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Anthony Hilton: The Government’s ignoring a mini solution to nuclear mess

22 January 2019

oshiba has been almost bankrupted by nuclear power in America so it was no surprise that it decided to get out of building a new plant at Moorside in Cumbria last year. But then Hitachi, another Japanese company, decided it too should choose discretion over valour: last week it decided to abandon one of its projects at Wylfa in Anglesey and at a second reactor in an earlier stage of development at Oldbury on the Severn.

Some £2.5 billion has been written off as a result of Hitachi’s involvement so these things do not come cheap. The group’s chairman, Hiroaki Nakanishi, said, however, that his company would only renew its involvement if the project was off its balance sheet, required limited capital investment and offered the prospect of adequate profit. The Government, being the obvious sponsor, decided not to get further involved.

The British nuclear industry is a mess. Successive governments spent 13 years devising a nuclear policy, and after years of debate, six nuclear power stations were eventually selected. The idea was that private contractors, not government, should take the risk and build the plants. But the contractors were wary, and with the collapse of renewable energy prices they have become warier still. Of the six sites, three have been abandoned, two — Sizewell and Bradwell in Suffolk and Essex — are still to be finalised. Only one, Hinkley Point C in Somerset is proceeding and it is controversial to say the least.

Chances are that Hinkley will be abandoned and we won’t build any more giant plants, but Government is still wedded to its policy so it may take a few years, or a general election. The cost of renewable energy is, however, coming down fast and environmentalists say new electricity storage systems still to be developed will eventually bridge the gap for when the wind does not blow enough. We are not there yet though.

But there is another option, though not one which environmentalists favour, and that is small modular reactors.

Rolls-Royce has been making and maintaining the power plants which drive the nuclear-powered submarines carrying Britain’s nuclear deterrent since at least the Sixties. Today it is the largest employer of nuclear scientists and engineers in the country, with a range of expertise matched by only a handful of countries round the world.

It hit on the bright idea of using this expertise to develop similar-sized mini nuclear power plants which could be made in a factory, transported on a lorry and used to generate enough electricity to supply a city the size of Leeds. It saw a huge opportunity to secure world leadership in an emerging technology which could be worth more than £100 billion in exports from 2030 onwards.

It argued that these units provide a practical alternative to vast plants such as Hinkley which, because they are so big and complex, are almost always one-offs with costs to match. SMRs in contrast would be one design with standardised components reaping the benefits of factory-based volume production so that the economies of standardisation would trump the economies of scale.

The country has committed itself to becoming a low-carbon economy. The company argues its SMRs would be a cheaper way than building big new nuclear plants to supply the secure, reliable low-carbon electricity baseload the country will need for this to happen. It would also be timely, which is important given how little spare capacity there is in the UK generating industry.

But as the technology needed government funding this would have required a radical change in how Whitehall operates, which is simply impossible.

It required Government to make a commitment to an industrial policy which supports UK intellectual property, advanced manufacturing and long-term high-value jobs in the UK.

It required Government to make available resources so the licensing and safety-assessment programme could run smoothly and remove the risk of the whole thing being endlessly delayed. It required further long-term thinking in the form of a promise to buy at least seven of the plants so that Rolls-Royce could capture the economies of scale in manufacturing which are essential to bringing the costs down.

It required Government to be willing to provide matched funding in the development phase of the project. And finally it required Government support to assist the company in fully developing its export markets.

Needless to say the Government has declined to do this and Rolls-Royce as a result is no longer speculatively prepared to pour in its own funds and has mothballed the project. So the chances are that we will not have small nuclear reactors either, other than in our submarines.