post

UAE READY TO START-UP ITS FIRST NUCLEAR REACTOR. WHICH COUNTRY WILL BE NEXT IN 2020?

The first unit of the Barakah nuclear power plant in the United Arab Emirates has received its operating licence from the UAE’s Federal Office of Nuclear Regulation (FANR) and commenced loading its first charge of nuclear fuel. The start-up has been eagerly awaited, as is was originally planned for 2017. The reasons for those delays have now been overcome and the international community is confident the plant is in a full state of readiness to produce electricity.

The UAE’s nuclear programme has been subject to many international peer reviews. The International Atomic Energy Agency (IAEA) has conducted 11 such reviews, with the last two being the Integrated Nuclear Infrastructure Review (INIR) in July 2018, and, in September 2019, its emergency preparedness. In addition, the World Association of Nuclear Operators, WANO, has undertaken 30 support missions and peer reviews, the latest of which concluded that following an extensive operational readiness assessment, Unit 1 is ready for start-up. 

Mr. Mark Reddemann, Chief Executive Officer of Nawah Energy Company (Barakah’s operator), said: “Successfully completing WANO’s PSUR [Pre-start Up Review] of Unit 1 of the Barakah Nuclear Energy Plant is a testament to our commitment to the highest national and international regulations and standards. As we progress towards the secure and safety-led start-up of Unit 1, we will continue to work closely with our partners to ensure we demonstrate our readiness to receive the Operating License from the Federal Authority for Nuclear Regulation, as we work to pursue the highest standards of operational excellence.”

In a recent article entitled A Strategic Perspective of Barakah: a Success in International Cooperation, the UAE’s Permanent Representative to the IAEA, Hamad Alkaabi, said “Thanks to our visionary leadership, along with a team of remarkable experts working in close collaboration with international entities, we have worked over the span of a decade to steadily progress to become the 33rd nation to enable nuclear operations for peaceful purposes.”

The four-unit 5600 MW(e) plant is being developed jointly by the Emirates Nuclear Energy Corporation (ENEC) and Korea Electric Power Corporation (KEPCO). The four 1400 MW(e) APR-1400 units, based on the Shin Kori 3 & 4 reactors in South Korea, will supply nearly 25% of the UAE’s energy needs and save 21 million tons of CO2 emission each year. With Unit 1 completed, Unit 2 is at 93% completion and Units 3 and 4 are at 91% 82% respectively.

Another country about to embark on a new nuclear future is Belarus. Their two 1194 MW(e) reactors are Russian designed VVERs and fully constructed, awaiting the go-ahead to load their first fuel. As with the UAE, the country’s ability to operate a nuclear power plant has been subject to international peer review by the IAEA and WANO.

Bangladesh and Turkey have started construction of their first power reactors, and Egypt is well advanced in developing its nuclear infrastructure. Saudi Arabia is also rapidly developing its plans to construct two large nuclear plants, as well as smaller plants for desalination purposes.

Worldwide, new reactor construction is now at a 30-year high, with more newcomer countries embarking on nuclear programmes. If these programmes are successful, it will result in a corresponding reduction in the dependency on fossil fuels.   

About the Author

Prospect Law is a multi-disciplinary practice with specialist expertise in the energy, infrastructure and natural resources  sectors with particular experience in the low carbon energy sector. The firm is made up of lawyers, engineers, surveyors and other technical experts.

This article remains the copyright property of Prospect Law Ltd and Prospect Advisory Ltd and neither the article nor any part of it may be published or copied without the prior written permission of the directors of Prospect Law and Prospect Advisory.

This article is not intended to constitute legal or other professional advice and it should not be relied on in any way.

For more information or assistance with a particular query, please in the first instance contact Adam Mikula on 020 7947 5354 or by email on adm@prospectlaw.co.uk.

For a PDF of this blog click here

post

THE EUROPEAN COMMISSION AND POSSIBLE REFORMS TO NUCLEAR THIRD-PARTY LIABILITY INSURANCE

Prospect Group experts have recently contributed to a study completed for the European Commission on nuclear third-party liability (NTPL) insurance. The EC’s interest in more work on this topic was driven by the following factors:

  • The differing legal regimes for NTPL evident within EU member states have led to wide disparity between the amounts of statutory financial security required by nuclear operators to pay for compensation to off-site victims that suffer nuclear damage (perhaps from a severe accident).  For EU countries with nuclear power plants, these amounts range from €43.9 million in Bulgaria to €2.5 billion in Germany (the UK amount is currently £140 million). To fulfil their statutory obligations, nuclear operators normally buy insurance to cover these financial security amounts.
  • A recognition that although the highest of these financial security amounts existing today globally apparently correspond to the insurance market’s available capacity, they do not match the potential total costs resulting from a severe nuclear accident. For example, at the time of Japan’s Fukushima accident in 2011, the financial security amount required of the operator was ¥120 billion (c. £844 million/$1.1billion) yet the compensation paid has already exceeded ¥9.33 trillion ($85 billion/£66 billion).
  • There is currently some uncertainty as to whether the nuclear insurance market can offer insurance cover for the full scope of the revised liability regimes, due when the 2004 revisions to the 1960 Paris Convention are ratified – probably early in 2021. The insurers have expressed concerns over the insurability of some of the revised heads of damage and at present most have refused to cover the extension of the time limit to bring a claim for bodily injury or death from 10 to 30 years.

Despite these difficulties with the provision of nuclear insurance, insurers can meet much larger loss amounts for other events that cause widespread damage to businesses and homes, such as natural catastrophes, for which claims totalling more than $50 billion per event are now quite frequently paid. With other events easily able to call upon such sizeable amounts, the EC commissioned this latest study to discover whether insurers could provide substantially more insurance for severe nuclear accidents, and if so, under what conditions.

The previous EC work on this subject revealed some interest from certain insurers in providing materially higher insurance amounts for catastrophic nuclear losses, but with this insurance cover activated by a trigger of some sort. Of course, at present using a trigger to activate a nuclear site operator’s required financial security for NTPL compensation is not permissible – the funds must be available for all nuclear damage, no matter how it arises.

However, if triggers are combined with other mechanisms or if new capacity is used to supplement the existing financial security requirements, could governments (and ultimately taxpayers), as the payers of last resort, be moved further away from the cost of a severe nuclear accident? The EC thinks the subject is worthy of further study, which is timely as the gradual merging of the capital and insurance markets is opening up new sources of capital and new ways of looking at risk.

In addition, the EC feels that it has made progress on other fronts that could have relevance to the field of nuclear liability. For example, in the EC’s view significant enhancements have been introduced to the EU legal framework, with the adoption of the revised Nuclear Safety directive and the revised Basic Safety Standards (BSS) directive; in particular, the revised BSS directive lays down uniform dose limits covering public exposures and occupational exposures and requires EU members to ensure that reference levels for emergency and existing exposure situations are established.

Will these changes permit greater EC intervention in the field of nuclear liability and will market developments encourage insurers to commit higher insurance capacity to nuclear liability?  To find out, the EC commissioned the study to assess the latest structure and capacity of the insurance and financial markets in the nuclear third party liability arena, with a view to evaluating how and to what extent these private market providers could increase cover in the event of severe nuclear accident.

Two future blogs will follow the EC study, examining firstly the current state of the NTPL insurance market and then possible mechanisms that might see more private capital and insurance backing NTPL financial security amounts.

About the Author

Prospect Law is a multi-disciplinary practice with specialist expertise in the energy and environmental  sectors with particular experience in the low carbon energy sector. The firm is made up of lawyers, engineers, surveyors and finance experts.

This article remains the copyright property of Prospect Law Ltd and Prospect Advisory Ltd and neither the article nor any part of it may be published or copied without the prior written permission of the directors of Prospect Law and Prospect Advisory.

This article is not intended to constitute legal or other professional advice and it should not be relied on in any way.

For more information or assistance with a particular query, please in the first instance contact Adam Mikula on 020 7947 5354 or by email on adm@prospectlaw.co.uk.

For a PDF of this blog click here

post

“THE PREREQUISITES FOR NUCLEAR ENERGY IN AUSTRALIA”: A BRIEF ANAYLYSIS OF THE HOUSE STANDING COMMITTEE’S FINDINGS

In August we reported that the Australian Parliament’s cross-party House Standing Committee on the Environment and Energy was undertaking an inquiry into the “prerequisites for nuclear energy in Australia”.

After nine country-wide public hearings and 309 submissions, the Committee has now published its findings: Not without your approval: a way forward for nuclear technology in Australia.

The meat of the report is some 93 pages long, with additional appendices, and has come up with three main recommendations to enable a way forward for nuclear technology in Australia; in summary these are:

  • the Commonwealth Government consider the prospect of nuclear technology as part of its future energy mix;
  • the Government undertake a body of work to progress the understanding of nuclear technology in the Australian context; and
  • the Government consider lifting the current moratorium on nuclear energy partially—that is, for new and emerging nuclear technologies only, and conditionally—that is, subject to the results of a technology assessment and to a commitment to community consent for approving nuclear facilities.

The first recommendation would be achieved by prioritising reliable and affordable energy while fulfilling emissions reductions obligations; adopting a strategic approach that would consider collaborating with international partners, developing Australia’s own national nuclear capability, procuring next-of-a-kind and not first-of-a-kind technologies; adopting a holistic approach which looks at opportunities in other nuclear areas such as medical applications and also non-energy areas such as health, water, food and agriculture. The community would need to be put at the centre of these efforts.

In developing its further understanding of nuclear technologies, the Australian Nuclear Science and Technology Organisation (ANSTO) should produce an assessment of the various nuclear technologies, and, in particular, consider the newer and next generations of reactor, including Small Modular Reactors (SMRs). Associated with this would be an economic viability of nuclear and an assessment of the other requirements which would need to be in place. A community engagement programme should be established that would “educate and inform” Australians.

There is a current moratorium on nuclear development in the country, and so the Committee calls for a partial lifting of this which would allow, subject to the above technology assessment, the potential development of the newer generation reactors. Moreover, development of a reactor or waste disposal site would require local community consent.

The report is not a consensus view of the whole Committee. The Labor members and an independent member, Zali Steggall MP, have produced dissenting reports, included in the main report. The Labor view is, inter alia, that there is no economic case for pursuing nuclear and that nuclear is in decline elsewhere. It has come up with a number of its own alternative recommendations. Ms Stegall goes along with the first two recommendations but says that the lifting of the moratorium is “pre-emptive”.

The report has been presented to the Speaker of the House of Representatives, for the Government to take the next steps.

In terms of lifting the moratorium, the Mineral Council of Australia (MCA) recently poll of some 1500 people has shown support for lifting the ban rather than opposing it, although it recognised 54% of them were unaware there was a such moratorium. The MCA has also welcomed the Standing Committee’s “pragmatic and methodical approach outlined in the report”, saying also “ … the current bans mean Australia – with the world’s largest deposits of uranium – is missing out on a potential industry which could employs tens of thousands Australians with high paying jobs, mostly in regional areas.”

We await with interest what the Government’s response will be.

About the Author

Prospect Law is a multi-disciplinary practice with specialist expertise in the energy and environmental sectors with particular experience in the low carbon energy sector. The firm is made up of lawyers, engineers, surveyors and finance experts.

This article remains the copyright property of Prospect Law Ltd and Prospect Advisory Ltd and neither the article nor any part of it may be published or copied without the prior written permission of the directors of Prospect Law and Prospect Advisory.

This article is not intended to constitute legal or other professional advice and it should not be relied on in any way.

For more information or assistance with a particular query, please in the first instance contact Adam Mikula on 020 7947 5354 or by email on adm@prospectlaw.co.uk.

For a PDF of this blog click here

post

THE GEOLOGICAL DISPOSAL OF RADIOACTIVE WASTE IN ENGLAND: RECENT DEVELOPMENTS

There have been two recent changes in the quest to find a permanent site for the geological disposal of higher activity radioactive waste.

Written Ministerial Statement

In a written statement to Parliament on 17 October, the Minister for Business Energy and Industrial Strategy, Nadhim Zahawi, designated the National Policy Statement (NPS) for Geological Disposal Infrastructure, following its laying before parliament on 4 July. This marked the final parliamentary step in the NPS process.

The Minister stressed the importance of those who have benefited from nuclear technology taking appropriate steps to manage the associated radioactive waste, adding the important role nuclear technology plays in transitioning to a carbon neutral economy. He also acknowledged that geological disposal is internationally recognised “as the safest and most secure means of permanently managing a proportion of this waste not suitable for other management regimes”.

He went on to say that the NPS provides an “appropriate and effective framework for the Planning Inspectorate and the Secretary of State for the Department for Business, Energy and Industrial Strategy to examine and make decisions on development consent applications for geological disposal infrastructure in England.” (Note that responsibility for this area in the United Kingdom is devolved to its separate countries and this NPS therefore only applies to England).

As well as the geological disposal facility (GDF), the NPS also covers deep borehole investigations which will be necessary to characterise the geology at potential sites. Accompanying the NPS, the government has also published associated documents:

  • Equality Analysis for the National Policy Statement for Geological Disposal Infrastructure, which concludes that people with protected characteristics would not be more or less affected than other groups by the impacts of the NPS;
  • Habitats Regulations Assessment of National Policy Statement for Geological Disposal Infrastructure, which supports the Secretary of State in meeting his obligations under regulation 110 of the Habitats Regulations; and
  • Post Adoption Statement for the Appraisal of Sustainability of the National Policy Statement for Geological Disposal Infrastructure. This is required by the Strategic Environmental Assessment (SEA) Directive 2001/42/EC and relevant implementing regulations to ensure that environmental considerations are taken into account.

Further Backing

Further endorsement of the approach to achieving geological disposal was announced last week by the nuclear and environmental regulators. Implementation of geological disposal is the responsibility of Radioactive Waste Management (RWM), a subsidiary of the Nuclear Decommissioning Authority. They are not yet subject to formal regulation, but in their joint annual report, the Office of Nuclear Regulation (ONR) and the Environment Agency (EA) reported on the outcome of their scrutiny of RWM during 2018-19.

ONR and EA work together “to make sure that any future geological disposal facility (GDF) will meet the high standards for environmental protection, safety and security that the public expects.” They will engage with RWM early in the process of identifying potential sites so that when a site is identified RWM already clearly understands what it needs to do as part of the regulatory process. They also liaise regularly with RWM to make sure that it gives the right advice to waste producers about packaging radioactive waste for future disposal at a GDF.

They say that RWM has significantly improved its generic Disposal System Safety Case, including taking the regulators’ earlier advice, noting though that “RWM still has a significant amount of work to do to develop a comprehensive, site-specific safety case and many aspects can only be fully evaluated once a site has been selected and specific designs produced.”

They added, “We are satisfied that RWM liaises with government and regulators to establish common understanding and manages any necessary changes through its change control process.” Further, “RWM has made significant progress towards addressing the need to protect groundwater resources and human health from the non-radioactive component of the inventory for disposal, and is providing the necessary advice to waste producers.”

While these two pieces of news are positive, the overall quest to find a site is still a work in progress and RWM is engaging with communities to inform this work.

About the Author

Prospect Law is a multi-disciplinary practice with specialist expertise in the energy and environmental  sectors with particular experience in the low carbon energy sector. The firm is made up of lawyers, engineers, surveyors and finance experts.

This article remains the copyright property of Prospect Law Ltd and Prospect Advisory Ltd and neither the article nor any part of it may be published or copied without the prior written permission of the directors of Prospect Law and Prospect Advisory.

This article is not intended to constitute legal or other professional advice and it should not be relied on in any way.

For more information or assistance with a particular query, please in the first instance contact Adam Mikula on 020 7947 5354 or by email on adm@prospectlaw.co.uk.

For a PDF of this blog click here

post

THE PREREQUISITES FOR NUCLEAR ENERGY IN AUSTRALIA: AN ANALYSIS OF THE INQUIRY SO FAR

A couple of months ago, we reflected on the announcement that the Australian Parliament was to hold an Inquiry into the prerequisites for nuclear energy in Australia. We are now two months into the four-month inquiry and submissions have now closed, although the hearings continue. We report here on the progress to date.

To date, over 250 submissions have been lodged from individuals and organisations, and five public hearings, which examine those submissions in more detail, have been held across the country.

ANSTO and AusYGN

The first person to give evidence was Dr Ziggy Switkowski, the former chairman of the Australian Nuclear Science and Technology Organisation, who headed the 2006 Federal inquiry into nuclear. He called for the ban on developing nuclear power in Australia to be lifted, although he thinks that the time has passed to construct large scale reactors, preferring instead the deployment of Small Modular Reactors (SMRs).

As expected, there are a variety of views represented in the submissions, both in favour of and against deploying nuclear energy in Australia. The Australian Young Generation in Nuclear, in its evidence addressing the workforce capability aspect, says “the development of nuclear power in Australia would present significant opportunity for employment and education for young professionals”.

WNA and CSIRO

The World Nuclear Association, as one would expect, is very much in favour of nuclear energy in Australia and provides positive evidence in each of the areas being looked at in the Terms of Reference for the Inquiry. In terms of energy affordability and reliability, and economic feasibility, the WNA says “in many parts of the world new nuclear plants are directly cost competitive on a levelised cost of electricity (LCOE) basis with other energy source.”

The Commonwealth Scientific and Industrial Research Organisation has referred its letter to the Inquiry to its Gen Cost 2018 report, produced in partnership with the Australian Energy Market Operator (AEMO), which provides updated estimates of electricity generation costs, including consideration of the role of nuclear power. However, WNA says of this report “The joint AEMO CSIRO GenCost report which is apparently considered authoritative in Australia certainly cannot be considered as credible when it comes to nuclear costs.

Economics come into the various submissions put forward elsewhere and include commentary on the economics of Hinkley Point C.

Law Council of Australia

A submission from the Law Council of Australia, prepared by the Australian Environment and Planning Law Group (AEPLG) of the Law Council’s Legal Practice Section, also looks at each of the areas of the terms of reference, relying much on the 2006 Inquiry report and the CSIRO report to support its statements. However, some of these appear rather subjective, and somewhat without foundation, such as:

  • While there are a number of countries [    ] are currently developing waste storage facilities, no long-term study exists as to the environmental and safety impacts of such facilities” (para 10). The development of each such facility is always supported by significant environmental impact and nuclear safety case studies based on actual site conditions
  • Countries that have historically welcomed the development of nuclear power are now moving away from this technology” (para 14). Japan is the only example cited.

In addition, there is an inaccurate statement at paragraph (21) relating to Hinkley Point, which includes the sentence: “Construction [of Hinkley Point C] has now stopped and may not resume.” This is clearly not the case.

Future Progress

Although not called for in the terms of reference, there are two submissions supporting the use of nuclear propulsion. The Royal Australian Navy (RAN) has ordered twelve Attack class submarines, of French design, to be built in Adelaide. Indeed, the Submarine Institute of Australia (SIA) has just concluded a separate conference on the subject. It proposes that nuclear for defence purposes and nuclear for civil energy use should be developed together in a “holistic” manner, not in isolation, and that this would strengthen the case for nuclear in the country.

In addition to the Federal Inquiry, there is also a state-level inquiry in New South Wales, looking at repealing the state ban on uranium mining and nuclear energy, as well as in Victoria, which is looking to repeal its ban on uranium exploration and mining.

According to a recent poll, more than 50% of Australians now feel that the country should develop nuclear power in order to reduce its carbon emissions, up from a reported 35% in 2011.

We will continue to watch and provide assessments of progress.

About the Author

Prospect Law is a multi-disciplinary practice with specialist expertise in the energy and environmental  sectors with particular experience in the low carbon energy sector. The firm is made up of lawyers, engineers, surveyors and finance experts.

This article remains the copyright property of Prospect Law Ltd and Prospect Advisory Ltd and neither the article nor any part of it may be published or copied without the prior written permission of the directors of Prospect Law and Prospect Advisory.

This article is not intended to constitute legal or other professional advice and it should not be relied on in any way.

For more information or assistance with a particular query, please in the first instance contact Adam Mikula on 020 7947 5354 or by email on adm@prospectlaw.co.uk.

For a PDF of this blog click here

post

“THE PREREQUISITES FOR NUCLEAR ENERGY”: AUSTRALIAN PARLIAMENT ANNOUNCES NEW ENERGY INQUIRY

Australia’s stance on civil domestic nuclear power has taken a surprising turn in recent days, with the announcement by the Energy Minister of a federal government inquiry into the “prerequisites for nuclear energy in Australia”.

Australia is the world’s third largest uranium producer (after Kazakhstan and Canada) but has traditionally steered clear of introducing nuclear as an energy source, instead relying on its reserves of coal and natural gas, which provide some 60% of its energy supply (33% is from oil, 4% biofuels, 1% hydro, 1% renewables). 

Previous Discussions

There have been several attempts to bring the nuclear discussion to the fore over the years, although these have never materialised. The last federal inquiry into the issue was held in 2006. Its chair, Dr Ziggy Switkowski, the retired chairman of Australia’s Nuclear Technology and Science Organisation (ANTSO), has now said that he thinks nuclear power could coexist with whatever “generation of renewables and batteries might exist into the future”.

In March 2015 the South Australian Government established the Nuclear Fuel Cycle Royal Commissionto undertake an independent and comprehensive investigation into the potential for increasing South Australia’s participation in the nuclear fuel cycle.” It reported in May 2016 on four main areas: exploration, extraction and milling; further processing and manufacture (of nuclear fuel); electricity generation and the management, storage and disposal of (radioactive) waste.

The idea of South Australia hosting an international disposal facility was found to deserve further analysis, plus the Commission recommended that existing prohibitions on nuclear power generation be removed. However, the Commission’s various proposals did not gain the bipartisan support necessary to be taken forward.

The New Inquiry

This is being held by the cross-party House Standing Committee on the Environment and Energy, and has to deliver its findings “by the end of the year”.

The background to the inquiry recognises that Australia has to fulfil its emissions reductions obligation, and that there continues to be a bipartisan moratorium on nuclear energy. However, it recognises the emergence of new technologies and changing consumer demand, with the Minister having specifically asked the inquiry to consider Small Modular Reactors (SMRs). Other aspects of the Terms of Reference include waste management; transport and storage; health and safety; environmental impacts; energy affordability and reliability; economic feasibility; community engagement; workforce capability; security implications; national consensus and “any other relevant matter”.

The inquiry will also have regard to the South Australian Nuclear Fuel Cycle Royal Commission and the 2006 Switkowski review.

The inquiry has very ambitious timescales and we will watch how it develops with interest!

About the Author

Prospect Law is a multi-disciplinary practice with specialist expertise in the energy and environmental  sectors with particular experience in the low carbon energy sector. The firm is made up of lawyers, engineers, surveyors and finance experts.

This article remains the copyright property of Prospect Law Ltd and Prospect Advisory Ltd and neither the article nor any part of it may be published or copied without the prior written permission of the directors of Prospect Law and Prospect Advisory.

This article is not intended to constitute legal or other professional advice and it should not be relied on in any way.

For more information or assistance with a particular query, please in the first instance contact Adam Mikula on 020 7947 5354 or by email on adm@prospectlaw.co.uk.

For a PDF of this blog click here

post

DIGEST OF UK ENERGY STATISTICS: LOW-CARBON SOURCES OF ENERGY

The new edition of the Digest of UK Energy Statistics (DUKES) for 2019, published by the Department for Business, Energy and Industrial Strategy (BEIS) on 25 July 2019 showed that in 2018, and despite outages, nuclear retained its place as the largest source of low-carbon electricity. This continued the trend from 2017, when it contributed 20.8% of all electricity generated, and low-carbon sources of electricity generated 50.1% of all power in the UK.

This is consistent with the findings reported in the Energy Trends: March 2019 Special Feature Article, which stated that in 2018 nuclear accounted for 18.7% of total electricity supplied to the grid, with fossil fuels supplying 47.7% and renewables 33.6%. The authors of this special report noted that the UK’s energy mix has changed completely since 1995, when nuclear contributed 25.3% and fossil fuels 72.5%.

The reports constitute recognition of the continuing need for, and contribution from, nuclear energy as a low-carbon ‘always available’ fuel and a vital part of the energy mix, essential to the UK’s commitment to net zero carbon emissions by 2050.

However, they also note that seven of the eight existing nuclear plants are due to be retired by 2030, and that despite the plans for plants at Sizewell and Bradwell, only the new reactors at Hinkley Point C are presently under construction. More needs to be done to reduce the costs of both construction and decommissioning. It is therefore significant that BEIS launched a new consultation on 23 July 2019 on a Regulated Asset Base model for nuclear financing.

About the Author

William Wilson is a specialist environmental, regulatory and nuclear lawyer with over 25 years experience in government, private practice and consultancy. He worked as a senior lawyer at the UK Department of the Environment/DETR/Defra, and helped to build up the environmental and nuclear practices at another major law firm. William has experience of all aspects of environmental law, including water, waste, air quality and industrial emissions, REACH and chemicals regulation, environmental protection, environmental permitting, litigation, legislative drafting, managing primary legislation, negotiating EU Directives and drafting secondary legislation.

Prospect Group is an award winning Multi-Disciplinary Practice combining the legal services of Prospect Law with the consultancy services of Prospect Advisory. Our lawyers and technical experts provide a single point of reference for clients involved in energy, infrastructure and other development projects.

This article remains the copyright property of Prospect Law Ltd and Prospect Advisory Ltd and neither the article nor any part of it may be published or copied without the prior written permission of the directors of Prospect Law and Prospect Advisory.

This article is not intended to constitute legal or other professional advice and it should not be relied on in any way.

For more information or assistance with a particular query, please in the first instance contact Adam Mikula on 020 7947 5354 or by email on adm@prospectlaw.co.uk.

For a PDF of this blog click here

post

EPR PROJECTS: WILL HINKLEY POINT C MEET ITS MILESTONES?

China recently released a positive update on the second EPR reactor at Taishan, some 90 miles to the west of Hong Kong, with the announcement that it had achieved criticality. This follows on from the first unit becoming operational in December 2018, which marked a world first for the design.

Why is this important?

The EPR design (originally the European Pressurised Water Reactor) is under construction at Olkiluoto in Finland, Flamanville in France and, of course, Hinkley Point in Somerset.

The Finnish and French projects have been subject to significant delays: Olkiluoto 3 construction began in 2005 and was initially due to be commissioned in 2009. However, fuel loading is expected in the near future and power production is expected to start early next year, concluding a 15 year project. In France, Flamanville 3 construction began at the end of 2007 and was due to become operational in 2012. Nevertheless, fuel loading is now due towards the end of this year, 13 years later.

Similarly, construction of the Taishan EPR units began in 2009 and 2010 respectively and were supposed to complete in less than four years each, instead becoming 10-year projects. Therefore, while there have been significant improvements in construction schedules, delays and cost overruns have still been significant.

The nuclear industry is not known for delivering big projects to time and cost. Each of these ventures has had its own reasons for delays and cost overruns.

How does this reflect on Hinkley Point C?

Construction of the two EPRs here officially started in December 2018, following significant groundwork preparation, and the first reactor is expected to be connected to the grid in 2026. This appears to be a more realistic 7-8 year project timescale than the overly ambitious four-years of Taishan and it is to be expected that EDF will apply the learning from its other projects to Hinkley Point C.

Hinkley Point C itself was on track to achieve “Jalon Zero” at the end of May; this being a French term meaning “milestone zero”. This was intended to mark the final pour of concrete to construct the nuclear island on which the reactors will be built, which required some 5.6 million m3 of rock to be excavated and 9,800m3 of concrete to be poured.

Only time will tell if Hinkley Point C will achieve all of its milestones and budgets. In future articles, we will look more closely at the reasons for the cost and schedule overruns inherent in this family of EPRs.

About the Author

Prospect Law is a multi-disciplinary practice with specialist expertise in the energy and environmental  sectors with particular experience in the low carbon energy sector. The firm is made up of lawyers, engineers, surveyors and finance experts.

This article remains the copyright property of Prospect Law Ltd and Prospect Advisory Ltd and neither the article nor any part of it may be published or copied without the prior written permission of the directors of Prospect Law and Prospect Advisory.

This article is not intended to constitute legal or other professional advice and it should not be relied on in any way. 

For more information or assistance with a particular query, please in the first instance contact Adam Mikula on 020 7947 5354 or by email on adm@prospectlaw.co.uk.

post

NUCLEAR RISK: THE INSURANCE PERSPECTIVE (PART III)

This article is published further to the Prospect Law seminar held at the Centre, Birchwood Park, Warrington, on Tuesday 30th April 2019.

Please click here to see the event flyer.

The seminar addressed gaps in the world of nuclear contracts, with a focus on insurance and the gaps to look out for in nuclear contracts and insurance arrangements, as well as the options available to minimise or remove these gaps. This is the final of three sequentially linked papers that summarise the seminar’s content.

This paper will consider some of the more obscure gaps that can occur, some resulting from the radioactive contamination exclusion (RCE) clause found on most non-life insurance policies, which was described in the first of these papers.

Insurance policies for nuclear contractors and operators

  • Normal liability insurance policies (for example directors and officers, or products and professional indemnity policies) purchased by any business will contain an RCE clause. This will exclude any ‘nuclear’ work.
  • Any contractors working on nuclear sites, especially if only occasionally or if nuclear consists of a small part of their work, will need to ensure that nuclear liability is properly allocated.

Claim investigation, defence, management and settlement costs

  • The liability Conventions require operators to have financial security to cover nuclear damage to third parties; these funds cannot be used to cover any costs incurred during or after a nuclear incident that causes damage. The Conventions are also silent on how these costs might be allocated. 
  • Operators, transporters and contractors must consider these costs and their allocation; insurance is available to cover them.

Counterparty Risk

  • The nuclear liability Conventions and national legislation leave nuclear site operators with long-term liabilities. Therefore, the solvency and durability of the financial security provider is an important consideration. 
  • The prevalence of RCE clauses and nuclear insurance complexities can increase counterparty risk.

Seminar Key Points

  • Insurance policy RCEs and interfaces can be the source of many coverage gaps.
  • Most of these and other gaps are avoidable or transferable with analysis, though sometimes at a cost.
  • Scopes of warranties, polices and contracts should all be subject to experienced review, to help minimise any lack of cover.

About the Author

Mark Tetley has wide experience gained from senior positions across the London insurance market as  both an underwriter  and a broker , in a variety of sectors. He provides advice and assistance on a wide range of insurance and risk issues, including comprehensive nuclear liability and property insurance assistance, complex infrastructure project programme design and review, claims and policy reviews, assistance with project insurance design and implementation in developing countries, and many other aspects of risk mitigation.

Prospect Group is an award winning Multi-Disciplinary Practice combining the legal services of Prospect Law with the consultancy services of Prospect Advisory. Our lawyers and technical experts provide a single point of reference for clients involved in energy, infrastructure and other development projects.

This article remains the copyright property of Prospect Law Ltd and Prospect Advisory Ltd and neither the article nor any part of it may be published or copied without the prior written permission of the directors of Prospect Law and Prospect Advisory.

This article is not intended to constitute legal or other professional advice and it should not be relied on in any way.

For more information or assistance with a particular query, please in the first instance contact Adam Mikula on 020 7947 5354 or by email on adm@prospectlaw.co.uk

THE NUCLEAR INDUSTRY AND BUSINESS GROWTH OPPORTUNITIES: CURRENT TRENDS

Business within the nuclear industry is notoriously fraught with a series of many and varied challenges, from manufacturing standards to regulatory hurdles and long-term framework-based relationships. However, considerable opportunities exist both domestically and internationally, and each organisation needs a robust medium and long-term strategy and plan if it intends to pursue these opportunities effectively.

In the UK, the HMG Energy White Paper, due for publication around July 2019, is expected to continue to support the case for new nuclear, both the large conventional plants and the modular variety. However, widespread concerns remain over the funding model for long-lived infrastructure projects, and a resolution over the current impasse related to government funding is urgently required in order to provide a stable platform for business growth. Perhaps the increased groundswell of opinion to tackle greenhouse gas emissions will turn out to be the trigger.

The UK Nuclear Decommissioning Authority (NDA) is undergoing further change as Magnox Ltd becomes a wholly owned subsidiary. The NDA has declared its intention to reduce the cost of decommissioning, suggesting that the collaborative sharing of expertise and knowhow across the NDA estate will bring major cost and programme benefits. Furthermore, the confrontational approach to contract award and monitoring processes will be under review, fostering a partnership relationship with the supply-chain. This concept was in evidence at the recent Sellafield Ltd Directors Forum event, where the major framework holders were encouraged to talk openly with the Supply Chain companies about forthcoming business opportunities.

International opportunities also exist globally, with many nations now looking seriously at large nuclear to meet their political obligations, as well as providing power generation, district heating and water desalination. Additionally, the demolition of old plants and the rehabilitation of existing nuclear sites present major opportunities. Whilst there are many press announcements about ‘new’ opportunities, the pursuit of international business requires careful thought and planning. It is not for the faint-hearted, with resources and a 2-year Executive commitment arguably the minimum obligation.

To begin that long journey, early discussion with technical legal and regulatory experts is a prerequisite in order to help define the appropriate long-term strategy and key business objectives.

About the Author

John Ireland is an internationally experienced energy specialist and senior business executive skilled in the development, negotiation, and management of businesses and technically complex contracts within both the Government and private sectors.  John has grown complex businesses in Asia and the Middle East, and assisted international organisations to develop business in and from the UK through joint ventures and partnerships.

Prospect Group is an award winning Multi-Disciplinary Practice combining the legal services of Prospect Law with the consultancy services of Prospect Advisory. Our lawyers and technical experts provide a single point of reference for clients involved in energy, infrastructure and other development projects.

This article remains the copyright property of Prospect Law Ltd and Prospect Advisory Ltd and neither the article nor any part of it may be published or copied without the prior written permission of the directors of Prospect Law and Prospect Advisory.

This article is not intended to constitute legal or other professional advice and it should not be relied on in any way.

For more information or assistance with a particular query, please in the first instance contact Adam Mikula on 020 7947 5354 or by email on adm@prospectlaw.co.uk.

For a PDF of this blog click here