difficult to see how those targets can be met without some new nuclear construction.”
Renewable energy combined with carbon capture and storage might one day meet all the UK’s energy needs, he said, but “we don’t know when that will be and it’s not proven”, so nuclear is needed in the meantime.
Taylor added that no new nuclear power plants are able to be built anywhere without some form of government support. “What the private sector won’t take is the huge uncertainty of the cost,” he said. “All infrastructure is tricky.”
Atherton stressed that, as an equity analyst, he looks at “investment opportunities” and, as such, “is not an advocate of one technology over another”. But, he added, that he agreed with Taylor that, “If you look at the pathway to 2030 in particular it was extremely hard to see how you could hit those numbers without a sizeable nuclear fleet on the system, whether that was the existing fleet or new nuclear. I certainly understand why the Labour Party in 2008, in the White Paper, decided that part of the solution to try to hit 2030 and through that 2050 was going to have to be a sizeable new nuclear program.”
Source: World Nuclear News