Below is the text of the speech made by Andrea Leadsom, the Minister of State at the Department of Energy and Climate Change, in London on 20 April 2016.
Good Morning Ladies and Gentlemen. It’s a huge pleasure to open Marketforce’s Nuclear New Build Forum today. As you will know, we face a number of very important challenges in the energy sector over the coming years – not just dealing with decades of under investment, but also meeting our energy trilemma of keeping the lights on, keeping the bills down and all whilst addressing our world leading decarbonisation targets. Your industry has a huge part to play in each of our objectives.
Since the start of the year, new nuclear has never been far from the headlines. Both Government and the nuclear industry have faced question after question about our plans for expansion.
And to be honest, I welcome those questions. I think it is healthy that projects on the scale of those proposed for nuclear new build should come under close public scrutiny.
One of the reasons I welcome questions about our new build programme is because it gives me an opportunity to restate, again and again, why we believe new nuclear is so important for the UK; it gives us the chance to explain that Hinkley Point C is a very good deal for the people of Britain; and it gives us the opportunity to say what we are doing to enable other new nuclear power stations to be built, for example at Wylfa in Anglesey and at Moorside in Cumbria and others besides.
Case for New Nuclear
New nuclear has a crucial role to play as the UK makes the transition to a low-carbon economy. To make this transition a success we must completely decarbonise the power sector and we need nuclear to do that. Why? Because nuclear is the only proven technology that can be deployed on a sufficiently large scale to provide continuous low-carbon power.
Our own analysis tells us that decarbonisation of the power sector can be achieved most cheaply, securely and reliably if nuclear remains a core part of the UK’s energy system.
And it is also clear that security of supply is far more likely if we have good diversity of supply. Whether we are considering the number of different suppliers of gas, or in this case the number of technologies we rely on for our power, avoiding over-reliance on a small number of sources is important.
Existing nuclear plants currently meet around 16% of our electricity needs. Without nuclear new build, the share of generation from nuclear could dip to 3% in 2030. This would reduce the diversity of our energy supplies and would almost certainly make achieving our goals to cut the UK’s greenhouse gas emissions far more challenging and more expensive.
So pursuing new nuclear is the clear and right choice for the Government.
But there are other considerations, too. Britain is a world leader in civil nuclear, through our skills-base, infrastructure and regulatory regime. Making nuclear projects happen can keep Britain at the forefront of nuclear development – generating skilled employment, building our supply chain and creating global export opportunities.
Good progress is being made so that Hinkley can provide clean, affordable and secure energy that hardworking families and businesses can rely on now and in the future. I was delighted to see for myself the progress being made at the site at the end of last year and it was amazing to see the level of enthusiasm there.
EDF and the French Government have said that EDF are working towards a Final Investment Decision ‘in the near future with the full support of the French Government’ and I’m sure EDF will be able to go into further detail later on today.
Hinkley Point C is expected to be up and running in 2025, and will provide 3.2 GW of secure, base-load and low carbon electricity, meeting 7% of the UK’s electricity needs. That is enough to power six million homes – twice as many as the whole of London.
Hinkley will provide an enormous boost to both the local and national economy: 25,000 jobs during construction; 1,000 apprenticeships; 900 permanent staff once up and running ;£40 million a year to the local economy. These are good numbers. Hinkley will make a difference.
Some people ask “is Hinkley a good deal for consumers?” I believe it is. We have made sure that consumers won’t pay a penny for electricity until the plant is generating, and so the risks during construction are with the developer.
If profits prove to be higher than expected a proportion will be shared with consumers; if the project comes in under budget, savings will be shared with consumers; but if there are overspends then the developer bears all the additional costs. That is a good deal for UK consumers.
But Hinkley C is only the first in a series of proposed new nuclear projects in the pipeline. It will blaze a trail for further nuclear development. Industry has set out proposals to develop 18 gigawatts of new nuclear power in the UK at six sites – Hinkley Point, Sizewell, Bradwell, Moorside, Wylfa and Oldbury. This pipeline could deliver around a third of the electricity we will need in the 2030s; reduce our carbon emissions by more than 40 million tonnes; bring an estimated £80 billion of investment into the UK and employ up to 30,000 people across the new nuclear supply chain at the peak of construction.
There is massive potential for UK suppliers from the new nuclear programme in the UK. It is a top priority for me that the UK supply chain must be given the opportunity to compete for high value contracts throughout the sector.
We are working closely with industry to create an environment that will have several benefits:
First, by developing an open and transparent approach to the supply chain: The Government is clear that we want the developers of new nuclear plant to share supply chain information with UK industry early, so that companies can prepare for the opportunity and line themselves up to bid for contracts.
Second, by maximising UK content in Hinkley Point C and future new nuclear plant: EDF has estimated that more than 60% of Hinkley Point C’s construction cost will be placed with UK firms. We want to match or better this percentage for all New Nuclear Build in the UK.
Third, through new trade partnerships: we believe UK expertise can help deliver nuclear projects in other countries, whether that is in the home countries of those proposing to build plant in the UK, or in third markets.
And finally by developing sustainable content: huge value comes from long-term contracts and I want to see our UK companies playing the long game, developing competitive investment strategies that will lead to a healthy and enduring nuclear skills base in the UK.
The Nuclear Industry Association has a very valuable role to play to support our supply chain, for example, by leading the way in creating the ‘Demand Model’, which will identify the UK Nuclear Industry’s capability and capacity for New Nuclear. The model will help companies understand where there are opportunities and match them to those opportunities.
And there is help for companies elsewhere – the Nuclear Advanced Manufacturing Research Centre is not only the UK centre of excellence for research into advance manufacturing but it supports the UK Nuclear Industry with its Fit for Nuclear programme which is readying UK businesses for new build.
A thriving supply chain needs a thriving skills base. A skilled workforce will be essential to build new nuclear plant on time and on budget and to maximise the opportunities for the UK supply chain. I was delighted to meet some of the new apprentices on my visit to EDF’s Cannington Court at the end of last year.
The scale of the industry’s new build aspirations, the length of time since the last new build project and the high average age of the existing nuclear workforce mean that it is essential to take action now to prevent skills gaps appearing during the course of the new nuclear programme. 70% of highly skilled workers in the nuclear sector are due to retire by 2025.
The most recent Nuclear Workforce Assessment suggests the total current demand for skilled nuclear workers is about 78,000. This is expected to rise to 111,000 as both the civil and defence new build programmes gather pace.
This is a challenge for industry and Government to tackle in partnership. The Nuclear Skills Strategy Group brings this partnership to life – the NSSG is the UK’s lead strategic skills forum for the sector and it will be accountable for developing a national nuclear skills strategy. The group will address the skills infrastructure, processes and the training provision. In addressing the skills challenge, the NSSG will continue to develop the pool of existing skills across the nuclear sector and will also consider the transferability of skills from other sectors in the energy space – something I believe is crucial to sustaining the industry.
To support these efforts, last year, the Chancellor confirmed funding to create five National Colleges, among which was The National College for Nuclear.
The College will work collaboratively with the wider industry, skills bodies and training providers and will look at international best practice to develop an industry-wide curriculum. It will start off two campuses in Cumbria and the South West and incorporate the best colleges, universities and training providers operating nationally to help deliver its objectives. BIS have now completed the due diligence process and are preparing the final grant offer letter.
Small Modular Reactors
Looking further into the future, alternative nuclear technologies may offer exciting opportunities that could help us to meet our energy and climate change challenges, as well as develop domestic capability. They could offer huge commercial opportunities for UK industry.
The Government already recognises the potential of Small Modular Reactors.
In November last year, we committed to investing at least £250m in nuclear research and development. This included a competition to identify the best value SMR design for the UK. Because SMRs are at the early stages of development, the UK is in a strong position to leverage its considerable expertise across the nuclear supply chain to develop them. This will help position the UK as a global leader in innovative nuclear technologies.
During the Budget the Chancellor announced the launch of phase one of a competitive process to identify which Small Modular Reactor designs could feasibly deliver in the UK. It will include structured engagement with technology developers, utilities, potential investors, funders and others interested in developing, commercialising and financing SMRs in the UK.
In addition, and as part of our wider R&D programme, Government will allocate up to £30m over the next 5 years for an SMR-enabling advanced manufacturing programme to develop skills capacity.
Separately, the Government commissioned a techno-economic assessment of SMRs, which is due to conclude shortly. This will contribute to the evidence that helps Government understand the potential long-term value that SMRs contribute to our in the energy portfolio and how they could contribute to the UK’s economic needs.
I would encourage those of you here today, who would like to participate in phase one of the competition, to register your interest. Now is the time.
Wider Nuclear R&D
But our efforts in research and development go wider than just SMRs. The Government is investing in an ambitious nuclear R&D programme intended to revive the UK’s nuclear expertise and position us as a global leader in innovative nuclear technologies.
As we develop the details of the programme, we are listening to the advice and recommendations of the Nuclear Innovation and Research Advisory Board (NIRAB), which has developed a proposed programme of national nuclear R&D under the leadership of Dame Sue Ion, an expert advisor on the nuclear power industry.
The NIRAB’s recommendations focus on 5 key themes:
Firstly, creating a strategic toolkit to better underpin future planning on nuclear R&D;
Secondly, researching more efficient and tolerant fuels for future and current reactors;
Thirdly, developing 21st Century manufacturing to build the advanced and modular equipment of the future;
Fourthly, working towards SMRs and the fourth generation reactors of the future through Advanced Reactor Design; and
Fifthly, recycling fuel to ensure a secure, cost effective and sustainable future for advanced reactors.
We will be announcing the priority work streams for the first year of the wider programme soon. We hope to announce the full 5 year programme later this year.
So, in closing, let me return to where I started.
Questions about new nuclear are part of a healthy conversation about this country’s future energy make-up. The rationale for bringing forward new nuclear plant remains strong – we are working to build a secure, affordable and clean energy system, with your help.
The opportunities for UK business are already there and are growing fast.
And the potential for the UK to be at the forefront of the next generation of nuclear that this government is determined to seize.