UK firms await Hinkley C finance triggers to enter nuclear market

Local suppliers are set to gain a flurry of contracts for the Hinkley Point C new build project as developer EDF works towards a definitive construction start in 2019.

Suppliers told Nuclear Energy Insider they remain undeterred by reports that the Final Investment Decision (FID) for the project had been delayed, and they viewed the 18 billion pounds ($26 billion) plant as a doorway to future opportunities in the sector.

In its annual results February 16, EDF said it was yet to reach a FID for Hinkley Point C but Group CEO Jean-Bernard Levy said first concrete is "on the horizon” for 2019 and EDF plans to continue preparatory work up until then.

Last month, French state-controlled EDF announced Christopher Bakken would leave his position as Project Director of Hinkley Point C, to join US’ Entergy. EDF's board was expected to make a decision on the project earlier this year, following a strategic agreement with China General Nuclear Power Corporation (CGNPC) in October 2015.

CGNPC agreed in principal to buy a 33.5% stake in the project, leaving EDF with a 66.5% share unless other investors are found.

Levy reiterated February 16 that a FID on the project was expected soon, and said it would take about three years of working with subcontractors before EDF could begin building the definitive structures.

The Hinkley Point C project consists of two 1.65 GW EPR reactors to be built in the county of Somerset, South West England. The plant is scheduled to come online in 2025 and it would be the first nuclear plant in the UK in over 20 years.

Delays to the FID have not dampened local supplier optimism over contract opportunities and the UK government has pledged to support local industries, such as the hard-hit steelworks sector, in gaining contracts.

Planning ahead

EDF approached the Somerset Chamber of Commerce back in 2010 to manage its Hinkley Supply Chain Team and in July 2015 the company named 21 preferred bidders from the UK, for contracts with a combined value of 1.3 billion pounds that ranged from construction to catering.

In October, EDF announced final terms agreements for engineering and construction contracts with four key suppliers: Areva NP will deliver the nuclear steam supply system, instrumentation and control; Alstom France will deliver turbines with Alstom UK providing services during operations; Bouygues TP/Laing O’Rourke (BYLOR) will take the main civil works contract; BAM Nuttal/Kier Infrastructure will take the earthworks contract.

The supply chain to the nuclear new build (NNB) project is now well-established. The Supply Chain Team acts as a regional hub connecting local suppliers looking for contracts to Tier 1 and 2 firms sourcing bids and delivery of products and services.

According to EDF, around 180 Tier 1 contracts will be needed to complete the construction of the site. These large suppliers will contract further down the chain to Tier 3 and 4 firms that are likely to be small- or medium-sized enterprises (SMEs).

The Somerset Chamber of Commerce said in November 2015 that almost 3,000 local businesses had registered on the supply chain portal, with some achieving preferred bidder status from EDF for contracts projected to total 250 million pounds during the construction period. Initial construction services required include building roads and temporary accommodation on site.

“Despite a short-term lull in activity on-site, the supply chain work has been on-going behind the scenes with EDF Energy, Tier 1 contractors and suppliers to map and match capabilities with work package requirements,” Chris Langdon, Hinkley Supply Chain Project Manager, said in a Chamber document published in November 2015.

EDF has already pledged Hinkley contracts with a combined value of 225 million pounds to five local supplier consortia. The Construction Operations Management Alliance (COMA), a joint venture between five local businesses, has been named as preferred bidder for a utilities construction contract that will include providing electrical networks and water supply across the site.

Neil Elliott, Managing Director of Hydroline Solutions Ltd and part of the COMA group, told Nuclear Energy Insider the Chamber had been instrumental in providing advice about EDF’s expectations on work packages and preparing to deliver contracts.

“We all knew it would be a slow process and slow to get your foot in the door but, once you do, it is worth it. It does lead to an entrance into the nuclear market,” he said.

Many standards of quality assurance and safety were similar to those applied to non-nuclear civil engineering services, he added.

Steel revival

Steel demand for Hinkley Point C includes around 200,000 tonnes of reinforcement in the concrete structures, over 600,000 embedment plates, large quantities of structural steelwork for the construction of the turbine halls and other structures, steel containment liners to the two reactor buildings, stainless steel liners to fuel ponds and a thousand kilometres of steel pipework.

The UK steel industry has struggled to compete in the global market and seen significant job cuts in recent years. According to labor groups, UK steel companies have been hit hard by surplus Chinese supply, a strong pound and climate change policy regulations. Pressure from the industry has led to pledges of support from EDF and the UK government.

EDF's UK subsidiary EDF Energy said in a statement January 19 that a "large proportion" of Hinkley Point C steel requirement will come from UK companies, subject to a competitive process.

"The UK does not currently have the capability or capacity of producing the very largest forgings required by the power station, therefore these will have to be sourced from outside the UK. There will be opportunity for suppliers, including those in the UK, to compete in the supply of forged components for the turbine generators and in other items such as pumps, motors, valves and the like," it said.

UK Business Minister Anna Soubry and Sheffield Forgemasters said in a joint statement February 3 that while local forgemasters cannot produce ultra large forgings, Sheffield Forgemasters "can produce 80% of forgings for projects like Hinkley Point C. Government said it would work closely with the Sheffield Forgemasters to ensure they are able to compete for opportunities in the nuclear supply chain.

The Times then reported February 13 that EDF would instruct main contractor Areva to look at subcontracting major works for the plant to specialist British steelworks, such as Sheffield Forgemasters.

Support structures

The Somerset Chamber of Commerce has also been active in steel procurement, forming the Somerset Steelworks Group and preparing bidding Procedures for nuclear-specific steelwork packages tendered during the construction phase. The alliance was introduced to Tier 1 contractors and advised on preparing appropriate quality assurance measures.

“There is a very large volume of steelwork at Hinkley Point C and other nuclear new builds and we see Hinkley as the first step into the nuclear market,” Bill Haley, Director of engineering inventory supplier The Haley Group and member of the Steelworks collaboration, told Nuclear Energy Insider.

Understanding safety and quality requirements, and the volume of record-keeping work needed to detail the supply and quality history of each component, was essential to gain opportunities in the project, he said.

Haley also confirmed the delays to the FID for the plant project had been offset by a steady stream of work demand elsewhere and had not discouraged the group from participating.

Matravers Engineering, another member of the Steelworks Group, has prepared as far as possible by completing Pre-Qualification Questionnaires (PQQs) that include security, health and safety and experience of working on a major project, and has undertaken audits by EDF Energy, achieving the required ISO 9001 and CE marking, Nigel Ball, the firm's managing director, said.

Having been through the approval process, Ball said he was confident that contract opportunities would arise and the Steelworks Group was now waiting for the final decision to go ahead.

Ball also said the members of the group were not in competition and they had benefited from information sharing.

“We all specialize in different areas and, between us, we could offer a broad range of steelwork services and products that complement each other. So, if a steelworks package is offered, we could meet the specifications.”

By Karen Thomas