Why there is new hope for new nuclear

The announcement last week by Rolls-Royce that it is ready to proceed with the development of small modular reactors (SMRs) is a significant step forward for the nuclear industry, and for the low-carbon agenda. For the first time in more than a decade there is serious competition in the sector, and the prospect that an industry which began in the UK seven decades ago can be revived and regain credibility.

Rolls-Royce has had its financial problems over the last few years but the company’s technical expertise is not in doubt. The firm has long experience of building reactors for nuclear submarines. Now it has developed a technology which, given the rapid go-ahead it deserves, could be producing power from small, easily built units within ten years.

For energy policy the attraction of nuclear is that it can supply significant volumes of continuous power without generating greenhouse gas emissions. There is great scope in the UK for wind power in particular to grow, but if there is to be large-scale electrification of the economy into areas such as transport, sources of power beyond wind and solar will be needed. The government’s reported plan to accelerate the transition from petrol-driven to electric cars will increase demand for batteries. Hydrogen offers a possible longer-term alternative, but green hydrogen—produced through electrolysis, without the costly complexity of extracting and storing the carbon from source materials such as natural gas—is still some way from being economically competitive.

In France, nuclear power has been an important part of the energy mix for the last half century. The same was true of Germany until recently. In Britain today, 20 per cent of the electricity we consume comes from nuclear stations. Those stations are ageing, having enjoyed life extensions far beyond their original planned closure dates. The physical risks of keeping them open are growing. The need to put in place new generating capacity is clear, even if the absolute amount needed is still an open question.

The countervailing problem with nuclear has been the hideously high cost of building that new capacity. France’s European Pressurised Reactor was designed to be large scale with low unit costs, but sheer size brought complexity and there is still no working version of the EPR in Europe. The first planned project at Flamanville in Northern France is already nine years behind schedule and €9bn over budget. Hinkley Point C, the EPR being built in Somerset, is also years behind its original plan. If ever completed, the electricity it produces will cost consumers £92.50 per megawatt hour, index-linked to 2013 for 35 years after the plant starts producing. While the prices of all competing fuels are falling, our children and grandchildren will still be locked into paying through the nose into the 2060s.

Powerful lobbying from the French state-owned company EDF is pushing the UK government towards ordering another EPR reactor to be built at Sizewell in Suffolk, even before Hinkley has been brought onstream. The cost of Sizewell has been quoted as £20bn. The lobbying should be ignored, just as it should have been ignored in 2013 when the current Hinkley contract was signed. The Sizewell development, which is bitterly opposed by local residents, should be rejected on grounds both of the costs and the environmental damage involved.

Rolls-Royce has put a better alternative on the table, with a technology that can be built incrementally in response to whatever pattern of energy demand emerges. SMRs, being simpler and smaller than other reactors, could be built on brownfield sites to avoid environmental damage and local opposition. Rolls also has an excellent safety record—something that matters enormously in a sector which constantly needs to demonstrate that risks are properly managed.

In contrast to Hinkley and Sizewell, the use of SMRs, whether from Rolls-Royce or other companies, would avoid the risk of locking consumers into high-cost options for decades to come. Hinkley and Flamanville have been described as white elephants. White dinosaurs would be a better description. Technology is moving very quickly and although some provision for the future has to be made now, innovation and new technical advances should be encouraged. We cannot know what the energy landscape will look like in 15 or 20 years’ time and decisions taken now should not pre-empt future progress.

The SMR option should also be seen as an example of creative industrial policy. These reactors have the potential for use in emerging markets around the world, and offer a viable option for limiting emissions and the fundamental damage caused by climate change. That could mean many thousands of permanent jobs as a new industrial sector is created.

Boris Johnson is reportedly planning to announce a ten-point plan to deliver decarbonisation. An endorsement of the SMR initiative should be point number one.