News focus: Making the switch to nuclear

21 June 2010

21 June 2010 | Lindsay Clark

As part of the US President’s recent Oval Office slating of BP, Barack Obama used the oil spill in the Gulf of Mexico as an opportunity to bring public opinion in line with his views on “clean energy”.

For him, this includes nuclear power, as his pre-election promises and subsequent Climate Change Bill demonstrate.

In the UK, the Conservative-Liberal coalition government is also continuing with Labour’s promise to create new nuclear facilities – the first for decades. Groups set to benefit are EDF and Horizon, a joint venture between E.ON and RWE.

Horizon believes its programme alone will result in a £15 billion investment, with sites being developed in North Wales and south Gloucestershire. But, the industry is, understandably, tightly regulated and electricity is not expected to be generated from these sites until 2020.

Dominic O’Brien, procurement manager at Horizon, says the lead-time caused by waiting for planning, safety and environmental approval can make it difficult to nurture a strong supply base to support the company’s build programme. “Uncertainty in the investment market is one of the major challenges,” he says.

To encourage supplier involvement, Horizon has embarked on a series of training programmes, drop-in events and conferences to ensure companies from industries as diverse as shipbuilding, petro-chemical and water equipment understand what is required to work in the nuclear sector. “We are developing a strategy which tries to identify prospective entrants and help them to qualify themselves to enter the nuclear industry,” he adds.

French firm Areva and the US’s Westinghouse are the main contenders to supply nuclear reactors for the new plants. Horizon is holding direct meetings with both firms, but O’Brien says it is also interested in suppliers further down the chain. “We want to be present in the vertical supply chain in order to scrutinise the process, which is part of our regulatory requirements.”

At the other end of the nuclear industry is the safe decommissioning of existing plants, itself a multi-billion pound industry. Ron Gorham, head of supply chain optimisation at the Nuclear Decommissioning Authority (NDA), says his quest to build a supply chain is bolstered by greater investment in new power stations.

“As the new build agenda gathers pace, the supply chain sees that as another opportunity. If they can aggregate decommissioning with new build, there is an extremely large agenda and we want them to take advantage of it,” he says. “We have been working with trade associations and their members to help them understand those cross-over opportunities.”

The difference between this and the new-build programme is that the NDA must go to the axe-wielding chancellor for its £2.8 billion budget.

Pressure on public spending will make it necessary for suppliers to co-operate with each other to drive down costs. “That’s the big challenge the supply chain needs to help us with,” Gorham says. “The industry needs that level of co-operation from everybody – that is from the top of the hierarchy down to SMEs. We want the nuclear market to be seen as the market of choice by the supply chain.”

Uncertainty among suppliers was underscored last week as the government was set to withdraw an £80 million loan to Sheffield Forgemasters, which was designed to help the manufacturer develop the technologies required to build nuclear reactor components.

Gorham says the withdrawal of any government support is bound to be a concern in the supply chain.

In May, Japanese manufacturer Toshiba, which builds nuclear power stations, demonstrated the international nature of the market, with a $100 million investment in USEC, a supplier of enriched uranium – the substance used to produce nuclear power. The global expansion of nuclear power could be sufficient to assure suppliers’ interest, despite wavering government commitment.

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