Speech by Vincent de Rivaz Nuclear New Build 2011 Conference: The road to Final Investment Decision
NUCLEAR NEW BUILD 2011
The road to Final Investment Decisions
Vincent de Rivaz
5 July 2011
I am delighted to be able to address so many people from our industry.
I am particularly pleased that our Energy Minister, Charles Hendry, is participating in this morning’s session. Charles is held in high regard throughout the industry. I would like to thank him and his colleagues across Government for the leadership they have demonstrated in recent months.
As the title of this morning’s session suggests I will look at the challenges we face as we move towards a final investment decision.
We continue to aim, with our partner Centrica, to be the first to deliver new nuclear in the UK.
2011 was always going to be a very important year for EDF Energy’s project.
I am on record as saying it would be ‘the year of delivery’. So, where are we and what impact has Fukushima had? Has it fundamentally altered the process?
The answer is no. Do not get me wrong. Fukushima was a very serious event. I have said from Day 1 that there would be a lasting impact.
But, it is noticeable and necessary that despite events at Fukushima decisions on important milestones are being made right now. I will return to these shortly but before turning to the UK let us think for a moment of those in Japan still dealing with the aftermath of these events.
We will hear more from Dr Weightman, recently returned from Japan, on this subject tomorrow.
You all know well the British Government’s position, post Fukushima, of continuity on nuclear. I believe there are three key reasons for this approach here in the UK, the first country to commercially develop civil nuclear power in 1956:
First, over 5 years of democratic and reasoned debate, and consultation, on the role of nuclear in our energy mix.
Second, the credibility of the Safety Authority – the Office for Nuclear Regulation - which is doing its job as a strong and independent regulator.
Third, if I may say as the operator of 15 reactors, the robust safety arrangements in the UK’s nuclear power plants
For our part, we are determined to learn any and all of the lessons from Fukushima.
In addition to the fact that we took immediate action at the same time we made clear that we would implement any recommendations addressed to the industry
When Dr Weightman published his interim report, he said that the UK nuclear power industry has displayed "a leadership for safety, and a strong safety culture".
But, we equally support his conclusion that:
"the quest for improvement should never stop. "
There is a difference between nuclear before Fukushima and nuclear after Fukushima.
Post Fukushima we will be safer.
Our culture of continuous safety improvement will always apply.
On the 18
th May we were asked to submit our plans to respond to the 25 recommendations Dr Weightman’s Interim report within 1 month. In our response on 17th June, we identified five main areas which we feel the UK nuclear industry needs to assess:
Improving open, transparent and trusted communications and relationships with key stakeholders.
Enhancing on site resilience to the effects of major events.
Providing off site emergency back up equipment that can also be readily connected to plant.
Considering the potential impact of abnormal natural events on local and national infrastructure.
Reviewing our emergency planning arrangements in response to extreme situations.
We are reviewing each of these areas now and it is clear to me there will be tangible enhancements that will make us safer and stronger.
We will provide an interim report on our progress to the ONR at the end of July and submit our final plan that will also fully address the Stress test questions at the end of September.
That is where we stand in relation to our existing nuclear stations.
Let me turn now to our new build plans.
It is important that the new nuclear programme in the UK should not be subject to unnecessary delay and it is not.
We will give an adjusted timetable in the autumn after the Weightman report, this adjusted timetable will benefit also from the lessons we are learning from experiences and challenges elsewhere – at our new build projects in China and in France. These experiences are of course invaluable as we progress works in the UK.
Regarding the timetable, the most important thing is to have a viable project
Therefore, it is crucial that we continue to maintain a focus on timely decision making and we do.
It is all about delivering a robust policy framework.
So I will talk specifically about:
The carbon price floor
The Energy White Paper, and Electricity Market Reform
National Policy Statements
And the other crucial areas where progress must be made – GDA, Waste, Supply Chain and Local Engagement.
The inclusion of carbon price floor in this year’s Budget was a crucial step. The first country in the world to take this action, it is a bold example of the UK’s leadership on energy and climate change matters.
Decisively establishing a robust long term price for carbon helps provide the right long-term incentives for investors today. It corrects the long-standing defect of having no meaningful, long-term carbon price signal as proven by the current carbon price of 13 euros a tonne.
It delivers what the founders of the carbon market always intended.
For us, it is critical for investment. For UK PLC, it will be critical for decarbonisation.
Of course, there may be short term impacts on prices. It is right that the Government is looking at how to maintain competitiveness for energy intensive UK businesses.
The carbon price floor is just one part of wider reforms to our electricity markets.
These reforms are vital. We have always said, we believe that electricity market reform proposals have to meet the expectations of customers, industry, and policy makers.
The Government’s preferred package – a carbon price floor, a contract for difference Feed-in-Tariff, a capacity payment, and an emissions performance standard – achieves this balance.
Contracts for Difference or CFD will have an important role to play for all low carbon technologies. As too will the Carbon Price Floor.
A CFD removes exposure to volatile commodity prices for both us as investors and our customers. It provides stability, not subsidy.
Customers will win, because the proposals are about stabilisation of bills.
Investors will win, because the proposals stabilise revenues, allowing greater confidence about the long term
Government will win, because the proposals will deliver the investment we need, affordably
It delivers a balanced, alignment of interests. This balance means that a CFD can be a lasting solution.
We look forward to seeing the White Paper next week.
The next important issue is the process for planning.
We were pleased to see the National Policy Statements presented. We look forward to the debate and parliamentary vote before recess.
This is notable progress.
Ratification of the Statements will provide a firm policy framework for our application to the Infrastructure Planning Commission. We hope to make this in the autumn.
The Generic Design Assessment is another vital issue.
We have agreed with the Office for Nuclear Regulation that we will have a clear programme to resolve outstanding issues from the Generic Design Assessment process - including the lessons to be learned from the events at Fukushima. You will hear more during the session on GDA tomorrow
We are also making progress on waste and decommissioning. I welcome the Energy Minister’s approach to the timescale for delivering the first waste into a geological disposal facility by 2029 announced last week.
As well as the national policy, the local issues are just as important as we think about investment.
On the ground at Hinkley Point we have completed extensive public consultation on our preferred proposals for development.
Since starting formal consultation in 2009, we have engaged with nearly 6,000 local people.
And the engagement with the local community there will continue as our plans move forward.
Ken Maddock from Somerset County Council will give you his perspective on this issue later today.
We are also working to engage the supply chain. We have worked with the NIA and others to deliver a series of supplier day events, the largest of which attracted over 650 businesses.
We will hold a further national supplier day in December this year, and we continue to take steps to build our Anglo-French relationship to develop excellence in nuclear across our two countries.
So, that concludes my overview of the issues we need to work together to resolve to deliver investment.
All of what I have described so far are the vital building blocks for our new build plans.
But they build from a foundation of acceptance and support for new nuclear.
Acceptance from our local communities.
From our key stakeholders.
And from the public.
Support for nuclear has been maintained in the UK.
Our latest public polling conducted by You Gov last week, shows public support for nuclear’s role in our energy mix remains strong.
61% of people continue to support nuclear’s role in our energy mix.
And importantly, this is a broad consensus. A majority of voters of all three political parties say nuclear should be part of the mix.
This acceptance and support is built upon trust.
Trust is itself created by an approach of openness and transparency by our whole industry.
Dr Weightman concluded in his report that "great strides" have been made towards openness and transparency in our industry.
But he also said that both industry and regulator should consider ways of enhancing this drive towards openness, transparency, and trusted communications.
Now, more than ever, we want to be and be seen as a trustworthy and fair company.
One committed to dialogue and engagement in order to build up public trust.
I believe we must act with humility and leadership.
Humility means respect for the facts, and respect for different viewpoints.
Leadership means deserving the trust of the people and ensuring that what this country needs will happen.
To achieve this trust we need to combine four dimensions of this leadership.
Not over weeks.
But for the long term.
We want the whole of our industry to unite behind a model which we can perhaps be broadly characterised as the ‘4 Is’, where we endeavour to:
Inspire and mobilise our senior teams to engage with others on the compelling story of safe and affordable nuclear as part of a diverse energy mix
Involve our staff working in our nuclear power stations in actively building public trust in nuclear. They, after-all, best embody the safety culture we are all committed to.
Impact our stakeholders and our customers, by listening to their views, including harnessing the power of social media
Integrate into our work third party organisations capable of contributing to a better understanding and appreciation of the achievements and challenges of our industry.
We have already started.
Our own programme is geared to delivering new ways to communicate with the public.
That includes opening visitor centres, and asking people head-on to challenge us to drive constant improvement. Just yesterday we launched a new page on our website, open to all, which will provide daily information about the current generating status of EDF Energy's nuclear fleet
We will build on these plans with more developments for the long term.
But, this is not just a challenge for us – EDF Energy.
It is a challenge for the whole industry.
I urge you to join us in this unique opportunity …
To build the right long term foundations based on safety, transparency and openness.