Vice President, International Business Development
How a land rover began Tom’s nuclear journey (1:17)
1:17-8:29 (Tom describes how he first became interested in nuclear energy.)
Q. How did you get into the nuclear space?
A. Tom is from Liverpool, England and only got into nuclear engineering years after building a Land Rover with a friend. At the time, Tom worked in outdoor education teaching children to rock climb. Tom and a friend wanted to climb Mt. Kenya and decided to build a Land Rover to drive there from the UK. While Tom never drove the car outside of the UK, this spurred his original interest in engineering. Later, Tom got an engineering degree from Liverpool University and began working at an engineering firm in project engineering and management. Tom had always wanted to work in the energy sector and was able to work in the nuclear industry in the early 2000s on uranium enrichment plant projects. In 2008, Tom entered the nuclear industry full time as the UK advanced their new nuclear builds. Tom is now the Vice President for International Business Development at Assystem.
The UK’s new RAB financial model (8:31)
8:31-15:30 (Tom explains the history of the UK’s nuclear industry and the new RAB financing model.)
Q. What is the history of nuclear in the UK?
A. The UK nuclear industry began in the 1950s. The UK always collaborated with the US on matters of nuclear defense but went in different directions when developing domestic nuclear energy. The first fleet were Magnox reactors which lasted about 40 years and used non-enriched uranium. The UK then built 15 Advanced Gascall Reactors (AGR), 50% of which will be switched off in 2025. The UK currently has one Pressurized Water Reactor (PWR), which is what the US originally built. The UK is also testing fusion and high temperature reactors in the UK, France and internationally. The next advancement for the UK is building EPRs, which are the next generation of PWRs.
The UK recently privatized the nuclear sector and developed nuclear policy and financial mechanisms in the early 2000s to attract investors, utilities and vendors to the UK market. Current projects include the EDF and China National Group (CGN) partnership to build Hinkley Point C nuclear power station and the Sizewell Nuclear Power Station project, which is currently in the planning phase.
The UK government is about to launch the Regulatory Asset Based (RAB) financial model which will allow investors to draw down a profit before actual assets are generating an income. This will attract long term investors, such as pension funds. Investors will gain a small return at first and a better return once the power plant is switched on. The RAB model is necessary to generate new investment for the UK’s nuclear industry because projects can sometimes require tens of billions of UK pounds, which is difficult to secure.
Financial difficulty has caused some nuclear projects to be paused. The Contract for Difference (CFD) funding model was used to finance the Hinkley Point C power station which manages risk sufficiently to give EDF the confidence to build plans and hit milestones. This model will not be used for the Sizewell project, which is currently paused, because the amount of investment needed is too much for EDF to attract. GE Hitachi Nuclear Energy has also paused their nuclear project. After investing almost 2 billion UK pounds, they were unable to attract the right investors to secure the funding needed to begin construction.
Large reactors come with high capital costs, but can last 60-80 years and will generate low cost, low carbon electricity. It is difficult for the private sector to fund these projects and, due to projects overrunning their timeframes and budgets, institutional investors are nervous to get involved. The RAB model hopes to alleviate some of this concern and excite the investment market, ultimately moving UK nuclear projects forward.
Reaching the Net 0 Target of 2050 with Nuclear (15:31)
15:31-22:45 (Tom discusses the funds needed to support a nuclear project and the reasons why funders may pull out. He also notes his optimism of the UK government’s support of nuclear energy moving forward.)
Q. Is the largest segment of capital cost the construction of the plant or the licensing and testing?
A. There are two elements of cost: capital cost and cost of finance. Capital cost involves the costs associated with design, manufacturing, planning, licensing and construction. About 20% of capital cost is spent on planning while 80% is spent on construction. When large costs start to build, projects must secure investment.
Projects may end prior to construction. This is not due to the expense, but usually because of political reasons. In the UK, Hitachi needed to attract both investors and an operator to run the nuclear facility post construction. Due to the UK’s political environment, they were unable to do so.
Luckily, the UK government is beginning to understand the need for nuclear energy, especially in reaching the Net 0 Target of 2050. While the UK public support wind and solar, these renewable energies are unable to support the base load electricity. As the UK government gets rid of coal and decreases gas, they will need to develop the nuclear industry further to supply the UK’s electricity needs. Enabling investors is key to achieving this and the nuclear industry is confident in the UK government’s ability to do so.
Educating youngsters to increase the UK’s nuclear percentage (22:46)
22:46-26:56 (Tom discusses the current percentage of the UK’s energy that comes from nuclear power and why we need to increase this percentage. Tom also speaks about the importance of educating children about nuclear power.)
Q. What is the percentage of nuclear right now in the UK and where do you see this percentage going in the future?
A. The 15 reactors that EDF own and operate currently generate 20% of the UK’s electricity. With the electrification of cars and increased electronic device ownership, the demand for electricity in the UK will increase over the next 10 to 20 years. As the UK decreases coal and gas, wind and solar will not be enough to meet the demand alone, especially considering the intermittency issues associated with dark English winters. Nuclear power, therefore, needs to be part of the solution.
Tom remembers a school trip as a child to the Sellafield nuclear laboratory visitor center. This was part of a campaign to educate school children about nuclear power and radiation, which ended in the 1990s. EDF is beginning to open visitor centers to educate the public about the low risks and impacts of nuclear power. While governments currently only think about 5 years into the future, they should be planning for future generations when natural resources begin to run out. Because 97% of nuclear fuel is recyclable and lasts decades, nuclear power should be considered by governments. Educating at a young age will help increase public support of nuclear power as the UK government plans for future electricity sources.
Decreasing project risk with SMRs and the Copy and Paste model (26:57)
26:57-33:47 (Tom discusses the different roles he has undertaken in the nuclear sector. He also discusses the countries that he foresees as perfect opportunities for nuclear growth as well as the Copy and Paste model.)
Q. What sort of projects do you work on as International Business Development Manager?
A. Tom has spent the last 10 years working on UK nuclear plant life extensions, upgrades and new builds. On the international front, Tim acts as an ambassador for the UK in bilateral nuclear agreements intended to share nuclear learnings and technology. He has worked in Japan, the Middle East, Poland and Turkey.
Some developing countries present perfect opportunities for nuclear development. In some places, a lack of grid infrastructure that restricts their ability to support a large scale reactor are perfect candidates for SMRs. These small modular reactors are manufactured in factories and then shipped to the location. India, for example, has a huge population and a high energy demand. Nuclear power is the only option to provide sufficient energy without using coal. India should be able to scale their nuclear program over the next 10 to 20 years to be similar to that of China.
One way to increase efficiency and reduce risk is to use a Copy and Paste model. This is when two identical nuclear facilities are built, reducing learning curves and costs while keeping construction on schedule. However, different countries have different regulations, meaning the Copy and Paste model does not always work. A regulator may change aspects of an existing plan to meet safety standards. For instance, the UK has the ALARP system meaning risk should be as low as reasonably predictable while the US’s NRC takes a more prescriptive approach.
Assystem’s strategy for nuclear project success (33:48)
33:48-42:50 (Tom describes Assystem’s strategies of following the customer and acquiring partner companies. Tom also notes the difference between markets pulling and pushing nuclear power.)
Q. Does Assystem focus on optimization when there are new regulations?
A. Yes. Assystem works on the basic design for the new EPRs and detailed construction designs. Assystem is also working with Rolls-Royce to produce the conceptual design for a small PWR reactor.
Assystem finds new projects by following their customers. They are an independent engineering and project management company rather than a nuclear vendor or utility. Their goal is to understand the country they will be working in, meaning familiarizing themselves with the local supply chain, legislation, policy and existing nuclear dynamics. They form partnerships with engineering companies, construction companies and consultancies, sometimes acquiring the companies they partner with. An example of this is when Assystem acquired Envy, a planning and geotechnical engineering company in Turkey. When Assystem was working with the Turkish government to plan the Russian VVR reactor project, Assystem formed a partnership with Envy and in 2016, acquired the company. This is beneficial because Assystem can utilize both their skills in Turkey with the skills from the UK and France to successfully support the nuclear program. This move enabled Assystem to gain approval by the Turksih regulator to oversee the project. Later in Saudi Arabia, Assystem was able to win a nuclear development program contract because they had the geotechnical knowledge and skills from acquiring Envy. The nuclear sector is global, requiring partnerships to be formed with local companies, communities and governments. A successful project depends on understanding the interactions between all stakeholders.
For Assystem, it is easier to work in a market pulling nuclear energy rather than one that is pushing away from nuclear for political reasons. Political risk brings uncertainty as politics can change yearly. Tom notes South Africa, Egypt and Kenya as examples of markets pulling nuclear energy. While Germany represents a market pushing away from nuclear, Tom believes they will likely extend their existing fleet in the future. This is because Germany pushed wind and solar 10 years ago, but they are still relying on coal and their existing nuclear as these renewable energies have not produced what is needed. Additionally, they will need to decommission their plants at some point, affecting jobs. The German government may change their position on nuclear in the next 10 to 15 years.
Reducing the UK’s 30 year nuclear construction gap (42:51)
42:51-52:06 (Tim states that nuclear energy will be used alongside solar and wind. He also discusses how the RAB and Copy and Paste models will decrease the UK’s nuclear construction gap in the future.)
Q. Are you suggesting that nuclear will prove itself over wind and solar and other technologies that may come along?
A. No. Nuclear power will not push out wind and solar but will be used as well as them. Nuclear is low cost and low carbon and will provide the base energy load for up to 100 years.
Moving forward, the UK must factor in decommissioning and waste management plans into their planning applications to think about solutions to issues now. Additionally, the Copy and Paste model can be a game changer to increase safety and efficiency. This will require, however, engineers and scientists to understand that changing designs increases risk. Copy and Paste can decrease costs by 30% and increase investor confidence that a project will be on time and on budget.
There has been a huge gap in nuclear construction in the UK. The last reactor built was in 1995. Hinkley Point C is due to be operational in 2025. The RAB and Copy and Paste models should help reduce this gap in the future. Additionally, SMRs can help increase speed as they are built in controlled environments that are not subject to weather delays. The UK’s nuclear industry is moving towards one similar to that of the automotive industry: one of quick build and low risk.
Education is key to the future of nuclear (52:07)
52:07-59:16 (Tom explores how a nuclear incident may affect Copy and Paste model reactors. He also reiterates the importance of education at a young age in securing the future of nuclear for the UK and the world.)
Q. What if a Chernobyl-like accident were to occur, shutting down all Copy and Paste model reactors? How would we navigate this?
A. Nuclear incidents push the market back 10 years, forcing the industry to rebuild confidence. An incident like Chernobyl will not occur in the US, UK or France due to the jurisdictions in place. The Fukushima accident was caused by an earthquake and the following tsunami, not the actual reactor itself. The nuclear industry must continue to educate and be transparent with the public to build support.
Education focusing on the limited nuclear risks are also important. This education must begin with children to increase the public’s comfortability with radiation. This level of education is also important for inspiring the next generation to join the nuclear industry through global outreach programs. There is currently a skill gap in the industry as many undergraduate students today do not choose nuclear engineering as a focus. Efforts must be made to increase the appeal of the sector by making it an exciting opportunity from a young age. Additionally, governments and the nuclear industry must collaborate to educate the public on the need for nuclear power in addition to wind and solar energy for reaching a zero carbon target.