New nuclear can earn its place within the energy mix

Comment by Mike Middleton, Practice Manager, Nuclear

New nuclear does not need to be expensive and can earn its place within the energy mix driving a Net Zero economy.

A combination of Government initiatives to enable access to affordable finance and learning from nuclear deployment programmes elsewhere illustrates how to further reduce nuclear project schedules, risks and costs.

For the last 50 years nuclear energy has been part of the diverse mix of power generation in the UK.  However, most of the UK nuclear power reactors operating today are expected to begin decommissioning over the next decade.  Construction is now well underway at EDF’s Hinkley Point C new nuclear power station; this is the first plant to be built since completion of the single unit pressurised water reactor at Sizewell B in 1995. EDF report that construction at Hinkley Point C is currently on track.

A range of scenarios and analysis reports illustrate the system value of nuclear technology alongside other low carbon technologies in decarbonising the UK’s economy.  The relative contribution from each of these low carbon technologies varies between these reports which is not surprising.  The extent of deployment of new nuclear is often limited by the associated uncertainties, and from analysis these uncertainties are relatively consistent:

  • Can the costs for new nuclear be expected to reduce?
  • Can the perceived risks associated with new nuclear build projects be addressed with confidence so that such projects are attractive to potential investors?
  • How can investors be secured, to finance such projects at an affordable cost of capital?

Addressing these uncertainties is important if nuclear energy is to play a significant role in a decarbonised UK economy, which would require a pipeline of projects beyond EDF’s Hinkley Point C and Sizewell C and deliver associated benefits through infrastructure investment for the UK economy.

In the Nuclear Sector Deal announced 27th June 2018, the UK Government committed to keeping under consideration a range of financing options when deciding how to proceed with future new nuclear projects.  Through negotiations with Horizon’s Wylfa Newydd project, the UK Government demonstrated the willingness to engage with project developers on this matter. The UK Government also committed to reviewing the viability of a regulated asset base as a sustainable funding model for future projects beyond Wylfa Newydd.  Whilst these commitments may bring forward solutions to the uncertainty of affordable funding, the uncertainties of cost and risk reduction remain.

The Energy Technologies Institute paper titled “Update to the role for nuclear in UK’s transition to a low carbon economy” summaries the learning from its Nuclear Cost Drivers project which was commissioned to address these two other uncertainties. The insight paper concluded that contemporary giga-watt scale reactors are the only designs ready to be deployed in the UK in numbers between 2025 and 2035.

The Nuclear Cost Drivers project was based on recently completed or nearly completed reactor projects together with expert facilitated interviews with senior personnel involved in the delivery of these projects. This project demonstrated that there was strong evidence of applicable cost reduction in the UK, but collective action was required by all project stakeholders, including Government, to bring about the integrated programme of activities necessary to realise this potential.

The project revealed from an international perspective that whilst there were troubled nuclear projects in Finland, France and the United States, there were many more projects from elsewhere including Japan, Korea and China that used repeatable engineering with shorter and more predictable project schedules.  Such projects typically benefitted from higher productivity levels in direct labour and indirect services, demonstrating the pathway to shorter projects with lower costs and less risk.

The ETI insight concludes that further evaluation of a potential UK integrated program could lead to better understanding the range of UK policy options which can drive the nuclear cost reduction curve.

Nuclear energy can be an important technology is the UK’s transition to a carbon neutral economy and does not have to be expensive. 

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