A Lot of Change in the UK Nuclear Space: Costs Up, Construction Delays

A happy future requires renewables taking charge

My artist’s impression of a Small Modular Reactor

I’m becoming increasingly sceptical that the nuclear industry is going to be able to rise again after the huge setback caused by the Fukushima disaster in 2011. Certainly it is too late for nuclear power to contribute significantly to the urgent short term need to decarbonize to address climate change. Recently I explored what is happening in relation to nuclear developments versus renewable energy in China, where renewables are clearly gaining ascendancy. Another market that has been seen as a major development area for nuclear power is the UK, as its fleet of nuclear reactors, which once provided 24% of UK power, are reaching the end of their effective lives. In 2022 UK nuclear power provided 13.9% of total UK power, with renewable energy providing 42% of UK power in 2022. There is an expected dramatic further fall in nuclear power production by 2028 since by that time only the 1.2 GW Sizewell B reactor will still be operable.

UK Governments over the past decade have been resolute in supporting an updated nuclear industry as retirement approaches for the nuclear fleet. The signature development of two nuclear reactors at Hinkley Point C (total 3.44 GW) has been seen as the project that will open up more plants  both large and small. While both sides of politics are keen, the rhetoric is distinctly dated, with lots of reference to “base load” power, a term which I suggest represents a former era of centralised power provision from big power generators (including nuclear plants), rather than the future which involves grids powered largely by renewables. The challenge is that Hinkley Point C has become a controversial source of expensive power (compared with renewables such as offshore wind). It has not helped that progress at Hinkley Point C has been slow, with a very recent further delay of 2-4 years for completion (now 2029-2031) and continued cost blowouts (now 31-34 billion pounds at 2015 values). Plans for a number of new plants to be funded by Chinese, US, Japanese and European interests have struggled due to the delays and cost blowouts. 2024 starts with some anxiety about funding of the Hinkley Point C facility, which is 2/3rd owned by French Government company EDF and 1/3 by Chinese company China General Nuclear (CGN). CGN will not provide funds beyond what it has committed and so the French Government is on the hook. This is not a happy position and may impact on the future development of Sizewell C (2 reactors total of  3.44 GW), which is the next large reactor complex planned for UK development. It seems that the UK Government has taken over Chinese CGN’s 20% share of the Sizewell C project. Is EDF ready to build Sizewell C without a bigger contribution from the UK Government? Time certainly has run out for Sizewell C (even if it gets the go-ahead) to contribute to the period up to 2030. There seem to be big issues to be resolved in the French/UK relationship in relation to the UK plans for nuclear revival.

UK Govt funding for SMR and Sizewell C but is this enough?

The UK Government has previously supported Rolls Royce in SMR (Small Modular Reactor) developments and it has announced  that 6 firms (EDF, GE-Hitachi Nuclear Energy, Holtec Britain, NuScale Power, Rolls Royce SMR, Westinghouse Electric Company) have been shortlisted for funding. The winners (does that mean more than one?) will be part funded in SMR developments. I’ve covered my view of SMR programs elsewhere.

It is becoming clear that the UK Government is increasingly seen as a key funder for UK nuclear ambitions as China and now France (through Government owned EDF) make clear that they are losing interest as the key investors in UK nuclear power.

Is there another opportunity other than nuclear power?

Recently in reviewing Japanese giant Hitachi’s approach to modern grids, I’ve been reminded that the concept of “base load” is outmoded. While Hitachi has a significant stake in nuclear power in partnership with GE, Hitachi is very focused on flexibility as renewables (solar PV and wind)  begin to dominate new power supply. It is clear grids of the future will not need “base load” power as delivered by fossil fuel or nuclear plants.

A recent paper by Melissa Stark  from RUSI (Royal United Services Institute) concerning the future energy picture in the UK is interesting. This paper outlines the big changes coming as solar PV and wind power become by 2030 the key drivers in the UK energy scene, which will be dominated by electricity. The paper indicates that by 2030 the UK might have 100 GW of renewable capacity (50 GW offshore wind, 25 GW onshore wind and 25 GW solar PV). The paper states that by 2030 the UK energy mix will be more than 70% electricity, up from ~20% in 2023; and 95% of the electricity will be low-carbon. Electric vehicles (10 million by 2030?) and more than 1.1 million heat pumps will mean domination of transport and heating by electricity (ie exit from fossil fuels). It is noted that seasonal contribution by solar PV and wind power is complementary. A key element for stability is an estimated 23 GW interconnector capacity between the UK and Europe by 2040, while demand flexibility will come from demand response and managed EV charging.

This overall conclusion seems consistent with future planning and will mean a more robust and more self-reliant system than currently applies. The bit that I find strange is introducing nuclear power, hydrogen and carbon capture as key parts of the transition to 2030. I find unconvincing, arguments that any of these technologies will be able to make a significant contribution up to 2030, and after that time, if solar PV and wind dominance is correct, they won’t be needed to any significant degree.

I’m not a financial advisor and so any investment decisions that you make after reading my work is the responsibility of you and your financial advisor. However, I hope that my commentary gives you and your advisor useful perspectives.