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Insight - Stakeholder Newsletter

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Insight Stakeholder Newsletter

Keeping costs down

18 November 2009

 Surplus land around Wylfa Power Station has been sold

Decommissioning old nuclear facilities is an expensive operation, as the headlines often proclaim, and although the NDA receives Government funding for its core mission, it is also required to seek maximum value from existing assets.

Business optimisation is therefore a key activity, generating income that can help to underpin the costs of clean-up while offsetting the demands on the taxpayer.

The NDA focused on its decommissioning strategy and major stock-take in the early years of its existence, but has now also turned its attention to the process of selling surplus pockets of land, as well as increasing the revenue from the property portfolio inherited from BNFL.

Much of this unused land surrounds existing nuclear sites and was once tentatively earmarked, back in the mists of time, for nuclear expansion proposals that did not materialise, or simply as buffer space with potential for other uses.

Following the Government's renewed commitment to nuclear power, however, the surplus land acquired the potential to attract greater levels of interest.

In March 2008, the NDA launched a market-testing exercise to assess the level of interest in a range of assets which included land adjacent to its sites, uranium-derived materials and its fuel manufacturing plant near Preston.

Six months later, following a series of meetings with organisations that had expressed interest - from both nuclear and non-nuclear sectors - the NDA was able to announce an initial sale of land around three sites. Given the difficulty of putting an accurate valuation on the land, it was decided to use an online auction which would ensure a transparent and competitive process for the bidders.

The auction began in March 2009, concluding successfully at the end of April. A consortium of EON UK Plc and RWE Npower bought land at Wylfa and Oldbury, while EDF bought land at Bradwell. The Wylfa sale was conducted jointly with EDF who also owned land around the Anglesey site.

The process raised up to £387 million for NDA which will be helpful in the current economic climate.

Project Manager Sam Hounslow said:

"It was difficult to gauge the potential level of interest in the land, and the value that might be realised, so the auction proved to be an excellent way to proceed. We were delighted with the response."

Now, also sold is a tranche of surplus land around Sellafield. Following expressions of interest the land was sold to a consortium of Iberdrola SA, GdF, Suez SA and Scottish & Southern Energy plc. This sale will ultimately result in proceeds of up to £70 million for the taxpayer.

The four sites are among 10 UK locations nominated for new nuclear power stations.

Meanwhile, the NDA is in advanced discussions with Westinghouse over a deal for the Springfields fuel manufacturing plant near Preston. This would provide excellent value for money for the taxpayer while also providing Westinghouse and the Springfields' workforce with the opportunity to develop future business opportunities.

At the heart of these discussions is the proposal to transfer responsibility for the commercial business and staff from NDA to Westinghouse, together with a long lease. This will provide NDA with an income stream and Westinghouse with the freedom to invest in the site.

NDA Commercial Director John Clarke added:

"The NDA has enjoyed a successful five-year relationship with Westinghouse as the Management & Operations contractor for Springfields. Their long-term understanding of the site, together with their experience as a nuclear fuel vendor, makes Westinghouse a good partner to exploit the potential of the site. The NDA will work hard to ensure this great commercial opportunity that could provide continued employment and a long-term platform for increased investment is a success."

NDA also owns a diverse range of properties that lie outside the nuclear licensed sites and include office space, housing, sports fields, a quarry and nature reserves. NDA Properties Ltd was transferred to NDA from BNFL and has assets worth around £15 million together with a rental income of £2.5 million.

Sites Announcement
The Government has recently announced the final list of potential new build sites this autumn after assessing each location against a list of criteria that range from environmental considerations to flooding issues and access to cooling water.  Once the site list is finalised, the land-owners will be wholly responsible for drawing up plans for new nuclear power stations and taking them through the planning process, both at local authority and Government level.