Speech

John Hayes speech to the Nuclear Industry Association New Nuclear Build Conference

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

John Hayes' speech on new nuclear.

The Rt Hon John Hayes CBE MP

Introduction

Thank you for your invitation to deliver this keynote address on such a proud day for new nuclear. I am delighted to have this opportunity to speak to you as Minister for Energy at this exciting time and to be able to thank you all for your continued support for and commitment to the nuclear power agenda. This Government is clear that nuclear is vital for our energy security now and we want it to be part of the energy mix in the future. This is no easy thing to achieve but as is so often the case, with huge challenge comes huge reward. The signs are positive; we are on our way.

I don’t think I can go any further in this speech without expressing my delight that the Secretary of State has today granted consent for the construction of Hinkley Point C. This decision was evidence-based rather than policy-driven but there can be no doubt that it is a crucial milestone which paves the way for the construction of the first new nuclear power station in a generation. The project will generate enough electricity to supply the needs of around 5 million homes. The project will employ up to 25,000 people over the course of construction and support around 900 permanent jobs during operation. Also, the Environmental Agency issued three new environmental permits for Hinkley Point C last week, relating to discharges and standby power supply systems which will ensure that people and the environment are properly protected.

Looking back

This news comes hot on the heels of an incredibly positive 2012 in which we saw real progress on each of the three new nuclear projects. In the last quarter alone we welcomed a new entrant to the UK new nuclear market in the form of Hitachi; the first nuclear site license in twenty five years was granted at Hinkley Point C; final design assessment was granted to the UK EPR reactor design; NuGen started site assessment work at Moorside; and NNB GenCo launched their first consultation for Sizewell C in Suffolk.

Recent challenges

But the work to achieve a nuclear renaissance remains challenging as the withdrawal of Centrica from the new build programme and the decision by Cumbria County Council not to participate in the GDF process recently illustrated. Such challenges are to be expected in any project of such scale and long timeframe. Some have seized on such opportunities to claim that the end is nigh for nuclear – mainly those who didn’t want it to begin with. They said much the same when RWE and E.ON withdrew from the Horizon project. But this was neither the case then, nor now.

Let it not be said however that I am underestimating the scale of the challenge we face. It is significant. Not only do we need to ensure finance and investment in new nuclear, we also need to ensure we have a fully-skilled work force and that opportunities for the UK supply chain are maximised. More on that later.

And we must not forget the need to manage our waste legacy. This has been ignored for too long and we must tackle this issue once and for all. Despite the recent decision in Cumbria the Government remains firmly committed to geological disposal as the right option for the long-term safe and secure disposal of higher-activity waste produced by our new nuclear power stations. The Managing Radioactive Waste Safely programme is a long-term one, and we are confident that it is sound and that it will be put into effect. The decision by Cumbria County Council does not change this. Nor does this decision undermine the prospects for new nuclear power stations.

Looking ahead

Attention over the coming weeks will continue to focus on NNB GenCo as they prepare to make their Final Investment Decision and today’s planning consent is a key factor in this decision. There has been significant press speculation about the progress of discussions around the contract and strike price. I can assure you that we remain focused on bringing forward this investment, but also getting the best deal for the consumer. It is right that we are transparent about the terms of any Investment Contract and we have been very clear that details of any deal made with NNB will be laid before Parliament.

Meanwhile, following my request to them in January, Hitachi and Horizon have begun the preparatory discussions with the ONR and the EA which are the first stage of the Generic Design Assessment process for the ABWR. The new Nuclear Industry Council, co-chaired by DECC, BIS and the NIA, met for the first time on 27 February. The Nuclear Supply Chain Action Plan is being implemented and an Industrial Strategy is due shortly.

But of course it’s not just up to industry. Whilst it is for private companies to build, operate and decommission our new fleet of power stations, government must provide them with the certainty they need to participate in new nuclear. With the market reforms we’re introducing in the Energy Bill investors can be confident about the returns on capital in advance of investing billions into new infrastructure schemes. As I steer the Bill on its passage through the House, satisfied that it includes fundamental measures to ensure a market-led approach that delivers certainty for investors and fairness for consumers, I do so confident that, at last, Government is plotting a sustainable energy future for the UK. And it would seem that the public increasingly agree with me. The NIA’s own survey at the end of last year showed that more than 70% of people now support nuclear as part of the energy mix in the UK.

Of course, securing new nuclear also requires the support and participation of local communities. As the House of Commons Energy and Climate Change Committee highlighted in their recent report, communities hosting new nuclear power stations are contributing towards our aims and should be able to benefit accordingly. We completely agree that we should recognise the contribution of these communities to our long-term energy security and that is why we have been working on the details of a package of community benefits which we will be setting out shortly.

The opportunity

And not only does nuclear support a sustainable energy future, it promises a prosperous future for UK plc as well. Nuclear is a key growth industry that provides highly skilled jobs. The 16GW of new build capacity planned by industry could create 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. Those are just estimated headline numbers for the whole 16GW new build programme, so let’s look at some real-life examples - EDF have estimated a peak construction workforce at Hinkley Point C of 5,600 people, with 900 permanent jobs once the plant is operational. Meanwhile, at the time of the purchase of Horizon Nuclear Power, Hitachi anticipated a similar employment figure at each of their sites.

To me it is clear that the UK has everything to gain from becoming the number one destination to invest in new nuclear and, as the most pro-nuclear Energy Minister this nation has seen for a generation, I am determined to make this happen.

And there is more to be gained. The civil nuclear sector is estimated to have contributed around £3.8bn in sales to UK companies in 2010/2011, with growth predicted at 2.8 per cent a year on average until 2014/15. Looking further afield, the global market was worth an estimate £95bn in 2010/11 and is expected to grow by 2.1 per cent to 2014/15.

Jobs, Skills and the Supply Chain

Let us not forget that the UK’s heritage, experience and knowledge of civil nuclear energy is second to none. We were the first country to successfully develop, deliver and operate nuclear power stations, meeting all the scientific, technological and industrial challenges that involved. Those challenges were formidable at the time, yet we were able to thrust ahead independently, and can now look back on over 60 years of successful and, above all, safe exploitation of nuclear power.

Today our expertise is recognised and much sought after. The UK civil nuclear supply chain has both excellence and experience. Its key strengths of innovation, quality, adaptability, sustainability and knowledge can make a critical difference to any project, anywhere in the world.

But if we are to remain at the forefront of civil nuclear power we need to look forward to ensure we are ready to meet new challenges and capitalise on opportunities. The scale of industry’s new build aspirations to develop up to 16GW of new nuclear power, together with the length of time since the last new build project, signifies an enormous challenge for the skills sector and the supply chain. We must take action now to prevent gaps developing and to ensure the UK new nuclear programme is delivered both on time and on budget.

That is our ambition – government’s, industry’s and the research community’s, all working together to maximise the economic benefit to the nuclear supply chain and wider economy, arising from a new nuclear programme, and to this end the Government will be publishing a new Industrial Strategy for nuclear shortly, providing more clarity about the direction of the civil nuclear power agenda through to 2030 and beyond. As Sir John Beddington has said, we have worked with industry and the research community over the last year to review the UK’s nuclear R&D capabilities and consider what actions we can take to develop them further. The outputs from this work have formed a significant input into the Industrial Strategy. I would like to take this opportunity to thank John for his work during his time as Government Chief Scientific Adviser and to wish him all the best for the future. I hope that we will continue benefitting from his expertise.

And our Nuclear Supply Chain Action Plan, published at the end of last year, also supports this ambition. The actions which are now being implemented by Government in conjunction with industry are designed with two things in mind. To provide long-term jobs and growth and to make sure the vital skills and capabilities required to support the rapid development of our new nuclear programme are available to industry, here, in the UK. By demonstrating how Government and the nuclear industry will be working together in the years to come confidence will be provided to future developers and future projects. Hergen Haye will be saying more about how we are implementing the plan shortly.

Concluding remarks

And so to finish as I began I want to thank you again for your support for the new nuclear agenda and to reiterate to you all this Government’s commitment to nuclear new build. It will not only provide growth, jobs and millions of pounds of investment but will contribute to securing our future energy supply.

The opportunities, along with the challenge of new nuclear are substantial, but I am certain we can deliver. I know we can all expect to see more success and progress from the UK new nuclear programme throughout 2013 and beyond.

The message I want to leave you with is simple, the future is bright and safe; the future is nuclear.

Published 20 March 2013