Nuclear power the future?

Transcription

1 Nuclear power the future? Produced by Richard Newton Head of Research

2 Produced by: Richard Newton Head of Research Movers & Shakers Property Networking Forum

3 Nuclear power the future? An opportunity for the construction sector? THE CONTEXT The world is using more power World electricity demand grew almost a quarter between 2000 and In 2007 it rose 4.7% and in 2008 it grew 2.5%. Due to the economic climate, consumption will fall by about 3.5% in 2009 but this is seen as a minor glitch in an overall upward trend in power consumption. In a report published last year, before the extent of the financial crisis was clear, the IEA forecast that electricity consumption would rise 32.5% between 2006 and Power shortfall and carbon emissions With limited prospects of a world or even a UK reduction in power consumption a crisis point has been reached. Fossil fuels have a finite capacity, although in the UK there are large untapped coal deposits, North Sea gas and oil has started to run dry, by 2020, net imports will account for over half of the UK s oil and gas consumption. In addition World Governments have recognised that there is a need to reduce carbon emissions to counter global warming. In the UK strict targets have been agreed to reduce carbon output although not all World Governments have agreed to similar measures. The Climate Change Bill was introduced into Parliament on 14 November 2007 and became law on 26 November 2008 and sets legally binding targets to reduce greenhouse gas emissions by 80% by 2050, with an intermediate target 34% by 2020 against a 1990 baseline. Amongst the range of measures to reduce emissions it is obvious that burning fossil fuels will have to be curtailed to meet these targets. That being recognised by 2016 up to a third of our power stations will have to close under EU law anyway. The UK is a long way behind in building replacement power generation plants and until they have been built the UK will be even more dependent on foreign power suppliers. A recently published government report estimates that the first power short-fall in the UK will be in The energy shortfall will reach 3000 megawatt hours per year. That is the equivalent of the whole of the Nottingham area being without electricity for a day. Electrify power generation plants in the UK Fuel Number of stations Coal 14 Gas (including CCGT) 46 Nuclear 10 Coal and oil, oil, kerosene, diesel, gas oil 35 Hydro 73 CHP 1,552 Renewable 883

4 ALTERNATIVE POWER SOURCES The search is on for alternative power generation methods to meet the growing demand. Pound-for-pound nuclear power is more effective than all other alternatives, wind, wave etc. and hence is an obvious alternative to existing methods of power generation. Wind power Land-based wind energy has the potential of covering six times the world's electricity consumption, however the huge number of wind farms required to do this ensures that almost everyone will be affected by them. Off shore wind farms maybe an alternative but present a host of maintenance problems. Wave power In theory as tides are very predictable harnessing wave power looks attractive but as the equipment is based off shore it has to cope with corrosive sea water and unpredictable weather conditions. Trials of wave power have begun but the high cost of production of electricity does not make it an attractive proposition at this time. Solar Power Again the sun in theory is an ideal free source of energy and we are all used to solar powered road signs but it is also very expensive to build solar power stations that provides a large amount of power. In addition it is limited by poor weather conditions and although power can be stored, it only works during the day. NUCLEAR POWER Although the most attractive solution to the UK s power problems, there are major hurdles to introducing more nuclear capacity planning, political, finance, safety etc. Less effective but more potentially environmental friendly schemes, large-scale wind farms are much easier to sell to the nation. Planning Laws The UK is fairly unique in having, up until recently, a very liberal view on planning, which allowed numerous public enquiries for major building projects. Witness the difficulty with T5 at Heathrow. With such an emotive subject as nuclear power it would have been expected that major delays due to the planning process. However changes to the law relating to infrastructure planning should avoid the lengthy public debates and enquiries. Political Scenario There are only a handful of companies equipped to build nuclear power plants, and countries. Until October 2006, the British Government owned one such firm, Westinghouse, but it was sold to Toshiba in Japan for a knockdown 2.8 billion. The French who have long been involved in building nuclear power stations have taken control of large swathes of our power sector and it is to them the UK looks for salvation. Currently France derives 80% of its electricity from 58 nuclear power stations and EDF (82% state owned) recently acquired British Energy adding 8 of the UK s nuclear plants to their empire. In general the Government s stated power policy is: to put ourselves on a path to cutting the UK s man-made emissions of carbon dioxide (CO2) by some 60% by 2050, with real progress by 2020 to maintain the reliability of energy supplies to promote competitive markets in the UK and beyond, helping to raise the rate of sustainable economic growth and to improve our productivity to ensure that every home is adequately and affordably heated. Financial In addition the UK Government has made it clear that it will not fund new power stations although they are imposing strict targets for carbon reduction on industry. The UK Government through subsidies, supports alternative power generation methods, it expects the power companies to finance the nuclear programme from their profits. Not surprisingly there is some resistance to this policy.

5 THE UK POWER MARKET The power market in the UK is extremely complicated with multiple generators, transmitters, distributors and suppliers supplying the market - over 40 different organisations although about 25% of them are very small organisations; wind farms CHP etc. Generators Generators companies responsible for generating the energy. Transmission Distributors Suppliers Distributors - are the owners and operators of the network of towers and cables that bring electricity from the National Transmission Network to homes and businesses Suppliers - are the companies who supply and sell electricity to the consumer. Customers, commercial, industrial & domestic Some organisations are a mixture of all three types of power companies. For example EDF, generates power, distributes it to consumers in London and the southeast and is also a supplier. Major power generators are: AES Electric Ltd EDF Energy plc RWE Npower plc Baglan Generation Ltd E.On UK plc Scottish Power plc Barking Power Ltd Fellside Heat and Power Ltd Scottish and Southern Energy BNFL Magnox Fibrogen Ltd Seabank Power Ltd British Energy plc Fibropower Ltd SELCHP Ltd Centrica plc Fibrothetford Ltd Spalding Energy Company Ltd Coolkeeragh ESB Ltd First Hydro Company Teesside Power Ltd Corby Power Ltd Immingham CHP Western Power Generation Ltd Coryton Energy Company Ltd International Power plc Derwent Cogeneration Ltd Premier Power Ltd Drax Power Ltd Rocksavage Power Company Ltd Types of power stations Conventional steam stations are stations that generate electricity by burning fossil fuels to convert water into steam, which then powers steam turbines. Nuclear stations are also steam stations but the heat needed to produce the steam comes from nuclear fission. Gas turbines use pressurised combustion gases from fuel burned in one or more combustion chambers to turn a series of bladed fan wheels and rotate the shaft on which they are mounted. This then drives the generator. The fuel burnt is usually natural gas or gas oil. Combined cycle gas turbine (CCGT) stations combine in the same plant gas turbines and steam turbines connected to one or more electrical generators. This enables electricity to be produced at higher efficiencies than is otherwise possible when either gas or steam turbines are used in isolation.

6 Transmission National Grid (Transco subsidiary) owns and maintains the high-voltage electricity transmission system in England and Wales. They provide a range of high voltage maintenance services to external customers such as generators, interconnectors and Distribution Network Operators. Distributors In the UK electricity is delivered by a number of organisations working in geographical areas. In the UK Distributors and Suppliers need not be the same company. So it is possible that a distributor covers a geographical area BUT the supplier to the consumer could be a completely different company. Essentially Suppliers send out the bills. Suppliers There are over 18 energy companies that supply residential, industrial and commercial clients. Suppliers are the company that most people see as the face of power in the UK. Suppliers handle contracts and billing for the end user. The suppliers can be distributors or can be linked with gas or other utilities. There are over 18 Energy companies supplying the UK. Amerada Atlantic Electric and Gas Basic Power British Gas Cambridge Gas and Electricity Countrywide Energy Ecotricity EDF Energy E.ON Energy Equipower (EBICo) Good Energy Green Energy UK London Energy Lloyds TSB Manweb npower Sainsburys Energy Scottish Hydro-Electric ScottishPower Seeboard Energy Southern Electric Swalec SWEB Energy Utility Warehouse Utilita Virgin Energy ZEST4

7 NUCLEAR POWER Bearing in mind the need for a step change in power production, nuclear seems, at this stage with current technology, to be the only sane way forward. That being said there will be a need for other power generating sources, wind, wave etc to help cover any short fall until the nuclear programme is up and running. The UK currently has 10 nuclear power stations, which provide approximately 20% of the country s electricity. Globally, nuclear power produces about 16% of the world s electricity requirements at about the same cost as energy produced from coal. Nuclear, however, produces huge amounts of energy from small amounts of raw matreial. WORK FOR THE CONSTRUCTION SECTOR There are basically three possible sources of work from the nuclear industry. 1 Dismantling specialist decontamination work 2 Retrofitting specialist rebuilding of existing sites 3 New build Dismantling Of the existing nuclear sites the majority are due to reach the end of their lives in the next 10 years and will have to be dismantled. NFL Magnox Capacity (MW) Published Lifetime Oldbury Wylfa British Energy Capacity (MW) Published lifetime Heysham 1 1, Hinkley Point B 1, Hunterston B 1, Dungeness B 1, Hartlepool 1, Heysham 2 1, Torness 1, Dismantling is specialist work and disposal of waste material will cause major problems. Retrofitting At this stage there is no evidence that there will be any retrofitting of existing power stations. Retrofitting is essentially rebuilding the facility. It involves elements of dismantling and the problems that go with waste material and new build and therefore is highly complex. In the UK the existing nuclear technology is old and new build seems a better alternative.

8 NEW BUILD The Government has earmarked 10 sites for new nuclear powers stations and they will be built using French technology. 1. Bradwell, Essex, NDA 2. Braystones, Cumbria, RWE npower 3. Dungeness, Kent, EDF Energy 4. Hartlepool, Durham, EDF Energy 5. Heysham, Lancashire, EDF Energy 6. Hinkley Point, Somerset, EDF Energy 7. Kirksanton, Cumbria, RWE npower 8. Oldbury, Gloucestershire, NDA and Eon 9. Sellafield, Cumbria, NDA 10. Sizewell, Suffolk, EDF Energy 11. Wylfa, Anglesey, RWE npower and the NDA The expansion of nuclear generation is fraught with difficulties; technological, planning, nuclear waste disposal, political, social, environmental etc. Technologically the quickest route is to copy, brick for brick the latest French design. However as this design, although built, has not produced any power and is therefore untried. Planning problems should have been eased with the new planning laws, but as they have not been tested, this is unknown territory for the Government. To minimise planning problems EDF plan to build the first two reactors on existing sites. Before building can commence the disposal of any nuclear waste has to be planned. Waste cannot leave the country it was created in so processing and disposal of dangerous waste has to be planned and agreed before a new plant can be started. The other stumbling block is the mining of raw material, which is in itself a finite material and in short supply. Value of work The first 2 power stations will be built on existing sites at Hinkley Point and Sizewell and are due to start in the last quarter of However, assuming the new planning regime works, realistically a 2011 start is more likely and the power plants will not be operational until 2018 at the earliest. DIFFICULTIES FOR CONTRACTORS The nuclear island and infrastructure is reputed to be worth in the region of 3-5bn per reactor with around 1bn worth of surrounding commercial and industrial buildings. Only major contractors have the ability to tackle projects of this scale and complexity. However, in the case of building nuclear plant contractors face numerous additional problems: Public sentiment potential opposition, will there be demonstrations, disruptions etc.? Will the new planning laws work or will there be 10 years of public debate? Political the UK has a power requirement and the UK Government is taking steps to meet that requirement. However parts of the UK, namely Scotland, has a ban on nuclear power, how will they satisfy their power requirement?. In addition the French own the power companies building the nuclear power stations and the UK could be subject to French political pressure in the event of a dispute between England and France or the EU. Funding - the UK Government has said that it will not fund these developments but the power companies are arguing that such an investment with a long return period is not feasible for a private company. Cultural issues French and English cultural issues have caused problems on other large joint ventures Channel Tunnel for instance. Language two different languages. The English and the French are not known for their desire to use foreign languages. Technological new untried technology compounded by different standards of drawings, ways of working etc.

9 NUCLEAR POWER HOW IT WORKS Nuclear power is possibly the most contentious and emotive of all methods of energy production, due to the nature of the material involved and long term consequences of accidents. Uranium is a naturally occurring radioactive element. It can be used in nuclear power production because if a free neutron collides with the nucleus of a Uranium atom, the nucleus splits (fission) into two smaller atoms plus one free neutron. This free neutron can then cause another fission to occur (a chain reaction). As the two new atoms weigh less than the original Uranium atom, an enormous amount of energy is released. The energy produced by the splitting of the Uranium nucleus is used as a heat source, which turns water into steam, which in turn drives a turbine. The turbine spins a generator to produce electricity. Safety The safety regulations surrounding nuclear power are very stringent, and there have been very few serious incidents at nuclear power stations. The world's worst nuclear accident occurred after an explosion and fire at the Chernobyl nuclear power plant in It released radiation over much of Europe. Thirty-one people died in the immediate aftermath of the explosion. Other infamous accidents were the accident at the Three Mile Island Unit 2 (TMI-2) nuclear power plant near Middletown, Pa., on March 28, 1979, In the UK the most serious incident was October 1957 when fire destroyed the core of a plutoniumproducing reactor at Britain's Windscale nuclear complex - since renamed Sellafield - sending clouds of radioactivity into the atmosphere. In both incidents there were no deaths or serious injuries. Waste The safe storage and disposal of nuclear waste is a significant challenge and yet unresolved problem. The most dangerous waste from nuclear power plants is spent fuel. A large nuclear reactor produces 3 cubic metres (25 30 tonnes) of spent fuel each year. It is primarily composed of unconverted uranium as well as significant quantities of transuranic actinides (plutonium and curium, mostly). In addition, about 3% of it is made of fission products. The actinides (uranium, plutonium, and curium) are responsible for the bulk of the long term radioactivity, whereas the fission products are responsible for the bulk of the short term radioactivity. There has been no real answer to the question of what to do with the waste but before new nuclear power plants are built, this problem has to be addressed. Weapons A by-product of a nuclear power plant could be weapons grade nuclear material. In fact in 1951 the Atomic Energy Commission in the USA concluded that commercial nuclear reactors would not be economically feasible if they were used solely to produce electricity; they would be profitable, however, if they also produced plutonium which could be sold for nuclear weapons. The global community through the International Atomic Energy Agency, within the United Nations has sought to prevent this by verifying that safeguarded nuclear material and activities are not used for military purposes. There are, however, problems with countries like Iran and Pakistan seeking to develop their own nuclear weapons arsenals against the wishes of the global community. THE BOTTOM LINE The UK is fast approaching an energy production crisis. Unless new production plants are built quickly there will be energy shortfalls within the next 10 years. The only viable method of producing large quantities of power with limited resources is nuclear. The problems associated with nuclear power production are great and many hurdles will have to be overcome. BUT Estimates of 3-5bn and 1bn worth of surrounding commercial and industrial buildings per reactor would provide a significant amount of work in the next 20 years for the construction and related sectors.

10 Business Vantage is a marketing and research support consultancy working with major clients in the property, construction and related sectors offering: Strategic Consultancy: pragmatic and practical support. Building on the strengths of the business through: better business strategies, greater customer alignment & more effective business development Research: intelligent, targeted customer research. Understanding: customers, markets, competitors & perceptions Identifying: alignment gaps, product/service & business opportunities Prob Activ: research driven business development. Identifying business opportunities through an established process of desk and telephone research Equal Partners, a series of syndicated industry leading studies, produced by Business Vantage, that examines the relationship between the customer and the supply chain and highlights potential areas for improvement. The results of the study (Office Occupancy) are very enlightening and has revealed some new and interesting thinking that owners and occupiers would do well to heed. Roger Bright, Chief Executive The Crown Estate Private sector construction Public sector construction Office occupancy Retail property Changing relationships in construction Equal partners Customer alignment in Construction Customers & Supplier Alignment alignmen in t retail in tail property Business Vanatge Ltd The BPF welcomes the contribution of Equal Partners (Retail property) to the debate on improving the relationship between suppliers of property and their customers. Liz Peace, Chief Executive British Property Federation There is certainly enough encouragement in this report (Changing Relationships) to suggest that this would be a highly successful business model. Don Ward, Chief Executive Constructing Excellence Business Vantage - associated companies: Richard Newton Head of Research 14 Park Street Windsor SL4 1LU Business Vantage has compiled this report using a number of information sources and cannot be held responsible for any inaccuracies and omissions and recommends that it is used for general guidance