Above: Hinkley Point C is already under construction (Source: EDF)
The UK’s nuclear industry received some useful reassurance in March, when the Climate Change Committee (CCC) concluded in a new report – Delivering a reliable decarbonised power system – that the government’s nuclear plans were consistent with operating a zero-carbon power industry. In addition, in the spring budget statement the government announced that nuclear will be in the ‘green’ group in a planned taxonomy of energy technologies (following on from the taxonomy already published by the EU). In the same statement Chancellor of the Exchequer Jeremy Hunt said he wanted nuclear to provide a quarter of UK electricity by 2050 – somewhat above the CCC’s target.
But the general consensus that some level of nuclear generation would be a positive benefit in running a Net Zero system has increased frustration over slow progress towards replacing the existing nuclear fleet. Political changes in the UK have slowed the government’s plans for new nuclear investment and the industry has tried to pressure government to make key decisions within the next year to maintain momentum in the programme.
The CCC provides analysis and advice to government on meeting the country’s legally-binding Net Zero carbon emissions target, along with regular score cards on the country’s progress. It covers the entire economy, but its focused report on “what a reliable, resilient, decarbonised electricity supply system could look like in 2035, and the steps required to achieve it” is a key document, because decarbonised energy supply is an enabler for other sectors.
It says that “a decarbonised power system by 2035 is achievable, but it requires that barriers to swift deployment of critical infrastructure are removed, and policy gaps remedied.” Its comment that a flexible low-carbon electricity system based on renewables and nuclear, “would also cut our exposure to volatile international fossil fuel markets” and that “these conclusions have new significance following the recent period of heightened energy insecurity” are also calculated to exert pressure on the government, which has been placing emphasis on energy security – reconfiguring its previous Department for Business, Energy and Industrial Strategy as the Department for Energy Security and Net Zero. In his statement Chancellor Hunt said the long-term solution to providing ‘cheap and reliable’ energy “is not subsidy but security”.
The CCC joined other interested parties in calling for action this year. In 2023 it wants the government to set out a “vision for what a well-adapted and climate resilient energy system will look like” and “create a minister-led infrastructure delivery group, advised by the new Electricity Networks Commissioner, to ensure enabling initiatives for energy infrastructure build are taken forward at pace, and necessary policy changes are implemented across the UK, to deliver a decarbonised and resilient power system by 2035”.
In capacity terms, the government still has an ambition to ramp up investment, with targets of 24 GW by 2050 and one project to reach final investment decision this Parliament (ie by mid-2024) and two in the next (ie by mid-2028).
The CCC says nuclear is “relatively expensive on a levelised cost basis and has a relatively inflexible supply profile,” but notes it could have a role in hydrogen production (which in turn can support system flexibility) and the provision of other system services. It says, “given the relative inflexibility of variable renewables and nuclear generation, these will need to be complemented by various forms of flexibility, in order to manage the electricity system over the necessary timescales.” The Chancellor was more encouraging, saying nuclear was “another critical source of cheap and reliable energy”, for when “the wind doesn’t always blow and the sun doesn’t always shine”. As expected, he said that “nuclear power will be classed as ‘environmentally sustainable’ in our green taxonomy, giving it access to the same investment incentives as renewable energy”. That measure is intended to encourage private sector investment into a UK nuclear programme but the designation remains subject to consultation.
Action needed this year
The CCC’s recommendations included two to be delivered before the end of 2023. Both were framing documents for the energy system as a whole: to set out “the government’s vision for what a well-adapted and climate-resilient energy system will look like”; and to “Create a Minister-led infrastructure delivery group, advised by the new Electricity Networks Commissioner, to ensure enabling initiatives for energy infrastructure build are taken forward at pace, and necessary policy changes are implemented across the UK, to deliver a decarbonised and resilient power system by 2035.”
Others had more specific items on the nuclear agenda for the year. Tom Greatrex, Chief Executive of the Nuclear Industry Association, highlighted that: “we urgently need planning reform to get critical infrastructure like new nuclear built more quickly. Sizewell C has taken 50% longer to consent than Hinkley, with thousands more pages of supporting documentation required, even though it’s a replica project. That’s unacceptable.”
The time taken is only part of the problem. Under the current framework there is a list of potential nuclear sites – although the original site selection was open, they all are sites that already have nuclear infrastructure. Other sites require special consent from the Secretary of State – a procedural barrier if small modular reactors (SMRs) are to be used in locations such as former coal-fired stations. The government is addressing the planning and development consent issue with a review of the existing major infrastructure projects regime (which would be used for Sizewell C and other GW-scale units) and a review of the general energy planning framework. Although the aim is to smooth the deployment of new plants, uncertainty during the process has a chilling effect on developers.
Equally fundamental, setting up of the UK’s new nuclear delivery body, Great British Nuclear (GBN), has been hit by the multiple changes at the top of government.
The new body was announced last year by then-Prime Minister Boris Johnson. Simon Bowen, who is advising on setting up the body, told MPs that a team of civil servants and advisors were tasked in May with a 100-day ‘sprint’ to produce a report for Johnson. However, Johnson had resigned as prime minister when the report was handed in. “It then went in to the Truss government, and subsequently, Prime Minister Sunak and Chancellor Hunt are now involved in the decision making. We have continued to develop what GBN could look like, and to advise government on what it could look like, but it is a decision for the Prime Minister and the Cabinet to make.”
He cited strategic choices that had to be made by the government. GBN has to set up a programme of new-build, but it has to hear from government whether it is committing to large gigawatt-scale units, SMRs or both, make funding available and commit to taking a major role: “This is a major infrastructure programme and government do need to take a leading role, so the decision needs to be made and it needs to be made quickly.”
Bowen said his team was in discussions with both the new energy department and HM Treasury but the current fiscal environment had also meant discussion had been “difficult and protracted”. But he stressed, “there is no point in setting up an organisation just so that the organisation can work out how it is going to operate, because that does not deliver any outcomes”.
His comments gave some indications on thinking about GBN. He said the report had recommended that “in line with international practice in the nuclear space, government have to take a leading role and have to provide funding to support the development of projects, and government have to take some of the risk.” He said: “We cannot expect developers to take the risk on doing all the characterisation work in a site like Wylfa if there is no certainty they are going to get a project at the end of it.”
Asked how much funding is needed, he said “it depends on government policy with regard to gigawatt [scale plant] and SMRs, but it is measured in a few hundred million… critically, to be able to fund development and to support the projects.”
He said government funding could be of the order of “a few hundred million” in early funding: as to the total, he said “is it going to be measured in billions across a whole programme? Yes, it will, because it is a major programme, and these projects are very expensive projects”. He said it is very expensive to bring in private investment while there is uncertainty and “the private sector will not invest unless it sees that government are committed to the programme and that they are also prepared to invest in their infrastructure.”
Bowen also noted that for many of the potential technologies there is no developer with capability, so “we need the capability to initially form a development company within GBN”. The question of whether GBN would eventually be an operator or a utility could not be answered “until we attract other people into the market.”
Bowen said that the organisation could be largely in place this year if it got the government go-ahead. If the government can deliver that and the draft for a new planning framework this year it could allow for the final investment decision on Sizewell C it seeks in this parliament – and a significant step towards a nuclear fleet to follow Hinkley Point C.
It is not clear that the spring budget moved the dial very far on that ambition. The Chancellor said “I am announcing the launch of Great British Nuclear, which will bring down costs and provide opportunities across the nuclear supply chain” but did not make commitments on any funding level, or on a timetable. On SMRs Hunt did have a timetable: he launched a competition for SMRs to be completed by the end of this year. If that demonstrates that SMRs are viable, he said, “we will co-fund this exciting new technology”.
Author: Janet Wood, Expert author on energy issues
