Nuclear project could follow T5 agreement

The UK's £40bn new nuclear programme could be delivered using a similar model to BAA's T5 Agreement.

Nuclear Industry Association (NIA) leaders said the T5 deal was attractive because nuclear projects face similar challenges.

Chief executive Keith Parker said: "T5 was a huge complex project planned meticulously in advance to enable the construction to happen on time and to budget. Certainly in the nuclear sector there is increasing use of modular components so pre-planning is vital. And bringing these schemes in on time to meet the UK's energy needs is vital."

EDF, E.ON, RWE and other utility companies planning to deliver new nuclear schemes in the UK are now looking at the T5 agreement.

The deal was a partnering arrangement between BAA and 60 first tier suppliers. Under the agreement, BAA shouldered all the construction risk, leaving contractors to concentrate on delivering the project to high quality and safety standards, on time and to budget.

The agreement covered 16 major projects and 147 smaller projects and involved a high degree of off site, modular construction.

Laing O'Rourke was the first tier supplier for civil engineering works and CJ recently revealed the firm's plans to become a first tier player in the new nuclear market.

Many money options for nuclear building

Fears that the banking crisis could hit the funding of the UK's £40bn new nuclear programme have been dismissed in a report by consultant Deloitte. The report, commissioned by the Nuclear Industry Association (NIA), concludes that the impact will be limited because of the timing of the programme, which is only at the planning stage.

Deloitte said that nuclear newbuild in the UK "will be driven primarily by large utilities such as EDF, Centrica, E.ON and RWE. These large corporations are in a good position to raise funds."

The report said their strong balance sheets will give them "the option of accessing the bond market directly to obtain finance rather than borrowing from banks. They have large customer bases and a mix of power station types."

Deloitte warned that factors such as government and regulatory policies for the nuclear power industry, and competition from gas and coal, pose a more significant threat to the programme than the credit crunch.

NIA chief executive Keith Parker said: "Nuclear stations have large upfront capital costs but once they are operating the return on investment is considerable and over a long period of between 40 and 60 years utilities have always been seen as a safe place to invest."