Speech

EDF Hinkley Point C Supply Chain Conference Keynote Address

Speech by Michael Fallon, Energy Minister, to the EDF supply chain conference.

This was published under the 2010 to 2015 Conservative and Liberal Democrat coalition government

The Rt Hon Sir  Michael Fallon MP

I am delighted to have the opportunity to join you today at this Supply Chain conference for Hinkley Point C. These are exciting times, particularly in respect of the UK’s new nuclear programme. As you will already know - several key milestones in the Hinkley Point C programme have already been reached;

  • In November 2012 the ONR issued a nuclear site licence for Hinkley Point C.

  • In December 2012, following a five-year assessment of the generic design, the nuclear regulators confirmed that the UK EPR reactor is suitable for construction in the UK.

  • On 19 March 2013, the Secretary of State announced his decision to grant planning consent for the Hinkley Point C project.

  • And on 21st October the UK Government and EDF Group announced that they have reached commercial agreement on the key terms of a proposed investment contract, the ‘strike price’, for the Hinkley Point C nuclear power station

Lastly, and subject to the will of Parliament, we expect the Energy Bill to receive Royal Assent by the end of the year.

And while state-aid approval from the Commission and third-party financing is still to be secured - the significant progress made has cleared the path for starting the construction of the first new nuclear reactor to be built in the UK for 30yrs.

I would like to take this opportunity to pay tribute to the hard work and dedication of EDF Group and their partners in getting to this point. However, we have now reached the stage at which EDF Group, with their partners, cannot continue this project alone. This is the point at which the supply chain, working collaboratively, must engage and begin the process of turning the Hinkley Point C approved designs and plans into a physical reality. This is the point at which your expertise, skills and determination will take this project from the drawing board to producing 3.2GW of low-carbon power annually for the UK for over 60 years.

It is heartening to see so many highly skilled and capable firms in the room wanting to be part of this project and I know that you represent just a cross section of those who wish to be involved. It gives me great confidence in the success of the project - and the importance of this project being a success cannot be overstated. But It is also important to remember that Hinkley represents the first of a whole fleet that will hopefully be deployed in the medium-term so it is essential to take a long-term perspective of the supply chain opportunities that new nuclear brings. Building safe and secure nuclear power stations that generate carbon-free electricity - and doing it to time and budget - while also enhancing the UK’s industrial and economic landscape, are crucial components underpinning the broad public support for new nuclear power in the UK. A significant failure in this regard would be to the detriment of our wider programme. The stakes are high and the challenges significant, but the opportunities are great.

Why does the UK need new nuclear?

It is worth taking a moment to remind ourselves on why new nuclear is important. It is without doubt, a safe, proven low carbon technology that can contribute to the UK’s future energy security, helping to ensure a diverse mix of technology and fuel sources over the long term.

And it will do this in a way that doesn’t pump harmful carbon emissions into the atmosphere.

In addition to helping the UK meet its energy needs and its environmental commitments, new nuclear power stations will create outstanding opportunities for the UK economy both via investment and jobs at Hinkley Point C and the follow-on developments.

Civil nuclear is a key growth industry that provides highly skilled jobs. The full 16GW of new build capacity planned by industry could support an estimated 29,000-41,000 jobs across the nuclear supply chain at the peak of construction activity, with industry investment equating to around £60 billion.

So I have explained why both the new nuclear programme and Hinkley Point C specifically is important to the UK, but why should it be important to you as a potential supplier. Why should you get involved? What’s in it for you?

Why should you be involved?

The simple answer, apart from hopefully making a reasonable profit on your contract, is one of opportunity.

Involvement in this project gives you the opportunity take advantage of the entire UK new build programme right from the start.

It gives you the opportunity to benefit from Billions of pounds worth of manufacturing contracts for Hinkley Point C alone.

It gives you the opportunity to be identified as part of the ‘baseline’ supply chain for all EPR reactors that may be built in the UK in the future.

It gives you the opportunity to develop partnerships, both with other UK firms or with overseas companies to expand your offerings and provide new and innovative solutions.

It gives you the opportunity to be recognised as a suitably qualified nuclear supplier, with recent UK new build experience, to nuclear developers with an investment programme for the UK that equates to around 60 Billion pounds in total.

Finally, it gives you the opportunity to use the skills, expertise and partnerships developed on this project to strengthen your ability to look beyond the UK market and access the staggering 1.5 trillion dollars worth of new build investment in new nuclear build predicted globally by the World Nuclear Association by 2025, across circa 30 countries.

Your being here today is evidence of your desire to be involved in this project and beyond. I know that it has taken longer than we all would have wanted to in order to get to this stage.

But we are now at a stage where practical action is essential to ensure that that firms stand ready and able to access the new build opportunities when they arise and win the contracts on the strengths of their bids. In order to do that, companies need confidence that the new build programme will indeed take place. The recent agreement announced between EdF Group and the UK Government is a clear demonstration to the supply chain of our commitment to new build. In addition, companies need much more information to be disseminated across the supply chain on the nature of the work packages involved, the estimated schedules and timeframe’s associated with projects. There also needs to be strong partnership working between the developers, their top tier contractors and the rest of the supply chain. That is why events like this one today, are so important.

I’ve explained some of the benefits I believe you will gain by being involved in this project and what can be reasonably be expected of the developers and the top tier contractors but what will be expected of you in return? No company can expect to win such a prize without effort as you are all very aware.

What is expected of the HPC Supply Chain?

So what will be expected of the Hinkley Point C supply chain?

Well, EDF Energy will explain in greater detail their expectations for their supply chain during today’s event and I’m delighted to note the publication of their accompanying guide on the detail of being a HPC supplier. However, I’d like to make you aware of the UK government’s expectations.

Firstly, and most importantly, we expect the highest standards of safety and compliance to all requirements of the UKs independent nuclear regulator. The British people quite rightly expect, and trust, that the new nuclear programme will not compromise the very high safety record that has built up over decades of safe nuclear operations and decommissioning activity across the UK. The ongoing acceptability of nuclear power in the UK and beyond depends upon this.

You have an obligation to ensure that nothing you do in any of your operations has a detrimental effect on the trust that has been placed on you and the UK nuclear industry.

Secondly, all suppliers must comply with the proscribed codes and standards for this design. I know that these will be the subject of further discussion during the event today, as EDF Energy and their partners provide more detail of these, so I will not dwell on these.

Thirdly, all suppliers must be cost competitive. No company should expect to win a contract on this project unless they are cost competitive. No company can expect to win a contract just because they are British, or indeed, just because they may be part of an established developer supply chain.

This is important not just for the developer but also for the UK taxpayer who as the right to expect, as promised in the 2008 white paper, that nuclear power is cost competitive with other forms of low carbon energy.

These three requirements are simple to explain but, I know are not always simple to achieve so, quite rightly the government will be right alongside you in helping you to achieve these.

Support HMG will provide:

The British government is committed to providing the supply chain with the support needed to ensure they have both the capability and capacity to take full benefit from the opportunities I outlined earlier. The newly formed Nuclear Industry Council has been created to ensure both Government and Industry do just that. I am privileged to Chair the Council alongside the Secretary of State for Energy and Climate Change and Lord Hutton and have seen first-hand the robust conversations that take place to develop and target the support required.

Specifically for the manufacturing supply chain this support comes, to name just 3 of many groups, from;

  • The Nuclear Advanced Manufacturing Research Centre to help both develop the capability of individual firms and to ensure, via use of our world class R & D facility in Rotherham, that we can develop the advanced manufacturing techniques required to support both this and the next generation of reactor designs.

  • The Manufacturing Advisory Service to provide tailored business support in order to help you, the manufacturer, streamline your processes, reduce waste, become more energy efficient and generally improve and grow your businesses

  • And the National Skills Academy for Nuclear Manufacturing to both identify and develop the highly skilled resource that is the bedrock of the manufacturing supply chain.

Members of these groups are here today, along with many others who will be providing much more information on all the support available to you.

In addition to these I am delighted to announce that early in 2014, up to £13 million will be made available jointly by the UK’s Innovation Agency, the Technology Strategy Board, the Department of Energy and Climate Change and the Nuclear Decommissioning Authority to help UK-based businesses take advantage of the opportunities that arise from the UK’s new nuclear programme. This is part of a drive to grow a robust and sustainable UK supply chain by developing innovative products and services for the nuclear sector. The initiative will focus on key technology areas such as construction, manufacturing, operation, maintenance and decommissioning & waste. This funding competition will open on the 17th March 2014.

Finally I want to strongly welcome the earlier announcement made by Humphrey Cadoux-Hudson on the launch of the Nuclear Supply Chain SME Partnership. Developing strong partnerships and regular, shared communications across the supply chain will be critical to the successful delivery of the UK’s Nuclear programme and I believe that this group will be a vital component in achieving this.

In summary, the Hinkley Point C project is a fantastic opportunity for you to become part of the firm foundations on which the UK’s new nuclear renaissance will be built.

And today is a fantastic opportunity for you to find out, at first hand, both what you need to do to take advantage of this opportunity as well as where you can go for help.

I wish you all a very successful and productive conference and a successful future in the Hinkley Point C project and beyond.

Published 9 December 2013