Annual report for the year 2014-2015
Small could be big for Britain
The next big thing for the UK’s nuclear energy industry and its suppliers could well be small – Small Modular Reactors (SMRs) to be precise. That was the message from the speakers who addressed SONE’s Annual General Meeting at the Institution of Civil Engineers in London on October 26th.
Because the speakers and I (in the Secretary’s Report) covered similar ground
in some respects this newsletter deals with the issues which were raised
rather than attempting to summarise all three contributions separately.
We were fortunate in having two excellent speakers this year – Andrea Leadsom
MP, the Minister of State at the Department of Energy and Climate Change, and
Dame Sue Ion, chairman of the Nuclear Innovation and Research Advisory Board
(NIRAB). What they had to say helped to make this AGM a distinctly upbeat
occasion.
Despite the opportunities provided by SMRs, both of our speakers warned that enthusiasm for the SMR concept must not be allowed to diminish support for the new build programme involving the larger reactors already identified for Hinkley, Sizewell, Wylfa, Oldbury and Moorside. The UK needs large and small reactor development and construction, it was emphasised.
Nevertheless, the need for an early decision by Government on the way forward for SMRs was acknowledged as a priority by the Minister. She promised an announcement “within months” and the urgency of the situation was underlined by dame sue, who said that the UK had at most a two year window in which to make up its mind about where it was going with SMRs – and with whom it would make the journey.
Get the decision right, the two speakers said, and the UK nuclear industry, no longer a lead player in conventional reactor development because of the twenty years spent in the nuclear energy wilderness, could become a world leader again via SMRs, as it still is in fuel manufacture, waste management and decommissioning.
All quiet on the Hinkley front
Although the AGM followed hot on the heels of the deals signed a fortnight earlier not much was said at the meeting about the Hinkley Point C project by the speakers or by SONE members. As some members have been very critical of the project in the past that was a little surprising. More for the record than anything else I covered the ground in my report.
Despite my misgivings, I acknowledged that all of the conditions needed to allow the Hinkley project to go ahead were now in place. A few weeks ago EDF and China General Nuclear Power Corporation (CGN) signed a strategic investment agreement for their joint investment in the construction and operation of hinkley and all of the necessary agreements between edf and the Government are now in a final agreed form, too.
Contracts with the key suppliers have been signed, with more than 60 per cent of the project by value expected to be spent in the UK. The project will strengthen employment within British industry, with 25,000 job opportunities expected during its construction. Skills training is under way and industrial agreements are in place with the trade unions.
The risk of constructing the twin unit power station to budget is to be borne by the investors and gain share mechanisms mean that consumers will share the benefit if costs are less than expected. That may seem a good thing as far as uk taxpayers or electricity consumers are concerned but there is no doubt that it has made the task of attracting investors more difficult and put up the over-all cost of the Hinkley Point C project.
EDF has taken an initial 66.5 per cent stake in the project (more than it had wanted) and CGN 33.5 per cent. EDF will remain the majority shareholder, having guaranteed that its stake will not fall below 50 per cent even if it is successful in finding other investors to share the risk and assumed profits. EDF will be the majority stakeholder in the Sizewell C station in Suffolk, too, if that comes to fruition.
CGN and EDF are already building two EPR reactors in China which are similar in design to those planned for Hinkley Point C and Sizewell C and encountering fewer problems than EDF has had to cope with in France and Finland. The company’s well publicised problems there have led to considerable nervousness in the UK about what might happen at Hinkley.
The shareholding relationship is different for the Bradwell project in Essex, if it goes ahead. CGN will take the lead on this one, with a 66.5 per cent stake and EDF taking the rest. The Chinese company plans to use its own reactor design, making it the first western showcase for china’s indigenous nuclear technology, which is now well established. China is building and operating more new nuclear power plants than anywhere else in the world, building up considerable expertise. Although it may be difficult to admit it, we now have a lot to learn from them.
A warm welcome
The Hinkley Point C announcement received a warm welcome from the other companies planning to construct new nuclear power plants in the UK. Horizon Nuclear Power, which plans to build two Hitachi-GE advanced boiling water reactor units at its Wylfa Newydd site in Anglesey. Now intends to step up discussions with the Government as it develops commercial and financing arrangements for the project.
Nugen, which plans to build three Westinghouse AP1000 reactors at Moorside, near the Sellafield site in Cumbria, believes that the Hinkley announcement sends a positive message to future investors.
Mrs Leadsom visited West Cumbria last month and was clearly impressed by what she learned from her discussions with nugen about the way the reactor project is going and the community involvement and support it has built up.
If the £10 billion project goes ahead – as seems likely – it will be the largest private sector investment Cumbria has ever seen. Local people are well aware of its potential for the West Cumbrian economy, while recognising the area’s heavy dependence on the nuclear energy industry. For the most part that is something they have learned to live with.
Up to 6,000 people will be working on the construction of Moorside at any one time, many of whom will have to move from other parts of the country. As the Minister has said: “We will have to look at where they will live, where their children are going to go to school and so on”.
She has asked the Cumbria local enterprise partnership to draw up a list of priority improvements needed for roads and other infrastructure needs – without making any promises.
It’s up to Cumbria to decide what Cumbria’s needs are and then the Government will look carefully at core infrastructure needs. We will help in accordance with the Government’s capability. There are very difficult public expenditure constraints but we are committed to new nuclear. Nuclear is a key part of our clean energy strategy.
The Minister also visited Sellafield and told the AGM that she had found it fascinating to see at first hand the size and scale of the clean up challenge there and the innovative ways these are being overcome. She described Sellafield as “a global leader, developing skills and expertise which we are already exporting around the world”.
During her visit the Minister was shown the newly arrived silo emptying plant (SEP) machine which will be used to scoop out the radioactive contents of one of the site’s most hazardous buildings – the Magnox swarf storage silo. The silo, which dates back to the 1960s, is one of four ageing waste plants at Sellafield prioritised for clean-up by the nuclear decommissioning authority.
The SEP machine, weighing some 400 tonnes, is one of three robotic retrieval systems that will sit on rails on top of the silo and lift waste out in a similar way to a fairground grabber machine.
In her talk, Dame Sue Ion pointed out that around half of the cost of Hinkley C could be attributed to the cost of borrowing the finance for the project. The capital cost of Hinkley C is expected to be around £34 billion, including £24.5 billion construction costs, and requires debt financing of £17 billion.
Larger reactors required significantly more up-front capital investment and took longer to build than SMRs, Dame Sue said. Because individual SMRs required less capital and were likely to go into operation more rapidly they were likely to prove an attractive proposition to potential investors looking for a faster return on a lower amount of money.
Small Modular Reactors – the issues
Small Modular Reactors are defined as advanced reactors that produce electric power up to 300 megawatts, designed to be built in factories and shipped to utilities for installation as demand arises. SMR designs include water-cooled reactors, high temperature gas cooled reactors and liquid metal cooled reactors.
Dame Sue pointed to several attractive features of the SMRs, which are interesting to potential investors and the Government. Among them are the possibility of using the now redundant Magnox sites for SMRs, producing components in the UK rather than importing them and developing supply chains so that we get more of the action.
At the end of last year the UK published a feasibility study report on SMR concepts, led by the national nuclear laboratory. Its purpose was to determine (a) whether SMRs are viable; (b) the potential UK industry role; and (c) the possible role that Government might play in that process.
The study indicated that worldwide there is a huge potential market for SMRs, particularly where they fulfil a market need that cannot be met by large nuclear plants. The size of the market is calculated to be between 65 and 85 gigawatts by 2035, valued at £250-£400 billion. In the UK alone the market could be around 7 gigawatts of power from SMRs by 2035.
The report came to the conclusion that there was an opportunity for the UK to regain technology leadership in the ownership and development of low-carbon generation and secure energy supplies through investment in SMRs.
After two decades of development work on SMRs the last three or four years have seen a significant acceleration in the technological progress being made by reactor vendors right across the globe. The study called for further financial analysis to clarify the economic case and closer examination of the alternatives for partner deals.
Choose your partner carefully
To gain access to larger potential markets for SMRs it would be desirable for the UK to choose a partner from another country in order to access the international market, the study said. If the UK was prepared to invest in a joint development programme with a current developer it could expect proportional involvement in the manufacture and development of the reactor whenever it sold globally.
The technical and financial assessments of available and suitable SMRs carried out for the feasibility study identified four worth further examination. All four of the companies concerned have indicated that they would be interested in collaborative partnerships with the UK.
The preliminary design of the china national nuclear corporation (cnnc) acp100 multi-purpose SMR was completed last year. The design incorporates passive safety features and will usually be installed underground, although it could also be used on a floating nuclear power plant. Its pressurised water reactor produces about 100 to 150 megawatts.
Babcock & wilcox and bechtel are offering a 125 megawatts modular nuclear power reactor. It is described as a passively safe advanced light water reactor (alwr) with a belowground containment structure.
Nuscale power, in which fluor is a majority investor, is working on small reactor vessels using conventional light water cooling methods. Each module is intended to be kept in an underground pool and is expected to produce about 50 megawatts of electricity.
Finally, Westinghouse’s SMR design is a 225 megawatts integral pressurised water reactor with all primary components located inside the reactor vessel and earlier this month the company made a positive pitch for a partnership deal with the UK to exploit it.
Westinghouse, part of the Toshiba group, said that it wanted to work with the uk on the deployment of SMR technology and put forward an unsolicited proposal for “a shared design and development model”. Under the proposal, the company would contribute its SMR conceptual design and then partner with the UK Government and industry to complete, license, and deploy it.
It reckons that the strategy would put the UK at the forefront of SMR technology, advance its standing in nuclear energy innovation, and create significant economic opportunities through leadership in the global market. The partnership deal proposed by Westinghouse, which is in talks with “a number of UK flagship companies”, would be structured as a UK-based enterprise jointly owned by Westinghouse, the UK Government, and UK industry.
Government support needed
Note the reference to the Government having a stake in the enterprise. It is clear that the financial risks for UK industry trying to develop SMRs on its own are too great. Financial involvement by the Government in the nuclear industry will therefore be needed – and the impression given by Andrea Leadsom at our AGM is that it will be forthcoming.
As it weighs up the four options on the table the Government will have to bear in mind the advantages of taking a partner with an SMR design already well developed or one with plenty still to do. It is going to be a delicate balancing act for the Government.
If the main objective was to meet the UK’s national need for clean, reliable energy we would choose an established and mature sme design, close to commercialisation, making it possible to deploy SMRs as soon as possible on a range of sites where bigger reactors could not easily be accommodated.
However, if the principal aim was to benefit the UK supply chain we would want our scientists and engineers involved in the detailed design and development of the chosen SMR, enabling the UK to become the default experts in the system. That would point in the direction of a design with a lot of detailed design work still to be done.
Annual General Meeting business
Attendance: Those who signed the attendance list were patrons: Sir William McAlpine, (Chairman) presiding, Dr.Gordon Adam; committee: Harold Bolter(Secretary), Terry Westmoreland (Treasurer) Neville Chamberlain, John Assheton, Professor J.A. Simmons, Ian Currie, Keith Parker; members: Roger Vaughan, Robert MacLachlan, George Nissen, Ray Dafter, David Jeffries, Roger Stuart, John Robbins, Richard Sergent-Manse, Ian McFarlane, Louis Plowden-Wardlaw, Terry Wynn, Dr. Peter Chester, Johnny Ball, Angus Ross, Stephen Redburn, Sir Bernard Ingham and Andrew Bokor.
Apologies for absence: Lord Jenkin, Lord Vinson, Damon De Laszlo, Adrian Bull, Steuart Campbell, Geoffrey Greenhalgh, Robin Smith, Ernest Maxwell, Dr. John Sandalls, John Hole, Douglas McDevitte, Peter Vey, Jim Corner, Dr.W.L.Wilkinson FRS, Ernest Maxwell, Gerald Clark, Ray Hall.
Minutes of previous meeting: (circulated as newsletter no. 193). These were approved as a true record. There were no matters arising from them.
Elections
Directors: Sir William McAlpine (Chairman), Harold Bolter (Secretary) and Terry Westmoreland (Treasurer)
Committee: The directors plus John Assheton, A.J.Bull, Neville Chamberlain, Gerald Clark, Ian Currie, Geoffrey Greenhalgh, Damon de Laszlo, Keith Parker, Ann Robinson, Professor J.A. Simmons, Robin Smith, Paul H. Spare and Dr. W.L.Wilkinson FRS.
Reports
Secretary’s report: Much of the report was covered by the two guest speakers and is covered elsewhere in this newsletter.
In addition I drew attention to the steps being taken by the national grid to protect the UK against brownouts this winter. It has had to put four old fossil fuel power stations on standby in case the 2.6 gigawatts of capacity they represent is needed. Some £37 million is being paid for the privilege.
Just how close we are to a serious electricity supply problem this winter came after our AGM, at the beginning of November, when for the first time the national grid had to rely on new measures to keep the lights on. It was forced to do so when several coal fired power stations broke down at the same time as wind farms produces less than one per cent of required electricity when it was most needed and solar panels even less.
As a result the grid used the emergency scheme which involves paying large businesses to reduce their use of electricity by powering down their air conditioning and ventilation systems between 5pm and 6pm.
The problem involving the coal fired power stations can be put down to their age. Several stations had unexpected maintenance issues at the same time and were shut down for an hour in the late afternoon of November 3rd, reducing available supplies.
The absence of electricity from wind turbines is more fundamental, pointing up the intermittent nature of supplies from this source. Because of low wind speeds most of Britain’s 6,500 onshore and offshore turbines were barely generating any power just when it was needed. With a theoretical maximum capacity of more than 13,000 megawatts they produced less than 400 megawatts of power for much of the peak demand period. To make matters worse being late afternoon it was getting dark and virtually no electricity was available from solar panels.
Another issue to which i referred in my report was the progress which is being made by the nda at Sellafield, concentrating more on legislative and technical advances which are promising to help the clean-up programme at the site than our speakers did.
Apart from the direct spend on the task i have been impressed by Government action during 2014-2015. In particular it has introduced legislation for any radioactive waste disposal facility to be considered “nationally significant infrastructure projects”. This means that future Energy Secretaries will choose the site. They may seek advice from the Planning Inspectorate and from local councils and communities, but will not have to accept the advice. The other development that attracted my attention was research into the chemical behaviour of intermediate level waste stored in silos at Sellafield for decades. This is expected to speed up the decommission of the silos by several years, save money, and be of interest worldwide.
Treasurer’s report: Membership numbers are declining, with the death of eight members and 13 resignations during the year. The reason is uncertain but the suspicion is that some member felt SONE is no longer needed, with the Nuclear Renaissance under way, and others feeling that they are too old to continue membership. In summary we started the year with 257 members and ended it with 239.
A tight hold has been kept on expenses. The biggest cost is the newsletter and
economies have been achieved by using e-mails to save on printing and postage.
The Treasurer reported that we are still benefiting from the generous response
by members to the Chairman’s appeal in September 2011. We ended the year with
a deficit of £4k and almost £20k in the bank. If the current levels of income
and expenditure continue we can carry on for a further four years. In summary,
the Treasurer felt that finance was not a major issue at the moment.
Discussion. Because of the increased optimism about the future of nuclear
energy in the UK members questioned the continuing need for SONE.
It was felt, however, that this was not the time for SONE to end its work as
opposition to nuclear power could be expected to continue and a quiet period,
with increasing public support, would provide an opportunity for positive
(rather than defensive) press and public relations.
Finally the continued use of the title Supporters Of Nuclear Energy (SONE) was questioned, with one member suggesting that it might indicate a lack of objectivity in the information we put out. It was agreed the committee, at its next meeting, should discuss this matter.