2014 Nuclear Issues Vol 37 No 5 July

Posted by NucNet on 30 July 2014 in Issues

Tagged with: Candida Whitmill, Dame Sue Ion, Hinkley Point, Penultimate Power, SMR.

Our nuclear future

“Use it or Lose it”. This paper by Candida Whitmill gives a rare, sensible assessment of the role of nuclear power in the UK both in its comments and the implied but unanswered questions it raises. (Civitas, Issue 11 June 2014). The fact that the author is the managing director of the Newcastle-based Penultimate Power, (which also lists Ian Fells as a director), – “a UK-led consortium to build small modular reactors in the UK for the domestic market and export (with) the aim is to capitalise and sustain the UK’s nuclear supply chain and fuel cycle capabilities, while providing low carbon, affordable energy for industry” – clearly influences the tone of her article, but this does not lessen its relevance or the force of its argument.

It starts by pointing out that “If the government is to meet legally- enforceable EU carbon targets, then replacing our nuclear power stations is essential; nuclear is the only source of reliable, large-scale, low-carbon electricity. Completing 16GW of new-build nuclear is pivotal to the government’s energy policy to meet carbon targets and to keep the lights on.” But for this we are now entirely dependent on foreign companies.

First and foremost is the French state-owned EDF with planning permission for Hinkley Point C, and an agreed price of £92.5 per MWh when the plant comes into operation probably not before 2024 at the earliest. Is this a high price? – consumers are already having to pay £120 for solar, and £155 per MWh for offshore wind. Permission to build however depends on the outcome of an assessment, now being carried out by the European Commission as to whether the combination of price guarantees and credit protection provided by the UK government is a breach of state-aid rules. What happens if the outcome rules against us does not seem to have been considered either by the Government or EDF, although it is suggested that EDF may not be too concerned with a negative decision from the EU as it now proposing to extend the life of their existing nuclear stations to 2023.

Further unanswered questions are on the role of two Chinese companies said to be taking 30-40% share in Hinkley C. Will they be content to be just passive investors or will they seek to take a more active role, particularly if the project seems likely to replicate the cost overruns and delays experienced with the Areva EPRs now under construction in Finland and France?

An assessment (by Liberium Capital ) is that in return for their investment at Hinkley the French and Chinese state-owned firms will earn ‘between £65bn and £80bn in dividends from British consumers over the project’s lifetime’. An implied question – Is this return excessive? – is not answered .

Second in line comes Hitachi, which plans to build up to three 1300MWe Advanced Boiling Water Reactors at Wylfa and Oldbury. Hitachi bought out the formerly German-owned Horizon project when a political decision by Chancellor Angela Merkel to curtail nuclear power in Germany left the partners RWE and EON no financial alternative but to withdraw. Hitachi’s decision to invest came at a time when the fallout from the Fukushima disaster left their own domestic market devastated by the Japanese government closing down all of the country’s nuclear plant.

The third UK project, Nu-Gen, a Spanish/French partnership, is said to be struggling to progress their Sellafield site due to financial difficulties, partly attributed to the Spanish government’s sweeping set of retrospective changes to renewable subsidies and utilities revenues. There are also reports that Toshiba plans to buy out Iberdrola’s 50 per cent and 10 per cent of GDF Suez’s equity with the intention of building three of their own Westinghouse AP1000 reactors by 2024.

“ The UK nuclear industry is now entirely vulnerable to the political agendas of other countries.”

While Whitmill’s report seems to recognize, or perhaps implicitly deplore, this sad fact, it exposes differences of opinion on the extent to which British industry might contribute in the supply of equipment and components. On one hand the Secretary of State for Energy, Ed Davey, has claimed that UK businesses would reap 57 per cent of the £16bn Hinkley project. This was however swiftly denied by EDF, arguing that ‘most of the available contracts could be beyond UK suppliers which are struggling to meet the complex safety and quality standards of the nuclear industry’.

On this point the report takes a strongly partisan line. “To dismiss the UK nuclear industry on such grounds is disingenuous….the UK nuclear industry has a total commercial turnover estimated at approximately £4 billion.2 Our safety record is second to none. Numerous UK businesses have been supplying the international nuclear market for decades across the whole lifecycle of nuclear from fuel enrichment, design, civil engineering, construction, systems, security, operation and maintenance, decommissioning and waste management. Millions of pounds have been allocated by the Technology Strategy Board for nuclear innovation and the National Nuclear Laboratory is leading an exciting new era of R&D….If Hinkley C is the first of several new reactor sites to be developed over the next decade, then it is vital that the UK’s supply chain can fully participate from the outset of the UK’s nuclear new-build programme. Yet, with EDF planning to use their own supply chain, UK input of any significant value could be in doubt.” It also points out that the 40% participation of two state-owned Chinese firms adds another layer of complexity.

At this point the interest of Penultimate Power in small modular reactors takes over. “Building reactors in excess of 1600MW, such as EDF’s EPRs, is proving eye-wateringly expensive. The Flamanville plant is four years behind schedule with costs soaring to €8bn. Olkiluoto 3 in Finland is five years late and over double the original budget. At time of writing, not one EPR anywhere is actually built and generating electricity. The feasibility of such capital- intensive, high-risk projects in today’s economic climate has to be questioned.”

The alternative is of course the SMR which it claims offers significant advantages. In contrast to large reactors SMR’s can be built more rapidly – in 3 rather than 10 years – and when several are built on one site each completed unit generates cash flow for its successors. SMRs can be fabricated, fuelled and sealed in the factory then delivered by road, rail or ship to the site ready for full operational status, thus the construction costs and risks associated with larger reactors are considerably reduced.

The report recognizes that a commercially operating SMR has yet to be built and a number of different designs have been proposed. But it is suggested that the capital costs may be comparable to those of an off-shore wind farm but with the very significant difference that load factor for offshore wind is around 30 per cent and the equipment would need replacing after 20 years, compared with 92 per cent for a nuclear plant with a life expectancy of 60 years.

This leads to a conclusion that it is difficult to disagree with.

The government has two options; let the UK become merely a host nation whence other nations can springboard their global nuclear ambitions and lose our own nuclear capability; or choose to let the start of a new-build programme of nuclear power reignite the UK’s nuclear supply chain, expand our fuel cycle facilities and showcase our world-class R&D capability. Supporting a programme to bring smaller, affordable, secure, small modular reactors to UK- based commercialisation could do just that.

Small modular reactors

A paper by the World Nuclear Association on SMRs (Updated 18 July 2014) considers an almost bewildering number of concepts – details are given on 29 different possible designs. The three main options are light water reactors, fast neutron reactors and graphite-moderated high temperature reactors. The first has the lowest technological risk, but the second (FNR) can be smaller, simpler and with longer operation before refueling.

But the most advanced small modular reactor project is in China, where Chinergy is starting to build the 210 MWe HTR-PM, which consists of twin 250 MWt high-temperature gas-cooled reactors (HTRs). This draws on the experience of several innovative reactors in the 1960s to 1980s. This is a technology where the UK experience of gas-cooled reactors and in particular the OECD Dragon project at Winfrith could be of value.

The Select Committee Inquiry

The Select Committee is now carrying out an inquiry on SMRs. Contrary to the calls for the UK to consider the development of SMRs the Nuclear Decommissioning Authority, in its evidence to the inquiry on 22nd July, confirmed that they were not interested in developing technologies on a speculative basis. To deal, ultimately, with 140 tonnes of separated plutonium the NDA is now considering only three technologies which have been proposed: General Electric-Hitachi’s PRISM reactor – a liquid metal-cooled fast reactor; CANDU reactor – a heavy water reactor; and from Nu-Scale a light water reactor with mixed oxide fuel. (Nu-Scale is largely owned by the Fluor Corporation with some participation by Rolls Royce whose experience with submarine reactors could be valuable.)

Any expectation that SMR’s might offer any substantial contribution to the UK electricity supply also seems some way off. The Select Committee were told by the industry, as well as by Sue Ion of the Nuclear Innovation and Research Advisory Board, that an SMR would be unlikely to be deployed in the UK before 2025, largely due to the time that would be taken to license a design. But why such a lengthy period could not be shortened was not adequately explained.

Even Rolls Royce in their written evidence to the Select Committee were far from optimistic. The scale of investment required and time taken to bring a new design to market would require a major Government investment – but on a more optimistic note, as the last of several options RR recognized that – … “the UK does have the capability. An indigenous technology would guarantee the development of UK skills and intellectual property, restore the UK civil nuclear design capability, and ensure that there was a product specifically tailored to meet the requirements of the UK and wider export market. In oral evidence the Rolls Royce witness confirmed the view that based on their long experience a pressurized water reactor would be the first choice.

Centre for Low Carbon Futures

This interesting organisation, formed by the universities of Birmingham, Hull, Leeds, Sheffield and York, is also funded by governments, industry, research councils and international agencies to consider the problems of energy and climate change. It has developed relationships with governments, industry and universities in the UK, Asia, India, Indonesia and Latin America, providing the evidence base to inform policy formation and to reduce some of the uncertainties.

Their written evidence to the Select Committee, compiled by Omar Saeed, which makes a powerful case for nuclear power in general and SMRs in particular is abridged below.

The recent publications of the Intergovernmental Panel on Climate Change (IPCC) provide the starkest warnings to date of the consequences of a degree rise in temperature. Maintaining greenhouse emissions below 450ppm by the year 2100 will be a challenging target as it will require a tripling or quadrupling of the share of low-carbon energy from renewables such as solar and wind, nuclear. Although not fully comprehended by all Governments or the general population, this is arguably the most significant challenges that we face. According to IMF managing director Christine Lagarde the situation is “by far the greatest economic threat of the 21st century.

While great investment has been made into offshore wind it suffers from issues of intermittency (as does solar power) all year round, falls victim to seasonal variations and requires a significant amount of expensive back up capacity which may only be provided by a gas. However, when gas plants remain idle for extended periods of time the traditionally low cost gas prices have a tendency to increase. While it is clear that while renewables have a key role to play in the future energy mix, we need to take the opportunity to diversify our electricity supply away from these sources. With the low cost of nuclear power well recognised and the UK being subject to the intense focus of overseas companies for potential nuclear construction it is clear that nuclear power has a major role to play in broadening our future energy portfolio.

In terms of power sector decarbonisation, the diversification of our electricity supply will be key. In order to meet carbon intensity targets within the next 20 years, a reliable and economic base-load source will be critical. Coupling this with the possibility of emerging low carbon technologies failing to fall to expected price levels, nuclear can provide a dependable source of power while avoiding carbon emissions and keeping prices low; the latter holds significant importance also because it will increase protection for both the everyday consumer and industry.

At present, nuclear is seen as a base-load generating technology and there are plans for large reactors at Hinkley Point C (HPC) and Sizewell as well as interests in construction from Hitachi and Toshiba. However, there is with current annual UK electricity consumption at 350TWh, a historical growth rate of ~1% per year and the electrification of road transport pending, it is clear that an increase in the UK’s nuclear infrastructure would be necessary to satisfy future demands.

With the above points in mind, SMRs could in principle make numerous achievements for the nuclear sector. Firstly SMRs could help to diversify the number of potential investors in the UK capable of constructing and operating plants. Secondly, SMRs’ lower initial capital investment could make the sector more attractive and reduce prices of power. Thirdly, any CfD period could be reduced compared to a Gigawatt (GW) scale reactor which in turn reduces the risks associated with this type of trading agreement. Fourthly, the introduction of SMRs could diversify the available electricity generating technology and in turn increase resilience of our energy portfolio. Finally, SMRs unique designs, smaller size, safety systems and increased mobility could allow for increased flexibility in deployment, creating opportunities to place reactors in both cities and remote locations. ….. Given that typical safety exclusion zones for GW scale reactors could be dramatically reduced for SMRs, there could be an opportunity for SMRs to be located near to industrial sites and therefore support process industries ….. Unlike other countries, the UK does not have a rich heritage of the construction of GW scale reactors which means that future reactors of this size will require imports. However organizations such as Sheffield Forgemasters, the Manufacturing Technology Research Laboratory in Manchester and the Nuclear Advanced Manufacturing Research Centre (NAMRC) in Rotherham could provide a sound base to kick-start and develop the necessary level of R&D required for a UK SMR supply chain. Specifically the development of a UK demonstrator SMR would be a significant chance for the UK to re-establish its eroded leadership in nuclear technology…. The development of a UK demonstrator SMR would be a significant chance for the UK to re-establish its leadership in nuclear technology which has been strongly eroded since the 1980s. ….

Let’s pretend

Lets pretend that no nuclear electricity is generated in the UK. Renewable energy would then be the only source of carbon free generation. But this exposes the difference between ‘renewable’ and ‘carbon free’. There is no virtue in renewability as such. The sole benefit of renewable electricity is that it is, or can be, regarded as generating electricity without adding to the air pollution and global warming potential that comes from burning fossil fuels. Yet this aim can be achieved more cheaply and reliably with nuclear power.

This fact is however increasingly ignored. Many discussions or commentaries on future energy supply focus solely on ‘renewables’. But Government statistics show that in 2012 wind power contributed only some 4.7% of UK electricity production compared to 19.5% from nuclear power. The nuclear electricity was generated at average load factor of 70.8 % compared with 29 % for wind plants. In addition the operating life of a wind turbine may be no more than 20 years compared with up to 50 or more for a nuclear plant.

Clearly, if the intention is to generate electricity from low carbon sources, wind power when compared with nuclear power is both expensive and inefficient.

Avoidable deaths

Although the Guardian cannot bring itself to mention nuclear power it has no hesitation in drawing attention to health and environmental costs of burning coal. An article on 22nd July declares that the UK and Germany lead a list of the EU’s most polluting coal-fired power stations. The concern is that the emissions into the atmosphere from these stations not only undermine the efforts to combat climate change, but also damage human health. The article asserts that the emissions from these power stations of nitrogen dioxide, sulphur dioxide, particulates and mercury are causing an estimated 1,600 deaths a year in the UK. Even if this figure is exaggerated any significant death rate at this level should be unacceptable. There should be a demand for an immediate reduction, and ultimately a complete phase out of coal-fired power stations and their replacement by nuclear plant, which has safely generated electricity in this country for nearly 60 years.