The complexities are enormous. Putting aside all of the construction and development risks that come with building a highly regulated and technical megaproject in the energy sector (and those risks are considerable on their own), the UK is still left with a herculean – yet not insurmountable – task if it hopes to entice private investors into constructing and operating eight new nuclear reactors over the next two decades.
An industry resurrected
The problem is that the UK has, for all intents and purposes, been out of the new nuclear build game for almost a quarter of a century (the last time ground was broken for a reactor in the UK was 1988). While there is a large body of operational, maintenance and decommissioning skill in the UK, one of the most obvious repercussions of this long absence from the sector is a lack of experienced professionals capable of executing not just one, but eight or more of these projects over the coming years. And while the UK is feverishly trying to up-skill workers to fill the looming gap, it is fairly clear that some expertise will need to be imported or externally recruited if targets are to be met.
While talent can easily be imported, the creation of a supportive regulatory and policy environment for new nuclear development is a decidedly home-grown proposition. The reality is that nuclear builds transcend the remit of any individual government department or agency, and therefore requires significant collaboration and a clear vision in order to succeed in encouraging private investors and developers to participate.
The authority to act
Better still would be the creation of a single ‘Infrastructure Authority’ that could maintain a unified and strategic plan for the country and coordinate government activities across the board. Had this been in place in the UK some 10 years ago, it is most likely that the Authority – if properly empowered – would have noted the sea change that was coming, been able to respond appropriately by advocating for new regulations and policies on a timely basis, and been alive to the skills issue as it emerged over time.
Without this – or the experience in structuring and tendering new nuclear build programs – the government has been forced to develop a regulatory and policy regime that would meet the needs of the nation while also appealing to developers and investors (in part by dramatically reducing the wide array of perceived regulatory and political risk).
Yes we can
On the whole, they have largely been successful. Currently, there are three developers active in the market. Each has already invested significant capital (one is thought to have invested more than GBP1 billion) into planning, design and consultation. Clearly, they would not have taken on this investment if they didn’t think that the government could make it all work. The recent acquisition by Hitachi of Horizon Nuclear Power from its founders, Eon and RWE, was an eye-popping demonstration of the trust placed in the UK government by international investors and was described by the British Prime Minister as a “decadeslong, multibillion-pound vote of confidence in the UK”.
The Horizon acquisition is part of an increasing body of evidence to suggest that the UK will, in fact, be able to achieve their targets using private developers and investors. But the journey is not over yet. Both on the development sites and within the halls of government, more action will certainly be needed. Those looking for best practices and lessons would be well advised to keep their eyes trained on the UK.
By Tim Stone and Dominic Holt, KPMG in the UK