Notice

Advanced Gas Cooled Reactor (AGR) decommissioning: factsheet

Published 23 June 2021

BEIS, NLF and EDF have agreed revised arrangements to deliver safe, lower cost, and more efficient decommissioning of EDF’s fleet of seven Advanced Gas Cooled Reactor (AGR) stations once they stop generating power.

Under the revised arrangements, the AGR stations will transfer to the Nuclear Decommissioning Authority (NDA) after EDF has ceased generating and defueled the sites, subject to regulatory approvals, with Magnox as the new Site Licence Company. The NDA will take ownership of the stations and manage the long-term decommissioning programme.

These arrangements will harness EDF’s unique expertise in defueling the AGR reactors and NDA’s extensive experience of decommissioning nuclear plants and facilities in the UK.

The new arrangements provide significant potential cost savings for the taxpayer, with the potential to achieve upward of £1bn of savings, without compromising on safety and security. They will also provide government with enhanced oversight of decommissioning costs.

The arrangements will incentivise EDF to achieve the defueling of the AGR stations in a cost effective manner. The arrangements also include real risk share, with EDF agreeing to take on the potential of up to £100m in charges for missing targets in return for the potential to earn up to £100m for meeting targets.

EDF’s costs of defueling and decommissioning (and any EDF incentive payments) will be met from the Nuclear Liabilities Fund’s (NLF’s) segregated decommissioning fund, established for that purpose.

The transfer of the stations to the NDA will provide enhanced opportunities for realising synergies, sharing know-how and creating a coordinated and consistent strategy as well as maximising and coordinating competition through the supply chain, which will also allow for more efficient delivery.

Details

The new arrangements relate to the fleet of seven Advanced Gas Cooled Reactor (AGR) stations (Hunterston B, Hinkley Point B, Dungeness B, Hartlepool, Heysham 1, Heysham 2 and Torness). EDF last year announced the end of generation of Hunterston B and Hinkley Point B in 2022 and recently, Dungeness B with immediate effect. The other four are all scheduled to close on a rolling basis by 2030.

Under existing arrangements, EDF was responsible for the full defueling and decommissioning of the stations. Existing legal agreements provide the Secretary of State with the option to acquire EDF’s closed AGR sites, for a nominal fee, to arrange for their decommissioning.

Under the revised arrangements the BEIS Secretary of State will exercise all HM Government’s ‘Decommissioning Options’ on EDF’s AGR sites simultaneously and on an irrevocable basis.

Subject to meeting relicensing requirements, ownership of the sites will transfer to the NDA after EDF has ceased generating and completed defueling of each station with Magnox as the new Site Licence Company.

The NDA, Magnox and EDF will cooperate to help ensure an efficient transfer of the AGR sites and to enable efficiencies and identify and realise cost savings across the AGR decommissioning programme.

The existing funding arrangements allow for EDF’s decommissioning to be met by a segregated fund managed by the NLF on a cost pass-through only (with no fee or penalty attaching). Under the revised arrangements, EDF will continue to receive their qualifying decommissioning costs from the NLF.

In addition, Government has agreed new incentivisation arrangements - focussed on EDF’s defueling work - to better align HMG and EDF’s interests. This will allow EDF to earn up to as much as £100m for meeting targets but also to be subject to up to £100m in contra-charges for missing targets.

The £1bn+ cost savings are anticipated to be realised, indicatively over the next around 20 years of the defueling and decommissioning programme, through a combination of:

• removal of uncertainty for EDF so they can prepare with full confidence for defueling, which will lead to shorter defueling periods;
• the introduction of incentivisation, including some risk-share to enhance defueling performance; and
• synergies and efficiencies anticipated through bringing the AGR and Magnox stations together under a single owner and licensee.

EDF aims to achieve the defueling of the AGR stations in between 3.5 and 5 years. Dungeness B will take longer due to its reactors being bigger and containing more fuel and allowing for extra preparation time.

To facilitate these revised arrangements, the Government has laid Designation Directions in both Westminster and in Holyrood (for Scottish Stations) which provide the appropriate vires for the NDA to undertake their pre-transfer work and obligations on these stations.

The Designation Directions have been deposited in the Libraries of both Houses.

The agreement between NDA and EDF that sits alongside the Designation Directions will be added shortly.

Further background

About NDA

• The NDA is charged on behalf of government with the mission to clean up the UK’s earliest nuclear sites safely, securely and cost effectively. Doing this with care for the people, communities and the environment is at the heart of the NDA’s work. It is committed to overcoming the challenges of nuclear clean up and decommissioning, leaving its 17 nuclear sites ready for their next use.
• The NDA is an executive non-departmental public body created by the Energy Act 2004 to lead the clean up and decommissioning work at 17 sites on behalf of government. It’s sponsored and funded by the Department for Business, Energy and Industrial Strategy (BEIS). The NDA plans for cleaning up the sites are approved by BEIS and Scottish Ministers, who provide a framework. Current plans indicate it will take 100+ years to complete our core mission of nuclear clean up and waste management. The goal is to achieve the end state at all sites by 2120.
• As owners of one of the largest nuclear decommissioning and remediation programmes in Europe, the NDA’s main priority is to lead the work across the NDA group and develop the strategy for how it should be carried out. It also plays an important role in supporting government’s aspiration for the UK to be a global leader in the civil nuclear sector.
• The NDA strategy is continually evolving and is updated every 5 years. The fourth iteration was published in March 2021.
• The NDA’s strives to deliver best value for the UK taxpayer by focusing on reducing the highest hazards and risks, while ensuring safe, secure, and environmentally responsible operations at its sites. By generating revenue through commercial activities, the NDA seeks ways to reduce levels of public funding from government.
• Cleaning up and decommissioning the UK’s nuclear legacy is a complex undertaking and relies on the full range of expertise and skills within the NDA group. Over the last few years, the NDA has transformed the way in which its group is organised, transitioning its operating model from a parent body organisation (PBO) structure to a subsidiary model. The PBO model saw its sites managed by private sector consortiums and moving to a subsidiary model removes previous commercial barriers, enabling the NDA to simplify structures, pursue opportunities, overcome challenges and share learning, skills, and technologies.
• By July this year, all the operating companies within the NDA group will have transitioned to being NDA subsidiaries.

About EDF

• EDF is helping Britain achieve Net Zero by leading the transition to a cleaner, low emission electric future and tackling climate change.
• It is Britain’s biggest generator of zero carbon electricity – from its 8 nuclear power stations and more than 30 wind farms – meeting around one-fifth of the country’s demand.
• EDF is investing in the UK’s low carbon energy infrastructure, constructing the first new nuclear power station in a generation at Hinkley Point C, leading the development of plans for Sizewell C in Suffolk, and construction, planning and development across a range of technologies including onshore and offshore wind, solar and battery storage.
• EDF is part of EDF Group, the world’s biggest electricity generator. In the UK it employs around 11,000 people.

About the Nuclear Liabilities Fund Limited (NLF)

• The NLF was established by HM Government on 28 March 1996 as part of the privatisation arrangements for British Energy plc (now EDF Energy Nuclear Generation Limited (‘EDFE’)) and revised on the restructuring of British Energy in 2005 to reflect the role of BEIS in underpinning the NLF. The NLF is wholly owned by the Nuclear Trust, established between EDFE, the Secretary of State and 5 trustees.
• NLF has a primary purpose of receiving and holding monies, investments, and other assets in a segregated decommissioning fund, to meet certain costs as set out in the revised arrangements of decommissioning EDF’s 8 nuclear power stations that are currently operating in the UK.
• Further information can be found on www.nlf.uk.net