Nuclear power could provide a vital contribution toward the UK achieving ambitious carbon reduction targets by 2020. In the past, the UK private sector has not found the rewards from investing in new Nuclear Power Plants (NPPs) sufficiently attractive to justify the risks inherent in such investments.

Three developments have coincided to make the prospect of new nuclear stations in the UK potentially more viable:

• the advent of the European Emissions Trading Scheme now imposes environmental costs on fossil generation. To an extent, the playing field is being levelled between these and nuclear fuel sources.
• The high and potentially persisting oil (and related gas) price has increased the appeal of nuclear stations compared to new Combined Cycle Gas Turbine stations.
• Nuclear technologies have materially altered in terms of economics and efficiencies in recent decades and it seems credible to consider the UK capable of benefiting from a second mover advantage - leveraging the experience and outlay of First Of A Kind costs within European, US and Asian new nuclear plant.

However, even if there is a robust economic case, new nuclear plants may not be built unless a broader framework is put in place to manage the uncertainties associated with their construction.  This means government and industry must find new ways of working together.

Deloitte is committed to moving the debate forward in these areas. Ciara Ryan, energy partner at Deloitte, comments:

“If the issue of climate change is to be seriously tackled with a balanced set of energy policy measures, then the nuclear debate must now become explicit and open between all interested parties. The preconceptions and long-held assumptions about this fuel source must be addressed by an objective examination of the current facts and developments.”

“We intend to use our expertise as leading nuclear advisors globally to research options and obstacles to inform this debate. The Deloitte nuclear series aims to contribute significantly to such a debate”.

Over the next six months Deloitte will continue to investigate and report on the following key issues within the nuclear debate:

• The impact of carbon and oil/gas prices on the future economics of new build Nuclear Power Plants and the political commitment to carbon reduction required to encourage 40+ years of investment.
• The adequacy of the current UK electricity market design in signalling the importance of climate change and whether it retains any inherent barriers to the consideration of nuclear as one option in the generation mix.
• The latest data regarding the economics of a new generation nuclear power plant in terms of capital costs; fuel costs; cost of capital; operating costs; economies of scale and decommissioning and waste disposal.
• Possible project financing and corporate financing structures for private sector nuclear new builds; the key risks inherent within the investment and possible options for risk/ reward transfer within such structures.
• Mechanisms to manage the financial and operating risks associated with back end fuel management and decommissioning.

Visit www.deloitte.co.uk to view the fist paper of the series, ‘Sparking the debate: the Deloitte Nuclear Series”.

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About Deloitte
In this press release references to Deloitte are references to Deloitte & Touche LLP.

Deloitte & Touche LLP is the UK's fastest growing major business advisory firm based in 21 UK locations, with over 10,000 staff nationwide and fee income of £1,246 million in 2003/2004. It is a member firm of Deloitte Touche Tohmatsu, a leading professional services organisation, delivering world class audit, tax, consulting and corporate finance services, with around 120,000 people in over 140 countries. Deloitte Touche Tohmatsu is a Swiss Verein, and each of its national practices is a separate and independent legal entity.

Deloitte & Touche LLP is authorised and regulated by the Financial Services Authority.

The information contained in this press release is correct at the time of going to press.