Global Insight Perspective | |
Significance | EDF Energy chief executive Vincent de Rivaz has indicated the company is pursuing plans to build a new nuclear power station in the United Kingdom, marking the first such announcement since the government lifted a moratorium and stated it would encourage a new generation of nuclear plants in its Energy Review in July. |
Implications | The proposal remains at a very early stage, with reactor design not yet announced and a location for the plant thought to be undecided, but EDF are said to be working with authorities on the first stage of obtaining a licence for the development. |
Outlook | Final investment decisions on nuclear projects are unlikely to be made until regulatory and policy frameworks are clear, putting pressure on the U.K. government to elaborate its declaration of support for new nuclear generation made in July and establish a comprehensive, long-term framework to oversee such investments. |
Preliminary Plans Announced
EDF Energy, the U.K. arm of French power utility Electricité de France, has revealed its desire to lead the revival of the United Kingdom's nuclear power sector by announcing plans to construct a new nuclear power station. The Business has revealed the company will seek a licence for the new £2.5-billion plant in early 2007, making it the first company to confirm plans for new nuclear investment since the government announced it would encourage a new generation of nuclear plants in its Energy Review in July.
While an official statement from the company has not yet been made, the news was revealed by EDF Energy chief executive Vincent de Rivaz at an industry meeting hosted by the United Kingdom's Utilities Strategy Group last week. De Rivaz said the company is working closely with the U.K. Nuclear Installations Inspectorate (NII) on the proposal and would also collaborate with British Energy, which currently operates 8 of the United Kingdom's 12 current nuclear facilities, to decide an appropriate location. It is thought that EDF will favour a European Pressurised Reactor (EPR) design for its new plant, a design developed by French company Areva and claimed to be safer than older reactor types. While EDF indicates a site for the new plant has not yet been decided, an EPR reactor could only be located in a handful of locations throughout the United Kingdom as it produces more electricity than many regional parts of the national grid could support. Other design options include Westinghouse's AP1000 reactor, General Electric's Advanced Boiling Water Reactor, and Canada's Candu Reactor.
The renewed focus on nuclear power comes as Europe faces sustained higher oil prices, an increasing import dependency, and pressure to reduce the greenhouse gas emissions resulting from the energy sector. Other European government's including Finland, Sweden, and Poland are also looking to revive their nuclear energy programmes, and the German administration is facing growing pressure to reconsider the country's current moratorium on new nuclear developments. Finland is the furthest progressed in terms of new build, currently in the construction phase of developing a 1,600MW reactor at Olkiluoto, although the US$4-billion plant is said to be about one year behind schedule.
Outlook and Implications
EDF is likely to make its plans official following publication of NII guidelines on the licensing process early next year. However, with up to three years required to obtain a licence, a further three years for the planning process, and another four years for construction and to bring the plant online, it is likely to be 2017 before new nuclear generation is contributing to U.K. energy supply. Such a timetable reflects the need for the government to move quickly on establishing clear rules and procedures for new nuclear build, particularly considering that by 2015 all but three of the United Kingdom's current nuclear plants will have reached the end of their operating life.
The government will not only need to work to develop a new nuclear framework in a timely manner, but also to develop a framework that lasts. As de Rivaz points out, new nuclear investments will stretch across up to eight parliaments and any risk that the future could hold a significantly less favourable operating environment for nuclear power could be enough to discourage companies from launching down the expensive nuclear track. While the government has announced its support for more nuclear generation, it remains open as to the tangible form that such support will take. Despite the massive costs associated with new nuclear generation, de Rivaz indicates a new U.K. nuclear power station can be realised without subsidies. However, he did call for the U.K. government to guarantee a minimum price—thought to be around 15 euro per tonne—for the carbon emissions credits that nuclear and renewable energy developments should receive for offsetting fossil fuel generation. EDF and a number of other European energy companies will be looking to the U.K. government for clarification on such points as the enormous process of building a new generation of nuclear power stations gets under way.