Home Business Rolls-Royce calls for formal funding talks over small nuclear plants

Rolls-Royce calls for formal funding talks over small nuclear plants

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Rolls-Royce has urged the UK government to enter formal negotiations over the funding for small nuclear reactors, which it hopes to build in England or Wales by the early part of the next decade.

Tom Samson, head of the company’s small modular reactor business, told a committee of MPs on Wednesday that Britain would face an electricity crisis next decade if it did not push ahead with building more “baseload” power stations that offer a reliable source of generation when weather-dependent renewables including wind and solar are not producing.

Rolls-Royce is leading a consortium that has designed a 470-megawatt small modular nuclear reactor, which could produce enough power for a city the size of Leeds and would be built in factories before being deployed at existing nuclear sites in England and Wales.

It wants the government to enter formal talks over potential funding models and how the technology could be deployed so it can start building factories. The first Rolls-Royce-designed SMR would cost £2.5bn, although the UK engineering company has argued the cost of each plant will drop to £2bn once it has a pipeline of orders.

Supporters of SMRs argue that the modular construction process cuts down on the risks and time associated with building large new atomic plants, while a British design would create new export opportunities as governments around the world reconsider nuclear power following the gas crisis triggered by Russia’s assault on Ukraine.

However, the first Rolls-Royce SMR would probably need a funding model underpinned by the government or bill payers.

The company has previously talked about models such as “contracts for difference”, which are used for technologies such as offshore wind and guarantee developers a set price for their output.

Alternatively, it has said it may consider a “regulated asset base” mechanism, whereby a surcharge is added to consumer energy bills long before any plant is operating to help finance schemes.

Samson warned the government it did not have the luxury of spending another two to three years talking about whether to build more nuclear capacity, saying without action consumers would be hit by the lack of reliable electricity sources in the 2030s.

“The next crisis that is on our horizon in this country. . . ice [electricity] capacity,” Samson said as he warned Britain had not built sufficient baseload plants to replace aging nuclear reactors and gas plants that were constructed in the 1990s. The UK is also phasing out all remaining coal-fired power stations by October 2024.

“Another year or two years or three years spent talking about it [building more nuclear] is going to really affect consumers in the 2030s and it’s really important that we take action now,” Samson added.

Former prime minister Boris Johnson said while in office that he wanted up to 24 gigawatts of nuclear capacity by 2050 — up from just 5.9GW at present — but chancellor Jeremy Hunt’s recent Autumn Statement referred only to the 3.2GW Sizewell C nuclear project in Suffolk, about which the government is in negotiations with the French state-backed energy group EDF.

Opponents of nuclear argue that it is expensive compared to other technologies.

The UK government did not immediately respond to a request for comment.

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