|In control: Hitachi is “on the brink of its biggest nuclear venture”|
Hitachi’s purchase of Horizon Nuclear Power in October 2012 is the latest milestone in a new wave of nuclear development in Europe.
The deal looks set to confirm the UK as the dominant growth area on the continent. But what is the picture in the rest of the world? The long-term nature of nuclear projects (an average of 10 years from planning to birth), and the need for significant investment, means that most new developments need government backing to get off the ground. Government policy can of course differ greatly from country to country, and is influenced by a myriad of often competing factors such as the desire for energy security and the political need to assuage public concern – reasonable or otherwise.
These factors are jostling with another major issue, climate change, which is making its way back to the top of the news agenda following a succession of natural disasters and unseasonal weather. All these issues present a fascinating backdrop to the wider discussions on nuclear power that are taking place right now across the globe.
In the UK nuclear industry, a vendor such as Hitachi, which has expertise in design and construction of nuclear plants, has to take a big stake in a power generation business to operate. EDF’s acquisition of British Energy in 2009 brought it eight of the UK’s sites, making it far and away the dominant player in the current scene.
But it is no longer all about EDF. In what is a significant move for the whole industry, Hitachi is now on the brink of its biggest venture in nuclear.
Last October, Hitachi purchased 100 per cent of Horizon Nuclear Power following its sale by German parent companies E.ON and RWE. This deal provides Hitachi with sites in Anglesey in Wales, and south Gloucestershire in England, as well as rights to build up to six reactors. Two or three plants are plannedfor each, generating from 2800-4200 MW per site.
The move will create as many as 1000 permanent jobs at each site, each of which is likely to have a 60-year operating cycle, and the resulting energy will power 10 million homes. During the construction phase the peak workforce could be in the region of 3000-6000.
The move was the start of a 100-year commitment to the UK by Hitachi, with a vision to achieve a long-term, secure, low-carbon and affordable energy supply at its heart.
The Horizon purchase was dubbed the start of “a new generation of power reactors” by the press. This narrative continued with last month’s news that EDF had been granted planning permission for Hinkley Point C in Somerset.
This will be the first power station to be built in the UK for two decades. This, plus the proposed Nugen power station in Sellafield, are a direct result of the government’s restructuring of the energy market to attract private-sector investment.
It has been a long process, starting with the 2003 Energy White Paper, which declared that nuclear’s “current economics make it an unattractive option for new, carbon-free generating capacity”.
But the realisation that all but one of the current nuclear facilities will have come to the end of their lifespan by the early 2020s brought back the idea of low-carbon nuclear in the energy mix, along with the backdrop of North Sea oil depletion, carbon reduction targets and intermittent supplies generated by renewable energy. The near-bankruptcy of British Energy, which was bailed out in 2004, also helped to force the issue.
Following this period of thinking time, the policy shift came with the 2006 Energy Review, which addressed the importance of reducing CO2 emissions and reducing dependence on imported energy. This was cemented with the 2008 White Paper, under the then Prime Minister Gordon Brown, which gave the go-ahead for a new generation of power stations on up to 10 sites. Then came its seamless absorption into the coalition’s 2011 national policy statements for energy, which made clear the government’s position on the importance of private-sector investment.
Hitachi sees the UK as a logical international hub for its nuclear business operations. The March announcement of the government’s own Nuclear Industrial Strategy – with around £33 million promised to help the industry compete in a global market – has served to confirm that the UK is among Europe’s leading nuclear champions.
This commitment promises long-term benefits for the economy, through investment and training of engineers and partnerships between organisations such as Hitachi and UK universities. But the UK has only been dominant since 2011, when the effects of the Fukushima accident revealed an altered European landscape that is likely to remain in place for a few years to come.
Nuclear in Europe
|Construction is underway at Hitachi’s fifth ABWR Shimane 3 plantin Japan|
New developments need to be tied in with government policy to succeed. In Europe, the fact that many European utilities are at least partially government-owned should help nuclear development. Though upfront and decommissioning costs are large, nuclear power plants are relatively cheap to run. Thus nuclear appeals to countries looking to end dependence on unstable or politically-insecure supplies as a cost-efficient long-term energy source.
A number of Eastern European countries are looking at the nuclear option, partly as security against overreliance on Russian gas. Bulgaria has plans for a reactor and Slovakia has two units under construction, while Slovenia and Croatia, which share a plant, are planning a second. Poland has launched a request for a proposal for its first two nuclear plants, and Lithuania has plans to build a new nuclear plant with Hitachi GE having closed its last nuclear reactor in 2009.
For western Europe, the “nuclear renaissance” has taken off, but has slowed a little of late. France has traditionally been the most prolific consumer of nuclear: 75 per cent of its electricity is generated this way. In 2011, its overall production was 423.5 TWh, second only to the US, which produced 790.4 TWh the same year. France is the world’s largest net exporter of electricity, from which it generates €3 billion ($3.9 billion) a year.
As with any infrastructure project of this magnitude, however, there can be hurdles to overcome. France’s new third-generation reactor has experienced delays and budget overruns. Finland, which has four plants over two sites, has similar issues with its fifth reactor, now expected not to be ready in 2014.
In Germany, which saw the most dramatic post-Fukushima reaction, nuclear has been wiped well and truly off the agenda, with eight of the country’s 17 nuclear reactors shut down as a result of political and public reaction to the accident. The country, which had generated one quarter of its energy from its 17 reactors, now plans to replace nuclear with renewables at an estimated cost of some €1,000 billion. But it begs the question: is this really practical, or even achievable?
Post-Fukushima, the situation in Japan has been changeable. Following an immediate “no to nuclear” policy, the new central government, elected in December 2012 and led by Shinzo Abe, is now beginning to turn towards a pro-nuclear stance.
|Hitachi hopes that its nuclear turbines will soon be turning in the UK|
However, the fast-growing economies and rapidly-rising energy demands of Asia mean that this is where the greatest demand lies. India and Pakistan have both had nuclear capability since the early 70s, it has been on the cards in many smaller Asian countries for some time. Vietnam, heavily dependent on hydroelectricity, has plans for up to 10 nuclear plants, which could come online by 2020, financed mainly by the Russian government.
There is also an agreement to establish another site, led by a Japanese consortium by the year 2020. The Thai and Malaysian governments are watching closely and are expected to follow if the project succeeds. In the UAE, a South Korean consortium has won the right to build four units in Abu Dhabi by 2020, with construction work already started.
China is the fastest-growing market in nuclear power generation – with plans for up to a six-fold increase in capacity by 2020, and 28 reactors under construction. The US has plans for 13 new reactors, for some late third-generation plants. South America has just six plants: two each in Mexico, Brazil and Argentina. The latter two countries both have plans for new reactors.
The whole industry has learned lessons from Fukushima. Climate change means more unprecedented weather events, and we should not limit our imagination when thinking about what could happen next. The human cost of Fukushima has rightly led to a shift towards re-examining safety features. Hitachi believes that its power stations will have the highest safety levels in the world. ABWR technology now has enhanced safety functions, which relate particularly to the function of cooling the reactor. Over time, as nuclear’s safety record continues to recover, public opinion will become more favourable and the industry itself will gradually build up confidence.
The UK’s nuclear industry is in a strong position in that it is supported by both government and public opinion. In July 2012, 63 per cent of people supported nuclear power, according to a survey from YouGov, while later figures show 40 per cent of people thought that the government should introduce more of it.
On the back of this major expansion into the UK, we now have an opportunity to show the world that nuclear is not just essential for a low-carbon future, it is desirable as well.
|Masahiko Nakane is the executive general manager of Hitachi Europe’s Nuclear Power Group.|
The Horizon acquisition
The Horizon bid involved competing technologies, with Hitachi-GE’s ABWR technology coming out on top. ABWR was devised with General Electric and Toshiba under a joint venture. A new generation of BWR technology currently being used at four sites in Japan, ABWR is the only example of the “new wave” technology in operation.
The system has a number of advantages over alternative technologies: it operates under relatively low pressures and temperatures, with a high fuel economy, simplified design and lower staffing and maintenance costs. It also has a construction record of being on time and on budget. While Horizon will be the operator, Hitachi-GE Nuclear Energy will manage the engineering, manufacturing and construction, with co-operation from others such as Babcock International and Rolls-Royce, which have signed memorandums of understanding to join Hitachi to plan and deliver the programme.
This purchase marks Hitachi’s first significant stake in a nuclear development company, and gives us the expertise that we need to operate our own plant. Other investors will be invited to join at a later date. While Hitachi has been a developer of nuclear technology for more than 50 years, a major focus has been on building its domestic market, so this purchase has helped us meet our goals of expanding our global footprint.
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