15 thoughts on what the Spending Review means for British Nuclear

Is Britain getting a 'golden age of investment in nuclear'?

Ed Miliband is promising a “golden age of investment in nuclear power”.

After years of wrangling, the Government has finally signed off on Sizewell C and are investing £14.2bn in the project.

Great British Nuclear’s (GBN) SMR competition is over too. The bookies’ favourite (if there are oddsmakers for such things) Rolls-Royce SMR won out. GBN are getting a rebrand too: they’re now to be known as Great British Energy - Nuclear. Catchy…

What should we make of all of this?

I have a few thoughts.

1. It is good news that Sizewell C is finally getting over the line. If Britain’s to get to Net Zero, it is essential we have clean baseload on the grid. When the wind isn’t blowing and the sun isn’t shining, we can still rely on nuclear power to keep the lights on.

2. Some critics of Sizewell C, and nuclear in general, will point to the high cost of the project compared to renewables. They have a point (up to a point). Sizewell C (and Hinkley before it) are expensive compared to the strike price at the last solar CFD auction. Offshore wind is a more complicated one. Strike prices from recent auctions are now recognised by the industry as undeliverable. Hornsea 4 is on ice. But, crucially these aren’t apples to apples comparisons. Not only does nuclear provide massive ‘system’ benefits to the grid, it is also less demanding of new grid infrastructure.

3. And not all renewables are equal. Going from a grid that’s 20% renewable to 25% renewable is a lot cheaper than going from a grid that’s 80% renewable to 85% renewable. Intermittency is a big issue when you reach very high penetration levels. Without long-duration storage, consumer flexibility, and interconnection, it gets very expensive very quickly.

   

4. Funding Sizewell C was important too as a signal to the industry. If a project can get as far as Sizewell C had then collapsed, it sends a big message. Investments that need to be made now in the supply chain would have been threatened.

5. Sizewell C is too expensive. Hinkley Point C is the most expensive nuclear power plant in the history of the world. Part of the reason was massive design changes insisted on by the UK’s nuclear and environmental regulators. The hope was that costs would fall significantly for Sizewell: it looks as if Sizewell C will be a bit cheaper than Hinkley Point C, but still far more expensive than other EPRs built in France, Finland and China.

6. If Britain is to build large-scale reactors past Sizewell C, then it is essential to cut costs. One option would be to look at different designs such as the Korean APR-1400 (which has been built abroad at a sixth of the cost as Hinkley Point C) or GE Hitachi’s ABWR (built in Japan). To get the former approved quickly, the Government could change the law to automatically approve any design approved by trusted regulators.

7. Another would be to revise regulations. Sizewell C’s environmental impact assessment was 44,000 pages long. Thousands of design changes were made to the EPR design in the UK. Many were environmental, for example Hinkley Point C is in the process of installing an acoustic fish deterrent. Others were based on safety grounds. For example, British reactors have an additional redundant control and instrumentation system. All of that adds cost. This is why the Government’s Nuclear Regulatory Taskforce has such an important job.

8. The Great British Nuclear SMR competition is over. Rolls-Royce SMR have been selected as the ‘preferred bidder’ and £2.5bn has been pledged for SMRs over the spending review period. To be clear, this isn’t an order for a Rolls-Royce SMR. Rather, it is additional money to overcome regulatory, planning, and design hurdles.

9. When the GBN competition was announced, many people criticised it and argued we should skip straight to ordering a fleet of Rolls-Royce SMR. After all, they are our best chance of being a leader in SMRs. The argument against it was twofold. First, it was not clear at the time that Rolls-Royce had the best reactor design. Second, there were suggestions Britain would order multiple reactor designs. The logic being that it’s not a good idea to put all your eggs in one basket and while you lose some fleet economics (the more we build the cheaper it gets) you are at less risk of backing the wrong horse.

10. Britain is not in the fast lane on SMRs. In Canada, Ontario’s publicly-owned utility has put in an order for four SMRs built by GE Hitachi. Construction is due to start next year. By contrast, Rolls-Royce SMR are only the preferred bidder. We still don’t have an order and there’s no expectation that Britain will have a Rolls-Royce SMR on the grid before 2030. One industry expert recently told me they reckoned Ontario is four-to-seven years ahead of us.

11. If GB Energy - Nuclear (as it’s now called) buys an SMR fleet, jobs and investment will stay south of the Scottish border. Labour’s First Minister candidate may have announced an intention to scrap the SNP’s ban, but as it stands only England and Wales will benefit directly. (That’s despite Scots supporting nuclear power.)

12. On top of the investment in Sizewell C and Rolls-Royce SMR, we also saw a big investment in fusion. Many are sceptical that we can ever get fusion to work cost-effectively, but if we can then the upside is so huge that a £2.5bn investment in British science and engineering is a no-brainer.

13. The Government also announced that it’s looking to create a route for private-sector led advanced nuclear projects. The details are sparse but it looks as if SMR developers will be able to access the Government’s National Wealth Fund for investment.

14. On that topic, a big barrier to SMR deployment is access to nuclear sites. In theory, new planning rules will make it possible to build in a much wider range of sites, including on ex-coal plants. However, there are major regulatory (and geological) advantages to building in a designated site. There’s also a political bonus too. People who live near nuclear understand how good it is for jobs.

15. So it’s good news that on top of cash for nuclear, they’re also creating a new ‘pioneer park’ near Sellafield in Cumbria, which will free up land for nuclear use. When Britain Remade visited Whitehaven in Cumbria we learnt from SMR developers and local figures that this was a big barrier to bringing nuclear back to the area. Credit to MP Josh MacAlister for campaigning hard for this.