UK nuclear plan faces battle for skills, components

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ONDON, Oct 9 (Reuters) Britain has no shortage of companies lining up to build a new generation of nuclear reactors, if given the go-ahead, but finding enough workers and all the components may prove a bigger challenge.

Britain faces a looming power shortage as old nuclear, gas and coal stations reach the end of their lives, and ''new nuclear'' is one of the few realistic options to fill the gap without boosting climate-damaging CO2.

Despite initial concerns the industry would balk at the high upfront costs of around 4.1 billion dollars a unit, at least 10 companies want to play a part, with British Energy and France's EDF leading the pack.

Each plant will cost about 3 billion pounds in total when factoring in the cost of disposing of waste during its lifetime and decommissioning the plant at the end.

''Finding the investors is not the issue,'' said an industry source. ''There may be big upfront costs and some risks, but once these things are running, they are like cash machines.'' The government is close to deciding whether to give the go-ahead to new nuclear following a public consultation that ends tomorrow.

Getting the green light has not been easy but the industry's biggest problems may lie ahead -- from sourcing the parts amid a global renaissance for nuclear power and from sourcing the workers as Britain enters a decade of massive infrastructure renewal.

PINCH POINTS EDF, the world's biggest nuclear operator, said yesterday it was considering building four British plants, but added a warning: ''There are some significant pinch points in the global supply chain.

''The principal pinch point is reactor pressure vessel manufacture, where current world manufacturing capacity is limited,'' it said. Other difficult parts to source include turbines and large metal forgings.

Suppliers of pressure vessels could in the next 18 months have their order books filled through to 2020, said a source at another European company looking to build in Britain.

British players may struggle to get their orders in quickly enough.

Greenpeace, which earlier this year won a court case forcing the government to conduct the current consultation, is considering going back to court again -- a process that would further add to the time pressure.

British Energy said it expected suppliers to increase capacity as the order pipeline builds and the market confidence increases. ''We're already seeing upgrading of forging capacity around the world,'' it said.

LABOUR SHORTAGE Delays in commissioning new nuclear could significantly set back Britain's ambitions to hit EU-wide goals of cutting CO2 emissions by 20 per cent by 2020.

Nine out of Britain's 10 nuclear stations are set to close by 2023, taking nuclear's contribution to British electricity from 20 percent today to around 3 per cent.

''If we were to shut down the existing nuclear fleet and replace it with gas-fired generation, the UK's emissions would rise by about 29 million tonnes of carbon dioxide a year,'' said EDF Energy Chief Executive Vincent de Rivaz.

''That is equivalent to the carbon dioxide produced by all the trucks on our roads,'' he said.

Workforce constraints are also an issue, and might limit the first wave of any construction to two units, says British Energy.

Each reactor would need around 2 per cent of Britain's construction capacity, said EDF.

''Since new nuclear construction is unlikely to start much before 2012, this upsurge in demand for construction skills matches well with the tail off in construction for the 2012 Olympics,'' it said.

At that point, however, nuclear would be also competing for labour with some of Britain's other huge infrastructure projects, including London's Crossrail link which will need around 14,000 workers.

Thousands more will be needed for re-engineering Britain's flood defences; building affordable housing and upgrading Britain's railways after decades of neglect.

On top of that will come major renewable energy projects as the country seeks to wean itself off hydrocarbons, the biggest of which would be a possible 15 billion pounds hydroelectric barrier across the Severn Estuary between England and Wales.

''Wherever you look there are big infrastructure projects going on,'' said analyst Tom Gidley-Kitchin at Charles Stanley stockbrokers.

''We've got a flourishing economy -- 15 years of consistent quarterly growth -- putting pressure on infrastructure that has not been upgraded for 10 to 20 years,'' he said. ''The main problem for the construction industry will be getting and keeping the skilled staff.'' REUTERS SG VC1620

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