EAC raises concerns that the Government’s direction on nuclear SMRs needs clarity

• Correspondence: Letter from the EAC Chair to the Secretary of State for Energy Security and Net Zero, relating to small modular reactors in the transition from fossil fuels, dated 13 February 2024
• Inquiry: Small modular reactors in the transition from fossil fuels
• Environmental Audit Committee

The UK Government aims to decarbonise the GB electricity grid by 2035, and has said that nuclear energy will be necessary to continue powering the country on occasions when there is low renewable energy output. EAC has examined the role of SMRs in the energy transition and notes that as a final investment decision on the first SMR is not expected until 2029, it is unlikely that the reactor project will be contributing generating capacity to the grid until 2035. The Government’s recently issued Civil Nuclear Roadmap suggests that as much as 24GW of generating capacity could be provided by 2050. This would include energy from fleets of SMRs, but also contemplates a path where investment decisions could deliver generating capacity as low as 12GW, leaving the Government’s overall strategy for the sector lacking clarity.

Evidence to the Committee also indicated that the models contemplated for UK deployment through Great British Nuclear’s SMR competition were likely to result in a greater amount of waste for storage and reprocessing. EAC received some evidence calling for regulatory processes to be streamlined to enable swifter roll-out of SMRs, but Committee members are clear that no compromises ought to be contemplated on regulatory safety standards.

The Committee heard that Government clarity on investment decisions and the commissioning of a steady stream of SMR projects had the potential to lower the overall costs of SMR projects as production efficiencies were realised. Industry witnesses observed that consistency of build tended to increase the efficiency of construction and therefore should decrease construction costs. As no commercial orders for SMR installations have yet been placed worldwide, the case for these benefits is not yet proven. EAC is clear that all value for money assessments on SMR projects undertaken within Government and Great British Nuclear must be published for parliamentary and public scrutiny before any decisions to commit public money are made, and ought to be available for assessment by the National Audit Office, without adding delay to delivery.

Clarity and consistency of build of SMRs, witnesses argued, can also create a secure skills pipeline and supply chains. As no new nuclear reactors in the UK have come online since 1995, EAC heard of a ‘skills deficit’ in the UK civil nuclear sector and that investment in skills is needed across the whole nuclear lifecycle for SMR deployment. With a roll-out of SMRs, skills will be needed for factory work, on-site construction, and plant operation. Deploying SMRs without concurrent supply chain development could hinder deployment and increase costs.

Chair's comment

Environmental Audit Committee Chair, Rt Hon Philip Dunne MP, said:

“As a result of the UK’s push towards nuclear SMR technology, the UK has the opportunity to be a genuine world leader in the manufacture of SMR nuclear capability with great export potential. However, despite pledging hundreds of millions of pounds in support for SMR projects and undertaking to invest in the construction of the UK’s first SMR, the Government’s overall vision for the sector at this stage lacks clarity: Ministers might commission as much as 24GW in nuclear capacity by 2050, but could commission as little as 12GW. The first SMR is unlikely to be in operation by 2035, the date Ministers have set for decarbonising the electricity supply: so what role will SMRs have in an energy mix dominated by renewables and supplemented by existing and emerging large-scale nuclear?

“This uncertainty risks knock-on effects for industry confidence: not only for investment decisions relating to the initial build and the construction of factories to build reactor modules, but also for the support and growth of supply chains and skills. We simply don’t yet know how much SMRs will contribute to electricity generation in the country, nor how much the roll-out is likely to cost the taxpayer.

“The Committee has therefore written to the Secretary of State for Energy Security and Net Zero to seek clarity on a number of points relating to the Government’s policy on SMRs. I look forward to receiving her response.”

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