Statement on Energy Policy:Written statement - HCWS322

Department for Business, Energy and Industrial Strategy
Made on: 07 December 2017
Made by: Richard Harrington (Parliamentary Under-Secretary (Department for Business, Energy and Industrial Strategy) )

Statement on Energy Policy

Today we have announced our next steps for the development of advanced nuclear technologies in the UK. The advanced nuclear sector has the potential to play an important part in the UK’s Industrial Strategy building on our existing economic strengths and competitive advantages in nuclear while shaping new advanced nuclear markets and contributing to tackling the Clean Growth Grand Challenge. To help deliver this, the Government will be providing up to £56m for advanced nuclear technologies over the next 3 years.

The Government launched the first phase of the Small Modular Reactor (SMR) competition in March 2016 as an evidence-gathering phase with the goal of gauging market interest among technology developers, utilities, and potential investors. That exercise is now closed.

My department received expressions of interest from 33 eligible participants. Officials have worked with these participants to understand the technological and commercial viability of new reactors in development. As an information gathering process, phase one did not involve down-selection. All eligible participants were given the opportunity to engage with the Government to inform policy development.

This exercise provided valuable insight into the advanced nuclear technologies market. We are grateful to the participation of all entrants.

What we have learnt

Phase one demonstrated that SMRs could potentially play an important part of a broader nuclear market. There is a large variety of potential technologies. These comprise technologies which range in scale between micro, small and medium scale reactors and which span technology types from conventional water-cooled reactors, to 4th generation reactors using novel fuels and coolants, as well as fusion reactor concepts. Given this breadth, the Government believes that “SMR”, as commonly understood, is too narrow a description for technologies coming forward after the current generation of nuclear power stations. Instead the Government considers this to be the “Advanced Nuclear” market.

Engagement with competition participants helped shape our thinking for the next steps for advanced nuclear policy. Three key requests came through. The first was that technology developers need better and earlier access to Regulators in order to address regulatory requirements by design and to provide confidence to potential investors. The second was support to turn new developers’ ideas into detailed designs, bridging the investment gap between innovation and commercialisation. The third request was to create the right market conditions to enable developers to bring new reactors to market as commercially viable businesses.

Advanced Nuclear Technologies – Next Steps

The competition demonstrated that there is the potential for the UK to become a world-leader in developing the next generations of nuclear technologies. The UK’s nuclear sector is well placed to compete globally in this emerging market. The policies announced today are intended as the first steps to achieve that potential.

We are providing up to £7m of funding to regulators to build the capability and capacity needed to assess and license small and novel reactor designs, as announced in the Clean Growth Strategy. This funding will also provide support for pre-licensing engagement between vendors and regulators.

Over the next three years we will also provide funding to support advanced reactors through a two-stage Advanced Modular Reactor Programme. Up to £4m in Stage 1 will support around 8 reactor vendors to carry out detailed technical and commercial feasibility studies. Subject to Stage 1 demonstrating clear value for money through a formal re-approval process with the Treasury, up to £40m of further funding could then support 3-4 vendors to accelerate the development of their designs. Up to a further £5m may also be made available to regulators to support this.

The Government will also continue to work closely with the advanced nuclear industry stakeholders to foster the market conditions needed to enable developers to bring privately-financed small and novel reactors to market. A crucial element of this is demonstrating commercial viability – in particular, the ability of new designs and delivery mechanisms to attract investment and generate cost-competitive electricity.

Therefore the Government is setting up an Expert Finance Group to advise how small and advanced reactor projects could raise investment in the UK. By bringing together nuclear and financial sector expertise we anticipate that this group will help demonstrate the commercial proposition of small reactors in the emerging nuclear market. The Group will be asked to report in the Spring.

Subject to further evidence on the commercial viability of advanced nuclear technologies, we will continue to look closely at other market failures which inhibit new reactors competing in our diverse energy markets.

This statement has also been made in the House of Lords: HLWS317

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