Britain’s nuclear industry committed to reducing construction costs by 30 per cent on Thursday, as the UK government gave the strongest signal yet that it is willing to help finance new reactors. Proposals to strengthen the nuclear sector called for new financing models to be considered for future reactors, including possible government backing. The recommendations were made in a proposed “nuclear sector deal” drawn up by a joint council of government officials industry leaders. The council is co-chaired by the UK energy minister, Richard Harrington. The proposals have yet to be formally endorsed by Greg Clark, business secretary, but the draft deal adds to signs that the government is warming to the idea of public financing for nuclear power. Previous UK governments have shied away from exposing taxpayers to the high cost of reactor construction, but heavy criticism of the £20bn nuclear project currently under way at Hinkley Point in Somerset has forced a rethink. Thursday’s proposed sector deal called for an evaluation of “how government involvement could reduce the cost of capital and deliver direct benefits to electricity consumer s”. It said that each 1 per cent reduction in financing costs would lead to a 10 per cent reduction in the electricity “strike price” needed to produce a return on investment for private developers. Nuclear developers are struggling to remain competitive against the falling cost of renewable power. The draft sector deal – part of the government’s wider industrial strategy – included a goal to lower the cost to consumers of new nuclear plants by between 20 and 30 per cent by 2030. This would imply a fall in the electricity “strike price” for new nuclear plants from the £92.50 per megawatt hour guaranteed to the owners of Hinkley Point, to as little as £64.75/MWh by the end of the next decade. That would still be higher than the £57.50/MWh cost of the latest UK offsho re wind contracts awarded in September. But Mr Harrington insisted on Thursday that Britain needed both nuclear power and renewables to keep the lights on while cutting carbon emissions. The government also announced a series of financial commitments to nuclear research and development on Thursday in a further sign of its support for the industry. These included £86m for research into nuclear fusion at the Culham research centre in Oxfordshire, which is facing a threat to EU funding after Brexit. However, industry figures said they were disappointed by the lack of firm financial support for development of small modular reactors (SMRs).
FT 7th Dec 2017 read more »
Ministers are poised to plough almost £150m into developing new nuclear technologies even after the Government’s own investigation revealed deep uncertainties about the economics of next generation reactors. The Government’s plan to reboot its stalled nuclear ambitions by investing in research and development has been mired by indecision and delay since it promised in 2015 to provide £250m to help developers find new, cheaper ways to invest in the low-carbon power. Government provoked further confusion today after issuing a flurry of funding announcements for small modular reactors, known as ‘baby nukes’, alongside findings that they may prove even more expensive than traditional nuclear plants. The new reactors, being developed by industrial giants including Rolls Royce and NuScale, will face another round of financial scrutiny by industry experts, the Government said. But in the meantime as much as £460m has been promised for new nuclear research and development by the end of the decade. The money will come from the Government, Innovate UK, and the Research Councils, a Government spokeswoman said. The research funding windfall includes £86m to develop nuclear fusion technology and a further £56m towards research and development of next generation nuclear reactors.
Telegraph 7th Dec 2017 read more »