Select Committee on Trade and Industry Minutes of Evidence


Examination of Witnesses (Questions 1-19)

MR ADRIAN HAM, MR MIKE KIRWAN AND MR RICHARD MAYSON

TUESDAY 13 NOVEMBER 2001

Chairman

  1. Good morning, gentlemen. I imagine that you would like to start, Mr Ham, by introducing your colleagues.

  (Mr Ham) My name is Adrian Ham and I am Director General of the British Nuclear Industry Forum which represents 66 companies in the nuclear industry in Britain. With me I have on my left Richard Mayson who is Head of Safety and Environmental Risk Management for BNFL. On my right, I have Mike Kirwan who is Director of Strategy and Business Development for British Energy.

  2. You are our first witnesses and there is no sign in the timing of your evidence but we are very grateful for the memorandum. Perhaps I can start. Much has been made about the fact that we have to import energy and the impact that it will have on our balance of trade in due course. I suppose it could be said that we have been importing nuclear generated electricity for some years now but, notwithstanding the French connection, does it really matter if we become net importers of energy? Do you think that it is essential in an integrated Europe with a single market that we really need to be independent or as near as possible energy independent?
  (Mr Ham) Firstly, historically Britain has for its electricity always been secure in its own internal supplies of fossil fuel to produce the power that its industry needs. We have not been in a situation where we have substantially depended on flows of either electricity or fossil fuel from overseas. Particularly with the development of North Sea gas of course and the explosion of gas generation inside Britain, we have seen things move still using British sources/domestic sources of power but, as gas reserves start to run out—and we have already, as you suggest, Mr Chairman, seen signs of that happening now and as the Government forecast suggests—we are going to be very substantially dependent on imported gas supplies through the European grid in the future: within two decades, to something like 80 per cent or so for our electricity from gas which will mainly, at that point, be coming from overseas. I would argue that that is very significant. I do remember around 28 years ago working in the Chancellor of the Exchequer's private office when we faced the OPEC crisis at that time in 1974 and it is extraordinary how such a crisis can affect the whole of an economy. It would be very unfortunate to see Britain go back into that situation as a result of neglecting some potential domestic sources of electricity such as nuclear power.

  3. Could you perhaps go into the reasons why the nuclear stations will be closing. If only for the record, if you could explain the significance of the closure of Magnox stations, the timing of the closures and when the other more modern stations will begin to require replacement, if that is the road that companies are set to go down.
  (Mr Ham) I will ask my two colleagues to make particular comments about the Magnox bid from Richard's point of view and about the other nuclear fleet from Mike's point of view. I think that the overall figure is well known and you have seen this in the submission that, in about 22 years or so, all the nuclear stations which currently provide around a quarter of the country's electricity will close as they come to the end of the life times. If I can ask firstly Richard to say something about Magnox.
  (Mr Mayson) The Magnox stations, as you know, have served us well over the last 40 years and indeed Calder Hall recently celebrated its forty-fifth birthday. We have recently completed technical studies which have confirmed that they are approaching the end of their life and closing dates have been announced for all the Magnox stations and we believe those are realistic closing dates, so within this decade all the Magnox stations will be closed.

  4. What percentage of nuclear power does that account for and what percentage of the electricity generation?
  (Mr Mayson) If we think of nuclear power as providing about a quarter of the country's electricity, the Magnox fleet comprises around seven to eight per cent.

  5. So, seven to eight per cent out of 25 per cent?
  (Mr Mayson) Yes, in that order.
  (Mr Kirwan) The remaining 18 per cent comes from British Energy's fleet of seven AGRs, that is advanced gas cool reactors, and one pressurised water reactor. The pressurised water reactor, Sizewell B, was only commissioned in 1995. I think we can expect to see that still generating in 50 years time. That is not the issue. The issue is the seven AGRs which have very finite lines because of technical characteristics of the reactor cores which get increasingly brittle over time and there is a critical life limiting factor there. We do not know precisely when those lives will end. We continuously review that and, at the moment, our belief is that four stations will have about 35 years life and there may be a few more years that we can get out of those but, beyond that, at this moment in time, we cannot see any likelihood of being able to extend those lives. So, on the basis of those current assumptions, we would see closures starting with two in 2011 and the last being between 2020 and 2025. So, by 2025, all but one nuclear station will have closed in the UK.

  6. If you were going to replace a station, what sort of time would you require for anticipating planning inquiries and then the build? What number of years would you have to allow before a station could effectively be replaced?
  (Mr Ham) In our submissions, we have pointed out that streamlining the planning process is an important issue, to allow timely build and indeed to make future potential build more financiable, but I will ask Richard to make a few comments about the particular points that BNFL make about improving and streamlining the planning process.

  7. Apart from the merits or otherwise of streamlining the planning process, let us work for the moment on the assumption that you are faced with the law as it stands. How long would you at a conservative estimate have to wait? The board takes a decision and then switches it on; how many years would it have to be?
  (Mr Mayson) Realistically, with the planning and public inquiry process that we have seen, you could expect it to take probably between three and five years including all the preparation, the site preparation work and so on that would be needed, and that would then be followed by early orders of equipment and the construction period and commissioning period which is about another five years, so you are talking of the order of 10 years from the decision to electricity on the bars.

Sir Robert Smith

  8. Before I ask questions, I do not have any registerable interests for this inquiry, but for the record of the Committee, I would like to give notice that I have a financial interest in Centrica and Shell Transport and Trading, and I am Vice-Chair of the All Party Off-shore Oil and Gas Group which is supported by UKOOA. I just want to follow up the question about the importing of energy and clarify where the uranium fuel for the nuclear industry comes from. Is it an imported fuel?
  (Mr Ham) Firstly, there are a number of global sources of uranium in different continents and I think that is a very good question, if I can pass it on to my colleague here from BNFL to enumerate those sources.
  (Mr Mayson) The principle sources are Canada and Australia; they account for about half the supply. There are about a dozen countries throughout the world that provide the uranium that we need. I think it is also important to recognise that the volumes of uranium needed for nuclear fuel are very much lower than fossil fuel volumes for example, and we could probably fit the entire fuel load required for a number of reactors for a year in this room. Relatively small volume is needed.

Mr Berry

  9. Does that suggest less security or more?
  (Mr Mayson) I would not believe this represents a great deal more and I believe it is also the case that, should our sea routes be suddenly cut off, the amount of fuel that exists in Britain at the moment would provide between two years and four years of continued operation of the existing fleet, so I would say that this compact storage, relatively speaking, of uranium is a massive plus for the security of supply offered by nuclear power.

  10. Despite the fact that the total supply required for a considerable time could be enclosed just in this room?
  (Mr Ham) Could be but is not in practice.

Mr Hoyle

  11. I have been listening to what you have had to say with interest. We talk about nuclear power and it adds diversity to supply and security of supply, but why do we need British nuclear power? We have been very successful using the interconnector and using French nuclear power, so why do we really need to expand this nuclear industry?
  (Mr Ham) I do not think that the industry is talking about expanding, we are talking about replacement of the existing capacity and the existing nuclear capacity is vastly greater than anything that could come from France on the interconnector and, if we are talking about reliability and security of supply, I believe that even France has been known to have industrial action which even affects its electricity power stations, so we are talking about a much greater dimension of energy security that is offered by the domestic nuclear industry.

  12. The other point you mentioned was about planning permissions. If you decommission, which you have done already because some of the Magnox stations have gone, one in particular in Wales, and you are looking for replacement, do you believe that you will need planning permission as you will be replacing a like or similar generator on the existing site?
  (Mr Ham) If I can just answer firstly in broad terms and there may be some technical follow-up that Richard may wish to go through, but there is also the issue of course of future funding which I know that my colleague on my right will probably like to make some comment on, so there are a number of hurdles that need to be overcome. In broad terms, because of the very strict regulation of the nuclear industry, there are issues of licensing new plant that have to be gone through with the independent nuclear inspectorate—that has to be gone through—and planning process has to be gone through very thoroughly and very exhaustively. So, if you like, there are several hurdles and of course because we manage in a fundamentally market based system, there is also the issue of finance, then the financing process will also have to be gone through. In terms of the technicalities that you mentioned in respect of individual sites, perhaps Richard could make a few other comments. I am sorry, are we going the right way?

  13. Is this a shortcut to planning permission if you were to use the existing site?
  (Mr Mayson) Obviously the planning process would have to be gone through at all the sites and there are sufficient sites in the UK to replace our fleet. I do not believe that it will be a shortcut, but clearly the local communities around the existing sites are well used to having nuclear power "on their doorstep".

  14. Just to take this a little further, for instance, if you were to take down a petrol station and put another petrol station or an oil refinery back on the site, you would not need planning permission because you were replacing something that was already there. I am just wondering whether you have looked at that. The other thing is, if you now see nuclear as very important, why did you allow the planning permission to run out on that building?
  (Mr Ham) Are you referring to . . .?

  15. Sizewell C.
  (Mr Ham) There was not a permission for Sizewell C; there was a permission of course at a different site but, at that stage, I think you will recall that there were major changes going on inside the electricity market and there was also the privatisation process which was taking place for British Energy, so there were some other major factors which intervened in the period in which there was a live planning permission for one more PWR.

  16. So why do you think you have it right now if you did not in the past?
  (Mr Ham) I am not sure if I see what you mean by the "it". What we are talking about is broadly a requirement for the replacement of existing nuclear capacity in Britain in a strategic period that overcomes the big loss that there would be if this very large chunk of completely CO2 free generation is allowed to disappear, so we are talking about 25 per cent of the power potentially going over a period of two decades. If there is not replacement of nuclear, how is Britain going to meet its CO2 targets in the future? How is it going to make sure that it is energy secure in the future? Those seem to me to be the two big questions that, at strategic level, we should be asking.

Chairman

  17. Am I right in thinking that Sizewell B is a follow-up to Sizewell A for which planning permission would have been obtained before? Is that correct?
  (Mr Ham) Sizewell A was Magnox and Sizewell B is PWR.

  18. There was a nuclear power station on the site of Sizewell B and it took an eternity to get —
  (Mr Kirwan) Chairman, just to correct you, both Sizewell A and Sizewell B operated in parallel. Sizewell B was not a replacement for Sizewell A.

  19. On the other hand, it still had to go through a very lengthy planning process. The fact that there was a nuclear power station on site did not necessarily make the planning process any more speedy.
  (Mr Ham) That is exactly right, Mr Chairman.


 
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