UK’s Existential Energy Emergency Spurs Funding Fixes
The UK Government is finally realizing that its once upon a time grand plan for 19.3GWe of new nuclear energy projects is in a shambles.
The good news is that after nearly a decade of dithering, and other forms of indecisive policy consultations, it is finally getting around to doing something about it.
Due to the perils of climate change, the U.K. needs zero carbon power from nuclear energy to meet its net-zero targets and to prevent a major energy crisis. The nation’s current fleet of reactors are scheduled to close by the end of the decade. The fact that only one of the 10 other planned new reactor projects is under construction has alarmed the UK government and finally impelled it to action.
Update: 10/04/21: (WNN) UK needs new nuclear, says Prime Minister Boris Johnson
The UK government is in discussions regarding proposals for a new nuclear power plant at Wylfa on Anglesey, British Prime Minister Boris Johnson confirmed in an interview with BBC Wales. He said previous governments in the country “have refused to take the tough decisions on nuclear for too long.” Meanwhile, EDF Energy has called for the government to make prompt decisions regarding the Sizewell C project.
The government’s attentions span for focusing on nuclear energy improved recently as a result of the wind not blowing as predicted leading to a crisis for electricity supply that came on top of a self-inflicted shortage of gasoline caused by the BREXIT deal with the EU.
According to wire service reports, the UK government will seek legislative approval from Britain’s Parliament for a new mechanism to fund the Sizewell C project. It is planned nuclear power station that will be composed of twin 1650 MW EDF EPRs. It will cost in excess of $27 billion.
The funding estimate is still a work in progress though EDF claims that lessons learned from building the Hinkley Point C project, composed of the same two types of reactors, will make them more predictable in terms of construction costs and less likely to go over significantly budget or fall behind schedule.
Why China is Out in the UK?
The main problem for funding Sizewell C is that the UK is in the process of booting its Chinese equity partner, China General Nuclear (CGN), out of an agreement to invest in a 20% equity stake in the project. In return, the UK government had promised CGN that it would be allowed to build one and perhaps as many as three 1000MWe Hualong One (PWR design) at the Bradwell site.
The Chinese are determined about wanting to build one of their Hualong One reactors in a first world country to prove its value for export. China has extensive experience with the design and all of the major nuclear components are manufactured by Chinese firms. In China the reactor has been built or is under construction or planned to be built at 11 sites: Fuqing 5 and 6 (Fujian Province), followed by Fangchenggang 3 and 4 (Guangxi), Zhangzhou 1 and 2 (Fujian), Taipingling 1 and 2 (Guangdong), and San’Ao 1 and 2 (Zhejiang). Fuqing 5 began commercial operation in January 2021. Negotiations with Argentina are ongoing for a single unit.
So far two of five planned reactors of this design have been built for export near Karachi, Pakistan. Also, the design is under review by the UK Office of Nuclear Regulation in its Generic Design Assessment. The process is in Phase 4 and at last report is expected to be completed this year.
The UK move to give CGN the heave ho from Sizewell C will be a huge bucket of cold water on these global ambitions. It will create serious tensions between the two countries and China is likely to retaliate in some manner that hurts UK trade. It will be the second time the UK has torched a major trade deal with China in the past few years.
China is already fuming over having lost a major telecommunications contract in July 2020 in the UK mostly at the behest of UK firms which wanted the business and convinced PM Boris Johnson the action would protect UK jobs. Security issues were also a major consideration based on fears China would use the equipment to conduct cyber espionage in the UK especially focused on stealing intellectual property from businesses.
Will a New Financing Method Raise $6 Billion?
The UK government must now find a way to bring at least $6 billion from new investors, and maybe much more, to pay for the project. Government funding through the much analyzed RAB method seems to be an early option. The UK government is reported to seek legislation this month for a funding mechanism to cover the costs of the construction of new nuclear power plants.
The regulated asset base (RAB) model is a government-funded mechanism that combines private-sector investment in a project, which is meant to cover the construction costs. The plan has been used successfully in the UK for airports, flood control, and other major infrastructure efforts.
Sizewell is just the tip of the iceberg in terms of financing the nuclear new build in the UK. Ten other full size reactors are still planned for six sites. On a rough order of magnitude, the total costs will likely be in the range of $81 billion or more over the next two decades. (see list below)
- Sizewell C – two 1650 MWe EPRs ($28 billion)
- Wylfa & Oldbury – fund the equivalent of four 1350 MWe ABWRs originally planned to be built at these sites by Japan’s Hitachi. That firm pulled out about a year ago due to an inability of the UK government and Hitachi to come to terms on costs and financing. ($20 bilion +)
- Moorside – fund the equivalent of two or three 1150 MWe AP1000s originally planned to be built at this site by Westinghouse. These plans collapsed due the bankruptcy of Westinghouse over the failure of the V C Summer project in South Carolina and the decision by Toshiba, the parent firm, to exit the nuclear industry and to sell off Westinghouse to a Canadian private equity firm. ($12-18 billion +)
- Bradwell – If the UK goes through with its decision to boot CGN off the Sizewell C project, it will need an entirely new vendor, EPC, and funding to complete it. ($15 bilion +)
What UK politicians are just now realizing is that the costs to the economy of not having the reactors, and turning into a British version of South Africa in terms of brown outs and shuttered major industries due to energy issues is way more costly than paying for the new power stations.
The new UK financial plan could become one of global industry’s most ambitious public / private funding efforts for new nuclear power. In addition to Sizewell C, it would also cover the following efforts. (Infographic courtesy of NucNet).
Waiting in the wings are multiple proposals to build small modular reactors (NuScale, GE Hitachi), and mid-size reactors (Rolls-Royce proposes a fleet of 16 470 MWe PWRs to be built out by the mid 2030s)
What’s Likely to be in the UK Financial Plan?
The RAB model is the government’s go to method of financing. The mechanism would be included in an investment decision for funding Electricite de France (EDF) 20 billion-pound ($27 billion) Sizewell C nuclear plant project in southeast England. The UK government would cover the 20% stake that had been part of the deal with CGN.
Unfortunately, the UK government moves about as fast as a pouring from jar of molasses in January and says that its first action, which is funding Sizwell C, is likely to take another year or two. Getting a clear line on funding earlier would be a huge boost to the project as every month of delay increases the cost of the twin reactors. It would also set the basis for funding all other other reactors.
The government is planning to hold on to CGN’s 20% stake, worth about $6 billion, until it can be sold to institutional investors. Britain is reported to be examining the option to float the stake on the stock market through an initial public offering. If the government were to provide guarantees to investors for the bonds, it would not only lower the cost of capital but also attract world wide attention.
The UK government has not set a timeline for working out all the details of its new grand financial plan. An announcement could be made prior to or during the COP26 climate change meeting that will take place in Glasgow (10/31-11/13). EDF and CGN declined to comment in response to inquiries from the Financial Times and Reuters.
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Small Modular Reactors to the Rescue in UK?
(New Civil Engineer) According to a report the the New Civil Engineer (NCE), a UK trade press news service, Wylfa, Bradwell, and Oldbury among 18 sites lined up for small nuclear reactors.
Clean energy developer Shearwater Energy has identified “about 18 sites around the UK” that could be used as small modular reactor (SMR) power plants. Shearwater Energy director Simon Forster told NCE it is a “dynamic situation,” adding that the existing Wylfa Newydd site on Anglesey is the current front-runner in its plans.
“We’ve been looking first and foremost at the existing nuclear sites and where they can be developed – can we develop on the footprint of the existing Magnox and AGR sites, for example? We rank the sites in order of likelihood of happening. It’s no secret that Wylfa is at the top. We think that’s a great site.”
On the Wylfa Newydd site, the firm proposes to build 10 GEH BWRX-300 SMR reactors. It has submitted a proposal for this to GE Hitachi and a cost estimate to the UK BEIS. Construction could start in 2025, and the project could generate power by 2028.
This is a schedule seems overly ambitious as GEH has not submitted has not submitted the BWRX-300 in an application to the UK Office of Nuclear Regulation (ONR) to get approval to built the design in the UK.
Forster told NCE that other potential sites include Bradwell B in Essex, currently being progressed by CGN and EDF Energy and the Oldbury site.
“If we lose Wylfa we’ve got another few sites after that,” he said. “We’re keeping a wary eye on Bradwell – if the Chinese decide to relinquish that site it might be something we look at.”
In total, Shearwater has a list of 40 SMRs that could be deployed at the 18 potential sites. These SMRs are three different sizes – 5Mw, 77Mw and 300Mw. Interestingly, none of the firm’s proposals include the Rolls-Royce 470 MWe mid-size PWR. The firm has also touted its plans to pair the SMRs with wind projects.
The 300Mw reactors are complementary base load stations, while the 77Mw is “a wonderful complement for renewable energy and dealing with the intermittency of wind farms,” Forster said. “Finally, the 5Mw reactors could be used by industries that need to decarbonize and require an onsite source of energy.”
The final hurdle to overcome is government support. “So in our case a government agreement needs to come first, not years later. That means we need policies in place on SMRs, and a decision on whether the RAB going to be extended to SMRs.”
Shearwater Energy Also Talking to Westinghouse About Wylfa
US company Westinghouse wants to build its AP1000 reactor technology at the north Wales site. The British government is in discussions with US nuclear reactor manufacturer Westinghouse to develop up to three 1150 MWe AP1000 PWR type nuclear reactors at the Wylfa Newydd site in Anglesey, Wales. If the project goes through, US engineering firm Bechtel would be the EPC to build a Westinghouse AP1000 reactor.
Neither firm brings any investors to the table which places the burden on the UK government to round up a combination of public funding as well as private money. Positioning the project to be attractive to investors will require a full steam ahead effort by the government to address concerns about financial risk.
In terms of investors for the Wylfa project, wire service reports in the UK indicate that a number of pension funds have also expressed interest in building reactors at Wylfa. According to the Times of London, Simon Forster, director of UK clean energy company Shearwater, which is interested in taking on the project, told MPs he was in contact with a “group of pension funds who are very keen to invest” in the project.
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U-Battery Unveils Full-scale SMR Mock-up at UK Site
(WNN) A full-scale first-of-its kind mock-up of the main vessels of the U-Battery advanced modular reactor (AMR), revealed by U-Battery and Cavendish Nuclear, has demonstrated how the reactor can be built using modular techniques.
The project was made possible with funding from the UK Government’s Department for Business, Energy and Industrial Strategy (BEIS) under its Advanced Manufacturing and Materials Program.
“By building a full-scale model, people get a real sense of what an AMR looks like as well as how it can be built,” U-Battery General Manager Steve Threlfall said. “It also enabled us to determine the requirements for the concept design and justify the nuclear power plant’s operational safety case. This is why the mock-up is essential to the delivery of what will be our first power plant.
“Our aim is to take advantage of the economies of scale used in advanced manufacturing and modularization settings and production line assembly techniques to produce this new generation of AMR technology, which will make a valuable contribution to the UK’s decarbonization efforts, and, in turn, help deliver Net-Zero.”
The project to build the mock-up, which includes the reactor vessel, the intermediate heat exchanger vessel, and the u-shaped connecting duct, began in February 2020, Threlfall said at an event held at Cavendish Nuclear’s Whetstone facility in Leicestershire..
U-battery is an advanced small modular reactor based on proven high-temperature gas cooled reactor technology, using highly accident tolerant TRISO fuel and delivering a scalable output from 10 MW thermal (4 MW electrical) with a footprint of 350 square meters. Each unit is projected to cost about GBP50 million (USD68 million).
The reactor’s high-temperature output of 710°C means it is ideally suited to provide a sustainable source of process heat for difficult-to-decarbonize industrial processes. The company says its cogeneration capabilities mean it can provide a locally embedded and reliable source of heat and power,
As well as Cavendish Nuclear, U-Battery’s supporting organizations include BWXT Technologies Inc, Costain, Kinectrics, Jacobs, the UK’s National Nuclear Laboratory, Nuclear AMRC, Rolls-Royce, the University of Manchester and Urenco.
U-Battery is participating in the second phase of the UK Government’s Advanced Modular Reactor Competition, through which in July 2020 it was awarded GBP10 million of funding to initiate design and development work.
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UK Government Issues Plans for Fusion Energy
(WNN) The UK government published a strategy this past week that describes how it will leverage scientific, commercial and international leadership, through public and private partnerships, to enable the commercialization of fusion energy. It has also launched a consultation seeking views on the regulatory framework for ensuring the safe and effective rollout of fusion energy.
The government plans to demonstrate the commercial viability of fusion by building a prototype fusion power plant, STEP (Spherical Tokamak for Energy Production). The UK hopes to deliver the world’s first prototype fusion power plant by 2040. The site of the demonstration plant is expected to be announced sometime in 2022.
The government strategy has two overarching goals:
- 1st – for the UK to demonstrate the commercial viability of fusion by building a prototype fusion power plant in the UK that puts energy on the grid; and
- 2nd – for the UK to build a world-leading fusion industry which can export fusion technology around the world in subsequent decades. This means developing a regulatory framework to insure the systems are safe and a supply chain and factory facilities to build them,
The strategy is focused on achieving these goals by working with the UK Atomic Energy Authority – the UK’s research organization responsible for the development of fusion energy – to secure UK leadership across three ‘pillars’: collaborating internationally; strengthening cutting-edge scientific research; and releasing private sector innovation to achieve its commercialization.
The UK government also published a green paper setting out its proposals for the regulation of fusion energy. The proposals cover the regulation of: occupational and public health and safety; environmental protection; planning consent; third party liabilities; security and safeguards for radioactive material.
The government said it believes that any regulatory framework for fusion energy facilities should serve to maintain safety and security in a way that is proportionate to the hazards involved.
“Due to the expected low hazard of fusion power, the government is proposing the continuation of a proportionate ‘non-nuclear’ regulatory approach. The Department for Business, Energy & Industrial Strategy (BEIS) said in a statement. “This will allow for the safe and efficient rollout of the technology through innovation-friendly regulation.”
To inform policy on the regulation of fusion energy in the UK, the government has launched a consultation to share knowledge and offer views on the proposals in the green paper. The consultation closes on 12/24/21. The government will publish its response in early 2022.
Science Minister George Freeman said: “By putting in place the crucial foundations we’re setting out today, we will ensure the UK is uniquely placed to capitalize on this innovative and revolutionary energy source in the years ahead – helping to tackle climate change and reduce our dependence on unreliable fossil fuels at the same time.”
Oxford, England-based Tokamak Energy, developer of the ST-40 compact spherical tokamak, welcomed the publication of the Fusion Strategy and the green paper.
“It’s tremendous news for UK fusion as it highlights a smooth pathway for regulating and stimulating a sector that aims to provide low-cost, limitless, low-carbon energy,” Chris Kelsall, its CEO, said.
“Today’s announcement shows the government’s clear commitment to establish the UK as an international leader in fusion – scientifically and commercially.”
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