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The publication earlier this month of the National Infrastructure Commission鈥檚 first 30-year assessment of the UK鈥檚 infrastructure needs has the potential to be a landmark moment for construction. The commission (NIC) was set up by former chancellor George Osborne in 2015 to take the politics out of big infrastructure decisions 鈥� no longer, in theory, should big calls be subject to ministerial fiat on the basis of opaque advice from civil servants given behind closed doors. Rather, experts should scientifically consider all the options, publish their conclusions and dare the government to differ.

All in all, it is the epitome of evidence-based policy-making that the industry has been arguing for. 鈥淚t鈥檚 a hugely important document, and something we鈥檝e campaigned for the best part of a decade for,鈥� says Alasdair Reisner, chief executive of the Civil Engineering Contractors鈥� Association (CECA).

But here鈥檚 the rub: the NIC鈥檚 assessment appears to contradict the government鈥檚 avowed policy on building a new generation of at least five nuclear power stations, which had been set to deliver a 拢45bn pipeline of work with just the first three. Instead, the National Infrastructure Assessment (see 鈥淜ey recommendations鈥�, below) concluded that investment in renewable technology 鈥� particularly offshore wind turbines 鈥� was the most cost-effective way to meet future demand for low-carbon power.

Its publication comes less than a month after the government pledged 拢200m of funding for a 鈥渟ector deal鈥� for the nuclear industry, predicated on building up the skills necessary for this new-build programme. And just five weeks ago, business secretary Greg Clark announced that the government was considering taking a direct stake in construction of the next power station in the pipeline, proposed at Wylfa in north Wales. Clearly, this publication raises all sorts of questions about whether the government will remain committed to this programme, or whether new-build nuclear is instead a zombie sector just waiting to be officially killed off.

 

The NIC鈥檚 assessment does not call for the end of all nuclear new-build aspirations. But the direction of travel is clear: its prediction is that the cost of an energy system heavily reliant on nuclear will, on current terms, be marginally more expensive than one powered 80%-90% by other renewables, and 鈥� importantly 鈥� that the cost of renewables is much more likely to fall in future and thus ultimately work out significantly cheaper. It is only because of all the uncertainties inherent in these predictions that it recommends continuing with nuclear at all, albeit on a 鈥済o slow鈥� basis, so as not to entirely lose capacity in the industry in case the programme has to be fired up again.

The assessment says a minimum of 50% and as much as 90% of UK electricity should come from renewables such as wind and solar power by 2050. And hence, that no more than one further nuclear reactor should be given the go-ahead before 2025. This, it says 鈥渨ill allow the UK to maintain, but not expand, a skills base and supply chain [and] to pursue a high renewables mix [鈥�] without closing off the nuclear alternative鈥�.

This may sound like a nuanced shift, but for those in the sector it is very radical. Few outside of environmental lobby groups have ever proposed a UK electricity generation sector reliant 80%-90% on renewables before. Richard Lowe, director of power in Aecom鈥檚 environmental division, welcomes the emphasis on renewables but questions how realistic it is. 鈥淥thers such as the Committee on Climate Change have done their own projections as to what is realistic, and I wouldn鈥檛 say this is the midpoint of the range 鈥� it鈥檚 very much at one end of the scale.鈥�

What the NIC鈥檚 team has reacted to is a dramatic fall in the price of renewable technologies, particularly offshore wind, alongside a steady maturation in the technologies needed to balance the inevitable intermittency of renewable power generation. Around 30% of UK electricity now comes from wind and solar 鈥� up from 12% just five years ago. And where nuclear power station Hinkley Point C required a guarantee of being paid 拢92.50 for every megawatt-hour (MWh) of electricity produced to secure investment, the most recent offshore wind farms brought to market, Moray Offshore and Hornsea 2, required a 鈥渟trike price鈥� of just 拢57.50 per MWh. This is a fall of more than 60% compared with the first offshore wind plants developed four years ago.

Furthermore, the NIC says it has factored into its assessment the cost of balancing the intermittency of renewables through storage, smart grids and interconnectors that will allow energy to be imported when necessary. Paul Dorfman, senior research fellow at the UCL Energy Institute, says: 鈥淭he notion that renewables are too intermittent, or too hippy or too lefty, is gone. The technology is there.鈥�

Serious blow

What many supporters and critics of nuclear power agree on, too, is how radical the NIC鈥檚 prescription would be for the nuclear new-build sector, which has benefited from cross-party political support for the best part of a decade. Nuclear critic Dorfman says: 鈥淭he NIC has clearly stated it鈥檚 time for everyone to get out of nuclear and embrace the renewables revolution.鈥�

Horizon Nuclear Power鈥檚 Wylfa scheme, as the only one in the pipeline to have advanced far enough to submit a planning application, would be the one further reactor beyond Hinkley allowed. This means that plans from the likes of EDF, China General Nuclear, Horizon and Korean state nuclear firm Kepco for power stations at Moorside, Sizewell, Bradwell, and Oldbury (see 鈥淣ew nuclear projects鈥�, overleaf), could all effectively be put on hold.

While none of these were expected to submit planning applications imminently, neither were they expecting to have to wait seven years to do so. Former MP Tim Yeo, chair of pro-nuclear lobby group New Nuclear Watch Europe, says: 鈥淚f  this is taken on by government, it鈥檚 a serious blow. You鈥檙e not going to get people to invest in their supply chains on the basis of only one nuclear plant coming forward. The existing investors might just walk away if the government is essentially saying 鈥榝orget it chaps, there鈥檚 no future for you here鈥�.鈥�

Aecom鈥檚 Lowe says it could have a chilling effect on those working up plans. 鈥淭his sort of message would have a lot of shockwaves,鈥� he says. 鈥淵ou would have to presume that schemes at Oldbury, Sizewell, Bradwell and Moorside would be affected. Most are expecting to submit applications in the next couple of years. It鈥檚 going to cause Korean and Chinese investors to have a long, hard look at whether they still make that investment.鈥�

This, of course, could be damaging to those construction companies that have set their sights on winning the big civil engineering and building contracts that inevitably accompany the construction of new nuclear power stations. CECA鈥檚 Reisner says this presents his organisation with a dilemma. 鈥淎s an industry we鈥檇 prefer that new nuclear goes ahead, but, having campaigned for the independent infrastructure assessment, we recognise the importance of not reopening the debate in one area just because we don鈥檛 like the answer. If we challenge one thing, then the whole document becomes open for debate.鈥�

Garbage

It鈥檚 already clear, however, that other supporters of the nuclear sector will not share Reisner鈥檚 reticence in challenging the NIC鈥檚 findings. The government has between six months and a year to respond formally to the NIC鈥檚 assessment, but does not have to implement its conclusions, meaning opponents have an opportunity to make their case. Aecom鈥檚 Lowe says the report takes 鈥渁n optimistic view鈥� of the potential for interconnector and battery technology to solve the intermittency issues inherent with renewables. 鈥淏atteries are getting better but it may be 10-15 years before we can deploy them at scale. At current prices they鈥檙e simply not deployable.鈥�

New Nuclear Watch鈥檚 Yeo says the report鈥檚 conclusions, if implemented, would pose a 鈥渟ignificant risk鈥� to the UK鈥檚 energy supply. 鈥淚t鈥檚 premature and dangerous to think a modern economy can run on renewables without significant alternative supply. There seems to be slight underlying bias in this report.鈥�

Tim Stone, chair of specialist insurance firm Nuclear Risk Insurers, says he was 鈥渞ather surprised鈥� by the assessment鈥檚 views on new nuclear, which he says 鈥渄on鈥檛 at all correspond with work by the Energy Technology Institute on Nuclear Cost Drivers nor the experience in Abu Dhabi, where a previously entirely non-nuclear country has delivered exceptionally good outcomes in both cost and schedule鈥�.

He says: 鈥淭he NIC views seem somewhat ill-informed, misunderstood or perhaps out of date. It seems as if they don鈥檛 believe that the UK, with its nuclear history and supply chain, can ever match what Abu Dhabi has achieved.鈥�

Stone adds that it doesn鈥檛 appear the assessment has taken whole system design into account in its costing of renewables, and points to recent power outages in South Australia where there is a high reliance on renewables.

One senior industry source goes further, describing the assessment as 鈥済arbage鈥� and predicting that the government will ignore it.

The NIC, of course, disagrees. A National Infrastructure Commission spokesperson points out that its assessment allows for one further power station and that the 鈥減ause鈥� on others is designed to give the UK flexibility to respond in the best way to future energy needs. He says: 鈥淥ur findings are based on the latest robust evidence that takes into account the evolving technologies, falling prices in the renewables sector and relatively small comparative price falls in nuclear generation.鈥�

Reality

But while the assessment is getting the nuclear sector hot under the collar, some say the timeframe indicated by the report for new projects simply reflects the reality of how long these schemes take to plan and finance. The experience of Hinkley Point, now under construction, is of such protracted delays that the original date for it to be up and running, 2017, passed before even the first concrete was poured. EDF now says it won鈥檛 be generating power until at least 2025.

In the 12 years since the then prime minister Tony Blair reversed government policy to back new nuclear, Hinkley is the only deal to have got over the line. The other schemes have faced major challenges, with many changing ownership in recent years. Consultant Alistair Smith, formerly nuclear development director at contractor Costain, says this experience means most contractors have already lost faith. 鈥淎side from those involved in Hinkley, contractors have lost interest and have moved on to more exciting things. Everyone鈥檚 been burnt so many times that it would take a lot to convince a chief executive to go for another project again.鈥� UCL鈥檚 Dorfman says: 鈥淭he market is in flight from nuclear.鈥�

Ironically, the sluggish progress on developing nuclear projects may give the government room to continue its current policy without requiring an embarrassing outright rejection of the NIC鈥檚 findings. Considering that it took Hinkley six years from submission of planning application to final go-ahead, developers might be tempted to push on with plans despite a prohibition until 2025, if given enough reassurance from government that it will look favourably on nuclear plants after that. Ben Lewis, infrastructure and energy director at planning consultant Barton Willmore, says: 鈥淚 don鈥檛 think the government will have to change tack. In reality the projects have been coming forward in a trickle not a flow. You could say this timing is just a reflection of reality.鈥�

The NIC鈥檚 assessment makes clear beyond any doubt that renewable energy has arrived in a way few thought possible even a decade ago. The likes of Dorfman say spending money on more renewables and energy efficiency measures would create far more stable and certain construction work than lumpy, hard-to-fund nuclear projects. But uncertainties remain around the ability of renewables to provide a base load of energy generation, despite technology advances. The government has a year to decide whether it thinks it can trust the NIC鈥檚 advice.