How nuclear could power a new wave of major projects

Whitehall harbours hopes of the UK building a new nuclear plant every year by the end of the decade. Tim Clark examines the hurdles and opportunities for a sector better known for delays and cost hikes rather than speed

It aims to make the energy system more secure and help with net-zero carbon aims, as well as acting as a springboard for an expanded, hi-tech industry with the potential for exports. The government’s new British Energy Security Strategy includes plans for nuclear power to generate 24GW by 2050, and to potentially deliver a new nuclear plant each year by the end of this decade.

It is the most ambitious nuclear programme in a generation – and one of the largest building programmes currently being planned – but if it is to succeed it will need a construction industry ready to take on the challenge, and a much more efficient process for getting projects off the ground.

Nuclear Industry Association chief executive Tom Greatrex tells Construction News that if the UK is to approve eight new plants by 2030, to meet the strategy’s goals, the pace of delivery will need to step up. “There’s not a lot of time to get to 24GW of capacity by 2050,” he says. “Also, whatever way you look at it, the amount of electricity capacity we will need is going to be much higher than it is now.”

The right funding formula

The energy security strategy says nuclear could meet up to 25 per cent of the UK’s electricity needs, but several recent attempts to boost capacity have fallen down over funding issues. There are currently six operational power stations, providing about 16 per cent of the country’s electricity. However, all but one of those are due to be taken offline by 2030.

One of the biggest obstacles facing nuclear has been the high initial capital cost of getting new reactors online, and if the government wants to approve a new nuclear reactor every year, funding will be a key issue to be solved.

EDF spent about £2bn on Hinckley Point before getting the go-ahead

Hinkley Point C serves as a recent example of how protracted negotiations can be. Greatrex says: “EDF spent the best part of £2bn on Hinkley Point before finally getting the go-ahead. It’s very hard for any company to spend that much money.”

Hitachi-owned Horizon, the former prospective operator of the Wylfa nuclear site in North Wales, is estimated to have spent about £1bn prior to pulling out of the scheme, citing start-up costs as a main reason for cancelling its involvement.

“The government’s answer has been to propose a new Regulated Asset Base model to ensure developers don’t have to stump up all the costs in advance”

The government’s answer has been to propose a new Regulated Asset Base (RAB) model – which will see energy bill-payers part-fund construction costs through their energy charges – to ensure developers don’t have to stump up all the costs in advance. The returns are lower for operators, but more stable. The government expects RAB to save up to £30bn in lifetime costs for each nuclear project.

Consultants Hydrock energy sector lead Peter Sibley says that applying the model to cover nuclear is an indicator of progress: “It provides a different funding basis, with the government acting as a guarantor in many ways by taking a stake.”

The government has launched two other main initiatives. The first is the £120m Future Nuclear Enabling Fund, which aims to unlock and accelerate new nuclear technologies and entire new firms on to the market. The second is to establish a body called Great British Nuclear, which will oversee how new reactors are chosen and built, effectively acting as a delivery vehicle for new plants.

Sizewell C

The first major reactor to go ahead under the new funding model is expected to be the £20bn Sizewell C in Suffolk. Designed as a replica of Hinkley Point C, Sizewell’s two reactors would produce 3.2GW of electricity, powering some six million homes.

The government took the decision in June to convert a £100m loan for Sizewell into equity and is expected to ultimately take a 20 per cent stake in the project – with EDF taking 20 per cent, and the remaining 60 per cent made up from infrastructure investors and pension funds. The parent company of British Gas, Centrica, has been reported by national media to be in talks to take a stake in the project. A deadline decision for a development consent order – the planning permission for a major project – is set for tomorrow (20 July).

Sizewell C is the first major reactor to go ahead under the new funding model

Greatrex says the equity stake was a crucial signal to industry. “Clarity of intent is important and not only for those investing in a project. If the construction supply chain anticipates that a lot of nuclear projects are coming along, they will want to invest in capability or capacity to be able to meet that likely demand. They are not going to do it on the basis of a headline.”

The last hurdle for Sizewell is EDF’s final investment decision, which will fully commit it to the project. It took about three years to proceed from the final investment decision at Hinkley, in July 2016, to the first concrete being poured for reactor one in mid-2019. EDF hopes Sizewell will be a much quicker process. One time-saving element is that it is replicating the reactor design of Hinkley at the Suffolk site, cutting down on the necessary regulatory approvals. EDF also says some innovations developed during the building of Hinkley, such as learning how to save time constructing its second reactor, compared with the first on site, will help to save time and costs at Sizewell.

“Even if Sizewell C is approved, the UK will only have produced a fraction of its lofty aims of generating 25 per cent of its energy from nuclear power”

Contractor involvement should be streamlined. Last year, a group of leading businesses – including Jacobs, Balfour Beatty, Mace, Laing O’Rourke and Mott MacDonald – came together with EDF to form the Sizewell C Consortium.

A Sizewell C spokesperson said: “Advanced works on Sizewell C will include a wide scope of work, covering site operations, civils and associated development work, valued at about £1bn to get the Sizewell C site ready for construction.Whilst we are likely to work with tier one suppliers from the Sizewell C consortium who are constructing [Hinkley], we are also working hard with the eastern region to make many contracts available to local businesses.”

The new Suffolk reactor presents some unique challenges. Ground conditions mean that a 50-metre-deep diaphragm wall around the entire site perimeter will have to be built to ensure the new reactor does not have any impact on neighbouring sites, such as the existing Sizewell B nuclear plant.

Despite the positive innovations, EDF has seen some major challenges at Hinkley. In May, the firm announced the latest £3bn cost hike and one-year delay to the project, partly due to COVID-19 but also to adapt the reactor design to UK regulations. Its total cost is now £8bn above 2017 estimates. A previous 15-month delay was announced in 2019.

Even if Sizewell C is approved, the UK will only have produced a fraction of its lofty aims of generating 25 per cent of its energy from nuclear power. Hydrock’s Sibley points out that the output from both of EDF’s new plants will just about cover the amount of power currently generated by the nuclear power stations due to shut down this decade. “We are kind of back to where we were in terms of power generation, so how do we go on?” he asks.

Designs on Wylfa

Despite several setbacks, another site that looks likely to see a reactor after Sizewell C is under way is Wylfa in Anglesey, Wales.

Horizon, which was backed by Japanese tech giant Hitachi, suspended work on Wylfa and Oldbury in Gloucestershire in January 2019, and officially withdrew from Wylfa in January 2021, after failing to agree a funding deal with the UK government. Since then, a new entrant, a joint-venture between Bechtel and US firm Westinghouse, has revealed that new designs for Wylfa would cost between £14bn and £17bn, and take six years to complete.

Horizon officially withdrew from Wylfa in January 2021. Credit: Horizon Nuclear

The Westinghouse design, known as an AP1000 reactor, has been through the approval process with the UK’s nuclear watchdog, which will speed up one necessary pre-construction obstacle.

“Wylfa is probably among the best, if not the best, sites for nuclear in Europe for many different reasons,” Greatrex says. “Geography, geology, support of the local community, links to the supply chain – it has also historically been a nuclear site as well.

“The Westinghouse reactor design has a bit of a head start as it has already been approved. You still have to get local consents, and purchase or lease the site, which hasn’t happened. But we know that Westinghouse is interested in it.”

For large-scale nuclear sites, Sizewell and Wylfa are the two anticipated to see construction first. Beyond that, a new nuclear entrant is taking shape.

Small modular reactors

Spearheaded by a consortium led by Rolls-Royce, designs for a small modular reactor (SMR) have taken further steps to becoming a reality in 2022. The UK is one of a number of countries pursuing a smaller reactor design, with Sibley describing interest internationally from countries such as China, the US and Canada, which are developing similar designs.

SMRs have several advantages over mega-projects such as Hinkley or Sizewell C, such as greater flexibility on siting and a more efficient modular construction. Rolls-Royce has said it wishes to build 16 reactors in total, with 10 operational by 2035. The SMR consortium includes the likes of Bam Nuttall, Jacobs and Laing O’Rourke.

Sibley says SMRs may hold advantages in delivering new nuclear at a faster rate than a traditional reactor. “With smaller plants you have more flexibility on where you site them. And by not having massive construction sites and constructing this in modular form. One thing that seems to be tying a lot of these together now is this really, really strong link to co-generation. This means using either the electricity from the small reactor or the waste heat energy as part of a hydrogen-production process, recognising the growth of the hydrogen economy and hydrogen market.”

How long?

In April, Rolls-Royce SMR chief executive Tom Sampson told MPs it could begin construction in 2029, if planning restrictions were relaxed. The firm submitted designs for its first small modular reactor in March.

Approval for Hinkley’s EPR reactor took five and a half years. However, Greatrex says the process could have been speeded up if sites could be identified alongside the reactor approval process, as well as scaling up the supply chain.

Some progress on site is being made concurrently with the approvals process. In June, a development firm, backed by the Welsh government, announced a plan to bring an SMR to the Trawsfynydd site, north of Barmouth in North Wales, which currently has a decommissioned nuclear plant. It has a target construction date of 2027.

Greatrex says: “We need to be working on a lot of the things to implement the SMRs now, such as establishing factories and identifying sites, which, if we did those one after the other, would take a further five or six years to complete. And that’s time we haven’t got.”

Encouragingly, Rolls-Royce is pressing ahead with its SMR plan. In early July, it announced a shortlist of potential locations for its first factory, which would be the first of three facilities that would manufacture the ‘heavy vessels’ for the SMRs.

The exact shape of the UK’s nuclear ambitions still awaits certainty, but, as a form of energy production, it appears to be back in vogue, and likely to feed the UK’s energy and construction industries for decades to come.

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