Government decision on Hinkley Point C marks the relaunch of nuclear in Europe and it will transform the prospects for our industry
It is a privilege to speak to you today at this Symposium organised by the World Nuclear Association. It is a timely invitation.
The WNA plays a crucial role in promoting understanding of nuclear energy across the world. We at EDF Group are very pleased and proud to be members.
It is timely that we have a global gathering here in London at a moment when, in the Prime Minister’s own words, Britain is open for business. And it’s timely for EDF Energy too. You may have heard, today we are celebrating an historic milestone. It is an achievement that demonstrates the value of investing in energy infrastructure.
It is the result of the determination, dedication and professionalism of people in the nuclear industry. It shows what can be achieved when we take a long-term view. I am talking of course about the new world record set by our Heysham 2 nuclear plant of nine hundred and forty days of continuous operation.
I know there’s some other news you will want to hear about – I will come to it.
Our world record run at Heysham says a lot about the nuclear industry and about us. It is a record we claimed at the beginning of August, beating the eight hundred and ninety four day record held for twenty two years by the Pickering nuclear power station in Canada.During this run, Heysham 2’s reactor has generated over fourteen terawatt hours of electricity - avoiding more than seven million tonnes of carbon emissions.
It’s another gold medal for Team GB. Adding to the Team’s stunning success at the Olympics and Paralympics this year. And it is just one example of the outstanding performance of EDF Energy’s 15 nuclear reactors in the UK.
Since the acquisition of the UK fleet in 2009 we have increased safety performance by 51%. We have increased output by 50% − a personal best we plan to beat in 2016. And we have safely extended the lives of our AGRs by 25% − 8 years on average. The majority of our existing nuclear capacity will now still be operating in 2025 as Hinkley Point C comes online.
This is the basis of our credibility as a nuclear operator and developer. This credibility is based on five key attributes.
- First, keeping safety and security as our overriding and enduring priority. We strive to meet and exceed the UK nuclear regulation standards in our drive for continuous improvement, overseen by the UK nuclear regulator, the Office for Nuclear Regulation. In the UK we are fortunate to have a very strong, independent, credible regulator.
- Second, continued investment in our people, plant and processes. We could not have achieved this if we starved or sweated our assets. We have done it by investing.
- Third, the support of our local communities and a commitment to being open and transparent.
- Fourth, the talent, motivation and engagement of our people. It is our skilled workforce, and the transfer of expert knowledge within and beyond our teams, which allows us to be a credible and responsible nuclear operator and developer. And by the way it’s not just our own employees. Long-term partnerships with our suppliers provide continuity and stability, sharing the value of our industry.
- The fifth and final attribute underlining our credibility is to give to all our people, our suppliers, our regulators and our communities a sense of future. We would not have the same level of engagement and performance without this. The prospect of Hinkley Point C and new nuclear has always been a formidable boost. Now it is more than a hope: Hinkley Point C is delivering the future.
Hinkley Point C – UK Government decision
Our credibility as a nuclear operator has been a major factor in our other big news of the week − the decision of the UK Government yesterday to proceed with Hinkley Point C. It is truly an historic moment. It marks the relaunch of nuclear in Europe and it will transform the prospects for our industry.
It is excellent news for British consumers. Just as it is for British and French industry. And by reconfirming the role of nuclear in the battle against climate change, it has global implications.
It is clear that all of us in this room, all of us in the wider energy industry, all of us who care about the planet and the people who live on it…we have a common enemy in climate change. We have a common goal: security of supply. And we have a common duty: to deliver this reliable, low carbon electricity in a way which is affordable. It is time that we step up to the challenge − together. This is our common purpose.
Hinkley Point is a crucial part of the answer, and I am sure all of us here today welcome yesterday’s decision. We understood why the new Government took the time to look at the project, to study all its component parts. The Government’s review was a strong, professional and timely process. It confirmed again the robustness and benefits of Hinkley Point C. This process has strengthened UK industrial strategy and governance.
These elements are good for this industry. They provide stability and clarity, which is precisely what investors need. We should all welcome the new legal framework for British critical infrastructure announced yesterday. It is entirely consistent with our views and it will benefit the projects under our partnership with CGN, as set out in the Strategic Investment Agreement signed last year in October 2015, including Sizewell C and Bradwell B.
5 key strengths of Hinkley Point C
Let me set out the 5 key strengths of our project at Hinkley Point C.
The project is strong, firstly, because it is strategic.
Yesterday Secretary of State Greg Clark said and I quote: “Britain needs to upgrade its supplies of energy, and we have always been clear that nuclear is an important part of ensuring our future low-carbon energy security”.
Of course, the UK is not alone in fighting the battle against climate change. The historic global agreement at the COP21 climate conference in Paris last year demonstrates a shared commitment to act and we should all congratulate the USA, China, France and others on their ratification of the Paris Agreement.
Climate change is an issue on which France and the UK are fully aligned. And the UK can take great pride in having led the way on this major issue.
It did it in particular by implementing an effective policy framework which includes the Climate Change Act along with the Electricity Market Reform and its three pillars: the Capacity Market, the Carbon Price Floor and the Contracts for Difference.
Here in the UK, there is a specific need to replace ageing fossil fuel plants with new low-carbon electricity and to replace what is already low carbon by low carbon. Because even if our existing nuclear stations are performing well now, the time will come when they will have to close.
The Secretary of State yesterday referred to a quote from Winston Churchill, who said that in energy, “diversity and diversity alone” was the foundation for security.
The future will include interconnectors, batteries, SMRs, gas and large nuclear, renewables, central and decentralised generation. No one technology is a panacea and there is no solution for the UK without new nuclear in the mix. For example, batteries have been heralded by many as having the potential to drastically transform the electricity system and its operation. It is good news that the price of battery storage is falling.
Batteries work well in smoothing out short term imbalances in electricity demand over hours and minutes. They are a great complement to baseload nuclear generation, which is reliably available to refill them. EDF Energy is developing this technology and recently won a ground-breaking contract to provide 49MW of battery storage to support the UK National Grid.Today there is no prospect of cost effective battery technology to store electricity for days, weeks and months rather than hours.
Small modular nuclear reactors (SMRs) are another technology we are developing.
We believe that SMRs have great potential in the UK as a low-carbon technology for the future, complementing large nuclear power stations and renewables as we decarbonise our power sector. However, today no one can know how long it will take for policymakers, regulators and planners to approve these designs and what they will cost.
I have heard some say that Hinkley should have been replaced by wind. Wind has a critical role to play in the energy future and EDF is investing in it. But wind’s intermittency means it will sometimes generate too little and sometimes too much so it will always need costly back-up power, and will sometimes result in excess power which is wasteful. In Britain – a crowded island – onshore wind has a limited capacity to meet our future needs.
As for offshore, recent auctions for UK offshore wind projects averaged £137 per megawatt hour compared with £92.50 for Hinkley Point C. That excludes system integration costs at around £10 per megawatt hour. Hinkley Point C will generate low-carbon, reliable, baseload generation around the clock – there when the wind doesn’t blow and the sun doesn’t shine.
Turning to gas, we at EDF Energy operate Britain’s most modern gas plant at West Burton and know that gas will remain an important part of the future mix. Gas is not a low carbon fuel. It is best used flexibly to help match supply and demand. And Hinkley Point C is competitive with gas when the cost of carbon emissions is taken into account.
Falling North Sea production means gas still needs to be imported, adding billions to the trade gap and leaving us vulnerable to imports at times of UK system peak when there is no sun and often no wind.
Part of the temptation for a new dash for gas was based on high hopes for UK shale gas, although it is not ready and not in production.
CCS – in theory the perfect complement to gas − was put forward as another big hope. We wish CCS developers the best. But today this technology is still unproven at scale and nowhere near to being a ‘shovel-ready’ or affordable alternative to projects like Hinkley Point C. In the fight against climate change, we cannot improvise. Even if we need to innovate and invest in new technologies, we cannot gamble on the hope of future technologies - rejecting the tools we have today for those we hope to have tomorrow.
Hinkley has all the attributes to play a decisive role now and for at least the 60 years of operation addressing the UK’s need for a reliable, secure, low-carbon and affordable energy mix. This brings me onto the second key strength – we are ready. These types of projects are incredibly complex. They are developed over many years at significant cost. They need design approval, planning consent, a fully developed supply chain, long-term partnerships, realistic costs, and most critically finance.
We know, I know, it’s tough, it’s complex. It is more difficult than I ever imagined it would be. The 10 year journey on Hinkley Point C has taught us the importance of leadership, a willingness to learn and humility. We will take everything that we have learnt in this respect through to the next project stage: construction. It is a huge challenge, but we are confident because we have the team to deliver.
They are highly motivated and experienced, and they have experience of previous difficult nuclear construction projects. They are modest because they realise the scale of the task, but they are determined to deliver on budget and on time in 2025. I wish the other nuclear new build consortiums the best. They realise how much time and investment these major infrastructure projects require. In his own words yesterday, Duncan Hawthorne, the CEO of Horizon, said that “Hinkley blazed the trail and EDF took the blows for us all”.
Hinkley Point C is a first. The momentum it creates restarting the nuclear new build industry will help future projects – including ours – to be even more competitive. It is what we must do and what we are determined to do.
Onto the third key strength – safety and security, which are at the heart of this project, as they are in all our existing plants and future projects.
The ONR only granted a nuclear site licence to Hinkley Point C after being satisfied that safety and security had been properly addressed.And the new legal framework announced by the Government yesterday will further strengthen the oversight of our industry – we welcome this. The EPR is the first and only new generation reactor to have completed the rigorous Generic Design Assessment process led by the ONR and the UK’s Environment Agency.
The two EPRs that EDF together with its Chinese partners will build at Hinkley Point C are the latest and most advanced nuclear reactors under construction in the world and the 5th and 6th EPRs to be built in the world. They already integrate all the lessons learnt from our EPR projects under construction at Flamanville and Taishan. Flamanville is now on track. Taishan is a success.
The testing programme for the Taishan EPR is running smoothly. Cold testing is complete and preparations for hot testing are underway. These are some of the final steps before commissioning. The alliance with our Chinese partner is the fourth key strength.
The UK will benefit directly from the experience of our Chinese partner CGN in building Taishan with EDF. Their investment in Hinkley Point C is much more than £6 billion of inward investment. Climate change is a global battle, and it is good to have strong partners at our side. We are very pleased to have them with us. The alliance with CGN offers the significant benefits of experience gained in EPR construction. And the involvement of Chinese partners provides valuable experience from the world’s largest civil nuclear programme.
The fifth and final key strength is the huge benefit the project will bring to the UK supply chain and the South West economy, and the support we receive in return.
From her very first day as Prime Minister Theresa May said she wanted a nation that works for the many not the few. We are convinced that Hinkley’s impact on the South West is consistent with this vision.
Making Hinkley Point C an engine for regional growth
We have worked with people and organisations across the South West for years to ensure they benefit, whether in terms of the local community, skills, education, jobs, the supply chain and the regional economy as a whole. We are on track to create 1,000 apprenticeships during construction. We have awarded South West contracts with combined contract values of more than £435 million, creating 650 jobs.
We are committed to making Hinkley Point C an engine for regional growth. And one big way we are doing this is by bringing together small, agile companies from the South West with large, established multi-nationals, for the benefit of all. Many of those companies are in the room today.
In addition to the South West supply chain, we have also created a national supply chain.
More than 2,000 companies across the UK have registered an interest in supplying the project alongside the Somerset companies who have registered. They are now part of the nuclear supply chain and are winning contracts. Like Express Reinforcements from Swansea, preferred bidder to supply 200,000 tonnes of reinforcing steel. That’s 25 times more steel than was used in London’s Olympic stadium. Or Harris Pye from Cowbridge, winning a contract for steel tanks – their first nuclear contract for many years.
The success of companies like this is the key objective for us. And today I can reconfirm that we expect 64% of the construction spend to go to UK companies. We are setting these companies up for success not only for Hinkley Point C, but for work on other major projects. And in all of this, we must remember that there can be no industrial strategy without a people strategy.
We have worked in partnership with trade unions to place people at the heart of our project, and we will continue to do so during all the construction period and beyond.
People have made a human investment into Hinkley Point C. They have decided to move house to take up job opportunities on the project. They have made decisions on their children’s education so that they have the best possible chance of gaining the necessary skills to work on the project. They have shown passion, courage and resilience throughout the 10 years we have been working on this project.
To conclude. There have been challenges and there will be more. But Hinkley Point C will be a success because people will be proud to work on it as a team. The team spirit of respecting each other, with no blame culture, a spirit of fairness and a sense of being in it together: those are key for motivation and success.
I have a special thought for people in this room representing the world nuclear industry who will be part of this project. In particular, I have a special thought for Areva. I want to thank all the companies for their support in this journey.
And I would like to give special thanks to the people of Somerset and the South West for their support for the past decade, despite the difficulties along the way, and despite the things they will have heard. This support will be more important than ever as we move now into delivery. Along with all of them we have lived and breathed Hinkley Point C for a decade.
We have fought the battle every day. And the fact that we are here demonstrates that we have the ability to deliver. Building the first new nuclear plant in Britain in a generation - and relaunching nuclear in Europe.
It will be an exciting industrial and human adventure. And when I look around me, I am proud of what this fantastic industry can achieve and I am inspired by what we will now build together.