UK firms garner all their energy to forge ahead in nuclear gold rush
3 March 2008
11 October 2013
8 November 2013
21 October 2013
11 November 2013
21 October 2013
If anything is guaranteed to divide public opinion, it is nuclear energy. At one extreme there is a band that sees nuclear as a panacea for a carbon-free UK, at the other it is seen as a risky technology with an unresolved waste management issue that could burden future generations.
The legal community is also divided. Most firms with prominent energy and projects practices recognise that the magnitude and long life-cycles of projects means getting involved in nuclear newbuilds will make a major contribution to their bottom lines for many years to come.
But not every firm with nuclear experience will be ripe for the work.
Hammonds projects partner Rupert Cowen, who is advising the Washington Group on its bid to decommission Sellafield, emphasises that it is not just fees or capability that will influence whether a firm wins a pitch for a newbuild, but also social and political savvy.
"At one level a nuclear project is just another project in terms of financing and return," Cowen says. "At that level any firm with a decent capacity and a full service offering should be able to do it. The thing that's different is the politics. It takes a certain type of individual and a certain type of firm that has spent time with individuals in government and the regulators to deal with this."
That would immediately single out a firm such as Slaughter and May, which has a close relationship advising the Government on regulatory matters through partner Paul Stacey. At the other end of the spectrum are firms with niche energy practices such as Burges Salmon.
Linklaters is understood to have already been instructed by a utility on this type of work. Freshfields Bruckhaus Deringer is advising E.ON and has already advised British Nuclear Fuels (BNFL) on the restructuring of the nuclear industry, as well as on the creation of the Nuclear Decommissioning Authority.
Clifford Chance energy head Andrew Grenville would not confirm whether he had been instructed, but the firm has a longstanding relationship with British Energy, the UK's largest owner of nuclear power plants. British Energy is expected this month to announce proposals to build new plants and is likely to hold a beauty parade for advisers soon after.
Hammonds, which sits on British Energy's panel, is expected to target the operator, particularly as it does not have existing relationships with other major players, such as German utility company RWE, which is eyeing the market. Elsewhere, Herbert Smith won the coveted role to advise French utility EDF in October 2006. The firm is advising on corporate, environment, planning, public law, real estate construction and regulatory matters, with energy partner Philip Newbery leading the team.
"We're convinced EDF is by far the most important client in this area," says Newbery. "We don't think we'd be looking to act for other developers. EDF is the largest developer of nuclear newbuild - 80 per cent of French power comes from nuclear."
Herbert Smith could win a lot of work given that EDF has teamed up with French nuclear services supplier Areva, which has extensive experience on newbuilds and has already put in six project proposals.
Areva is not putting all its eggs in one basket though. It is understood that it has been in talks with several Europe-wide utilities about entering into consortia. If it is successful in its attempt to corner the newbuild market, the first generator could be up and running by the end of 2017.
For some firms - such as Denton Wilde Sapte, Hammonds, Linklaters and Pinsent Masons - nuclear involvement could be doubly beneficial, given that there is some overlap between decommissioning and newbuild. Although construction and decommissioning are at different points in the nuclear lifecycle, the regulatory and environmental issues are of a similar nature.
However, bidders in decommissioning tend to be engineering and construction outfits rather than operators. Firms will need to work hard to build relationships with both utilities and engineers to truly corner the nuclear market.
That said, Margaret McLean, general counsel at CH2M Hill, one of the construction companies bidding for the Sellafield decommissioning work, points out that it is still early days for the newbuild process. She adds that, for her company at least, it would be "pretty premature" to have lined up external advisers at this point.
In spite of this, forward planning could be vital, as some of these firms are bound to be conflicted or simply will not have the capabilities to take on the work, leaving a small number of firms circling the developers.
And the opportunities are considerable given that 15-20 developers, utilities and construction outfits, as well as owners and vendors of sites, are planning to get involved individually or in consortia. "It's a bit like a tea dance - developers are tip-toeing around looking for construction contractors," says Dentons energy, transport and infrastructure sector head Christopher McGee-Osborne.
Due to the sensitivity around siting plants, firms will have to prove their planning and regulatory capabilities. Likely sites will include those where there are existing nuclear plants, both because local populations have a history of living with nuclear generators on their doorsteps and also because they are often located in some of the more remote parts of the country where there are few alternative sources of employment.
Cumbria's urban regeneration and economic development agencies West Lakes Renaissance and Cumbria Vision are both calling for West Cumbria, the home of Sellafield, to be seriously considered for future nuclear development. As well as the employment it would generate, local agencies hope they will benefit from some kind of incentive, as is laid down in the 2006 white paper.
Making sure this does not amount to subsidies will be a challenge for the Government, which would be "spat out by the green lobby", as one lawyer puts it.
Firms also need the ability to engage with all stakeholders, including environmental groups. Greenpeace has already flexed its muscles, stalling the newbuild process by persuading a court to label the consultation process insufficient. The environmental organisation's lawyers have now launched a second challenge to the Government.
Greenpeace nuclear campaigns head Ben Ayliffe says the group is constantly fielding calls from law firms keen to know what its next move will be.
According to one lawyer, this kind of dialogue is positive. "It takes patience and commitment to talk to Greenpeace in a constructive way," he says. "[But] it has a very open attitude to it, despite the official lines. People are very open and can see the reality that government is committed to renewables; they can see that in the timeframe we're dealing with it's not possible to get enough energy [solely from renewable sources]."
With a series of increasingly detailed white papers published and the planning bill in Parliament, the major challenges will be in achieving an agreement around the mechanism for pricing carbon at the European level, which is needed to work out returns on private investment.
Despite the challenges that lie ahead, for a small band of firms the nuclear rewards will be huge, and not just from a monetary point of view.