The government’s Ten Point Plan for reaching net-zero includes a commitment to investing £525m in new nuclear. Where will the money go, and is the government’s spending strategy realistic?
Development funding for large-scale new nuclear
After some doubt over the role of nuclear in the energy mix, the government has now publicly committed to pursuing new nuclear projects on a large scale, “subject to value for money”.
The UK currently has one large-scale nuclear plant under construction: Hinkley Point C in Somerset. At our estimate, the public money spent on loan guarantees for the project is more than 10 times the entire fund announced for new nuclear – and they form part of a bigger package of subsidies. Does the government really expect future large-scale nuclear projects to go ahead without the promise of public funding on this scale?
It is likely that the next large-scale power station to get the go-ahead will be Sizewell C in Suffolk. This has faced strong local opposition, leading EDF Energy to make significant changes to its construction plans last month in an effort to reduce the environmental impact. A 30-day consultation started this month.
Mini-nuclear plants: up to £215m
In order to support new technology in the field, the government will be investing up to £385 million in an Advanced Nuclear Fund. Up to £215 million of this could go into the development of Small Modular Reactors (SMRs), also known as “mini nuclear”.
Up to now, the size and complexity of nuclear plants has meant high upfront costs and long timescales. The idea behind SMRs is that instead of building one large plant, you build multiple smaller plants, all to an identical design. The components are small enough to transport, so they can be manufactured in one location and then moved to the site of the new reactor for assembly.
Rolls-Royce has announced plans to build 16 SMRs in the UK and will be likely to get some of this fund. They estimate it will take 10 years to get the first one up and running, after which they believe they will be able to make two a year.
Advanced Modular Reactors: up to £170 million
The government has already been funding research into the feasibility of Advanced Modular Reactors, and is now funding research and development with the aim of building a demonstrator by the early 2030s, if not before. The government’s Ten-Point Plan refers to “high-grade heat” unlocking hydrogen production, so it sounds as if they are focusing on very-high-temperature reactors, or VHTRs.
What will the money achieve?
There are two big concerns with the plans announced in the Ten Point Plan. The first is that the nature of nuclear means we won’t see quick results. Even if construction on Sizewell C were to begin immediately after the consultation ends next month, it would still take another 10 years to complete. Other projects are still at the negotiation stage. Work on the SMRs is expected to start soon, but we can’t expect this new model of reactor to start generating energy within 10 years either.
Decommissioning will halve our current nuclear capacity in the next five years, but no new plants will be ready in time to fill the gap. Even Hinkley Point C, which has already been under construction for four years, probably won’t be ready for another six. The shortfall will have to be made up by other energy sources in the meantime, such as the Drax project to build the UK’s biggest ever gas-fired power plant, which was approved a year ago.
All valid models for reaching our goal of net zero emissions by 2050 show that electricity demand will drastically increase as sectors such as transport and heating become electrified, and that the electricity must come from low-carbon sources. It seems likely that the government is planning for wind power, the first item in the Ten Point Plan, to meet the bulk of this new demand.
This doesn’t mean that it’s wrong for the government to fund research into innovative new energy technologies for possible use in the future; it just means that the plans just announced for nuclear will do nothing to meet our energy needs in the short-term.
Is it enough?
The taxpayer is already giving billions of pounds in loan guarantees to the not-yet-built Hinkley Point C. But this represents a fraction of the true subsidy. A review by the International Institute for Global Development before construction began in 2016 found that the UK government will be subsidising Hinkley Point C in five different ways, including guaranteed prices for electricity and help with the costs of waste disposal and decommissioning. When you add up all these subsidies, the total cost to the taxpayer of Hinkley Point C is likely to be more like £40 billion. The entire sum pledged to new nuclear in the Ten Point Plan is less than 2% of this.
The new generation of SMRs may turn out to be better value for money. But is it realistic to expect that any new nuclear projects will get up and running with just a slice of the £525m pie? Or will the true cost to the taxpayer be orders of magnitude greater?
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