Energy and Utilities

UK government launches Great British Nuclear and modular reactor competition

Published on 20th Jul 2023

Modular focus opens way for multi-billion investment and the future of nuclear in UK's decarbonisation journey

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The Department for Energy Security and Net Zero (DESNZ) this week officially launched the arms-length body Great British Nuclear (GBN), as originally pledged in the 2023 Spring Budget. Tasked with accelerating the delivery of nuclear projects across the country, interim GBN chair Simon Bowen stated: "GBN is core to delivering the government's new nuclear programme".

Alongside the launch, the government announced GBN's first competition for up to £20 billion in funding to design and build small modular reactor (SMR) nuclear projects, which it says "could result in billions of pounds of public and private sector investment" in the UK.

SMRs are a fraction of the size of a conventional nuclear power reactor, generally up to 300MWe equivalent, and can be designed and built at a faster pace while avoiding the high capex costs and delays that can impede conventional nuclear projects.

The minister for nuclear and networks, Andrew Bowie, said the competition puts the UK "front and centre in the global race to unleash a new generation of nuclear technology". The government invites SMR developers to register interest with GBN for the competition with immediate effect, with this phase to conclude in autumn 2023.

Nuclear funding package

The government also announced a grant funding package across the nuclear industry worth up to £157 million. Grants have been allocated to a variety of projects spanning a wide range of nuclear technologies.

The most sizable grant is a £77.1 million investment into companies engaged in "advanced nuclear business development", intended to lay the groundwork for developing new designs for SMRs to be constructed within the decade.

A grant of up to £58 million has been allocated to the development of advanced modular reactors (AMRs) and next generation fuel. As AMRs operate at a higher temperature than SMRs, they are suited not only to nuclear power but to the production of hydrogen (known as pink hydrogen) and sustainable aviation fuel.

DESNZ cited a February 2023 report, "Delivering Value", from Oxford Economics on behalf of the Nuclear Industry Association (NIA), which estimates the value of the nuclear industry to the UK economy at £6.1 billion. Grant Shapps, the secretary of state for energy security, heralded the dual announcements as "the first brush strokes of our nuclear power renaissance to power up Britain and grow our economy for decades to come", highlighting the government's commitment to growing the industry.

A two-pronged approach?

The government has been clear that nuclear can play a big part in solidifying the UK's energy security and decarbonisation credentials. The 2022 Energy Security Strategy sets out the ambitious target for 25% of the UK's electricity to come from nuclear (amounting to 24GW of operational capacity) by 2050. In 2022, nuclear power comprised around 15% of the UK energy mix.

To reach its goal, the government remains strongly committed to large projects such as Sizewell C and Hinkley Point C. The government's press release states GBN will continue to consider the role of "further large gigawatt scale nuclear power plants in the UK energy mix", although there are now few options beyond Sizewell C.

Alongside the gigawatt projects, the government hopes early investment into SMRs will accelerate progress towards the target. The GBN competition is the first step on this journey, and the SMR selection process is seen as a significant development in scaling up the technology.

The NIA have commented that "there is a range of sites and communities across the country ready to host SMR technology, alongside the large scale nuclear capacity we will also need". Industry is confident, therefore, that the two-pronged approach is a sensible one.

The government, in its energy white paper in December 2020, declared its intent to deploy the country's first operational SMR by the early 2030s, and it is hoped this week's announcements will build on that ambition.

Osborne Clarke comment

With conventional gigawatt nuclear projects often beset by delays and cost overruns and several false starts as potential developers have come into and then exited the UK market, it will take a real step forward to justify DESNZ claim of a "massive revival" of the industry. The renewed government focus on SMRs – long touted in some quarters as a potential panacea of the energy trilemma of affordability, security and sustainability – should give cause for optimism on that front.

SMRs still have to prove their concept and find their place alongside the growing installed capacity of more established renewable solutions like wind and solar, but their ability to provide baseload low carbon power to completement intermittent renewable energy is clear. The latest DESNZ announcements mark an exciting new chapter for a technology that presents a key piece of the puzzle in the UK's decarbonisation journey.

In relation to the SMR competition, while UK incumbents Rolls-Royce appear to be ahead of the pack, there will undoubtedly be opportunities for international developers, and it will be interesting to see the levels of success enjoyed by overseas entrants to this nascent market.

This article was written with the assistance of Luke Webb, trainee solicitor.

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* This article is current as of the date of its publication and does not necessarily reflect the present state of the law or relevant regulation.

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