Nuclear Power’s Renaissance Is Losing Momentum in Britain

Britain’s ambition to renew its aging fleet of nuclear power plants is losing momentum after the government offered few new details on how it will support additional projects.

Prime Minister Boris Johnson’s administration set aside 500 million pounds ($661 million) for small modular reactor projects but was silent on support for traditional large-scale plants. The issue gained urgency on Thursday as Electricite de France SA’s announced it will close its Hinkley Point B reactors two years early.

Nuclear Power’s Renaissance Is Losing Momentum in Britain

The government’s latest thinking on how to replace its aging fleet of nuclear plants marks a dramatic shift from 2013, when David Cameron agreed to funding for new reactors at the Hinkley Point site with support from China. Since then, relations with China have deteriorated, electricity demand slumped and renewables such as wind and solar farms became much cheaper than new atomic plants.

“Large scale reactors are running into problems with delays, and developers pulling out,” said Rob Gross, director of the U.K. Energy Research Center. “By contrast, small modular reactors appear to politicians as new and exciting, with a leading role for British firms.”

Nuclear Power’s Renaissance Is Losing Momentum in Britain

That left an uncertain outlook for 20 billion pound Sizewell C nuclear project in eastern England that EDF is hoping to develop. That would replace units set to retire in 2035, when the last of the existing fleet of atomic plants in the U.K. will close. Including the Hinkley Point B that EDF said will close in 2022, four major plants will close in the next four years. The only project set to come online is Hinkley Point C in 2025.

The early closure of Hinkley Point B “is a reminder of the urgency of investing in new nuclear capacity to hit net zero,” said Tom Greatrex, chief executive officer of the Nuclear Industry Association. “It can only be replaced by new nuclear stations that produce the same reliable, always-on, emissions-free power.”

For more than a year, the government has been promising an energy white paper that may set out a future funding model for nuclear power plants. That document is now due next month, delayed as ministers debate how to balance the energy industry’s needs with strains on the budget from Covid-19 and the worst economic recession in decades.

Nuclear Power’s Renaissance Is Losing Momentum in Britain

The problem for nuclear power is its cost and time scale. Each project can cost 20 billion pounds or more and take a decade to deliver. Wind farms need a fraction of that money and can come together in less than five years. And while the cost of renewables is falling, nuclear power is becoming more expensive, with EDF reporting cost overruns and delays both at its Hinkley Point C project and one in France.

EDF is the only remaining nuclear developer with a major project underway. The French utility wants to build additional units in eastern England in a project dubbed Sizewell C. But it has made it clear it can’t shoulder alone the risks and investment needed. The government has suggested it may take an equity stake in Sizewell. The white paper may deliver a verdict on whether it might adopt the Regulated Asset Base model that has been used to with other major infrastructure projects.

Nuclear Power’s Renaissance Is Losing Momentum in Britain

For Hinkley Point C now under construction in western England, China General Nuclear Power Corp. took a one-third stake in the project. The government agreeing to pay a subsidy of 92.50 pounds for every megawatt-hour of electricity the plant produces for 35 years. The price would drop to 89.50 pounds if a station using the same technology goes ahead at Sizewell C.

That deal left EDF and its partners with all the risks involved with building the plant and taxpayers owing nothing until the facility begins generating electricity. However, the deal is looking like a bad value for consumers, since the wholesale price of electricity at the moment is about half of what EDF will earn.

The two key uncertainties that remain are “whether refinancing on a RAB model can bring down costs and unblock development of conventional reactors, and how long it will take before SMRs are market ready,” Gross said.

Up to now, the thinking had been that the U.K. would build one more large scale nuclear plant. That was the advice to government of a National Infrastructure Commission paper in 2018. All other projects on the drawing board have fallen by the wayside since then.

Britain’s Aging Nuclear Plants

Name of PlantScheduled closure
Hunterston BDecember 2021
Hinkley Point BJuly 2022
Heysham 12024
Dungeness B2028
Heysham 22030
Sizewell B2035

Hitachi Ltd. exited a long-planned U.K. nuclear power project in September after turning down the most generous support package the government had ever offered.

Nuclear power supporters note reactors feed a constant stream of electricity without climate-damaging fossil fuel pollution. It’s part of the government’s roadmap on how it will meet targets for reaching net-zero emissions by 2050.

“Only with robust financial commitments -– potentially including public equity stakes -- can the government overcome the challenges which have undermined U.K. nuclear capacity development over the past decade,” said Andrew Leming, researcher at the research group Bright Blue.

Britain’s Nuclear Projects

Project NameSize (GW)PartnersStatusComments
Hinkley Point C3.2EDF, CGNUnder constructionOn track to start generating 2025, costing 22.5 billion pounds. Construction financed by EDF. Government guaranteed price for power sold from plant.
Sizewell C3.2EDF, CGNIn planning processReactor design based on Hinkley plant. EDF looking for ways to fund it without shouldering all the risk. It’s seeking to combine government and private funding. Construction due to start 2021. Electricity flows from 2031.
Bradwell2.3CGNEarly technical stagesSeeking government approval for a Chinese reactor design. China’s ownership of a major infrastructure project likely to be politically sensitive.
Wylfa2.9HitachiShelvedCompany was unable to reach financing agreement with U.K. government. Was due to start generating in mid-2020s.
Oldbury2.9HitachiShelvedProject in very early development stages. Site identified but no applications had been made for regulatory approvals.
Moorside3ToshibaShelvedDecision to halt project came after failed attempts by Toshiba to sell its stake. No financing agreement was in place with the government. Was due to start operating in 2025.

©2020 Bloomberg L.P.

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