With £40bn investment in new nuclear plants expected by 2025, just how far down the rabbit hole will UK manufacturers have to venture before they come up grinning like Cheshire cats? Edward Machin reports on access to nuclear industry procurement contracts
A Nuclear Industry Association report into the UK supply chain’s capability to deliver a new nuclear programme, updated in 2008, concluded that 70% of the scope by value of these reactors could be supplied by UK companies — and more, given further investment. Aye, thought that might get your attention.
Lies, damn lies and statistics, though, right? Judge for yourself: EDF Energy has committed to delivering four new plants: two at Hinkley Point, Somerset and a further two at Sizewell in Suffolk.
Horizon Nuclear Power is set to build at Anglesey and Gloucestershire while a joint venture of Iberdrola, GDF Suez, and Scottish and Southern Energy has acquired land ready for new build in West Cumbria.
Case Study: The clean up guys
With many focusing solely on future supply chain cash cows, managing the maintenance process once nuclear power stations reach the end of their working lives remains an equally vital area of opportunity for UK based companies. One such example is industrial service provider Hertel’s work at Calder Hall, Sellafield, which stopped generating power in 2003.
An immediate impact of stopping generation was the effect on the asbestos insulation and lagging.
Previous inspections had shown that the asbestos was safe; once power generation stopped, however, the subsequent loss of heat meant the asbestos soon started deteriorating.
Neither economical nor practical to repair or replace the insulation, a decision was taken to remove all the asbestos from the heat exchangers.
The specialist asbestos removal division of Hertel, which had been providing maintenance services to Sellafield for a number of years, was appointed. More than 2,300 tonnes of asbestos was stripped and removed from site in one of the largest asbestos removal projects in Europe to date.
And while the first new nuclear plant is expected to come online in 2018, commercial arrangements to deliver new builds — including partnerships and joint ventures — are already emerging. Orders for the bulk of plant and services can be expected to start developing within two years, with construction of EDF’s Hinkley Point plant beginning as early as 2011. Unsurprisingly, then, “The UK nuclear industry is gearing up for the challenges and opportunities of nuclear new build, placing British companies in a prime position to take advantage of the opportunities which will develop,” says Keith Parker, chief executive of the Nuclear Industry Association. “The industry already directly employs some 45,000 workers across the UK, with decommissioning, waste management and ongoing operations all providing huge opportunities for UK businesses.” But what of those on the ground? Is the outlook as promising for SMEs not directly engaging with the Avevas and Westinghouses of this world — or not yet, at any rate? “The nuclear supply chain is not a ‘here today, gone tomorrow’ business activity for manufacturers,” explains Graham Balshaw of Assembly Solutions, a Bolton-based contract manufacturer of electrical cable assemblies. “The current economic climate, coupled with current thinking on energy supply and the environment, indicates that supplying the nuclear industry will be quite long-term.” Sensibly, though, he tempers the excitement of those fixated solely on the riches lining any potential supply chains. “It must be said that while the longterm outlook for manufacturers thinking of entering the nuclear supply chain is extremely promising, one must remember that the industry is not ‘order today and invoice tomorrow’.”
Peter Birtles, director at Sheffield Forgemasters International, considers the future for large civil nuclear forgings.
While there are numerous factors affecting the manufacture and delivery of the latest generation of civil nuclear power plants, arguably the most apparent is the lack of capacity for manufacture of the large and ultra-large forgings required for reactor pressure vessels and steam generators.
Compared to civil nuclear manufacture’s halcyon days — when as many as 21 stations were built per year during the period from 1979 to 1990 — there are far fewer companies operating in the sphere. The net result of this is that, out of maybe a dozen large forging plants across the globe, only seven or eight presses are physically large enough to manufacture products of the size required for first and second generation power plants such as the UK’s Magnox reactors, PWR and DWR design reactors, AGR reactors and Russia’s RBMK stations. Additionally, these critical forgings are increasing in size for the third generation of nuclear power plants: the Westinghouse-designed AP1000 stations and Areva’s EPR designs, for example.
To put the market’s civil nuclear supply and demand into context, there are 370 stations approved for build across the world over the next 25 years, with an average build rate of around 13 stations per year — but only capacity to supply forgings for seven or eight per year under current supply. This includes third generation reactors, which are likely to be the choice for the UK’s future provision. So far, the first of the third generation of reactors has yet to come online, highlighting the fact that the entire international civil nuclear programme is behind schedule.
We are now witnessing another market requirement which has to be met within a constricting time-frame from the second generation PWR stations in operation, many of which had a fundamental boiler design weakness, resulting in an inconsistent flow rate and causing premature corrosion. Those components now need replacing, and this will tap into the same sparse supply chain for large civil nuclear forgings. An additional market to new-build, this is significant, with some 20 stations in France alone each requiring replacement of three or four steam generators — only a portion of the global requirement for this remedial work.
If we also consider that the same nuclear-accredited manufacturing companies are responsible for producing the components needed by the world’s defence industry, notably for nuclear-powered naval vessels, it becomes evident that this lack of supply is not simply a problem for the world’s power requirements, but a vast opportunity for the top-level heavy engineering sector. Japan Steel Works will increase its capacity with the addition of another large press in the near future, but this only increases its monopoly of the market without completely solving the shortage of global supply. What is urgently needed is another player to enter the market to free up supply and create an element of competition. The opportunity will be lost if the market is capitalised on by other nations, resulting in a significant loss to the UK.
Go (North) West
Balshaw’s note of caution aside, when the lawyers get involved you know something must be afoot. One of an increasing number of legal service providers seeking to exploit the nuclear environment, Hammonds LLP recently hosted a Warrington-based event advising businesses in the North West as to how they can become part of the ever growing supply chain. The region currently enjoys one of the world’s largest concentrations of nuclear facilities and expertise, with over 25,000 skilled professionals — equating to half of the UK’s total nuclear workforce — employed in 300 companies across its counties.
With a number of stations earmarked for local build, and the utilities spending an estimated £8- 10bn on each, manufacturers in the area look to be sitting on something akin to a goldmine. The opportunities do not stop there, though: there are also considerable prospects arising from the UK’s legacy decommissioning programme. West Cumbria is home to the Nuclear Decommissioning Authority’s (NDA) headquarters, responsible for overseeing safe decommissioning at UK sites, while nearly 60% of the NDA’s annual £2.8bn budget is expended in the North West — primarily at Sellafield, which accounts for £1.5bn of expenditure.
Neil Burns of Croft Engineering Services is one manufacturer alive to the possibilities of nuclear sitting on his doorstep. “The industry needs to engage with small specialists across the supply chain who know what they’re talking about,” he says. “A small redevelopment or refinement by an expert can save thousands, or often hundreds of thousands of pounds, not to mention countless working hours.” Based in Warrington, Croft Engineering Services supplies to VT Nuclear (Sellafield), Nuvia (Dounreay), Strachan & Henshaw (Sizewell decommissioning), Babcock International and NSG, among others.
With so enviable a portfolio, the company’s focus must surely exist entirely around nuclear and its permutations. Not so, says Burns. “The amazing thing is that, like us at Croft, manufacturers don’t have to be nuclear specialists in order to seize a nuclear opportunity. The nuclear industry is another ‘specialised’ area of work for us in the same way that food or automotive industries require specific understanding of the manufacturing challenges they face.
“There is great capability out there to prove that the British manufacturing and engineering sector is the best in the world, and if the nuclear industry purchases locally it further reduces the carbon footprint. There are plenty of opportunities from every conceivable British manufacturing sector to supply to the nuclear industry, and these opportunities can be seized if companies use the guidance provided by organisations such as the Manufacturing Advisory Service, as well as putting a little professional effort in themselves.” Better get moving then. Not to do so? Well, you’d be mad as a Hatter.