Future Electricity Series Part 3 - Power from Nuclear

This independent, cross-party report highlights the key role that political consensus can play in helping to reduce the costs of nuclear power in the UK, as well as other low carbon technologies. This political consensus has never been more important than in this ‘defining decade’ for the power sector. The report highlights that an immediate challenge facing the UK’s new build programme is agreeing with the European Commission a regime for supporting new nuclear power. Changing the proposed support package would not be an impossible task if made necessary, but maintaining broad political consensus and considering the implications of delay are also important. The State Aid process is an important opportunity for scrutiny, with the report demonstrating that shareholders for Hinkley Point C could see bigger returns (19-21%) than those typically expected for PFI projects (12-15%). However, it is too early to conclude on the value for money of the Hinkley Point C agreement. Both the negotiation process and the resulting investment contract are important, but there has been little transparency over either so far and the negotiations were not competitive. The inquiry calls for more urgency and better coordination in seizing the opportunity to reuse the UK’s plutonium stockpile.

The UK’s stockpile of separated plutonium presents opportunities to tackle a number of national strategic priorities including implementing long term solutions for nuclear waste, developing new technologies that could redefine the sector, laying the ground for new nuclear power and pursuing nuclear non-proliferation.  Government has identified three ‘credible solutions’ for reuse, and the report recommends that it now sets clearer criteria against which to assess options and identifies budgetary requirements to help expediate the process. The report also argues that Government should do more on new nuclear technologies that could redefine the sector – such as considering smaller reactors, nuclear for industrial heat or hydrogen production, and closed or thorium fuel cycles. The Government’s initial response to a review of nuclear R&D a year ago by the then Chief Scientific Advisor, Sir John Beddington, has been welcome, and it needs to build on this. In particular, the UK should capitalise upon its existing expertise and past experience to focus efforts where there is most strategic value. Nulcear waste. Having failed to date, the Government must urgently revisit plans for finding a site to store nuclear waste underground for thousands of years. Implementing this is a crucial part of demonstrating that nuclear waste is a manageable challenge. Despite being rejected by Cumbria County Council, the continuing strong support amongst communities in West Cumbria for hosting a site is a promising sign.

On affordability, the report finds that it is not yet clear which electricity generation technologies will be cheapest in the 2020s and beyond. Coal and gas could get more expensive if fossil fuel and carbon prices rise, whilst low carbon technologies could get cheaper as technology costs fall with more deployment. This is the main reason for adopting an ‘all of the above’ strategy, including nuclear power, until costs become clearer, and there is broad consensus behind this general approach.  

On security of supply, the inquiry says that deployment of nuclear power is likely to be influenced more by the economics of system balancing rather than technical system balancing challenges, which can be met with greater deployment of existing balancing tools. The cost of maintaining system security is likely to mean that the UK maintains at least some baseload capacity, such as nuclear power, to limit system costs.

On sustainability, the report finds that the environmental impacts of nuclear power are comparable to some generation technologies and favourable to others, although the long lived nature of some radioactive nuclear waste and the dual use potential of nuclear technology for civil and military applications create unique sustainability challenges, which the UK is a world leader in managing.

It is the final report of the Future Electricity Series, an independent and cross party inquiry into the UK power sector, sponsored by the Institution of Gas Engineers and Managers