Nuclear power

Nuclear reactors: is big beautiful?

Nuclear power has long been a controversial source of energy. Detractors point to high infrastructure costs and difficulties associated with storing nuclear waste, amongst other concerns. Advocates, however, view it as a clean and reliable alternative, which the grid requires as the country steadily shifts away from coal and other fossil fuels which we have relied upon for decades.

But last week, the car giant Rolls-Royce released a report on small modular nuclear reactors (SMRs), outlining how they think the technology – first developed several decades ago to power submarines – could foreseeably bridge some of the differences in opinion between pro- and anti-nuclear voices, and usher in a “once in a lifetime opportunity” for Britain to be at the forefront of nuclear technology. Such bold claims, however, require scrutiny – given Rolls-Royce’s commercial interest in the technology’s adoption, and also the relatively untested nature of SMRs as part of the energy system.

Typically defined as nuclear reactors which can generate up to 300 megawatts of electrical power, and can be produced in a single factory on a repeated basis – i.e., ‘modularly’ – SMRs have been touted by their supporters as a way for the UK to tap a reliable source of energy, able to ensure the lights stay on when the sun isn’t shining or the wind isn’t blowing.

One of the main selling points of energy generated by SMRs – at least compared to conventional large-scale nuclear projects such as Hinkley Point C in Somerset – is cost. An economic fact true of most goods and services is that increased and repeated production has a tendency towards falling average unit costs – what economists would call economies of scale. For larger nuclear projects, which are effectively produced as ‘one offs’ every few decades or so, designers have been unable to exploit the potentially lucrative economies of scale because the actual technology involved typically changes to such a significant extent with each project. However, for SMRs, the opportunity to do so is theoretically much greater. Owing to the fact that a factory may fabricate many several SMRs, financial savings in materials and alike allow for a lower cost per reactor to be achieved, ultimately manifesting itself as a lower cost per unit of usable energy generated.

Others have highlighted the fact that financing SMRs could be more attractive to investors, relative to large-scale nuclear plants. Reasons for this are broadly twofold: on the one hand, capital expenditure costs will be lower given that the reactors will be much smaller – allowing a more diverse pool of investors to consider financing a project; on the other, the asset will begin generating dividends far sooner, because it can be built and operationalised more quickly, again, due to its smaller size. This could therefore mean that investors might agree to a lower strike price for their energy generated, given the fact they will not have to factor in more of a guarantee on their return on investment.

SMRs may not just make financial sense, but they could also play a vitally important role in expanding our nation’s ‘energy flexibility’, through helping to decentralise energy production. Decentralisation of energy can be advantageous for the environment because when energy is consumed close to where it is produced, transmission losses are minimised. Developments in other energy sources have already been heading in this decentralising direction for some time now – consider, for instance, solar photovoltaic panels atop people’s houses. Some have also suggested that because SMRs require less water for cooling than their larger cousins, they are more environmentally friendly in this respect, and could also help in bringing energy security to remote areas which may not be located close to seas or large rivers.

Nevertheless, questions do remain about SMRs. In this very blog, much of the financial case for them is based upon the theoretical assumption that economies of scale will be realised – and realised in sufficiently large proportions to warrant a revolution in the energy sector. Because the technology is so untested as a commercial source of electricity generation, estimates about how far costs will fall are difficult to accurately make at this stage.

Environmental NGOs have also criticised SMRs, largely on the basis that they are not strictly speaking a renewable form of energy generation – certainly, SMRs will still inevitably call for the intermittent disposal of spent nuclear fuel. Even if one is not inherently opposed to nuclear energy, it has been pointed out that nuclear waste is an area where large-scale plants have the upper hand over SMRs, because the latter would face a challenging coordination problem stemming from several nuclear sites all needing to dispose of individually lesser, but cumulatively equal, amounts of nuclear waste.  

Yet perhaps the foremost factor which could jeopardise the roll out of SMRs is the remarkable fall in the cost of certain forms of renewable energy, such as solar and wind power. Incidentally, these are technologies which have already very much felt the virtuous cycle of economies of scale themselves, as the costs of their parts have tumbled as they have become more and more widespread. Coupled with ongoing learning about how best to deploy renewables, and a fine tuning of the technology they utilise, wind and solar farms are now more efficient, and more cost-effective, than ever.

Indeed, in the aforementioned Rolls-Royce report, it is somewhat ambiguously claimed that they are “working towards” the medium-term target of £60 per megawatt hour of energy generated through SMRs. Initially, Rolls-Royce even concede that a figure of around £75 per megawatt hour is more likely. This would be noticeably more expensive than the £57.50 per megawatt hour of wind generated power, recently agreed to by two companies in the most recent Contracts for Difference auctions.

In 2015, the then Chancellor, George Osborne, signalled the Government’s ambition to explore new nuclear technologies – pledging £250 million into a nuclear research and development programme. Since then, it has launched a competition to invite engineers to submit their plans for the best value SMR design for the UK. As the nation continues its transition away from dirty and polluting fossil fuels, there is an ongoing debate about which technologies will power the UK forward. In theory, SMRs could have a number of potential benefits, relative to large-scale nuclear. But they also come with certain disadvantages, not least of which is their relatively untested nature.

Eamonn Ives is a Researcher at Bright Blue

Filling the coal mine

Coal will go down as one of the most significant resources in the UK’s industrial, economic and social history. First mined shortly after Roman times, it powered the industrial revolution and moulded the UK into the world’s economic powerhouse through the nineteenth and into the twentieth century.

However, it is not always widely appreciated that UK coal production actually peaked in 1913 and has been in decline ever since. In 1970, coal generated about two-thirds of all electricity, but in 2015 it generated just over a fifth, and government policy is for coal-fired power stations without carbon limiting technology to close by 2025.

By contrast, civil nuclear power is at the exciting early stages of a resurgence, after many years where there was a combination of a dash for gas and lack of investment in the UK’s energy infrastructure. As the 16GW nuclear new build programme gathers pace, Energy Secretary Amber Rudd MP has said that nuclear is “central to our energy secure future”, whilst noting “unabated coal is simply not sustainable.”

Not sustainable because it is a finite, polluting resource which the developed world is turning its back on. The outcome of international climate talks in Paris last year clearly illustrated this trend and showed how countries are working together to combat the growing effects of climate change and air pollution. Nations are now searching for their perfect energy mix to maintain economic growth and security of supply, at the same time as reducing carbon emissions. 

Unfortunately there is no silver bullet for solving the energy mix question, but for many countries coal is no longer even part of the answer. With 80% of our heating coming from gas in the UK, it will continue to play a significant role alongside renewables and nuclear. Interconnectors, demand management and storage technologies will continue to develop too. It is a complex picture, but one which requires a nuanced and balanced response.

The advantages of renewables are clear but, because of their inherent intermittence and with no large scale and low-carbon industrial storage option likely in the foreseeable future, it means nuclear power remains a necessity because it generates the baseload, low-carbon power required to keep the lights on and our economy flourishing.

The drive for secure, reliable and low-carbon alternatives mean the north will also look to another one of its distinguished industries to help provide the energy for the Northern Powerhouse.

Ever since the end of the Second World War, the nuclear industry has provided the north, particularly the north-west, with high-skill, high-value careers. Sellafield, once a secretive munitions site, deliberately hidden from the Luftwaffe, is now a hive of activity with over 10,000 employees on site working to decommission the vast and complicated site. Significant progress has been made in recent years and Sellafield, once seen as a relic of the sector, is being transformed by new innovations in nuclear decommissioning. Skills and expertise, which are nurturing a specialism that is world renowned, are being exported to Japan and into other international markets.

Next to Sellafield, NuGeneration is finalising its plans to build three new reactors to help power the north. Based in Manchester, the joint venture between Toshiba and ENGIE aims to build 3.8GW of new nuclear capacity in Cumbria on its Moorside site. The project will create tens of thousands of new jobs and supply chain opportunities, not only in the north of England but across the UK. It will also generate sustainable careers when operating, and provide surrounding communities with low-carbon, secure electricity for at least 60 years.

Nuclear reactors are nothing new in the north of England. Calder Hall, Hartlepool and Heysham 1 and 2 have powered the north since 1957 and will continue to until at least 2030 when Heysham 2 is scheduled to shut down. Stations which have provided jobs for over a century and avoided the emissions of millions of tonnes of CO2. The potential of small modular reactors, currently under consideration by the Government, presents even greater manufacturing and supply chain opportunities that will benefit industry in the north of England.

While unabated coal continues to decline in its significance as an energy source, the nuclear sector represents a great opportunity for the north – both in complementing other ways of generating electricity as the distinction between electricity and energy demand is eroded, but also in providing long-term, skilled employment in construction, operation and supplying components for those power stations. Nuclear energy is not just a necessity, it is also an opportunity.

Tom Greatrex is the CEO of Nuclear Industry Association

The views expressed in this article are those of the author, not necessarily those of Bright Blue.