Tuesday, 29 July 2014
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Nuclear is 'shovel-ready' but government and industry still need to work together

Today we face major and far-reaching decisions. We must take them in a difficult economic context. But the need for investment in our energy infrastructure is as real as it has ever been - as Ofgem has recently made clear.

We know that gas will have a continuing role to play in meeting our energy needs. Indeed in recent months we have ourselves overseen the construction of a 1300MW Combined Cycle gas station in Nottinghamshire.

“We need a balanced energy mix, which delivers security of supply, affordability and decarbonisation

But the reality is that North Sea gas is depleting and the UK is now increasingly dependent on imports from Norway and Russia. While shale gas should be investigated it will not be a cheap and easy ride. Even BP has said that usable shale gas resources in Europe are limited.

So our challenge remains the same: we need a balanced energy mix, which delivers security of supply, affordability and decarbonisation.

New nuclear has a vital role to play as part of the mix, alongside renewables, and gas and coal fitted with carbon capture and storage.

Just as we need to be realistic about our energy mix we also must be realistic about long term prices. We have to pay for very significant investments in our energy infrastructure.

While electricity demand today is 25TWh or 7% below the 2008 peak, this will not remain the case forever. We must be honest, just as Ofgem has been. With investment going in and demand rising we must expect the unit price of electricity to increase over the coming decades.


Cutaway diagram of the proposed Hinkley C EPR reactor and power station

We have taken considerable strides forward in our project at Hinkley Point in Somerset: in terms of planning; in taking forward the Generic Design Assessment; in developing a new industrial covenant with our union partners and contractors; in identifying the right partners for key parts of our project, including the main civil works, and both the conventional and nuclear island; and in submitting to Government our proposal for a Funded Decommissioning Programme.

Our project team now numbers some eight hundred people. We are creating a world class team, including individuals who have worked successfully on delivering major projects such the London 2012 Olympics. By the end of this year the project will be ready for a Final Investment Decision.

So we are ‘shovel-ready’. We are on the brink of delivering an infrastructure project similar in scale to the London Olympics. We are poised to deliver immense benefits in terms of jobs, skills and economic growth – locally and nationally.

But like all investors in capital intensive infrastructure projects we need to have a compelling business case. In this respect our final investment decision requires more progress to be made. The Secretary of State has made clear publicly that he is committed to making progress, with the Second Reading of the Energy Bill before Christmas. And the Energy Minister has told me of his determination and his confidence that his team has the mandate it needs.

Progress requires above all the agreement of a Contract for Difference (CfD), including the strike price, duration, indexation and the conditions for review. We are engaged with DECC on an intensive process to review our costs, the project risks and delivery arrangements, and to define transitional arrangements.

“We have workers in high-visibility jackets, standing ready to go to work on our site

The CfD will reveal the cost competitiveness of nuclear with all other low carbon technologies. Nuclear is the best low carbon choice for consumers.

The CfD will be a simple, transparent and proven instrument. It will deliver a fair and balanced outcome for investors and customers. The transitional arrangements will give legally robust foundations, well in advance of Royal Assent of the Energy Bill, for the certainty we and our partners need to decide to invest.

So, the reality is clear.

We have workers in high-visibility jackets, standing ready to go to work on our site.

The responsibility now is on the Government and us to deliver the CfD and transitional arrangements, the framework to make it possible to move to the next stage around the end of the year.

This article is adapted from Mr de Rivas’s opening statement to the House of Commons’ Energy and Climate Change Committee’s “Building New Nuclear” session

Readers' comments (2)

  • The CfD will reveal the cost competitiveness of nuclear with all other low carbon technologies. Nuclear is the best low carbon choice for consumers.

    That is just assertion based on what the nuclear energy says without doing any research whatsoever. As with all minerals we have taken most of the easy and richest veins of uranium and are now reliant on poorer reserves increasing CO2 output equivalent to gas powered generating units.


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  • Nuclear is NOT low carbon. The UK energy mix will be wind, wave, solar and tidal power. Two decommissioning Magnox reactors on the Hinkley site are currently causing new cancer cases due to vents being installed into the reactor cores in 2006. The regulators refuse to enforce the re-sealing. Two AGR reactors on the Hinkley site are at risk of core meltdown due to ageing, cracked and misaligned graphite bricks, faulty fuel pins and failed boiler tube welds. The regulators refuse to order their shut down, once more demonstrating that human error is likely to cause yet another Fukushima, any day now in Somerset.

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