UK think tank urges more nuclear construction

25 January 2021

Concrete pour at Hinkley Point C (Credit: EDF Energy)Investment in at least one more commercial nuclear power plant is necessary to ensure that the UK can secure its energy supply without compromising efforts to combat climate change, according to a new report by the conservative Centre for Policy Studies.

The 55-page report, “Bridging the Gap: The case for new nuclear investment”, released on 21 January, says that to reach Net Zero, the UK needs to significantly decarbonise its power supply.

Noting that the UK will have retired 14 of its 15 nuclear reactors by 2030, the author, Eamonn Ives, says “there is a risk that without more capacity, the UK will have to prolong its dependence on fossil fuels” – which would exacerbate climate change.

The report says that the route map for reaching Net Zero by 2050 is unclear largely because of “the political and economic turbulence of the past several years”, which has meant “certain key decisions have been ducked for too long”.

It adds: “This has bound the hands of the current Government, forcing it to intervene in the market to ensure that the country can keep the lights on while still progressing towards objectives such as Net Zero – and raising the risks that this will end up piling costs onto either consumers or taxpayers.”

It further notes: “Multiple technological developments should help to facilitate the transition to a cleaner, cheaper, more intelligent energy system, in which the state can step back and permit the forces of market competition to truly take off.”

The report argues that the UK “needs an energy system which is fit for purpose – with adequate capacity to fulfil future energy demand in a way which is compatible with the Net Zero objective, but also minimises costs to consumers and businesses”.

Britain will lose significant quantities of zero-carbon baseload power as its ageing nuclear fleet is decommissioned, some of which capacity loss will be met by Hinkley Point C. “But without replacing more of it there is a sizeable chance that the UK will risk energy insecurity, and have to pivot back to fossil-fuelled power generation to keep the lights on.” 

The report urges the government to go beyond Hinkley Point C and support the further expansion of nuclear capacity, but without affecting long-term interests of taxpayers or billpayers. It suggests the regulated asset base (RAB) model, which allows developers to charge energy consumers before generation begins, along with “ex ante funding caps” and  “penalties for late delivery of assets”.

The report argues that the government should:

  • Introduce a simplified and standardised price on carbon, to create a level playing field between energy generation methods, as well as stimulating markets in other green technologies and energy saving products;
  • Rationalise and streamline current decarbonisation policy;
  • Deliver a better business environment for innovation, to promote research and development in green technologies;
  • Shift towards equivalent firm power capacity auctions which rate generators equally in accordance to their ability to supply firm power;
  • Improve the regulatory landscape specific to the nuclear industry, to ensure the UK is not constructing any excessive barriers to this technology – especially in terms of future nuclear developments such as small modular reactors (SMRs).

The report concluded that the UK energy system needs to remain robust. “But this is not to say that the building blocks of Britain’s energy system must remain the same as they have always been.” Zero-carbon energy generation methods must continue to replace ones which are fossil-fuelled if climate objectives are to be achieved.

While the report said it could not accurately predict exactly how the energy sector will look like in 30 years’ time, “in the nearer term, some things are certain”. Electrification of the economy will increase with the power increasingly coming from zero-emission sources “such as onshore and offshore wind turbines, solar PV, and nuclear reactors” alongside improvements in energy storage, in the form of batteries and green hydrogen. coal-fired power generation is redundant, and fossil gas will follow but renewables may not fully fill the gap.

“Therefore, we argue that the UK must commit to keeping its nuclear industry going, at least in the near-term. The government should be a champion of nuclear power, and recognise the potential it has to help deliver on its climate objectives and provide many other benefits.” This means “supporting the construction of one more nuclear power station by delivering a financing model which works for all parties concerned.”

This would retain the pipeline of skills and jobs in the industry, which “will be vital if the UK is to seamlessly transition to constructing next generation nuclear technologies – such as SMRs and fusion reactors – if such technologies are able to mature in time and be competitive with renewables plus storage”.

The government has “mapped out a bold, big picture vision for how the energy will work in the future” but “it needs to start the process of making that a reality”. “As should be clear from the past few years, inaction simply stores up problems for later generations – something which makes neither economic, environmental, nor ethical sense.”

Concrete pour at Hinkley Point C (Credit: EDF Energy)

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