The grinding progress towards breaking ground for Hinkley Point C has once again made national headlines this month with a fresh challenge to its rationale from Austria’s Chancellor heading to the European Court of Justice. This adds weight to a complaint filed only days before by an alliance of German and Austrian renewable energy companies.
With all the controversy and endless mithering about the generosity of Hinkley’s contract for difference (CfD), the cost of the project and whether or not its construction contravenes EU state aid laws, you’d be forgiven for believing that Hinkley represents the be all and end all of nuclear new-build in the UK. But a meeting with Alan Raymant, chief operating officer at Horizon Nuclear Power, reminds us firmly that this is far from the case.
Formed in 2008 and with an annual turnover of £135 million, Horizon owns the sites at Wylfa, Anglesey and Oldbury, Gloucestershire, which make up half of the UK’s current nuclear new-build prospects alongside EDF’s prominent Hinkley Point C and Sizewell C programmes.
Raymant was appointed to his role in 2009, stepping on in a career spanning renewables leadership at Eon and directing operations and assets for Central Networks.
Doggedly convinced of the necessity of nuclear power in the UK’s future energy mix, Raymant is philosophical about the tortured, high-profile progress of Hinkley, and methodically focused on moving Horizon’s own projects forward, come what may.
Addressing the most recent furore over Hinkley, Raymant comments that Horizon was “disappointed but not surprised” by the challenge from Chancellor Werner Faymann, which suggested the project’s subsidies were not “in the interest of all EU member states”. The legal wrangling is “a matter for the UK government”, he adds, although there’s a feeling that such quibbles should have been resolved last year with the results of a lengthy investigation into Hinkley’s state aid rules compatibility by the European Commission.
“We’d like this issue resolved as soon as possible, but it doesn’t dent our confidence that we’ll be able to reach acceptable agreements with government for Wylfa Newydd,” shrugs Raymant.
Achieving those agreements will sit at the centre of Horizon’s outward-facing strategy this year as it looks to clinch its own CfD for its Welsh project, which is being pushed ahead of the Oldbury initiative. Raymant explains that this prioritisation will focus and optimise internal resources but also ensure that “we’ve got a concept that works; that financially, is sufficiently attractive to investors” so that it can be rolled out more quickly a second time – and perhaps more.
With a Conservative government in place, Raymant is optimistic about negotiating a satisfactory deal for Wylfa. The Conservative manifesto committed to support nuclear new-build and Raymant believes that energy secretary Amber Rudd not only provides continuity of experience in the Department of Energy and Climate Change, but also “clearly understands the importance of having a balanced energy mix in order to address both the affordability and decarbonisation agendas and that nuclear is central to that”.
While negotiations with government rumble on, however, there’s plenty to keep Horizon’s rapidly expanding workforce busy. There’s a good three years’ work yet to be done developing the Wylfa plant, for instance. This includes upgrading the site’s infrastructure requirements and getting a plethora of permits which conjure a mountain of paperwork and span conventional planning consent, environmental permits and all the nuclear licensing that is required before anything can actually be built. Foremost among these is the generic design assessment (GDA) process for the proposed reactor technology, which will of course be provided by Hitachi GE Nuclear following Hitachi’s £700 million acquisition of Horizon in 2012.
The GDA process was introduced by the last Labour government to make the approval process for new nuclear technologies in the UK more effective. Once approval is given to a particular technology under this regime, developers are authorised to use that technology across all sites, rather than having to go through a laborious inquiry process for every location where it intends to use it. In principle, this should make future nuclear new-build projects run more smoothly and minimise public expense on drawn-out technical inquiries for technologies that are already known to be sound.
That said, the GDA process is itself a lengthy and intense affair – necessarily, of course, since it looks to guarantee the safety of nuclear energy generation. Horizon started the four- to five-year GDA process in 2013 and hopes to complete it by the end of 2017. Since Hitachi’s boiling water reactor is commonly used in nuclear energy plants around the world, and is only a new technology for the UK, Raymant is fully confident it will sail through scrutiny of its safety systems and performance.
Having the assurance of such a widely used technology is a major boon to Horizon, says Raymant, who recalls uncertainty over the technology choice back in the days of Horizon’s Eon-RWE ownership – before the Fukushima disaster and Germany’s decision to bring an abrupt end to its nuclear industry, triggering the sale of Horizon.
“We were looking at both the AP1000 and the EPR,” says Raymant. “We’d gotten to the point in late 2011/early 2012 where we really needed to make that decision in order to develop the permits.” But step forward six months and the decision was made for it, giving “a major advantage” to Horizon’s projects. Hitachi’s nuclear power generation business is a strong vertical within the global group whose 2014 annual report shows the segment’s profits increased 409 per cent to yen (¥) 152.9 billion compared with the financial year ending 31 March 2013. Hitachi says this represents a contribution of 7 per cent to its global revenues of ¥9,616 billion (c£50 billion).
However, with every upside there comes a downside, and Raymant allows that what Hitachi brought in terms of technology certainty has been countered to some extent by a lack of experience and knowledge about developing and operating nuclear plant – things which its German former owners had in abundance.
This means that there’s now a bigger job in terms of “developing the organisation”. “We are a developer,” explains Raymant, and Hitachi is a manufacturer – “we will have to build an organisation which will ultimately own and run a nuclear power station”.
This poses a challenge in terms of recruiting appropriate skills at a time when engineering generally and the nuclear industry in particular frequently complain of debilitating skills shortages. But Raymant is buoyant and says that, so far, Horizon has successfully – if not easily – attracted the people it needs, and lots of them.
From around 90 employees in 2012, headcount has increased to just over 300 today. By March next year, another hundred people will be added and between 2019 and 2022 there will be a surge as operating staff are brought on, inflating the organisation to more than 1,000 people.
“Deep”, specialist nuclear skills unsurprisingly pose the biggest challenge in terms of recruitment, says Raymant, and can require a global trawl of the talent pool. Where possible, however, Horizon is looking to recruit, and build, skills locally in order to cement its place in the North Wales economy and build strong ties with the community in which its 2.7GW plant will sit.
With a vocal global community of nuclear energy opponents always ready to leap on signs of adversity, nurturing relationships with communities around nuclear energy plants is an important part of any developer’s strategy and one that Horizon certainly takes seriously, says Raymant. In addition to bringing locals into the fold via employment, it runs a number of formal and informal stakeholder engagement groups through which it can keep people up to date on plans – not only for the plant itself but also Horizon’s intentions for managing traffic flows, housing construction staff, and environmental mitigation – and gather feedback or concerns.
Having this consultative mechanism in place will allow Horizon to prove it has taken the right steps to placate worry and act as a good neighbour to the Anglesey community should it find criticism or barriers being raised against plant progress in the future. It’s a necessary safeguard, although on the whole, Raymant is not ruffled by the idea of opposition to nuclear power. He claims public opinion generally has been “net positive” in favour of nuclear new-build for some years now and on Anglesey in particular Raymant says there has been “consistently strong support for what we are doing”. In part, this is helped by familiarity with life in the shadow of a nuclear power station – Wylfa A has been in operation since 1971.
In addition to public stakeholder engagement for Wylfa, the project has led to the creation of groups for collaboration with business and industry peers whose activities rub up against plant development. The Energy Island working group, for instance, includes National Grid, which is in the process of gaining permissions to upgrade the existing Wylfa power station’s 1GW grid connection so that the new plant can operate to maximum capacity.
Raymant says he’s aware that there’s ongoing discussion about how much of this connection should run overground and how much underground. “National Grid will have to come to an accommodation which meets all the stakeholders’ needs as well as their own from a regulated utility perspective,” he comments, but clarifies that the approvals process is completely outside Horizon’s sphere of influence.
“The level of interaction and co-ordination is strong, but we are separate companies and it is a separate process. Formally, they are running their own show.” The Energy Island stakeholder group, however, gives the opportunity for both parties to make regular presentations to the other, ensuring that they are working appropriately in parallel.
“We don’t have a role in their process, but clearly we are integrated with it because we have a connection agreement with them. So it’s very important for us to understand where they are in their process – and for them to understand where we are in ours,” Raymant sums up.
With the technology in place, the organisation coalescing, site technicalities being addressed and the red tape being studiously observed, Horizon’s final task will be to put a commercial and financial framework around its whole package so that “we have a robust business case that we can attract investors into”. This thought brings him full circle, back to the importance of forthcoming negotiations with government and setting Wylfa’s strike price – an agreement that will be “fundamental to attracting finance, whether that is debt finance or equity finance”.