Britain to Spend $255m to Match Japanese Forging Capability

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If any more certain evidence was required that the UK government is finally facing up to the impending disaster that the energy sector has become then last weeks announcement that the UK is taking steps to plug gaps in its nuclear industry supply chain was it.  The country’s foremost forging specialist Sheffield Forgemasters is to get government loan guarantees amounting to £170m (US$255m) to build a 15,000 ton heavy steel forging press required to make the main reactor containment components. The package is to be made up of £35m from the European Investment Bank, £20m from other bank loans and £50m from the American Engineering group Westinghouse as a down payment on parts to be made for nuclear reactor projects the company has won for construction later this decade.

The first point is Britain has left itself woefully under-invested in the energy sector due to government dithering for much of the last decade, a combination of uncertainty about future emissions markets and political short-termism meant the Labour government, first of Tony Blair and then Gordon Brown, put off making crucial decisions about long term energy security. Nothing like an impending blackout by the latter part of this decade if decisions weren’t made to replace at least the country’s nuclear reactors. The authorities are now in a flurry of activity awarding contracts for replacement of Britain’s aging nuclear power stations, most of which will have to be decommissioned by the end of this decade along with older coal fired power stations that fail to meet EU emission standards. The total loss of generating capacity is said to be over 22 GW.

But Britain finds itself in a dilemma, having started the commercial nuclear industry by building the world’s first commercial nuclear reactor in 1956 at Calder Hall, Sellafield (electricity generating fission reactors had been built in the US and Russia prior to this for experimental and military purposes). Britain was one of the first countries to widely adopt nuclear power in the 1960’s and for the next 25 years the US, Britain, France and Japan built sufficient reactors to meet between 20 and 80% of their electricity needs. Although some countries have continued to replace aging reactors and hence maintained an active domestic supply chain, Britain has not built any new reactors or played a part in the admittedly greatly reduced international market for more than 20 years. Consequently the supply chain has not been able to justify the investment to keep up with the industry’s requirements. And now faced with the construction of 8 possibly 10 reactors totaling 16.2 GW, it could have to source up to 50% of the reactor components overseas. The forgings for example can only be made by one mill in the world at the moment, and that is in Japan.

There are some who have criticized support for the nuclear industry in this way, even though the government is largely providing loan guarantees rather than actual loans themselves, meaning the company will have to pay back the £170m at commercial rates to their lenders over the term of the loan. But when these guarantees are compared to the level of funding the renewables market receives, it pales into insignificance. A House of Lords report summarized the UK subsidy situation: Renewable generators currently receive around £1.25 billion per year from increased electricity prices caused by the Renewables Obligation, Emissions Trading Scheme and Climate Change Levy, mostly from consumers. Taxpayers fund the Research Councils’ £30 million a year on renewable energy research. They pay to the Environmental Transformation Fund, about £130 million a year on grants to renewable generators and farmers growing energy crops. The total support for renewable generation from taxpayers and from energy consumers, is now of the order of £1.4 billion a year. Under the Energy Act 2008, the UK system is being modified from 2009 to provide greater incentive to use offshore wind, biomass and emerging technologies. The government agency responsible, Ofgem estimates that in the course of achieving 30% of supply from renewables it will cost consumers £6 billion per year by 2020, and the feed-in tariff for schemes up to 5 MWe will cost them £7.9 billion per year by 2030.

Such sums must prompt the question would Britain not be better advised to push for 50% of electricity generation from nuclear rather than 20% and forget about the renewable energy sources altogether? At least with this new forging capability Britain will be able to meet 80% of the content from home grown sources regardless of whether they opt for French EPR or American Westinghouse AP1000 designs.

–Stuart Burns

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