Billions for new UK nuclear

The UK government has committed more than £14 billion to build Sizewell C, a new nuclear power station on the Suffolk coast. It’s been heralded as the biggest investment in nuclear energy for a generation, and ministers say the project will power six million homes, create thousands of jobs, and help to usher in what they call a golden age of clean energy. But it’s not without controversy. Opponents warn of ballooning costs, long construction delays, and higher bills for consumers. The project’s true price tag - and its value to Britain’s energy future - also remain hotly debated. I’ve been speaking with Simon Taylor, author of 'The Fall and Rise of Nuclear Power in Britain,' and expert in energy policy and finance at Cambridge’s Judge Business School…

Simon - The government has, for some time, wanted new nuclear to be part of its overall energy policy, not least because most of the old nuclear power stations in Britain have either closed or will be closing by the early 2030's. So, the idea of building some new nuclear stations is at least partly just to keep nuclear as part of the overall energy mix. That, in turn, is partly because it is a good idea in energy policy to have a range of options – not to put all your eggs in one basket.

Most of our energy in future is going to come from offshore wind, and that, on the whole, is a good and clean source of energy – but it isn’t always windy, so we do need alternatives. Nuclear has the advantage that it’s always on – it runs 24 hours a day.

Chris - How do the costs stack up, though, and why do projects like this tend to start with one price tag and, as we’ve seen with Hinkley C – which is another project on the opposite side of the country – suffer massive overruns? Why does this happen?

Simon - I think there are two aspects to this. Nuclear, in recent years, in both Western Europe and the United States, has had a very poor record in terms of construction. Several projects have gone well over time and over budget, and I’m afraid Hinkley Point C in the west of England is one of them. So, there’s something about building nuclear – at least in these countries – which we struggle with. It’s partly because we haven’t done it for a very long time. But there is a broader question over big projects – it’s not just nuclear. We’ve seen problems across the Western world. Doing big, complex construction projects always seems to bring trouble, and nuclear is a particularly complex type of construction.

Chris - The government are arguing that, because they’ve done it once for Hinkley C, it’ll be easier the second time for Sizewell C. Do you buy that?

Simon - The argument is that you learn by doing, and on the whole, there’s a lot of evidence for this. Hinkley Point C is actually two reactors, and the construction team say – and there’s every reason to believe them – that the second one has gone more quickly and smoothly than the first because they have learned from it. Sizewell C will be an identical copy, so, in effect, you’re building the third and fourth reactors, and there’s every reason to think, therefore, that it should go more smoothly. That said, construction costs have gone up in the UK in recent years, and it remains a complex project where things can go wrong.

Chris - When it is ultimately completed, what’s the business model for nuclear, and does that actually lead to cheaper energy? Or, when one takes all of this massive cost into account, is it actually a very expensive way to generate power?

Simon - If you compare an additional unit of electricity from solar or wind or nuclear, nuclear – at least in Britain, Europe, and the US – currently comes out a lot more expensive, because the capital costs are currently so much higher. However, if you look at it on a system basis, and you ask what it would cost to build a whole decarbonised electricity system, doing that without nuclear is probably possible – but it gets very expensive when you’re trying to decarbonise the last few units of electricity. You end up having to build a lot of extra wind or solar to cope with those periods when there’s very little wind or sun. In that context, having some nuclear – as long as the costs aren’t too high – can, overall, be a sensible decision. The government haven’t actually made that case very effectively, but there is modelling work to suggest that nuclear can make sense on a system basis.

Chris - And if we consider not pounds, shillings and pence – the physical financial cost of something – but we consider the carbon cost, is the case clearer for nuclear in those terms?

Simon - Well, the evidence on this, I think, is quite clear, because the Intergovernmental Panel on Climate Change looked at this in detail several years ago. On the basis of the whole life of a project – from construction all the way through the years of generating electricity – nuclear is pretty similar to solar or wind in having very low carbon emissions per unit of electricity generated. On that basis, nuclear can, I think, credibly be regarded as a low-carbon source of electricity.

Chris - One way to do nuclear is this one: big scale, big infrastructure, one plant that serves many. The other way of thinking about this – which has come up much more recently – is the devolved approach of small modular reactors, which are smaller in scale and footprint, and they serve a smaller area but do it in a more bespoke way. The argument is that they’re built on a production line and you make many of them – therefore, you make many economies of scale in producing them. Now, how do the two compare? How do they stack up? Because the government seem to be hedging their bets here. They’ve also said they’re going to invest in this technology. I think Rolls-Royce have got the gig for the UK. How do they look in comparison?

Simon - Traditionally, there have been economies of scale in nuclear, and that’s why, all around the world, people tend to build reactors with 1,000 megawatts or more of capacity – and that’s quite a big number – because there are fixed costs of clearing a site, security, insurance, regulation. All of these things have argued for building big. The argument for small modular reactors is that, if you can mass-produce them – so to speak, in a factory – you can get the unit cost of production down. The problem with big nuclear is that you’re building a very complex and very specialised machine, with lots of parts that are made specifically for that project. That type of manufacturing is always going to be more expensive than using standardised units that you can build at scale.

So, the idea of small modular reactors is a very good one in principle, because if we can get to the point where we’re producing large numbers of these things on a very controlled basis and we get the benefits of economies of scale, that should bring the costs down. The problem is that these reactors don’t yet exist. They are a concept, and the designs look very interesting, but no one has actually built them yet.