Transparency data

DECC government major project portfolio data, September 2015

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Project Name FID Enabling for Hinkley Point C Sellafield Model Change (SMC) Magnox & RSRL PBO Competition Smart Meters Implementation Programme Geological Disposal Facility Programme (GDF) Carbon Capture & Storage Commercialisation Programme
IPA RAG rating (A Delivery Confidence Assessment of the project at a fixed point in time, using a five-point scale, Red – Amber/Red – Amber – Amber/Green – Green; definitions in the IPA Annual Report) Exempt under Section 43(2) of Freedom of Information Act 2000 Amber Amber/Green Amber Amber Amber
Description / Aims Primary objective is to agree a contract to enable the construction and operation of a new nuclear power plant that achieves a fair deal, represents good value for money, is affordable and is compatible with State aid rules. Secondary objective is to fully explore and understand the issues around a CfD for HPC and make a recommendation to ministers based on this. Changing the model for engaging the private sector at the Sellafield Site from the current Parent Body Organisation model to a new Market Enhanced Site Licenced Company in which Sellafield is a subsidiary of the NDA characterised by public sector retention of the uncertainties intrinsically associated with Sellafield. Intended outcomes include faster progress in decommissioning, reducing the time at risk of older facilities and a more efficient delivery of the Sellafield Lifetime Plan. The objective of the procurement (competition) is the delivery of a series of outputs largely based on the extant baselines of Magnox and Research Sites Restoration Ltd (RSRL) at 10% lower cost [currently defined as outcomes of the Magnox Optimised Decommissioning Plan and Optimised RSRL Baseline]. The performance obligations associated with delivery of this objective are embodied within a Client Specification which forms the basis of the Site Licence Company Agreement and Parent Body Agreement. By the end of 2020 every household and small business will have been offered Smart electricity and gas meters. Smart Meters will give consumers up-to-date information about how much gas and/or electricity they have used in pounds and pence, as well as units of energy. Smart meters will have benefits for consumers, suppliers and energy networks. Consumers will have near real-time information about their energy use, enabling them to monitor and manage their energy consumption, save money and reduce carbon emissions. Switching between suppliers will also be made simpler and faster. Energy suppliers will have access to accurate data for billing and will be able to offer a wider range of services and tariffs. Energy networks will have better information to manage and plan current activities and support the move towards the development of a smart grid. The primary objective of the programme is to site and construct a permanent geological disposal facility (GDF) as the safe, secure and environmentally responsible solution to the long-term management of higher-activity radioactive waste in the UK, excluding Scotland. The programme also supports the delivery of the UK's nuclear new build programme because before development consents for new nuclear power stations are granted, the Government needs to be satisfied that effective arrangements exist or will exist to manage and dispose of the wastes they will produce. The CCS Commercialisation Programme aims to support practical experience in the design, construction and operation of commercial-scale CCS power generation. The perceived high technical and commercial risks have thus far prevented the deployment of CCS in the UK. Market failures have led Government to intervene by providing £1bn capital funding, and ongoing support for low carbon electricity generation as a means of encouraging future investment (without future HMG capital subsidy) in CCS in the 2020s.The strategic objectives of the programme:Creating confidence in the future market and bringing forward greater investment by demonstrating that CCS can operate on a commercial scale;Reducing technical uncertainties and assessing the benefits of different storage options, which will be crucial to the widespread deployment of CCS.
Departmental commentary on actions planned or taken on the IPA RAG rating. Data not provided The programme continues to make good progress and remains on track to successfully deliver share transfer on 1st April 2016 and to create the new environment for success. There has been no deviation to the schedule. Key risks continue to be mitigated /retired and no risks have become issues. Actions arising from the DCA receive focussed attention and are either closed out or mitigations are underway. Budgets remain on track. Following the application of competitive tension via the competition process and share transfer to a new Parent Body, a target cost incentivised contract arrangement is in place for delivery of the performance obligations in the contract over a period of 14 years, envisaged in two phases each of circa seven years. The target cost as bid is £2.4bn for phase 1 (nominally seven years) and £1.4bn for phase 2 (nominally seven years). Currently the project is focussed on "Consolidation" of the successful bidder’s commitments into the Site Licence Company's Lifetime Performance Plan. The Licence Agreement anticipates some change to the Target Cost during the Consolidation phase but the full extent of the change will only be known on completion of Consolidation which is forecast to be April 2016. A key enabler to achieving a lower cost for delivering the programme is the NDA's ability to put in place funding to match the programme established by the contractor in the updated Lifetime Performance Plan. Should the updated Plan prove unaffordable a further iteration may be required. A MPA Gate 0 Review in March 2015 assessed the Programme as Amber. This reflected the good progress made since the last Gate Review in 2014, but acknowledged that there remained a number of areas requiring close management attention by the DECC programme team. Action is underway or complete against all recommendations. The Programme needs to continue to work closely with multiple cross-industry delivery partners to ensure Programme success. In July 2014, the Government published a White Paper setting out the revised siting process for a GDF. The rating continues to reflect the early stages of a long term project that involves working in partnership with communities. Data not provided
Project - Start Date (Latest approved start date) 01/09/2011 13/01/2015 03/04/2012 02/12/2009 30/06/2008 25/10/2011
Project - End Date (Latest approved end date) 01/06/2016 24/05/2017 01/09/2028 31/12/2020 31/12/2040 31/12/2016
Departmental narrative on schedule, including any deviation from planned schedule (if necessary) Start date represents start of project following the EMR White Paper of July 2011. End date represents the expected conclusion of the project following award of contract and transition of contract management to the Counterparty body. End date estimated as being in 2016 2015/16 milestones delivered to schedule The date for completing the current Consolidation Phase has been extended to accomodate addtional scope compared to the March 2013 postion which was the basis for the bid. However, this will not impact on the project end date. On schedule for 2020. (The Data and Communications Company (DCC) has drawn on some planned contingency. The DCC Live date remains August 2016.) The programme commenced following publication of the Managing Radioactive Waste Safely (MRWS) White Paper in June 2008. In July 2014, the Government published a further White Paper on a revised siting process. Planning assumptions will be kept under review by the developer, Radioactive Waste Management Ltd. The Project end date reflected the situation where Final Investment Decision would be taken in the first half of 2016 transitioning to business as usual arrangement contract management and closing the CCS Commercialisation Programme by the end of the 2016.
2015/16 Budget (£million) £2.30 £2,217.25 £674.00 £12.00 £25.58 £40.27
2015/16 Forecast (£million) £5.90 £2,217.25 £549.00 £12.00 £25.83 £29.23
Variance Budget / Forecast %age 156.52% Budget variance less than 5%. -18.55% Budget variance less than 5%. Budget variance less than 5%. -27.41%
Total budgeted whole life costs (£million) (including Non-government costs) £36,963.64 £29,975.00 £3,860.00 £19,261.09 £11,393.00 Exempt under Section 43(2) of Freedom of Information Act 2000
Departmental Narrative on Budget / Forecast variance for 2015/16 where more than +/- 5% Project costs relate to the project team and external technical, legal and financial advisers. In Q1 2015/16 an overspend was forecast against the 2015/16 budget due to changes to the project timetable. Additional budget was sought in DECC's mid year review. Budget variance less than 5%. The Budget values reflect the estimated cost for Phase 1 work only under the previous Parent Body Organisation on a cost re-imbursable arrangement for Magnox. The forecast values reported here reflect the reduced Target Cost (price) for the same work under the new contract, now that the competition has been concluded and share transfer completed, with amendments for the new consolidation time frames. Budget variance less than 5%. Budget variance less than 5%. The variance is due to changes in the anticipated level of Front End Engineering and Design expenditure.
Departmental Narrative on Budgeted Whole Life Costs The Whole Life Costs (WLC) for this project are determined by the difference between the Strike Price for Hinkley Point C and the long-term Wholesale Electricity Price forecasts, which are influenced by market prices for fossil fuels. Therefore, we would expect the WLC to vary year on year to reflect changes in the market. From 2014 to 2015, DECC’s projections of wholesale electricity prices fell, reflecting underlying low fossil fuel prices and a subsequent reduction in DECC’s gas and coal projections. This resulted in an increase in the whole life costs for Hinkley Point C. Wholesale prices are volatile and sensitive to a number of uncertain factors including, for example, future global gas price trends, carbon prices, coal prices, the level of intermittent generators in the system and demand trends. Whereas the strike price agreed for Hinkley Point C is fixed and has been set following extensive negotiations with EDF and with advice from independent expert advisors. Hinkley Point C alone will generate 7% of reliable low carbon electricity for the UK; enough to power 6 million homes for 65 years. These costs are those that will be incurred over the period which the benefits from the Sellefield Model Change were expected to accrue in the Outline Business Case. Whole life cost cover the Phase 1 costs only of decommissioning the ten Magnox and two RSRL sites and taking them into their Care and Maintenance states. They also cover the costs of processing and managing the resultant radioactive and non radioactive wastes arising from decommissioning activities for Phase 1 only. Finally the whole life cost addresses the establishment of a "Regionalised approach" to carry out surveillance and, if required, maintenance ops on the sites after they enter Care and Maintenance. The total budgeted whole life costs figure in this return is presented in undiscounted nominal terms for comparability with other programmes. The figure differs to the total cost figure in the January 2014 Smart Meters Implementation Programme Impact Assessment which is expressed in 2011 real prices and discounted to present values (in line with HM Treasury appraisal guidance); the total cost figure in the 2014 IA is £10,927m, which is expected to generate a total benefit of £17,141m, resulting in a net present value benefit of £6,214m. Whole life cost figures represent the estimated cost of designing, constructing and operating the GDF out to 2130s. Note that the costs reported here only cover costs related to a GDF for legacy waste and waste arising from the existing fleet of nuclear reactors, it does not include any provisions for waste disposal from a new nuclear build programme, as this will be funded by new nuclear operators. The Whole Life Cost figure is presented in real terms due to the long timescales associated with the programme. Data not provided