Nuclear research and technology: Breaking the cycle of indecision Contents

Chapter 4: Small Modular Reactors

Small Modular Reactors

70.SMRs represent a new approach for civil nuclear power generation. They are smaller than conventional nuclear reactors, with power outputs of around 300MW or less.69 The modularity of SMRs means that much of the plant can be fabricated in a factory environment and transported to site, unlike existing nuclear power plants where there is more on-site fabrication. It is believed that prefabrication of components can reduce costs, improve quality control and speed construction. Globally there are some 45 designs at various stages of development, though none as yet are ready for deployment.70 A number of SMRs can be linked to give a particular output for a power station. The UK has experience, through Rolls-Royce, in building reactors within the SMR size range for submarine propulsion. There are, however, important structural and operational differences between these and those reactors used for generating electricity.

71.At the request of the Government the NNL, with industry partners, carried out a feasibility study of SMRs, published in December 2014.71 The study concluded that the size of the potential global SMR market is approximately 65–85GW of base load electricity by 2035, valued at £250–£400bn. It also concluded that there could be a UK market for 7GW of power from SMRs by 2035 and that it would be desirable for the UK to partner with another country to help access the international market. Rolls-Royce told us that 7GW of power would “be of sufficient scale to provide a commercial return on investment from a UK-developed SMR, but it would not be sufficient to create a long-term, sustainable business for UK plc.” Therefore, any SMR manufacturer would have to look to export markets to make a return on their investment. This point was also made to us by the NNL.72 Furthermore, David Orr, Senior Vice-President, Future Programmes and Technology at Rolls-Royce Nuclear, commented that there is not a large enough market in the UK for more than one design to be commercially viable.73

72.Prof Tynan outlined some of the criteria that any SMR design would have to meet to be suitable for deployment in the UK:

“First, the SMR has to be economically viable and bring indigenous value to the UK. To put that into context, it would have to mean value derived from significantly cheaper energy prices … It would have to create long-term, sustainable, high-value jobs. It would have to stimulate the UK supply chain, particularly for advanced manufacturing. It would have to provide intellectual property ownership for the UK. That would have to translate into value by export sales.”74

73.A study by the Energy Technology Institute suggested that it would take around 10 years to complete the design, safety analysis, manufacturing development and construction of the first UK demonstrator SMR. Once a demonstrator SMR has been built and operated successfully, series production of SMRs could then proceed.75 Similarly Tom Mundy, Executive Vice-President Program Development, Managing Director UK & Europe at NuScale Power, told us that if NuScale’s SMR design entered the Generic Design Assessment (GDA)76 process in 2017 then it could be deployed by 2027 in the UK.77 Mr Orr told us that Rolls-Royce would be looking at 2028–30 to deploy an SMR in the UK.78

74.The Cambridge Nuclear Energy Centre explained that SMR reactor technologies can be divided into two groups:

They went on to say that only the first group is capable of being deployed in volume from about 2030.79

Potential benefits

75.The NIA told us that there is major potential in the UK for SMRs as a complementary technology to the current new nuclear build programme.80 However, Westinghouse UK told us that “the potential benefits … will be heavily dependent on the specific reactor design in question.”81 That is to say whether the reactor design chosen is a Generation IV or light water based SMR as outlined in paragraph 74. According to the NIA, SMRs could contribute to the UK’s energy security and climate change objectives while having the potential to mitigate some of the challenges associated with new large-scale nuclear power plants, such as financing, infrastructure and siting.82

76.Penultimate Power UK, a business developing an SMR design, outlined some of the further potential benefits of SMRs:

“[L]ower capital costs, quick to build so faster return on investment, offsite modular construction mitigating onsite risks, new passive safety features and, depending on design, new applications for a low carbon economy such [as] electric heat and transport.”83

77.Rolls-Royce explained that, given the absence of any established global SMR supplier, there could be substantial benefits of being the first to market. They went on to say:

“A UK SMR programme will create many highly skilled jobs in both the near and longer term and also re-establish the UK as a leading global nuclear nation. Rolls-Royce estimates that a regular production schedule of one SMR per annum would generate >10,000 jobs within the supply chain, which could increase to c.40,000 jobs on the basis of two UK plants per annum and secured export opportunities of c.9GW.”84

78.In addition to generating low carbon electricity for distribution across a national grid, SMRs are proposed for a range of alternative or additional uses depending on the reactor design, including the generation of process heat for industrial or district heating applications, water desalination in arid regions and the production of valuable additives such as hydrogen, isotopes and certain chemicals.85

79.SMRs could be placed on existing nuclear sites, which are already licensed and have the necessary grid infrastructure. In particular the sites of Magnox power stations, which are in the process of being decommissioned, may be suitable for SMRs.86 Furthermore, the local workforces at these sites have the necessary nuclear skills. North Wales Economic Ambition Board told us that the Trawsfynydd Magnox site in North Wales is ideally suited for an SMR because “it is [in] public ownership, it has the right infrastructure (cooling capacity; grid connectivity; road connections; routes to transport large loads to site), local support, support at a North Wales and Wales level [and] proximity to centres of excellence for manufacturing.”87

Potential challenges

80.There are a number of potential challenges to be overcome before the deployment of SMRs. The NIA told us that development of an SMR would require significant Government support in terms of “an appropriate regulatory framework, including a GDA slot for licensing the design, and other … issues [such] as siting (including pubic acceptance) … and funded decommissioning arrangements.”88

81.The NNL told us that novel fuel designs or fuel cycles will increase the time and cost of licensing and commissioning an SMR. NNL also said that, while SMRs offer a range of potential benefits, “the economic case for [SMRs] is yet to be fully demonstrated.”89

82.Dame Sue Ion explained that “SMRs by definition will require multiple units across multiple [sites]” and therefore additional nuclear licensed sites may be needed, depending on the extent of deployment. She went on to say that:

“[S]mall nuclear should be considered as complementary to large nuclear reactors and not simply as an alternative, given the ability of larger stations to provide the bulk of baseload requirements.”90

83.Nuclear proliferation is defined as the spread of nuclear weapons, special fissionable material and weapons applicable nuclear technology to non-nuclear weapons states (as defined by the Treaty on the Non-Proliferation of Nuclear Weapons (NPT))91 or non-state actors (as covered by United Nations Security Council Resolution 1540)92. Under the NPT nation states have a legal responsibility to safeguard nuclear weapons, material and technology. The International Atomic Energy Agency (IAEA) has responsibility for providing a safeguards verification system for monitoring and verifying the non-proliferation obligations of member states.93 Within Europe Euratom (see Chapter 6) also provides additional safeguards verification.

84.SMRs have the potential to increase or decrease the proliferation risk depending upon the type of SMR produced. Dame Sue Ion told us that proliferation risks “are likely to arise due to an increased number of reactor units”.94 SMR designs that intend to use relatively high enrichment fuels, will also present more of a proliferation risk. It is also possible that more countries of concern could obtain SMRs because of the lower cost of procuring them and the lower technical skills entry point required. However, there are potential opportunities to reduce the proliferation risk with SMRs such as alternative fuel designs to reduce material attractiveness or the fuel cycle being operated outside of the country of operation, including the storage of spent fuel.

Box 3: Summary of potential benefits and disadvantages of SMRs

Potential Benefits

Smaller reactor size meaning both a lower absolute capital cost and a shorter construction period than a large reactor.

The reactor system can be manufactured in a factory setting, rather than in-situ at the construction site.

The smaller size means that SMRs could be constructed on a much wider range of sites than large reactors, giving more flexibility and the option to increase the generating capacity beyond that which could be met by large reactors.

There is potentially a large international export market for SMRs, for early movers.

SMRs could be placed on existing nuclear licensed sites.

Certain SMR designs offer more value than just the production of electricity. Products such as heat, hydrogen, isotopes and high value chemicals are all additional possible outputs.

Potential Challenges

The ‘first of a kind’ build cost for any commercial SMR would be comparable to that of a conventional large reactor and would therefore need Government support.

Cost savings for manufacture will typically only be realised after 10 or more reactors have been built, which is likely to be bigger that the UK market for SMRs.

SMRs have the potential to both increase and decrease the proliferation risk depending upon the type of SMR produced.

Government inaction

85.As part of the £250m announced for nuclear R&D (see paragraph 34) in the spending review and autumn statement 2015, the then Chancellor of the Exchequer announced that part of the funding would be for a competition to “identify the best value Small Modular Reactor design for the UK”.95 The Government launched Phase One of an SMR Competition in March 2016.96 The Government told us that Phase One provided “interested parties an opportunity to present their views on the benefits and risks of SMR deployment”. Furthermore they told us that the criteria set out in Phase One were designed “to encourage a wide variety of entrants to participate, enabling the gathering of evidence from a cross-section of interested parties, including reactor vendors, specialist manufacturers and service providers”.97

86.The Government has also stated that it intends to develop an SMR Roadmap, which will “summarise the evidence so far, set out the policy framework and assess the potential, for one or more possible pathways for SMRs to help the UK achieve its energy objectives, while delivering economic benefits”.98 The Government has stated that the roadmap will also include details of how it will identify suitable sites or types of sites for SMRs, and work it will undertake with the Office for Nuclear Regulation to ensure that appropriate provision is made within the process for regulatory approval.99 Alongside Phase One and the SMR roadmap the Government commissioned a Techno-Economic Assessment of SMRs in May 2015. The assessment was carried out by a group of contractors led by Atkins Limited and was completed by August 2016. BEIS is yet to publish the analysis. Phase One of the Competition was expected to be completed in Autumn 2016 with the publication of the roadmap happening at the same time.100

87.Mr Orr told us that this has not happened yet and that Rolls-Royce were “seeking clarity” from BEIS as to when it will take place.101 In its written evidence the Government said it “will provide further information on next steps for the programme in due course.”102 When we asked the Minister, Jesse Norman MP, for more information on the Government’s timetable he was unable to provide any further information.103 In a reply to a written question on 29 March 2017 Lord Prior of Brampton, Parliamentary Under Secretary of State at BEIS, re-stated that the Government would provide information of the next steps of the SMR competition “in due course”. Furthermore he said that Phase one “does not involve the down-selection of a reactor design”.104

88.The Cambridge Nuclear Energy Centre made it clear in its evidence why SMR development requires Government support:

“It is clear that no SMRs will be developed in the UK without government involvement and support. No vendors could bear the development cost by themselves. There is no effective market in nuclear power plants—small or large. Government, as in the US, needs to be involved at least in the development of a SMR.”105

89.NuScale Power echoed this, telling us:

“[T]here is a key role for Government to be a part of the “first-mover solution” specifically by taking action that will reduce risk associated with SMR development and deployment.”106

90.Professor Neil Hyatt told us that there is a lack of clarity over the national strategy on SMRs107 and Dame Sue Ion suggested that companies that have invested significantly in preparing responses to Phase One are likely to lose interest if the Government delays any decisions on SMRs. 108

91.Penultimate Power UK went further, telling us that ongoing delays by Government and a lack of clarity on how the competition will proceed have paralysed the market and that “without urgent action the window of opportunity for meaningful participation will soon close.”109 Plaid Cymru told us that “the failure of the Government to publish its SMR roadmap … and techno-economic assessment of SMRs is causing concern about its capacity and focus to the development of the industry at this pivotal time.”110

92.Lord Hutton explained to us that the NIA “are, and remain, disappointed that, having kicked this off and raised expectations so much, we have not had anything back [from the Government] at the points when we were promised”.111 While he accepted that the decision to commit to SMRs is a big call, he said: “that is what Governments are there to do. They are not there to avoid the big decisions, they are there to take the big decisions … if [the Government] are going to maintain the interest of the commercial sector here, they really have to be clear about which direction they want to go in.”112

93.When we asked the Government about the risk of paralysing work in the SMR industry by further delaying the SMR competition, Craig Lucas, Director of Science and Innovation for Climate and Energy at BEIS, told us that:

“We are very sensitised to that risk, if you like. I would also say that this is a very complicated area and the range of things that has come forward to us has meant we have had to do a lot of thinking about the evidence presented and what is a viable proposition and what is not. The long-term nature of this decision, to some degree, justifies the level of effort we have been putting into it, I think.”113

94.Mr Norman told us that he did not think the SMR competition should have been named as a competition and that “it was more a … call for ideas across a much wider spectrum”.114

95.Mr Lucas said that BEIS “have done an extensive piece of evidence work to look at the state of maturity of the different technologies and the likely level of costs they might achieve” and that this showed “that the possible technology outcomes are of a very wide range” and therefore the Government needs to look at “the question of investability … and the question of the amount of value that UK plc could capture”.115 This piece of work is the techno-economic assessment of SMRs commissioned by the Government (see paragraph 86). In response to an oral question in the House of Lords on 24 April 2017 Lord Prior said:

“[W]e simply do not yet know whether small modular reactors will represent a cheap source of low-carbon energy for the future. We just do not know what the economics are, which is why in due course we will be publishing a technical and economic evaluation, based on assessing the 32 proposals that have been put to us for SMRs. The only truthful answer at the moment is that the jury is still out.”116

96.In order to make a decision about SMRs the Government needs access to the best possible independent expert advice. We were concerned when Prof Howarth told us that the NNL “stand ready to support government in being able to determine the market assessment and how effectively we move into [the SMR] market”,117 implying that the Government was not already seeking the NNL’s advice. The Government should seek technical advice from NNL as a matter of routine, as well as other industry experts, when considering technical decisions such as the development of SMRs.

97.It is important to recognise that there are several distinct questions that arise from the consideration of SMRs. Perhaps the most important, given that deployment before the late 2020s is unlikely, is what role they could be expected to play alongside the other elements in the UK energy mix at that time. In principle a number of SMRs on a single site could replace a single large reactor. Alternatively SMRs could be more widely distributed with attendant advantages and disadvantages. Both public acceptability and availability of finance, public and private, will be very important. Although a UK role for SMRs would be important, alone it would be unlikely to justify major investment. A joint venture between manufacturers with different and substantial home markets would be welcome.

98.We are disappointed that the Government launched a competition for SMRs and has not kept to its stated timetable. This has had a negative effect on the nuclear sector in the UK and if the Government does not act soon the necessary high level of industrial interest will not be maintained. It is particularly alarming that the results of Phase One of the competition, which does not involve the selection of an SMR design, have yet to be announced by the Government.

99.We did not detect any urgency from the Government to make a decision on the SMR competition. Whilst acknowledging the need for due care, the Government must publish its strategy for SMRs without delay if industrial interest is to be maintained and if commercial opportunities are not to be missed. We have reached a critical moment for the future of the United Kingdom as a serious nuclear power strategically positioned to capture coming opportunities.

100.The Government should also publish its techno-economic assessment of SMRs immediately and make clear whether it believes there is a sound economic case for the UK to make a substantial strategic investment.

69 In oral evidence Rolls-Royce suggested that SMRs could be as large as 500MW; Q 12 (David Orr)

70 House of Commons Library, New nuclear power, Briefing Paper, CBP-7705, 15 September 2016

71 NNL, Small Modular Reactors (SMR) Feasibility Study (December 2014): [accessed 16 March 2017]

72 Written evidence from the NNL (PNT0046)

73 Q 12 (David Orr)

74 Q 5 (Prof Mike Tynan)

75 ETI, Preparing for deployment of a UK small modular reactor by 2030 (September 2016): [accessed 20 March 2017]

76 Generic design assessment (GDA) is the process used by the nuclear regulators (ONR and the Environment Agency) to assess the new nuclear power station designs. It allows the regulators to assess the safety, security and environmental implications of new reactor designs, separately from applications to build them at specific sites.

77 Q 13 (Tom Mundy)

78 Q 13 (David Orr)

79 Written evidence from the Cambridge Nuclear Energy Centre, University of Cambridge (PNT0056)

80 Written evidence from the NIA (PNT0041)

81 Written evidence from Westinghouse UK (PNT0027)

82 Written evidence from the NIA (PNT0041)

83 Written evidence from Penultimate Power UK (PNT0013)

84 Written evidence from Rolls-Royce (PNT0006)

85 Written evidence from University of Leicester (PNT0022), Terrestrial Energy Inc. (PNT0057) and Rory Trappe (PNT0008)

86 Q 16 (David Orr)

87 Written evidence from North Wales Economic Ambition Board (PNT0059)

88 Written evidence from NIA (PNT0041)

89 Written evidence from the NNL (PNT0046)

90 Written evidence from Dame Sue Ion (PNT0031)

91 Treaty on the Non-Proliferation of Nuclear Weapons (NPT), 1 July 1968: [accessed 24 April 2017]

92 United Nations Security Council Resolution 1540 (2004), 28 April 2004: [accessed 24 April 2017]

93 IAEA Statute (updated version of 28 December 1989): [accessed 30 March 2017]

94 Written evidence from Dame Sue Ion (PNT0031)

95 HM Treasury, Spending review and autumn statement 2015 (27 November 2015), section 7.7: [accessed 20 March 2017]

96 BEIS, Small Modular Reactors Competition Phase One (17 March 2016): [accessed 20 March 2017]

97 Written evidence from HM Government (PNT0029)

98 DECC, Small Modular Reactors Competition: Phase One Guidance (17 March 2016), p 5: [accessed 20 March 2017]

99 BEIS, Small Modular Reactors Competition Phase One (17 March 2016): [accessed 20 March 2017]

100 DECC, Small Modular Reactors Competition: Phase One Guidance (17 March 2016), p 8: [accessed 20 March 2017]

101 Q 14 (David Orr)

102 Written evidence from HM Government (PNT0029)

103 Q 33 (Jesse Norman MP)

104 HL Deb, 29 March 2017, HL6114

105 Written evidence from the Cambridge Nuclear Energy Centre, University of Cambridge (PNT0056)

106 Written evidence from NuScale Power (PNT0049)

107 Written evidence from Prof Neil Hyatt, University of Sheffield (PNT0028)

108 Written evidence from Dame Sue Ion (PNT0031)

109 Written evidence from Penultimate Power UK (PNT0013)

110 Written evidence from Plaid Cymru (PNT0042)

111 Q 57 (Lord Hutton of Furness)

112 Ibid.

113 33 (Craig Lucas)

114 Q 33 (Jesse Norman MP)

115 Q 33 (Craig Lucas)

116 HL Deb, 24 April 2017, col 1212

117 Q 46 (Prof Paul Howarth)

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