The Government is showing fresh interest in new nuclear but can it avoid repeating past mistakes?

Against the backdrop of the current energy crisis comes the news that the Government is looking at new proposals for a nuclear reactor at Wylfa Newydd. The original proposal was for an Advanced Boiling Water Reactor (“ABWR”), but after developer Hitachi failed to agree a financing arrangement with the Government it withdrew its proposal. Now there are two alternatives on the table using different technologies.

Another roll of the dice for the Westinghouse AP1000…

Bechtel wants to build two Westinghouse AP1000 reactors and is seeking an alternative approach to funding with an initial two-year plan to deliver the front-end engineering design with government funding which could then “create the conditions” to attract potential investors and a developer. This could be achieved by modifying the proposed RAB funding model or through some other mechanism of cost recovery.

“It is a complex build but where the risk comes is not in the engineering. It comes in the supply chain, materials, labour costs and productivity. The government can help by providing certainty of upcoming projects. If the supply chain knows what’s coming there is improved pricing,”
 – Barbara Rusinko, president of nuclear, security & environment at Bechtel

The idea is that a project that has state support through the early stages is more likely to succeed given the large capital investment requirement needed before any returns would be seen. The capital costs of new nuclear projects have risen to an extent that they are too large for private investors to absorb without some form of state backing. Bechtel hopes that its funding model would provide a viable alternative to the previous developer-led approach to nuclear projects.

The proposal would be modelled on Plant Vogtle in Georgia, where two AP1000s are set to begin operating in 2022. The AP1000 design received Government approval in March 2017 for the proposed plant at Moorside near Sellafield in Cumbria. The project had an indicative commissioning date of 2025 at the time, but was cancelled by developer Toshiba in 2018. Toshiba’s subsidiary, Westinghouse, filed for Chapter 11 bankruptcy protection in 2017 following major cost over-runs at a number of its nuclear projects. In mid-2018, Westinghouse was bought by asset management company Brookfield, and the subsequent restructuring allowed the company to exit Chapter 11.

The Vogtle reactors are expected to begin commercial operation in 2022-23, after significant delays and cost over-runs – a history shared with the similarly troubled European Pressurised Water reactor (“EPR”) technology. The two Vogtle units were supposed to open in 2016 and 2017, and have seen their costs rise from US$ 14 billion to a potential final price of US$ 27 billion. Consumers in Georgia pay an additional 11% on their energy bills to fund the site.

….or the first roll for small modular reactors

Shearwater Energy has made an alternative proposal that would involve using both the Wylfa Newydd site and the nearby site of the existing Wylfa Magnox site which is being de-commissioned. The scheme would have 12 small modular reactors (“SMRs”) with an initial capacity of 924 MW alongside a 1,000 MW wind farm. The plant would produce three million kilograms of hydrogen for use in the transport sector.

The company has signed a memorandum of understanding with US SMR developer NuScale, which last year became the first company to win approval for its small reactors from US nuclear regulators. Once fully developed, the company expects the scheme to have a capacity of 3 GW.

NuScale expects to have its first power plant up and running by the end of this decade, in Idaho, USA. The first NuScale Power Module is planned to begin generating electricity in 2029, with the remaining modules coming online for full plant operation by 2030. The company has secured US$ 200 million of investments this year to support its plans.

Meanwhile EDF continues to push its troubled EPR technology

After Toshiba pulled out of the proposed AP1000 project at Moorside, it wound up its subsidiary, NuGeneration, which was to be operator of the project, and the site was abandoned. Since then a group consisting of 15 major companies including EDF, has put forward plans for a Clean Energy Hub at the site. Also in the group are Altrad, Atkins, Balfour Beatty Bailey, Bilfinger, Cavendish Nuclear, Doosan Babcock, GMB, Jacobs, Laing O’Rourke, Mott MacDonald, Mace, Prospect, Quod, Unite the union, and economic development specialist John Fyfe. They plan to develop two EPRs – the same technology as at Hinkley Point C – as well as potentially hosting small modular reactors (“SMRs”) on the site.

A new challenge to the EPR revolves around EDF’s partnership with China General Nuclear Power (“CGN”) which has a 20% stake in the Sizewell C project, another proposed EPR. UK-Sino relations have deteriorated in recent years, and there are increasing concerns about the involvement of Chinese companies in strategic infrastructure in the UK, which may impact the future of the project. This weekend The Guardian newspaper has reported that Government could announce plans to take a stake in Sizewell C as early as next month, ahead of Cop26.

EDF’s board is due to meet in November to discuss the project, but according to The Guardian, it is wary of investing tens of millions into the project without a firm commitment from the Government. In the meantime it is understood that the US Government is pressuring the UK to extract the Chinese from British nuclear infrastructure. EDF’s main board only just approved Hinkley Point C by 10 votes to 7, with one board member resigning ahead of the vote saying the project was financially risky and would lead France further away from renewable energy. There are other reports suggesting that EDF intends to delay its internal decisions on Sizewell C as a result of the concerns over Chinese involvement.

I sincerely hope that these rumours about a Government stake in Sizewell C are unsubstantiated. Until such time as EDF manages to deliver a working EPR in Europe the Government would be foolish to commit taxpayer money to the technology. At least at Hinkley Point C the burden on taxpayers comes through a generous Contract for Difference but that only applies once the station is running. The timeline beneath this post illutrates the sorry history of the EPR project and should give pause to anyone considering putting money into the failing technology.

Excitement is building around nuclear fusion

The Moorside site has also been put forward to host the first prototype spherical fusion reactor, known as the Spherical Tokamak for Energy Production, or “STEP”, which is slated for 2024. It is one of a number of sites hoping to make the final shortlist which is expected to be produced in the autumn. The UK Atomic Energy Authority will then make recommendations to the Secretary of State for Business, Energy and Industrial Strategy, who will make a final decision on the site by the end of 2022.

This week I attended a presentation given by Ian Chapman, the Chief Executive of the UK Atomic Energy Authority who spoke enthusiastically about the prospects for nuclear fusion. He described the challenges to achieving an efficient fusion reaction that generates more power than it consumes and stated, quite compellingly, that a fusion-power power station could be a reality in 20 years (although fusion in 20 years has been promised for decades!).

The next milestone for fusion will be the completion of the ITER project in France, which he described as 80% complete. The aim of the project is to generate 500 MW of output energy for 50 MW of input energy (this is not electricity – turning the output energy into electricity will be the objective of the STEP project).

However, looking at the ITER website a couple of things jumped out…the 50 MW is referred to as “input heating power”, but the site itself will have an electrical load of 110 MW to up to 620 MW.

I reached out to Chapman for clarification, and he confirmed that the objective of ITER is to demonstrate a thermal gain of ten times, but that the site will have a parasitic load of 600-700 MW. In order to be a viable source of electricity, the technology will need to be developed further to yield even higher thermal gains.

He told me that they would expect a reactor with a similar parasitic load to have a heat output of 2 – 2.5 GW to produce 0.5 – 1.0 GW of electrical output. The STEP prototype will aim for a thermal gain of around 1 GW to produce a few hundred MW of electricity, with subsequent commercial units likely to go up in thermal power.

A 700 MW parasitic load is the output of a medium-sized power station, so it would make sense to co-locate a fusion reactor with SMRs as a means of having a guaranteed, stable and reliable source of input power.

Nuclear is critical for Britain’s security of supply

If Britain is to achieve its net zero ambitions, it will need a reliable source of zero carbon electricity that is not dependent on the vagaries of the weather – nuclear power. But the existing fleet is aging and closure dates are looming.

This time last year there was notionally 9.1 GW of nuclear plant operating and 3.26 GW under construction at Hinkley Point C. I say notionally because the 1,120 MW Dungeness power station had been offline since 2018, and EDF eventually took the decision this year to close it permanently. Excluding Dungeness, there was 8 GW of nuclear capacity, but available capacity was significantly less. The average winter availability last year excluding Dungeness was 67%.

The 969 MW Hunterston B reactor is due to close on 7 January next year, half way through the winter. The 960 MW Hinkley Point B station is also planned to close in 2022. Hartlepool (1,185 MW) and Heysham 1 (1,155 MW) are set to close in 2024. This means according to EDF’s schedule, the fleet will be reduced to 3.7 GW. However this could be reduced further depending on the condition of Torness and Heysham 2  – EDF announced this year that both could shut years ahead of their planned 2030 closure dates due to safety concerns.

The issue is that these reactors have already generated almost as much power in running for 33 years as Hinkley Point B and Hunterston did in 45 years. Those stations are closing early due to cracking in the graphite cores, a problem that is linked to the radiation levels generation from running, so given their higher utilisation levels, they could potentially develop this cracking at any time. Once cracks emerge, the plants would only have three or four years of safe running left. It is entirely possible both could close by 2025, meaning that only the relatively new 1,194 MW Sizewell B plant would remain by the middle of the decade.

The current planned start of operations for Hinkley Point C (3,260 MW) is the end of June 2026, so even if it opens on time (which is a big “if” given the delays across all of the European EPRs), there will be a significant nuclear gap, and the fleet would be only half of its current size.

The Government needs to act on the looming capacity crunch

The current energy crisis is bringing the UK’s looming capacity crunch into focus, and the Government is sounding increasingly enthusiastic about new nuclear. But caution is required: before throwing more money in the direction of as yet un-proven new technologies such as the Sizewell C /Moorside EPRs or the Wylfa AP1000, the Government should see some proof of concept.

The only next generation nuclear technology with any kind of track record is the Advanced Boiling Water Reactor, and while Hitachi has withdrawn its proposal for the Wylfa site and liquidated the company through which it planned to deliver the project, it still owns the land, and might be persuaded to re-kindle its interest for the right funding package. I still believe this is the best option despite it not being currently on the table, and greatly preferable to committing more money to technologies which so far are failing to materialise.

SMRs also merit support. Unlike the EPR and AP1000 reactors, they lack a track record, good or bad, but they show enough promise that they are worth developing further. The Government should provide the support needed to get them to the next stage of development. It’s time to stop prevaricating and make a serious commitment to credible new nuclear solutions.