123.The UK Government is supporting the development of small modular reactors (SMRs) as part of its objective to be a ‘top-table’ nuclear nation. In the 2015 Autumn Statement, a £250m research package for SMRs was announced as part of a competition to identify a best value design and to build an SMR in the 2020s. Additionally, the 2016 Budget included plans to allocate a further £30m for an advanced manufacturing programme for SMRs, and announced that a more detailed roadmap for the SMR competition would be published. Trawsfynydd has been suggested as a possible site for a first-of-its-kind SMR.
124.In March 2016, the first phase of the SMR competition was launched, and is expected to last until autumn 2016. This aims to gauge interest in developing SMRs among developers, investors, and utilities, to gather information to guide the rest of the competition, and to develop the SMR roadmap. In addition, the Government’s techno-economic assessment (TEA) of SMRs, which will also influence the roadmap, is due to be published (having been expected by March 2016).
125.The Government’s policy to develop SMRs was criticised by some witnesses, who argued that SMRs are not economically viable, with no commercial SMRs in existence. Professor Gordon MacKerron and Dr Philip Johnstone stated that the National Nuclear Laboratory’s estimate of a ten-year time-frame was ambitious, whilst other studies suggested SMRs could take between seventeen and twenty-six years to become operational. Neil Crumpton, People Against Wylfa B, suggested that due to the timescales for deployment it would make more sense to invest in renewables now.
126.We were also told that it was very difficult to know if SMRs would be commercially viable in the future. Furthermore, claims for their viability relied on overturning the received wisdom of the nuclear industry, that building large nuclear reactors allows for economies of scale. Professor Gordon MacKerron and Dr Philip Johnstone’s written evidence states:
“SMRs could only overturn this argument if two conditions are powerfully present. The first is that factory production would minimise the kinds of ‘on site’ cost escalations that have been problematic for conventional nuclear reactors. The second is that if there are orders for a large number of SMR units, then economies of scale in manufacturing multiple units would kick in.”
127.Professor MacKerron concluded that it might take hundreds of units before SMRs become cheaper than large reactors on a per megawatt basis and that this made them a significant economic risk. As such, for SMRs to be viable, there would need to be a relatively large customer base for them. Gareth Clubb, Friends of the Earth Cymru, thought this was the reason why there had been no progress in developing SMRs:
“A spokesperson…working in this field for years said, “The problem I have with SMRs is not the technology, it’s not the deployment, it’s that there’s no customers.” The problem is that it is expensive, like all nuclear energy, and no one wants to create it. If you consider the context that the cost of renewable energy is reducing, it will not work economically.”
128.While the National Nuclear Laboratory’s feasibility study agrees that a customer base will be necessary for SMRs to be viable, it disagrees on the scale required to bring the price down. It suggests that a first-of-its-kind SMR could produce electricity at a cost of £84/MWh, but that building and selling 15 SMRs would bring the price down to £67/MWh.
129.A further issue that witnesses raised was whether the Office for Nuclear Regulation would have the capacity to carry out a GDA for an SMR. In their written evidence, Professor Gordon MacKerron and Dr Philip Johnstone said:
“SMR safety licensing, including site-specific issues, would take around six years, the same time as for large reactors…the ONR is currently licensing the ABWR, the AP100 and could potentially be also licensing the Chinese Hualong design…Additional licensing of novel SMRs could place extra strain on the resources of the ONR and could contribute to delay”
130.The ONR told us they were planning for an application from an SMR vendor in the near future, and that their inspectorate team is projected to rise from 350 staff now to 500 by 2020 in order to deal with additional GDA applications. However, the ONR confirmed that although SMRs are smaller than other nuclear reactors, the GDA process would probably take as long as for large reactors.
131.The evidence we received made it clear that while SMRs are not certain to be a source of low-cost power, they are an option worth exploring. It is possible that SMRs will be price competitive with both large nuclear reactors and renewable sources, but that case is not proven. Similarly, until a first reactor is developed, it is difficult to be sure whether a large enough customer base exists. Nonetheless, we did receive evidence from experts such as the National Nuclear Laboratory that suggested that SMRs could be a viable option and there are potential customers.
132.We support the UK Government’s objective of developing SMRs in the UK. We believe that successfully developing an SMR would be a major opportunity for the UK. However, in light of the reservations of some witnesses and the potential risks of the project, the Government’s competition must carefully consider the potential cost of any SMR project and determine whether there could be sufficient demand for SMRs. The UK Government must be sure that any decision to support an SMR developer offers value for money and a relatively high chance of successful delivery.
133.The proposed development of an SMR in the UK could take a number of different routes. The UK could develop an SMR from scratch entirely in the UK; it could partner with a foreign vendor; or it could buy an ‘off-the-shelf’ design from a foreign vendor. In backing a vendor through one of these routes, the UK Government will have to consider cost, time to market, and the potential for bringing jobs and intellectual property to the UK. One of the proposed advantages of SMRs is that they can be manufactured at scale, bringing their cost down and allowing SMRs to be exported to a world market. The Minister explained a major benefit of SMR development:
“[The] big advantage is…that you could create…a production line for SMRs. You could make them quite commercially available, so they could be a huge opportunity for UK plc if we can build the entire supply chain, including the design of the reactor itself, and then it could be a huge exportable opportunity”
134.Buying an off-the-shelf SMR might be the cheapest and quickest option, but the UK would not accrue any of the benefits of manufacturing SMRs in the UK. By contrast, if the UK chose to go it alone, the investment costs would be substantial, and the UK probably would not be first to market. Professor Andrew Sherry, Chief Scientist, National Nuclear Laboratory, told us the UK is currently behind other countries in developing SMRs.
135.Developing a Small Modular Reactor in the UK could support the creation of a nuclear supply chain in the UK. With the National Nuclear Laboratory (NNL) and Nuclear Advanced Manufacturing Research Centre (NAMRC) located nearby in the north west of England, North Wales could take advantage of this. This will only be possible if the UK Government makes the right decision when choosing which SMR model to back through its SMR competition. Buying an off-the-shelf SMR design with no intellectual property or opportunity to partner would limit the economic opportunities to the UK.
136.For the SMR competition, the potential for partnership and job creation should be a major factor in the Government’s decision. While this must be balanced with cost, we recommend that the Government should enable either the creation of UK-based SMR developer or a partnership with an international vendor that will deliver UK involvement in manufacturing and jobs. The Government should do this by creating the appropriate regulatory and business environment. We also believe that progress has to be made soon, if the UK wants to be first to market for SMRs. Greater clarity on the potential for SMRs to be built in the UK would also help firms with nuclear and advanced manufacturing skills to prepare for opportunities in the supply chain.
137.When the UK has made its decision on the SMR competition, it should work with local authorities and the Welsh Government to deliver jobs where they are needed. North Wales is well positioned near centres of nuclear excellence in north-west England and needs investment to stimulate the economy. If SMR manufacturing can be brought to the UK, we recommend the Government should consider bringing it to North Wales, where it could link up with existing nuclear sites and the NNL and NAMRC.
138.Trawsfynydd has been suggested to us as a potential site for a first-of-a-kind SMR, and the proposal has wide support, including from local councils, union representatives at Trawsfynydd, local economic bodies, an SMR developer, and industry bodies. A number of local residents also submitted evidence in support of bringing an SMR to Trawsfynydd.
139.There are a number of factors that would support the case for SMRs at Trawsfynydd. Due to its previous use as a nuclear power station, it already has available grid connections, an adequate supply of cooling water, and a skilled local workforce. Additionally, the site is already in public ownership and has not been ear-marked for any further developments, and the local population is used to the presence of a nuclear power station. Due to these factors, David Batters, Chief Financial Officer, NDA, told us that using Trawsfynydd could save money for the Government.
140.Gwynedd County Council said that developing an SMR at Trawsfynydd would be extremely beneficial for the area. Dyfed Wyn Edwards, Leader of Gwynedd County Council, told us that an SMR could help to reverse local emigration:
“the area is bleeding young people, suffers from low wages and there are people in work who are living in poverty. Such a development would therefore offer higher wages and deal with those three aspects.”
The Council also said that an SMR was the most plausible use of the Trawsfynydd site after decommissioning. Sioned Williams, Head of Economy and Community Services, told us:
“We are promoting SMR development on this site because we have looked at every other option. There is another opportunity for a data centre on the site, but that would mean about 20 jobs. There is no comparison. …There are other opportunities, but they would provide few jobs and lower wages”
The Snowdonia Enterprise Zone Advisory Board agreed, saying that an SMR was the ‘main feasible option’, and that an SMR development would complement the Wylfa Newydd project, helping to improve skills and manufacturing in North West Wales.
141.However, there are two potential obstacles for building an SMR at Trawsfynydd. The first is that the site is not currently licensed for new nuclear build, and land around Trawsfynydd, including the lake, could be sold by the NDA. This would mean that the site might no longer have access to water for cooling. Dr Richard Savage, Chief Nuclear Inspector, ONR, said that the use of Trawsfynydd would not be unreasonable, but that it would need to be designated a nuclear site before the ONR could assess it.
142.The second obstacle is that an SMR sited at Trawsfynydd might not be financially viable due to the location. One potential advantage of SMRs is that the excess heat they produce could be used for heating in nearby population centres. Professor Gordon MacKerron told us that the rural location of Trawsfynydd would make this difficult for an SMR to be economically viable:
“a place like Trawsfynydd is not well positioned because there is not a very large local heat load. I think if there were to be development of SMRs at Trawsfynydd it would almost certainly involve a larger premium or subsidy to the developers than if…SMRs were to be built somewhere else.”
143.Professor MacKerron based his view partly on a report published by the Energy Technologies Institute (ETI). Subsequent evidence from ETI stated that, although they thought connecting SMRs to district heating systems would improve the economic case for SMRs, they did not think it was necessary, particularly for a first-of-its-kind reactor. In both their original submission and this follow-up they state that Trawsfynydd would be a suitable site for a first-of-its-kind SMR.
144.Other witnesses also thought that the use of excess heat would not be necessary for an SMR to be viable and that the positives of the Trawsfynydd site outweighed this factor. The NNL’s feasibility study, published in 2014, suggested that a first-of-its-kind SMR would be cost-competitive with existing large-scale nuclear power stations, without factoring in using heat. The view of Professor Andrew Sherry, Chief Scientist, National Nuclear Laboratory (NNL), was:
“I don’t think the fact that Trawsfynydd is a rural community rules it out by any means, and certainly not for a first of a kind plant, which is a proof of principle but could also generate baseload power that can be put into the grid.”
145.The Minister told us that DECC was looking at potential SMR sites and would take Trawsfynydd into consideration. Lee McDonough added that the SMR roadmap would set out the site criteria later this year.
146.It is clear that Trawsfynydd would be an ideal site for a first-of-its-kind SMR. The availability of cooling water and the grid connections mean it would meet the technical requirements, and its history as a nuclear site and its ownership by the Government mean that it would be easy to designate it as a site for SMR development. The presence of a skilled workforce, which is strongly in favour of the project, would also be a major boost to SMR development.
147.The location of Trawsfynydd also makes it useful for a first-of-its-kind SMR. An SMR at Trawsfynydd would provide a good test case of whether SMRs can deliver value for money electricity without needing to sell large amounts of excess heat.
148.It is also clear that SMR development would be the best option for the future use of Trawsfynydd. It would be the most favourable economic option for Gwynedd, providing an economic stimulus to the area, and many-quality jobs. It would also help to keep skilled workers in the area and would provide clarity on the end status of the site, reducing the cost of decommissioning.
149.We recommend that Trawsfynydd should be designated as a site for a first-of-its kind SMR. The Government has told us that it will set out site criteria later this year for SMRs. In order to support the development of SMRs and the region of Gwynedd, the Government should move fast to make it clear what needs to be done for Trawsfynydd to meet these criteria and be designated as a site. That said, we are strongly of the view, based on the expert evidence we have received, that Trawsfynydd is a standout candidate for locating a first-of-its-kind SMR.
138 Professor Gordon MacKerron and Dr Phil Johnstone () and Q108
140 Professor Gordon MacKerron and Dr Phil Johnstone ()
143 National Nuclear Laboratory, , December 2014
144 Professor Gordon MacKerron and Dr Phil Johnstone ()
149 Cyngor Gwynedd Council (), Isle of Anglesey County Council ()
150 Mr Rory Trappe ()
151 BDW Consulting (), North Wales Economic Ambition Board (), Snowdonia Enterprise Zone Advisory Board ()
152 NuScale Power LLC ()
153 Energy Technologies Institute (), Institution of Mechanical Engineers () and Institution of Mechanical Engineers, “”, September 2014, and National Nuclear Laboratory (). Industry bodies include the Institute of Mechanical Engineers, the National Nuclear Laboratory, Energy Technologies Institute, and the Nuclear Institute
154 Mr Emlyn Evans (), Mr Matthew Griffith (), Mr Iolo Roberts (), Mr Hefin Jones (), Mr Keith O’Brien (), and Gerallt Rhun ()
155 Q212 and Q214
158 Snowdonia Enterprise Zone Advisory Board ()
160 Q107. See also Professor Gordon MacKerron and Dr Phil Johnstone ()
161 Q107–108, Energy Technologies Institute, , August 2015
162 Energy Technologies Institute () and Energy Technologies Institute - supplementary ()
163 National Nuclear Laboratory, , December 2014
21 July 2016