UK Government Takes Further Steps Towards Increasing Nuclear Energy Capabilities

By on January 25, 2012

by Charlotte Doerr

The 2008 Nuclear White Paper issued by the UK Government’s Department for Business, Innovation and Skills, (which, at the time, was known as the Department of Business Enterprise & Regulatory Reform), stated that nuclear energy, in addition to other low-carbon sources, would play an increasingly important role in the future energy mix of the country.  The current UK Government has remained committed to the development of new build nuclear projects; notwithstanding the Fukushima disaster in March 2011, which caused other European countries to revisit – and in some cases abandon – their support for nuclear energy.

On December 8, 2011, the UK Government continued its drive towards encouraging investment in new nuclear plants in the UK. The Department of Energy and Climate Change (DECC) introduced statutory guidance on the price of disposal of nuclear waste paid by new nuclear operators and on the content of new nuclear operators’ plans for decommissioning old plants.  The statutory guidance, issued pursuant to the Energy Act 2008 (the Act), was (i) the ‘Funded Decommissioning Programme Guidance for New Nuclear Power Stations’ (FDP Guidance) and (ii) the ‘Waste Transfer Pricing Methodology for the Disposal of Higher Activity Waste from new Nuclear Power Stations’ (Waste Transfer Pricing Methodology).  The Waste Transfer Pricing Methodology prescribes the method for determining the price to be paid by new nuclear operators for the disposal of intermediate level waste and spent fuel at the UK Government’s proposed geological disposal facility.  The application of the method will be set out in a contract between new nuclear operators and the UK Government.

The Act requires all new nuclear operators to have in place an approved funded decommissioning programme (FDP) prior to commencing construction.  The FDP Guidance provides that a FDP must be ‘realistic and clearly defined’ with a ‘robust’ estimate of decommissioning and waste disposal and management costs (some of which will be included in the aforementioned waste transfer price).  Likewise, funds for the future clean-up must be set aside in a structure administered independently of the operator and the UK Government.  A potential operator has the freedom to choose the nature and form of the structure, provided that the funds are insolvency proof and managed in a transparent manner.

The Guidance represents one of a number of steps being taken by the UK Government to facilitate and prepare for the introduction of new nuclear power in the UK.  The indicative timeline issued by the Office for Nuclear Development identifies additional milestones to be met before the first nuclear power plant in the UK since 1995 becomes operational (currently expected in 2018), including proposals to reform the UK electricity market, designed, amongst other things, to support investment in new nuclear and other low carbon energy sources.         




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