Call for Evidence

Inquiry

The Environmental Audit Committee is undertaking a short inquiry to examine the potential role of small modular nuclear reactors (SMRs) in providing power to the UK energy mix as the country’s energy requirements move away from the use of fossil fuels.

 

Technological background

Nuclear fission reactors split heavy fuel atoms, such as Uranium-235, causing a chain reaction of fission and releasing energy as heat. This heat energy can then be converted into electrical energy.[1] In water cooled nuclear reactors this heat is used to vaporise water into steam, which then turns a turbine and generates electricity.[2] Small modular reactors (SMRs) are small nuclear fission reactors that can be factory-produced as modules but rely on the same technology as many current nuclear power plants (such as water cooled reactors).[3] Public awareness of SMRs and positive perceptions of nuclear power both appear to be growing.[4]

SMRs are thought to be cheaper and quicker to produce than conventional nuclear reactors, with construction expected to take between 3-4 years and to cost at least £3 billion.[5] They typically produce up to 300 MW(e)[6] per unit, though the Rolls-Royce SMR has a larger capacity, for example.[7] Unlike conventional nuclear reactors, many of the safety mechanisms of SMRs are passive, relying on physical processes, likely making them safer.[8] The fuel requirements for SMRs are much smaller than those of conventional reactors; on average SMRs will need refuelling every 3 to 7 years (as opposed to every 1-2 years for conventional nuclear reactors). Estimated electricity prices from SMRs like the Rolls-Royce SMR have been increasing over time, with initial estimates of £40-60/MWh increasing to £75/MWh.[9] However, these estimates are still lower than the strike price[10] of Hinkley Point C, a conventional nuclear reactor.

Since SMRs are small, they may be particularly suitable for providing power to remote locations, replacing diesel generators as backup generators, and replacing coal power plants.[11] SMRs may have more flexibility than conventional nuclear reactors, allowing them to provide power based on demand. However, operating below maximum capacity is costly for nuclear power plants, and would raise unit electricity prices.[12] Combining SMRs with other energy systems may circumvent this issue. By co-generating other energy sources (such as hydrogen), plant efficiency could potentially be over 80% (compared to the 33% of conventional gigawatt-scale nuclear fission reactors).[13] Combining SMRs with more variable renewable energy sources like wind and solar, for which retaining generated energy can be more difficult, may also increase the resilience of low-carbon energy systems.[14]

Scientists from the University of Maryland estimated that focusing on SMRs as opposed to gigawatt-scale nuclear reactors may decrease climate change mitigation costs, defined as the cost of reducing greenhouse gas emissions, by up to 27%[15]. However, a recent paper suggested that SMRs will not meaningfully contribute to grid decarbonisation by 2035, in no small part because of the time it will take to deploy SMRs. Thus, SMR deployment could be a key component of the UK’s net zero and decarbonisation strategies, but this will depend on the timescales at which they are deployed.

 

Policy background

Timeline of deployment

The Government’s 2020 Ten Point Plan for a Green Industrial Revolution listed First-Of-A-Kind SMR deployment by the early 2030s as a target.[16] The current plan, announced in October 2023, pushed back the SMR deployment target to the mid-2030s.[17] However, SMR developers have suggested that SMR deployment in the early 2030s is possible.[18]

 

Work in other select committees

A recent Science, Technology, and Innovation Committee inquiry (July 2023) summarised SMR technology and the current plans for their deployment. Similarly, a recent inquiry from the Welsh Affairs Committee (in May 2023) discussed SMRs in the context of Trawsfynydd, a proposed site for SMR deployment, and the potential value of SMR deployment to Wales. Both inquiries determined that timely action was required to meet SMR deployment targets and recommended that key areas like financing, the length of the GDA approval process, and site choice be addressed in the upcoming new nuclear National Policy Statement. They also requested greater clarity in the SMR deployment plan.[19] The House of Lords debated nuclear power in September 2023, discussing opportunities for SMR deployment in the UK in the context of these inquiries. This debate identified the need to incentivise private investment into the UK nuclear sector.[20]

 

Government investment

In November 2021, the Government awarded up to £210 million to the Rolls-Royce SMR team for design development.[21] In July 2023, Westinghouse Electric Company UK Limited was awarded three grants, totalling £10.5 million, in part to develop fuels for both a conventional gigawatt-scale nuclear reactor and an SMR based on similar technology.[22]

 

Financing SMRs

The 2018 ‘Market framework for financing small nuclear’ report from the Expert Finance Working Group on Small Reactors detailed several strategies to increase investment into British SMR projects.[23] Following this, the 2022 Nuclear Energy Financing Act made provisions for nuclear power projects to be financed using the Regulated Asset Base model. This model shifts risk away from investors, financing plant construction through small charges to consumers. This likely makes investment into plants more attractive to private investors but means that taxpayers will be paying for plants before they start generating electricity. No caps on taxpayer costs have been established yet.[24] However, it is still unclear what financing models will be used to fund SMRs. Given that each financing model has different costs for the taxpayer and varying levels of industry confidence, establishing this may be key to meeting SMR deployment targets.

 

Generic design assessment and site licensing

To assess the suitability of nuclear power plants in the UK, companies can submit reactor designs to the Generic Design Assessment (GDA); this approval process takes 4-5 years. Though not a legal requirement, completing the GDA de-risks projects by assessing designs, safety, security, and environmental impact prior to construction.[25] Despite their long-established reactor technology, no SMRs have completed the GDA, and only one SMR (the Rolls-Royce SMR) is currently undertaking the GDA process. Of the 8 designated new nuclear sites in the UK, none have yet been licensed for SMRs. These designated sites may themselves not be best placed for SMRs, as they would not take advantage of the benefits of SMRs – namely, that they are small, can supply remote areas, and can be used to co-generate other energy sources.[26] However, the delays imposed by assessing new sites for SMRs could prevent SMR deployment targets from being met.

 

Energy targets and Great British Nuclear

In March 2023, the Department of Energy Security and Net Zero forecast that new nuclear power stations would only be generating 7GW by 2040, most of which will only replace nuclear power plants being decommissioned by the end of the decade.[27] This may jeopardise the UK’s ability to meet the Government’s target of producing 24GW of nuclear power by 2050.[28] Great British Nuclear (GBN) was established by the Government in March 2023 to boost the UK’s nuclear power capacity, with a specific initial focus on SMRs. GBN recently selected 6 SMR developers (including Rolls-Royce SMR and Westinghouse Electric Company UK Limited, which have both received Government funding) through its competitive technology selection process, deeming them most likely to meet the target of a Final Investment Decision by 2029. These firms will now be able to compete for Government contracts, the winners of which will be announced in Spring 2024. It has not yet been announced how many government contracts will be available or the type of financing model these contracts will utilise.

 

Terms of reference

The Committee welcomes written submissions which address any or all of the issues raised in the following terms of reference, to be received by 5pm on Thursday 9 November 2023:

Timelines for SMR delivery

• What has prevented SMRs from being established in the UK, given that the technology and fuel sources already exist, and the Government has already financially supported R&D?
• How realistic are the current targets for SMRs (Final Investment Decision by 2029, deployment mid-2030s)? How should the Government’s targets be revised, if at all?

SMR regulation and financing

• How should SMRs and larger gigawatt scale reactors be balanced to help the UK meet its net-zero targets and targets to decarbonise the national grid?
• What best practice and previous experience, including from other countries, can guide policy, allowing the UK to take advantage of the benefits of SMRs while also making them competitive?
• How effective are existing financial models (e.g., Contracts for Difference, Regulated Asset Base) for SMRs? Should new financial models be considered for SMRs?
• What is the overall benefit or cost to the public purse from the UK’s adoption of SMR technology in its generating mix?

Delivery process

• How does the current SMR technology design competition impact on the delivery of SMRs to commence generating capacity on time and on budget?
• What benefits might accrue, and what issues might arise, if the Government were to select more than a single design to commission?
• What are the advantages and disadvantages of a prototype SMR being required to be delivered by a winning competitor ahead of installation of the initial SMR?
• What export opportunities for the UK arise from the winning SMR design or designs?

 

It is recommended that all submitters familiarise themselves with the Guidance on giving evidence to a Select Committee of the House of Commons .

 

[1] International Atomic Energy Agency, ‘What is Nuclear Energy? The Science of Nuclear Power’ accessed 4 October 2023

[2] International Atomic Energy Agency, ‘Water cooled nuclear reactors (WCR)’ accessed 4 October 2023

[3] International Atomic Energy Agency, ‘What are Small Modular Reactors (SMRs)?’ accessed 4 October 2023

[4] Department of Energy Security and Net Zero, ‘Public Attitudes Tracker Summer 2023: Heat and energy in the home’ September 2023.

[5] U.S. Department of Energy Office of Scientific and Technical Information, Small modular reactor: First-of-a-Kind (FOAK) and Nth-of-a-Kind (NOAK) Economic Analysis (August 2014), p 8 ;

Nuclear Innovation and Research Advisory Board, Clean Growth Through Innovation - the need for urgent action, (2018), p 22

[6] MW(e): Megawatts electric, the electricity output capability of a power plant.

[7] International Atomic Energy Agency, ‘What are Small Modular Reactors (SMRs)?’ accessed 4 October 2023 ; Rolls-Royce SMR, ‘Why Rolls-Royce SMR?’ accessed 4 October 2023

[8] D.T. Ingersoll, “Deliberately small reactors and the second nuclear era.” Progress in Nuclear Energy vol 51, Issues 4–5 (2009), 2009, pp 589-603

[9] Nuclear Advanced Manufacturing Research Centre, ‘Small modular reactors’ accessed 6 October 2023 ; Science, Innovation and Technology Committee, Eighth Report of Session 2022–23, Delivering nuclear power, HC 626, para 100

[10]Strike price: a fixed price per unit of energy that energy companies are guaranteed to earn per unit of electricity, either through government subsidisation when market prices are low or through payment to the government when market prices are high.

[11] Sichen Gao, Guohe Huang, Xiaoyue Zhang, and Dengcheng Han, “Small modular reactors enable the transition to a low-carbon power system across Canada.” Renewable and Sustainable Energy Reviews, vol 169 (2022).

[12]Arjun Makhijani and M. V. Ramana, “Can small modular reactors help mitigate climate change?” Bulletin of the Atomic Scientists, vol 77 (2021), pp 207-214.

[13] International Atomic Energy Agency, Advances in Small Modular Reactor Technology Developments, September 2022.

[14] D. Michaelson and J. Jiang, “Review of integration of small modular reactors in renewable energy microgrids.”, Renewable and Sustainable Energy Reviews, vol 152 (2022)

[15] Gokul Iyer, Nathan Hultman, Steve Fetter, and Son H. Kim, “Implications of small modular reactors for climate change mitigation”, Energy Economics, vol 45 (2014), p 144-154

[16] Prime Minister's Office, Departments for Energy Security and Net Zero and for Business, Energy & Industrial Strategy, The Ten Point Plan for a Green Industrial Revolution. November 2020, p 13

[17] Department for Energy Security and Net Zero and Great British Nuclear, ‘Six companies through to next stage of nuclear technology competition, accessed 2 October 2023.

[18] Science, Innovation and Technology Committee, Eighth Report of Session 2022–23, Delivering nuclear power, HC 626, para 58; Nuclear energy in the UK, POSTnote 687, Parliamentary Office of Science and Technology, December 2022

[19] Science, Innovation and Technology Committee, Eighth Report of Session 2022–23, Delivering nuclear power, HC 626, para 105 ; Welsh Affairs Committee, Third Report of Session 2022–23, Nuclear energy in Wales (parliament.uk), HC 240, para 32, 32, and 34 ; Welsh Affairs Committee, Fifth Special Report - Nuclear energy in Wales: Government Response to the Committee’s Third Report of Session 2022–23, HC 1656

[20] HL Deb, 7 September 2023, cols 659-664 [Lords Chamber] 

[21] Departments for Energy Security and Net Zero and for Business, Energy & Industrial Strategy, ‘Advanced Nuclear Technologies’ accessed 6 October 2023

[22] Westinghouse UK, ‘Westinghouse Awarded Trio of Grants from UK Nuclear Fuel Fund’ accessed 6 October 2023

[23] National Nuclear Laboratory, Expert Finance Working Group on Small Nuclear Reactors, ‘Market framework for financing small nuclear’, August 2018

[24] Nuclear Energy (Financing Bill) 2021–22, Briefing Paper CBP9356, House of Commons Library, January 2022; Nuclear energy in the UK, POSTnote 687, Parliamentary Office of Science and Technology, December 2022 

[25] Environment Agency, Natural Resources Wales, and Office for Nuclear Regulation, ‘New nuclear power plants: Generic Design Assessment guidance for Requesting Parties’, accessed 6 October 2023

[26] Science, Innovation and Technology Committee, Eighth Report of Session 2022–23, Delivering nuclear power, HC 626, para 261 and 264 ; Small Modular Nuclear Reactors, POSTnote 580, Parliamentary Office of Science and Technology, July 2018 

[27] Department of Business, Energy and Industrial Strategy, Energy and emissions projections: 2021 to 2040: Annex K, May 2023 ; Science, Innovation and Technology Committee, Eighth Report of Session 2022–23, Delivering nuclear power, HC 626, para 22

[28] Prime Minister's Office and Department for Business, Energy & Industrial Strategy, British energy security strategy, April 2022.