Nuclear under the cosh

The public has started to lose faith in the nuclear sector even more than usual recently as the cost of offshore wind has plummeted, and a lack of clear signals from the government has only served to exacerbate the matter, says David Blackman.

It was a touch ironic, sitting in London’s former County Hall, to hear energy minister Richard Harrington’s staunch defence of nuclear power last week.

He was making his speech just yards from the chamber where the whole capital was declared a “nuclear-free zone” when the building was the seat of the Ken Livingstone’s Greater London Council in the early Eighties.

It was a reminder that the nuclear power and political controversy have often been bedfellows. But Harrington’s speech, when he strayed off-script to brand some nuclear critics as “naive and simplistic”, will have been music to the ears of his audience at the Nuclear Industries Association.

The sector has been under the cosh even more than normal following the results of September’s contract for difference auction. This showed that offshore wind’s generation cost was just £57.50MWh, far below the £92.50 strike price agreed for Hinkley Point C last year.

The subsequent months have also seen the publication of a critical report by the National Audit Office in which the public spending watchdog branded as “marginal” the business case for the UK’s flagship nuclear project.

The industry’s discomfort has been exacerbated by the absence of clear signals from the Department of Business, Energy and Industrial Strategy (BEIS) about its stance on nuclear.

That picture is a bit clearer following the publication last Thursday of a gamut of policy documents by the department, ranging from a sector deal for the industry to proposals for where next steps on its small modular reactor competition and a revision of the policy statement on where new plants should be located.

It’s time to re-justify the nuclear programme

– Doug Parr, head of policy, Greenpeace

Last week also saw South Korean utility Kepco emerge as the preferred bidder to take over Toshiba’s project at Moorside, reducing the uncertainty surrounding the delivery of plans to deliver the Cumbrian coastal project.

Doug Parr, head of policy at Greenpeace, says that the government has “largely ignored” the mounting calls for a rethink of the nuclear programme, which has not been subject to a thorough review since 2008. “It’s time to re-justify the nuclear programme. Things have changed massively but there are no signs of reflection on the changes that have taken place.” But Tim Yeo, chairman of New Nuclear Watch Europe, says last week’s announcements show that BEIS is taking nuclear energy “seriously” after a spell of “blowing hot and cold”.

However, while Harrington is happy to wear the nuclear industry’s shirt, he was clear in his speech that the industry had to find ways of reducing costs across the nuclear lifecycle.

The Nuclear Industry Council’s proposed sector plan, also published last week, sets out a goal of reducing new build nuclear costs by 30 per cent. The quid pro quo from the NIC is that the government should use its access to low borrowing costs to help underwrite nuclear new build projects, which would in turn deliver a significant reduction in strike prices.

Last week’s announcements included a long overdue update on the government’s small modular reactor (SMR) competition. The date on the front of the techno-economic assessment of SMRs, carried out by engineers Atkins and consultants EY, shows that it has been stuck in a Whitehall pending tray since July 2016 even though it was only published last week.

The TEA’s findings help to explain why SMRs have proved to be such a hot potato within Whitehall. The study calculated that the power produced by a mini-pressurised water reactor (PWR) would cost £101/MWh, which is even more than the £92.50/MWh strike price agreed last year for Hinkley Point C that most commentators agreed was a bad deal for the taxpayer.

If they are serious, they have to put some money in

– Tim Yeo, former chairman, energy and climate change select committee

The competition was further complicated by the wide range of technologies that the government had to assess.

The then Decc (Department of Energy and Climate Change) appeared to expect a range of miniaturised versions of the PWRs standard in nuclear generation. What they received was a much wider spectrum of technologies, such as the molten salt reactors developed by Moltex Energy.

To reflect this more complex spectrum of technologies, which proved difficult to compare, BEIS has rebadged the programme. Up to £44 million has been earmarked for research into “advanced” reactors. However, many of the companies which participated in the original SMR competition, feel short-changed by the government’s announcement.

Ian Scott, co-founder of developer Moltex, is frustrated that companies will have to retender for R&D funding given that the department will know all about their proposals from the information already submitted for the SMR competition.

The paltry sums on offer for the initial pot of funding, which works out at a maximum of £300,000 per company and must be accessed in order to qualify for the second and larger tranche, is scarcely worth the bidding costs, he adds.

Yeo, who is also a former chairman of the House of Commons energy and climate change select committee, agrees that the time has come for more tangible commitment from the government. “If the UK is going to be a player in the global SMR market, we’ve got to get on with it now. Otherwise we will be left behind as we have been in large nuclear. “If they are serious, they have to put some money in. It would help if they made clear that if any remotely encouraging progress is made they would put money in.”

And the nuclear industry needs to hear a clear endorsement from the prime minister herself, he says: “People often underestimate the confidence boosting value of statements from the top.”