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Horizon nuclear sale vital to avoid skills drain

The energy minister has admitted the Horizon nuclear consortia must be bought within months to avoid a skills drain, despite insisting UK new nuclear plans are “world-leading”.

Speaking at a DECC select committee hearing, Charles Hendry insisted that the timeline for construction of nuclear plants, formerly led by Horizon partners E.On and RWE Npower, could be accelerated by consortia with greater financial muscle.

He said that there was a “window of a few months” for bids to be finalised to ensure the local nuclear workforce is maintained and specialist skills are retained that would “drift away” if the timeline was dragged out.

He added: “They have two sites that are very good potential sites for development. Wylfa is exceptional and there are other people looking at those sites that we hope to come forward with investment.

“It was certainly disappointing [that Horizon pulled out] but I don’t think it derails the new nuclear programme. We see significant interest from new companies coming forward so it could lead to an acceleration of that programme of work through their additional resources and skills.”

E.On chief executive Dr Tony Cocker had told the committee the decision to withdraw was “down to the financial firepower of the company”.

He said: “A number of issues have affected our financial performance as a company over the last two to three years. Nuclear investment is extremely long term. There is a substantial investment for a long period before you get a return on investment.”

Mr Hendry was speaking as fears over EDF Energy’s plans at Hinkley Point C resurfaced after reports that the Kier/Bam Nuttall £100m earthworks contract had been delayed to the second half of the year.

Several contractors have told CN they are being left in the dark as to when contracts will be awarded, with bidders for the £1.2bn main civils deal now expecting a decision by the end of May.

Contractors are also waiting for clarity on contracts including marine works for 11 km of cooling water tunnels and a preferred bidder for the temporary jetty.

EDF Energy’s commercial director in charge of procurement Alan Cumming is understood to have left the company, however it has continued with new procurement after it issued ITTs for pre-qualified contractors in the past month for work including the Cannington Bypass, the Hinkley Point and Bridgwater Campuses and four park and ride facilities.

Sources close to the project insisted that privately EDF was not wavering in its commitment to the project, however several expressed concern at the impact of nuclear consortia pulling out of new build projects.

One source said: “People are not as confident as they were two years ago that new nuclear will definitely happen. Fukushima had an impact but it is more about the policy framework and long-term revenue security that is the problem.

“There’s also a lot of work in decommissioning so contractors will be asking why am I chasing new build work when I could put my resources into other workstreams that are more likely to happen?”

Meanwhile EDF Energy chief executive Vincent de Rivaz addressed the Nuclear Development Forum, chaired by energy secretary Ed Davey today.

He said: “Over the coming weeks and months, our focus has to be on detailed discussion of the [Contracts for Difference] – in particular the five main attributes: Price; duration; change of law; payment model; indexation.

“With the right level of commitment, we can reach agreement and achieve an outcome that will be good value for the nation, electricity consumers and investors.”

In response to CN enquiries, an EDF spokesman said: “With our partner Centrica we are progressing with a strong and credible new nuclear project. Clearly our final investment decision depends on having a profitable project which meets the financial targets.”

EDF also said it would undertake initial consultation on Sizewell C by the end of this year.

Readers' comments (1)

  • Charles Hendry of course raises some good points here. Securing a future for Horizon, and the nuclear builds at Oldbury and Wylfa, will provide fantastic opportunities for new jobs and vital new skills in the UK’s construction industry.

    But we must also remember that the new nuclear builds at Sizewell and Hinkley Point C were scheduled to happen before those, and still look very likely to go ahead. These projects alone will help to create around 50,000 new jobs – 60% of them in the construction sector. And already, CITB-ConstructionSkills has committed £2m of funding and will work with the Nuclear Energy Skills Alliance, to ensure that the right skills for the industry’s growth will be delivered through these projects.

    Furthermore, the Government’s wider infrastructure plan, which includes re-juvenating the nation’s courthouses and a new generation of garden cities, will also help to ensure that a ‘skills drain’ does not happen in the industry.

    Mark Farrar, Chief Executive, CITB-ConstructionSkills

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