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The future of the UK’s nuclear energy sector has lurched from positivity to doubt many times in recent years and it currently appears unable to generate much by way of positivity. In November and December, the UK government’s 10-Point Plan for a “green industrial revolution” and Energy White Paper seemed to step back from previous commitments to help build a new nuclear plant.
In the Conservative party manifesto for the 2019 general election, production of nuclear power was a central part of their low-carbon power generation policies. The choice of how to do so is now firmly behind the creation of “mini-plants” or Small Modular Reactors (SMRs). Government funding from the Department for Business, Energy & Industrial Strategy (BEIS) in the region of £500m has been offered towards attracting private investors with Rolls Royce quick to declare their interest.
Meanwhile, involvement in the proposed construction of the Sizewell C plant in Suffolk by the developers EDF Energy has become less of a draw. The spiralling costs of the project were weighed against the realisation that energy provided at some stage far into the future was likely to cost considerably more than that provided by renewables such as wind and solar.
Sizewell C had been at the public consultation stage between 2012 and 2019 after which the planning application was accepted for examination by the UK Planning Inspectorate. Initial interest from private investors was high but this has cooled. On February 6th, one of the major potential investor – Aviva Investors – announced that they considered the “ESG (environmental, social and governance) impact of nuclear is far from clear” and they would not be involved in any investments in the sector.
This was followed by a similar disclosure from Legal & General Capital who already partner EDF Energy on other green projects. Without making any public disclosure, one of their investment service consultants responded to a query from a pension-holder: “Legal & General will not be investing in the Sizewell C nuclear power plant”.
Where this leaves Sizewell C remains to be seen but there are also other worries for EDF Energy. In January, the Environment Agency and Natural England raised concerns that design changes made to the Sizewell C plans were detrimental to local nature reserves and were in danger of being approved without an adequate evaluation.
Sizewell C is modelled almost exactly on the Hinkley Point C nuclear reactor in Somerset – the only UK plant currently in construction and another EDF project – which was scheduled to be operative by the end of 2025 at a cost of between £21.5bn and £22.5bn. In January, EDF announced that delays due to the Covid-19 pandemic had led to a revision of the date of electricity generation – now set at June 2026 – with the knock-on effect of increasing the cost of the plant to £23bn.
The government will also be aware that the price guaranteed to EDF for Hinkley Point electricity - £92.50 per MWh (megawatt hour) – is double that which BEIS has agreed for power generated by wind farms which will come into production in 2025.
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