As governments continue to set and strive to meet net-zero targets, a common understanding is that the transition to sustainable energy is a far more complex issue than merely switching from non-renewable energy sources to green alternatives. There is a delicate balance that must be maintained between making progress on the transition to clean energy, achieving strong energy security throughout the process, and ensuring that this is all done at an affordable price point.
The conflict in the Ukraine really brought to light how vital energy security is. Many countries were exposed due to the extent to which they rely on foreign energy imports. In the UK, it was a little over one year ago that the country was left with no option but to pay Belgium world-record breaking prices of over £10,000/MWh (EURXX/MWh) to stave off a blackout. For perspective, the spot price for electricity on the National Grid is currently hovering around £100/MWh (EURXX/MWh). The need for a sustainable, secure energy supply has perhaps never been so widely recognised and understood. As it turns out, keeping the lights on whilst reducing carbon emissions is no easy feat.
Backing nuclear ambitions
The UK, which has set an ambitious target of being net zero by 2035, has nonetheless made some hugely promising steps with the recent launch of Great British Nuclear – a government-backed initiative dedicated to supporting one of, if not the most promising carbon-free energy solution that we have at our disposal. It should not be overlooked that other sources of clean energy, such as solar and wind, have also seen considerable support from both the public and private sectors, and they have potential to play an important role in transitioning to a clean energy mix in line with the UK’s targets. However, these variable output options are necessarily ideal solutions and this is where nuclear power is demonstrably superior. Nuclear plants run 24/7 whilst emitting zero carbon, and they are not dependent on the weather or any other external conditions.
This is in part why it is so encouraging to see the government throwing its weight behind nuclear power with the launch of Great British Nuclear, which from its outset has pledged to deliver grant funding of up to £157mn (EURxxmn), as well as launching a competition to develop SMRs. This particular focus on SMRs is a wise one for the government to have taken, as their potential really speaks for itself; they take up vastly less space than their full-scale reactor counterparts, and being factory built, they come online quicker, meaning that those funding the transition can see a return on their investment sooner. Whereas full-scale reactors have often been criticised – and fairly so – for being slow, long-term projects that can be vulnerable to delays and cost overruns, if their promise is realised SMRs could be described as a relatively cheap, cheerful, and overall more attractive alternative from an investor’s perspective. The reduction in construction risk is also a major upside of SMRs from a climate protection point of view, as time is very much of the essence in our mission to mitigate and reverse the adverse effects of climate change. Put simply, time is against us with regards to solving the climate crisis, and SMRs offer a means to respond more quickly and on a more reliable time frame than full-scale reactors do.
Overall, it is probably not an understatement to identify SMRs as a potential game-changer when it comes to driving the clean energy transition, and so the government’s decision to zero in on this corner of the nuclear energy sector should be recognised as sound policymaking. With the launch of Great British Nuclear and the dedicated support for SMRs, the UK has also positioned itself as a potential front runner in developing a technology that could play a pivotal role in achieving net zero. Indeed, if a network of SMRs springs up across the UK as the government appears to envisage, we could well move from an economy reliant on energy imports to an exporter of clean energy to other nations.
Nuclear policy failures
The road to net zero remains a complicated one, though, and some inevitable challenges lie ahead. Regrettably, nuclear energy has suffered some reputational damage since it was first introduced, most notably due to incidents such as those at Chornobyl and Fukushima. As a result, in addition to attracting investment, nuclear power will have to contend with public opinion to a greater extent than other zero carbon energy sources. The launch of Great British Nuclear will have sent a powerful message, but as the development of nuclear reactors begins to get underway, we can expect a similarly determined response from the small but vocal anti-nuclear minority.
However, those who would see the opportunity that is nuclear power left untouched are often arguing from a position of misconception or misunderstanding about the safety of nuclear power. Modern reactors are extremely safe, and assessments from the World Nuclear Association have found that in the Western world, commercial nuclear reactors have never been responsible for a fatality due to radiation exposure. The safety record for nuclear reactors is essentially unmatched, and so opposition born out of fear of the energy source is baseless and misdirected.
Where in the UK the launch of Great British Nuclear has encouragingly indicated that policy makers have not succumbed to the pressures of the anti-nuclear minority, unfortunately the same cannot be said for parts of Europe. The EU has a history of being divided on the topic of nuclear power, with nations such as Germany taking a strong stand in opposition to it. Earlier this year, Germany phased out the last of its fleet of nuclear plants, and it has stated its intention to avoid the energy source completely in its path to net zero.
The result of this short-sighted policy is already clear to see, as Germany’s carbon emissions have not declined as sharply as they otherwise would have since it started phasing nuclear power out of its energy mix. It is currently Europe’s largest overall emitter of carbon. There is more than a hint of irony in Germany’s decision to shut down its nuclear fleet, as Germany possessed some of the best performing reactors in the world. In a decision that defies logic, rather than use those assets to battle climate change, they have decided that it is “greener” to replace them with increased reliance on fossil fuels. Germany is not alone in its opposition to nuclear, with nations such as Portugal, Austria, and Denmark also vocalising their resistance to the inclusion of nuclear power in the EU’s green taxonomy in recent years. While it is frustrating and disappointing to see nuclear driven into a retreat in Germany, it is not all doom and gloom for Europe, as Sweden has just announced plans to build 10 new reactors in the next 20 years, Poland is embarking on an ambitious nuclear power programme, and France, always a nuclear stalwart, earlier this year passed legislation to accelerate the construction of new reactors.
From tiny acorns
The outlook for nuclear energy right now in the UK appears rather sanguine. If the hopes behind the launch of Great British Nuclear to develop a wide network of SMRs and nuclear plants come to fruition, the UK will be well positioned to support our European neighbours, including Germany, if and when further disruptions to energy supply occur, or when they are in need of larger amounts of clean energy imports to meet their net zero targets.
To reach this vision, however, the government will need to follow through with sustained support over the next decades for the development of nuclear power in the UK. The launch of Great British nuclear is a solid start, but it is only a first step in a long road to becoming an energy self-sufficient nation, and the government cannot rest on its laurels. In real terms, we are likely behind where we need to be on our road to net zero, but it is nonetheless a case of better late than never with regards to this latest support package.
As the old saying goes, the best time to plant a tree was 10 years ago. The second-best time is today. The government has planted the seed of a flourishing nuclear energy sector with the launch of Great British Nuclear, and with continued support, we can hope it see grow in the years ahead.
Author: Vince Zabielski, Partner, Pillsbury
