Half of £24bn nuclear reactor investment will go to overseas suppliers

More than £12bn of the UK government spend on two new power plants will go abroad, mainly to companies in France, a government adviser warns

More than half of the £24bn expected to be spent on the first British nuclear reactors for two decades could go abroad to foreign suppliers, a leading UK academic and government adviser has warned.

The issue is of extreme political sensitivity because George Osborne has already faced criticism for providing huge subsidies to Hinkley, which is being developed by EDF Energy of France.

“It will be seriously tough for British manufacturers to meet the needs of EDF in line with the commitment that 60% of the value of the project will remain in this country,” said Sir Keith Burnett, who is a member of the Council of Science and Technology reporting to the prime minister, David Cameron.

Burnett, the vice-chancellor of Sheffield University, said that 40% of the total value of the work at Hinkley Point atomic plant would largely go to French firms.

At least £4bn worth of spending on items such as pipes and pumps – around 15% of the project by value – will be up for grabs for the UK but only if local companies can provide the higher specification supplies required by EDF. Burnett thinks that will be difficult to achieve.

“The British government needs to continue with the help it is giving through the Innovate UK and other publicly funded organisations which help support supply companies. Without concentrated effort there are still going to be difficulties [for suppliers],” he added.

Burnett’s concerns were echoed by Jenifer Baxter, head of energy and environment at the Institution of Mechanical Engineers. She said there was a potential shortage of skilled personnel and a lack of clarity over the exact timing of Hinkley and other energy infrastructure projects.

“There is definitely a nervousness in the industry about whether companies coming into these jobs have the quality standards necessary. We do have the basic engineering skills but can we grow the specialist knowledge quick enough to meet the procurement process and timetable?”

Part of the problem is that small and medium-sized British firms have not had the opportunity to supply equipment to a new nuclear power station since Sizewell C in Suffolk was completed in 1995.

The Hinkley Point C facility in Somerset is still awaiting the final investment decision from the largely state-owned EDF and its Chinese partners, although ground preparation is already under way.

The basic earth moving, road construction and erection of buildings will be carried out by British contractors such as Balfour Beatty and Laing O’Rourke but the high-end pressure vessels and turbines will be provided by the likes of Areva of France.

It is the middle-end work which Burnett is worried about, with the added possibility that UK companies cannot take advantage of other planned UK nuclear projects by companies such as Hitachi of Japan.

EDF insisted it was still confident that Britain would win more than £14bn worth of contracts in line with its target, indicating particular confidence in those areas such as pumps and pipes highlighted by Burnett as a worry.

“Work to enable the British supply chain to compete for contracts means that more than 60% of the project by value will be spent in the UK. The project will strengthen British industry, jobs and skills with 25,000 job opportunities during its construction.

“National, local and international supply chain events over the last six years have helped UK businesses understand the requirements necessary to join the project which will restart new nuclear construction in Britain after a 20-year pause.
“This has resulted in the creation of joint ventures which could lead to further opportunities for participation in successive nuclear projects in the UK and globally.”

http://www.theguardian.com/business/2015/dec/06/nuclear-reactor-investment-pay-overseas-suppliers-hinkley-point

Doesn't surprise one bit.