CIVITAS - Safeguarding Britain's £4bn nuclear industry
UK nuclear expertise is under threat as new plant projects go to foreign companies
• A programme of government support is needed to reinvigorate the British supply chain
• New class of small modular reactors offers cheaper, quicker alternative
Britain risks losing its £4 billion-a-year nuclear industry unless the government does more to ensure domestic firms will benefit from projects to rebuild the UK's generating capacity over the coming years, a new paper published today by the cross-party think tank Civitas says. (Read the full report here.)
The three companies intending to build new nuclear power stations in the UK - French state-owned EDF, plus Japan's Toshiba and Hitachi - already have their own established supply chains.
In the latest of the Civitas series Ideas for Economic Growth, entrepreneur Candida Whitmill calls for a programme of government support for a new line of smaller reactors which are quicker to build and could be manufactured largely in the UK.
Small Modular Reactors (SMRs) - defined as reactors of less than 300MW - could provide an attractive alternative to the high-risk and eye-wateringly expensive projects currently planned.
Such a plan would help safeguard UK nuclear expertise built up over 60 years and which has an estimated annual turnover of £4 billion, she writes in 'Use It or Lose It: A business case for an alternative way to rejuvenate the UK nuclear industry'.
Whitmill, managing director of Penultimate Power UK Ltd, a UK-led consortium to build SMRs in Britain, warns: "Outsourcing nuclear power projects that the UK will be committed to for the next 60 years must be handled carefully if our indigenous industry is not to be diminished.
"International investment is welcome, if in collaboration with UK businesses. The government has two options; let the UK become merely a host nation whence other nations can springboard their global nuclear ambitions and lose our own nuclear capability; or choose to let the start of a new-build programme of nuclear power reignite the UK's nuclear supply chain, expand our fuel cycle facilities and showcase our world-class research and development capability.
"Supporting a programme to bring smaller, affordable, secure, small modular reactors to UK-based commercialisation could do just that."
Among the advantages of the SMR model is that they:
• Are built more rapidly, typically in three rather than eight to 10 years, giving a faster return on investment at a lower capital cost;
• Can be built off site, in factories, reducing costs and risks;
• Mostly use fuel with less than 5% enrichment, satisfying concerns about proliferation;
• Are far more compatible with intermittent renewables than larger reactors when it comes to balancing the National Grid.
The UK could supply the necessary forgings for SMRs and already has the capacity to supply more than 70% of other nuclear components, she adds, presenting an opportunity to secure demand for Britain's advanced manufacturing skills.
SMRs are being pursued by several countries keen to have access to secure low carbon energy without the prohibitive upfront capital costs and uncertain timescales that plague larger nuclear plants.
The US Department of Energy is already implementing a comprehensive programme supporting SMRs through to commercialisation, offering $452million of match-funding to incentivise developments; this money helps support the expensive process of engineering, design certification and licensing.
"In trying to rejuvenate a domestic nuclear industry, the UK is in a similar situation to the US," Whitmill writes.
"The rewards are high in terms of a full panoply of jobs across design, manufacturing, construction, services and R&D activities, coupled with economic growth, but it is recognised that the market alone will not open up this opportunity due to unsustainably cheap shale gas and international government-owned corporations with access to cheap finance capital."
As things stand, the UK nuclear industry faces an uncertain future as foreign companies position themselves to rebuild the UK's nuclear capacity.
"The UK nuclear industry is now entirely vulnerable to the political agendas of other countries. Only government-owned utilities have the capacity to fund these massive projects which will each take about 10 years to build. Significantly, these global utilities already have their own established supply chains."
Whitmill questions whether British firms stand to gain as much from the deal for EDF to build two reactors at Hinkley Point C, in Somerset, as Energy Secretary Ed Davey has claimed.
"If Hinkley C is the first of several new reactor sites to be developed over the next decade, then it is vital that the UK's supply chain can fully participate from the outset of the UK's nuclear new-build programme.
"Yet, with EDF planning to use their own supply chain, UK input of any significant value could be in doubt. The 40 per cent equity to be held by two Communist state-owned corporations adds another complexity.
"Where opportunities for the UK supply chain exist, there may be long time-lapses between the three disparate projects. Such uncertainty is not conducive to investment in the human and physical resources essential to sustain a robust supply chain.
"Without an additional, more accessible market, the UK's supply chain may not be able to participate fully in the nuclear renaissance and risks being left behind; a scenario that the government, which has woken up to the value of an advanced manufacturing sector, is surely keen to avoid."
'Use It or Lose It: A business case for an alternative way to rejuvenate the UK nuclear industry' can be accessed here. It is the eleventh in the Civitas series Ideas for Economic Growth, which is part of the Wealth of Nations programme. More details can be found here.
Candida Whitmill is Managing Director of Penultimate Power UK Ltd, a UK-led consortium to build small modular reactors in the UK for the domestic market and export.
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