1)During the seven decades since the UK built the world’s first civil nuclear reactor in 1956, Britain’s nuclear energy policy has been characterised by intermittency.
2)Between the 1955 White Paper ‘A Programme of Nuclear Power’ and 1979, 17 nuclear power stations were approved: ten Magnox followed by seven advanced gas-cooled reactor (AGR) plants. There was then a gap before Sizewell B, the pressurised water reactor (PWR) plant, was approved in 1987 and came online in 1995. It then took 21 years for another nuclear new build to be approved—the European pressurised reactor (EPR) at Hinkley Point C was approved in 2016 but is not due to come online until 2027. Since then, discussions about building new reactors at Wylfa on Anglesey and at Moorside in Cumbria foundered. But the Government is in negotiations over a second EPR facility at Sizewell. And the Government has, since 2020, contributed £385 million to research and development in advanced nuclear technologies (including small modular reactors and advanced modular reactors).
3)A more stable feature of UK nuclear policy has been the funding of fusion research and development. For example, the Joint European Torus (JET), the central facility of the European Union’s Fusion Programme, has been hosted at the Culham site since 1983. That programme has yet to produce a commercially deployable source of energy from fusion.
4)The legacy of this intermittent history is that nuclear power which, from about 5.5 gigawatts (GW) of nuclear capacity, currently contributes 15% of the UK’s electricity needs, will fall substantially by 2028, when all plants bar Sizewell B are scheduled to come to the end of their lives. Even when Hinkley Point C comes online, nuclear capacity will remain below current levels because of the expected retirements.
5)The UK’s legal commitment to net zero greenhouse gas emissions by 2050; worries about the security of imported fossil fuels heightened by the consequences of Russia’s invasion of Ukraine; and the expected shift toward higher electricity demand as part of the overall energy mix, mean that the loss of contribution of a domestic, non-carbon emitting source of baseload power (also known as firm or dispatchable power) has created a gap in our future supply of power.
6)The Government’s response, in its Energy Security Strategy, published in April 2022, is to aim to achieve 24 GW of nuclear capacity by 2050. This is an ambitious aim: it equates to three times current nuclear capacity, even before plant retirements, and it is almost double the highest nuclear installed capacity the UK has ever achieved. The Government estimated that nuclear power will then contribute around 25% of the UK’s electricity supply.1
7)The Government has also said that it wishes to deploy small modular reactors (SMRs). No SMR is as yet commercially operational, but SMRs are envisaged to be (ultimately) cheaper to manufacture, quicker to construct, and more flexible in where they could be sited.
8)It is not clear what proportion of the Government’s 24 GW ambition for nuclear power by 2050 will be accounted for by SMRs. The Government has also said that it will sponsor the development of a future generation of nuclear reactors, known as advanced modular reactors (AMRs) or Generation IV reactor technologies, and will continue research and development into fusion technologies—although it does not expect the latter to contribute to commercial electricity supplies by 2050.
9)We believe that the Government is right to identify nuclear power as an important contributor to meeting our future electricity needs. Given the otherwise declining contribution of nuclear power, this ambition requires a substantial programme of nuclear new build.
10)The power gap that has opened up in the supply of nuclear energy was—since it results from the retirement of ageing plants without their timely replacement—foreseeable and should have been acted upon by previous governments. That it was not, is consistent with an intermittent commitment to nuclear power which has characterised UK policy for most of the period since civil nuclear power was first deployed.
11)The recently announced Government target of 24 GW of nuclear generating capacity by 2050, and the aspiration of deploying a new nuclear reactor every year are statements of ambition.2 But they do not amount to a strategy that will ensure that such capacity is built. Witnesses to our inquiry characterised the Government’s Energy Security Strategy, published in April 2022, as more of a “wish list” than a strategy to achieve those ambitions.
12)A year after the Energy Security Strategy was published, an Energy Security Plan, was issued in March 2023. But it did not include much further information about how the Energy Security Strategy would be implemented.
13)Even taken together, the 2022 Energy Security Strategy and the 2023 Energy Security Plan, do not amount to the comprehensive, detailed and specific strategy that we believe is required if the Government’s aspirations are to be delivered.
14)To be able to achieve the Government’s target of 24 GW of nuclear power by 2050 requires a large number of actions to be taken in an orderly and timely way, not only by Government but by a wide range of other parties, including: developers; regulators; fuel suppliers; providers of finance; educational and training institutions; and other suppliers.
15)One of the lessons of the 70-year history of civil nuclear power in the UK is that there is advantage in a stable, actionable set of policies and dependable commitments made on behalf of governments. Policies and commitments need to endure beyond terms of office of a particular administration, such are the long timeframes associated with nuclear development.
16)Where such continuity and predictability has been absent—whether because of stop-start policies, ambiguity of commitment or long delays in making decisions—this has usually been at the expense of the cost-effectiveness and the performance of the UK nuclear industry as a system.
17)A Nuclear Strategic Plan must go beyond high-level aspirations: it must be a specific plan bringing together many particular decisions to be taken according to a clear timeframe upon which others can rely.
18)A true strategic plan must also be integrative. It should bring together the actions and decisions required to the range of parties involved, inside and outside of government, and ensure that they are coherent and coordinated with each other, rather than pulling in different directions.
19)A first step was taken towards this approach in the negotiation and agreement of the Nuclear Sector Deal in 2018. This initial agreement between the Government, regulators, research bodies and commercial companies in the UK nuclear industry, set out agreed mutual actions on areas such as technology, licencing and skills development. It was envisaged that this would be the first of a deepening series of Nuclear Sector Deals, but there has been no further progress in the intended direction.
20)In each of the areas we examined closely—new gigawatt-scale nuclear; advanced nuclear technologies; fusion; financing; skills; regulation; and decommissioning and waste management—the repeated requirement from witnesses from across the nuclear industry was for a much clearer and more concrete strategic plan, and one which involved commitments from a wide range of stakeholders.
21)Therefore, a core recommendation of our inquiry is that the Government should develop and publish a clear Nuclear Strategic Plan, which:
22)We recommend that such a comprehensive Nuclear Strategic Plan should be drawn up, consulted upon and agreed before the end of the current Parliament in 2024.
23)A new nuclear body, Great British Nuclear (GBN), was announced in April 2022 to help new nuclear projects through to deployment. In March 2023, the Government confirmed that GBN would come into existence imminently and would be initially tasked with running a competition to select small modular reactor designs.
24)A common theme of evidence to our inquiry was ambiguity as to what GBN’s role would be. Simon Bowen—since appointed interim chair of GBN—told us that GBN requires statutory powers. In May 2023, the Government announced, during the second reading of the Energy Bill 2022–23, that it would amend the Bill to provide GBN will the powers it required to support the UK’s nuclear industry. We are pleased to see this progress, as during our Inquiry the Government had not been able to provide us with any clarity on GBN’s role or how it would be set up.
25)Having said this, there is still ambiguity over what GBN’s exact remit will be in the future, beyond running a SMR competition. We recommend that the Government should set out a more comprehensive statement of GBN’s remit, operational model and budget, and its intended role with respect to ministers and government departments. Within this detail, the Government should clearly define what the role for GBN will be on supporting new nuclear projects beyond the initial SMR competition, including in relation to gigawatt size projects beyond Sizewell C and AMRs.
26)There is ambiguity over what proportion of the Government’s 24 GW target by 2050 will be met by new gigawatt-scale power plants, as opposed to advanced nuclear technologies.
27)The National Infrastructure Commission has previously said the Government should only support one additional large-scale plant before 2025, after Hinkley Point C. Simon Bowen, on the other hand, said that there should be three more and that a fleet approach offers value for money.
28)The Government should provide greater clarity on the mix of reactor technologies it expects to deploy to meet its 24 GW aim—whether gigawatt- scale, SMRs or AMRs. Very large-scale plants require very significant financing and the timeline of when they are planned to be built will be important. In addition, major decisions on the part of multiple organisations and companies will depend on whether there is a dependable and foreseeable stream of new build over the next 25 years. This has vital implications for cost and the establishment of a bigger nuclear supply chain.
29)If the intention is that there should be multiple new gigawatt-scale reactors, the Government needs to come to a decision on whether it will favour serial versions of the same technology—with the benefit of knowledge and resources being transferable from one project to another—or to favour the competitive dynamic and greater resilience to type failure that would come from deploying different technologies. A Nuclear Strategic Plan must set out clearly the resolution of both questions.
30)During the hiatus that is inevitable before new nuclear power can contribute to the UK’s energy supply, it is possible that the lives of some of the existing fleet of nuclear reactors could be safely extended. The functioning AGR’s are requiring more regular maintenance and safety inspections, and no life extensions could be contemplated without a rigorous safety case provided to and accepted by the Office for Nuclear Regulation (ONR). EDF announced in March 2023 plans to extend the lives of two of the remaining five nuclear power stations—Heysham 1 and Hartlepool—until early 2026 rather than March 2024 as planned.
31)We believe that it is reasonable for EDF to seek life extensions to extend their contribution to the grid if, and only if, the ONR’s judgement is that they can be operated safely, as is currently the case. A Nuclear Strategic Plan should spell out how the current reactor fleet, through life extensions, will contribute to the Government’s ambitions of 24 GW from nuclear by 2050.
32)SMRs are a type of nuclear reactor that are intended to be largely prefabricated at dedicated manufacturing facilities and then assembled at approved sites. This form of construction is anticipated (with replicated use) to cut the costs of nuclear construction, reduce the risks of overruns, and—because of this and their smaller capital outlay—make the reactors easier to finance commercially at a time when gigawatt-scale reactors have proved too much for commercial balance sheets to bear.
33)SMRs have not yet achieved commercial deployment. But in the UK, the Government has decided to invest £210 million, alongside £280 million contributed by commercial funds, to a consortium—Rolls-Royce SMR—with the intention of developing the design to generic design assessment (GDA) approval, the process for which it entered in March 2022. The Rolls-Royce SMR design would have a generation capacity of 470 megawatt (MW) per reactor.
34)The Rolls-Royce SMR consortium in evidence to our inquiry said that if it received a contract from a customer by the end of 2023, it could have reactors contributing electricity by 2031–2. Other companies have criticised the Government’s decision to award research funding only to Rolls-Royce SMR—albeit following a competition—rather than a wider range of potential suppliers.
35)GBN has been tasked with running an exercise to choose between alternative SMR propositions—including Rolls-Royce SMR and its competitors. At this stage it is unclear what contribution the Government expects SMRs to make to its 24 GW target.
36)In developing a Nuclear Strategic Plan the Government should answer the questions of:
37)Each of these questions will require a clear answer if vendors are to be able to take decisions on whether and when to take the next steps towards eventually deploying SMRs.
38)AMRs also offer important advantages in terms of cost and the potential for co-generation. But if they are to advance, the research and development needs to move from the desk and the lab towards demonstrators, and this will require the Government to make decisions as to which technologies to fund. The Government should continue its support for the AMR Research, Development and Demonstration programme and ensure that it takes decisions on funding particular technologies and projects without delay, so that it keeps pace with competitors.
39)Gigawatt-scale nuclear projects cost tens of billions of pounds to plan and construct before a single unit of electricity is generated. Their long period of construction, complexity, and subordination to potentially variable regulatory standards have been associated with large cost-over runs and delays. For all of these reasons, and more, the financing of gigawatt-scale new nuclear power has proved formidably challenging. Most civil nuclear nations have built new nuclear power stations on the public sector balance sheet, as did the UK for all of its existing nuclear power stations. Hinkley Point C has been financed off the Government balance sheet by the French Government-owned utility EDF and Chinese CGN. Its construction is proceeding in return for a 35 year Contract for Difference (CfD) fixed at £92.50/MWh in 2012 prices. The conceived cost of construction has increased from £18 billion at the time of the final investment decision to £32 Billion in 2023 and its completion date is now forecast to be 2027, around two years after EDF’s estimate at the time of Final Investment Decision (FID). It is important to note that the estimates of that cost overrun as result of the CfD model are not to be met by UK consumer or taxpayer, but by the companies. The CfD runs for 35 years from start-up during the 2025–2029 period. If the plant is not generating electricity by 2029 then the contract would be shortened by one year up until 2033 after which the contract will be cancelled and EDF will not receive any top-up revenues from the CfD.
40)Given the demonstrated unwillingness of private investors to take on all of the construction risk of gigawatt scale nuclear plants through the CfD model, it is inevitable that a public-private risk sharing model should be contemplated if new gigawatt-scale plants are to be constructed. The Regulated Asset Base (RAB) model—which has been given Royal Assent in the Nuclear Energy (Financing) Act is one such. However, the model entails significant uncertainties and downsides. Chief among these is that although the financing of a plant should be cheaper in headline terms than a model in which the private sector shoulders all construction risk, the extent to which this represents value for money depends on the financial value of the construction risk being absorbed by the public balance sheet. The consumer or taxpayer is taking an unknown and uncertain risk of cost overruns, yet disburses funds from day one without earning a return.
41)The Government should show how this offers value for money to taxpayers and should be open to other alternative partnerships between the public and private sectors as practised in other countries. The choice to proceed with gigawatt-scale nuclear power should not be made without robust estimates of its value for money, including the financial value of the construction risk being assumed by taxpayers or billpayers. A headline lower cost than Hinkley Point C is not justified if the value of the risk is too great. This is true even if it forces a conclusion that—for all its other advantages—gigawatt scale new nuclear is not financeable on defensible terms, and that the UK’s nuclear ambition would need to be pursued through other nuclear technologies.
42)So far, the Government has not published financial figures which allow the cost of this risk transfer to be known. The Government must publish figures, before signing contracts for new gigawatt-scale nuclear, which allow a proper assessment of value for money to be made, including setting out the level and potential cost of construction risk to be borne by the consumer or taxpayer.
43)It may be the case that the size of capital outlay means that private investors will not repeat a CfD contract for new nuclear, whatever the price. But the lack of alternative choices should not mean that any terms will be acceptable for a RAB financed plant. The Government should make, and disclose, its best estimate of the value of the risk that would be taken on by the public, and a clear plan of how those risks can be managed through incentives during the development, construction and operational phase of the project’s lifetime.
44)The Government should publish details of how the estimated savings from using the RAB model for funding Sizewell C were calculated, and provide clarity for the funding structure, by publishing the Heads of Terms for the agreed RAB funding model for that project.
45)Even without new nuclear builds, the nuclear industry needs to recruit or train 50,000 new employees over the next 20 years, as a relatively older workforce retires. And if the Government’s 24 GW target is to be met, the current workforce of over 65,000 people will need to more than double, requiring between 75,000 and 150,000 new recruits.
46)Careers in the nuclear industry are well paid—the average salary in 2021 was £47,000, 80% higher than the UK’s average salary. Work is focused in areas of the country where pay and employment is lower—40% of civil nuclear jobs are located in the 25% most deprived local authority areas.
47)The nuclear sector offers very attractive prospects for good careers with longer term security than exists in most industries. People who work in the nuclear industry find their roles rewarding and stimulating, although we heard evidence of the sector having an “image problem” in the competition for STEM qualified graduates and trainees, compared with well-known employers in the tech sector and sectors such as advanced automotive. The stalled history of nuclear new builds prior to Hinkley Point C may also have contributed to the nuclear sector not being considered by some potential recruits as a destination of choice.
48)Attracting and training the workforce which is required to meet the Government’s ambition for nuclear, needs co-ordinated actions by the whole sector: Government, existing nuclear operators, developers, regulators and educational institutions. The Nuclear Skills Strategy Group—which brings together many of the employers in the industry—has produced a strategic plan for what recruitment and training is needed in the future and how a workforce (which is predominantly male and white) can draw on a wider pool of talent.
49)As with the Government’s strategy, we have now reached the point in which high level goals need to be turned into specific commitments by individual organisations by particular dates.
50)Many of the skills that are needed in the sector are not specifically ‘nuclear skills’ but rather expertise and experience with more general applications, such as those in construction project management and engineering. We heard evidence that the nuclear industry should be more open to bringing in people with such skills from other sectors—not only to expand the range of talent available, but also to guard against the risk that the nuclear industry becomes too insular and impervious to different ways of doing things.
51)Much of the training of new nuclear recruits to nuclear jobs will be done through apprenticeships. In such cases there needs to be close working between employers and colleges, including the National College for Nuclear, to ensure that the curriculum is developed, and its development properly resourced, in advance of need and so in advance of the payment that comes through student enrolment.
52)If the nuclear sector is to expand it will also require more graduates and highly qualified workers. Witnesses to our inquiry were concerned that the current output of graduates and postgraduates with expertise in nuclear technologies was not adequate to the needs of the industry, even before expansion of the sector. Universities and other higher education and research institutions should be engaged as part of a clear and specific strategic plan to ensure that the capacity is in place to provide the necessary courses, to be able to deliver the expertise needed to meet the Government’s strategic objectives.
53)Previous decades of mismanagement of nuclear decommissioning in the UK—from inadequate provision for decommissioning costs, to record keeping so negligent as to have left ponds of radioactive waste whose content in unknown—has made the responsibilities of the Nuclear Decommissioning Authority (NDA) some of the most challenging, complex and consequential of any organisation in Britain today. The NDA has made progress in the last five years in simplifying its structure, making more credible estimates of the costs of decommissioning, and replacing complex and opaque subcontractor arrangements with more straightforward ones. The vast annual budget for the NDA—necessarily between £3.5 billion and £4 billion—and the critical importance of its work means that the performance of the NDA must be kept under close review by the Government and Parliament, and that it should have a strong relationship with the Department for Energy Security and Net Zero, the Treasury and the Prime Minister’s office.
54)The experience and expertise which the NDA has in civil nuclear decommissioning is more than any other country in the world, as a result of the UK being the world’s first civil nuclear nation. The NDA’s expertise’s can be deployed globally, as countries who were later in constructing civil nuclear power stations than the UK seek to safely and economically decommission their reactors. This is a tremendous export opportunity for the UK’s expertise which can raise revenue for the NDA and therefore taxpayers.
55)The NDA should establish, with the involvement of Government, a long-term plan to expand this international work while maintaining a thorough and dependable service within the UK.
56)Most of the nuclear waste that the UK must safely handle and dispose of has already been produced by previous nuclear installations. The incremental waste generated by new nuclear power plants is not likely to be a material factor in decisions on approving new gigawatt-scale plants. We note, however, evidence presented to us which indicated that SMRs and AMRs would produce waste which may require different handling.
57)It is imperative that a clear understanding of the waste consequences of new nuclear technologies, how it will be dealt with, and at what cost, should be part of the decision-making on whether or not to deploy these technologies.