A funding deal for the first fleet of mini nuclear reactors is not expected to materialise for at least another 12 months, amid a row in government over the cost of Britain’s wider nuclear ambitions.
Last year, in order to triple domestic nuclear capacity to 24 gigawatts by 2050 — a quarter of the UK’s projected electricity demand — Boris Johnson set out plans for eight new large reactors alongside the development of small modular reactors (SMRs).
The government also announced the formation of Great British Nuclear (GBN), a body responsible for helping to deliver the next generation of reactors and SMRs by identifying potential sites, developers and investors.
At present only one plant, Hinkley Point C, is under construction, with the financing and final investment decisions on Sizewell C still pending.
However, even though all but one of the UK’s existing plants are set to be shut down by the end of the decade, the government’s nuclear strategy now appears at risk of stalling amid internal disagreements.
In particular, Whitehall sources have revealed that there remains significant uncertainty over the scale of state investment in SMRs.
Rolls-Royce, which has created designs for a 470 megawatt SMR and wants to begin building factories, has called for ministers to enter funding talks and start placing orders. Rolls is understood to be seeking a commitment for four initial SMRs at a cost of about £2 billion each, which it believes would unlock orders from interested foreign buyers. But a senior government source said the Treasury would not sign off on any orders or significant funding until the technology had approval from the Office for Nuclear Regulation, which is not expected until 2024.
While the government has already invested £210 million in Rolls’s technology, the Department for Business, Energy and Industrial Strategy (BEIS) is also still assessing whether its competitors, including GE Hitachi, may offer “more viable” alternatives.
Insiders have signalled that the government may opt to launch yet another competition to gather further evidence before any firm deals are struck. More broadly, Treasury ministers harbour big concerns over the costs associated with GBN, which officials have warned is billions over budget.
While officials expect GBN to be announced early this year, after months of delays, the internal wrangling could lead to changes to both the body’s scope and funding.
Last night Paul Stein, chairman of the Rolls SMR consortium, said: “We stand ready to upscale SMR as soon as we get the green light ... We’re confident our design will bring the lowest cost of energy ... the lowest risk, and be game changing for British jobs and exports.
“It’s not just procurement of SMRs that is at stake, but our energy security, our national prosperity and the development of a home-grown design which will re- industrialise our nation. We trust that whatever process the government follows will reach this same view and we can proceed with pace.”
A BEIS source said: “It is clear the way to shore up this country’s energy security is to achieve a pipeline of new nuclear. The government [is] committed to .. establishing and backing Great British Nuclear.”
