Energy and Climate Change Committee
Oral evidence: Small nuclear power, HC 347 Tuesday 24 June 2014
Ordered by the House of Commons to be published on 24 June 2014.
Written evidence from witnesses:
ThorEA
The University of Manchester
Centre for Low Carbon Futures
Energy Technologies Institute
Nuclear Industry Association
Members present: Mr Tim Yeo (Chair); Ian Lavery; Dr Phillip Lee; Mr Peter Lilley; Christopher Pincher; Sir Robert Smith; Graham Stringer; Alan Whitehead
Questions 1-84
Witnesses: Professor Rebecca Seviour, Chair, ThorEA (Thorium Energy Association), Professor Tim Abram, Director, Centre for Nuclear Energy Technology, The University of Manchester’s Dalton Nuclear Institute, Professor Martin Freer, University of Birmingham, representing the Centre for Low Carbon Futures, Paul Stein, Chief Scientific Officer, Rolls Royce Plc, Dr David Clarke, Chief Executive, Energy Technologies Institute, Peter Haslam, Head of Policy, Nuclear Industry Association, gave evidence.
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Examination of Witnesses
Witnesses: Professor Rebecca Seviour, Chair, Thorium Energy Association (ThorEA), Professor Tim Abram, Professor of Nuclear Fuel Technology, Dalton Nuclear Institute, and Professor Martin Freer, University of Birmingham, representing the Centre for Low Carbon Futures, gave evidence.
Q1 Chair: Good morning. Thank you for coming in. There is a great deal of interest in this subject and we are still in the early stages of our inquiry. Would you briefly introduce yourselves before we start the questions?
Professor Freer: I am Martin Freer from the University of Birmingham, director of our centre for nuclear education and research.
Professor Seviour: I am Professor Rebecca Seviour from the Thorium Energy Association and Huddersfield University.
Professor Abram: Good morning. I am Tim Abram from the University of Manchester. I am the Westinghouse Professor of Nuclear Engineering there, and the director of the Rolls-Royce Nuclear Technology Centre.
Q2 Chair: May I start by asking generally what role you see for small nuclear power in the UK?
Professor Freer: First, in the context of climate change, since this is that Committee, the UK has extremely challenging targets around climate change. If one looks at the roll-out of nuclear power at present, the best estimate would be that Hinkley Point C comes around 2023. The next reactor after that, Sizewell C, will not be shortly after that. It will be at least five years after that. The contribution that nuclear power is going to be able to make to climate change targets is somewhat diluted by those sorts of time scales. My belief is that one has therefore to look at how to accelerate nuclear technology in the UK and small modular reactors could be that.
The other factor is that if nuclear power takes off in a significant way worldwide, the amount of resource that we have in terms of uranium could be as low as 60 years hence. Therefore, we will be challenged in terms of nuclear power technology; it will just end up being a bridging technology and one then has think about what follows on after that.
If one is looking to deploy nuclear power on a longer time scale there are a couple of options. You’ll hear about thorium, I’m sure, in a minute, so exploiting other types of fuel is one. In my opinion, the more favourable option is to explore the options around fast reactors. Fast reactors have the ability to burn not uranium-235, but natural uranium. We in the UK have enough fuel from tails of uranium and our plutonium stockpile to keep a fleet of fast reactors going for tens of years, producing tens of gigawatts of power, so as a country we have a free supply of fuel to keep those fast reactors going. Fast reactor technology fits very clearly within the SMR portfolio. It is a plausible way for the UK to proceed in terms of closing the fuel cycle. Fast reactors will take the fuel that comes out of the light water reactor fleet that we are about to build in a way that is environmentally consistent. For me, the biggest opportunity is thinking forward in the longer term about how fast reactors should become part of the energy production environment around a closed fuel cycle.
Professor Seviour: I agree with Martin very much in that if we are going to meet the agreements that we have set internationally to meet our CO2 emissions, we are going to have to invest in nuclear energy as a way forward. In fact, in increasing our electricity and energy production via nuclear, as Martin already pointed out, we are looking at a relatively short-term supply for the current way we use uranium, estimated to be around 92 years. That will drop very rapidly to around 30 years if nuclear increases to 110% of our energy production.
One point on which I agree with Martin is that we should be keeping different technologies on the market up here to be looked at and developed. One of those is thorium. Thorium is an element that is four times more abundant than uranium and one that has a more diverse supply chain, so we have a greater security of supply of thorium.
Professor Abram: It’s good going last because all the good points have already been made. Can I just check that I understood the exam question correctly? Was it, what is the role of small reactors in the UK?
Chair: Yes.
Professor Abram: Great. I agree with everything that my learned colleagues have already said in respect of the role of fast reactors and the potential role of thorium in the future—all good stuff. Why small reactors specifically? If you look at the history of nuclear power in the UK, it has predominantly been supplied by what we today would call small modular reactors. That is, reactors with a power output of 300 MW or less. That actually constitutes most of the Magnox fleet. They were actually quite small reactors when they were built. They were not modular, of course, that is very true, but the role of specifically small reactors was very neatly summarised by Martin.
The difficulty we have found—I won’t need to remind you of this—in deploying large reactors is that they are enormously costly. Essentially, they are beyond the means of most industrial companies. The balance sheets of most industrial companies are simply not large enough to sustain an investment of several billion—you can pick your currency, it does not really matter—pounds, euros or dollars. Most companies are not large enough to sustain multiple units of that magnitude of investment. Smaller units that are more affordable, that can be brought to the grid more quickly and generate revenues more quickly are affordable by a much larger range of potential generators. That, specifically, is the attraction of small modular reactors as opposed to the very large ones.
Q3 Chair: Okay. We will stay looking at the UK for the time being. I think we all understand that we are not going to see a great deal of contribution from new large nuclear until the end of the 2020s. Are you suggesting that if we were to develop smaller nuclear reactors, they could make a more significant contribution at an earlier date?
Professor Freer: I think it’s unlikely. The natural time scale, probably, for bringing small modular reactors to market and being able to construct them in the UK is at least 15 years but, if one is to make the 2050 targets, one needs to find a way of accelerating nuclear power technology in the latter years. The current ambition to reach something like 16 GW is great, laudable and even challenging but if one wants to get even higher than that, which is the ambition of some, one needs to find a way of accelerating. It will not be in the shorter term; it will be in the medium to longer term.
Q4 Chair: If we were to do this, would there be commercial advantages? If the UK becomes a leader in the development of small reactors, does that offer us commercial advantages as well?
Professor Freer: In other words, where does the opportunity lie? I think there are a number of opportunities that the UK could exploit. Direction of travel around large-scale gigawatt reactors is impressive. It has created an environment where major nuclear power companies and countries want to invest in the UK. One only has to look at what has happened recently in terms of the interest from China—CGN’s and CNNC’s investment—and the longer-term ambition that they have. The UK has been rather smart in terms of ensuring that the supply chain points very strongly to the UK. Up to something like 70% of the supply chain for Hinkley Point C could point to the UK—a great advantage for UK jobs and skilling up UK industry in nuclear technology.
I believe that the same kind of opportunity could be available in SMR technology. I do not think that the UK is really in a position to build its own reactors. We are a little bit too far behind the curve; the US and China have taken great steps here. We should be looking at how to get them—for example, China, who are already well ahead of the curve, building small reactors in southern China—to think about building a small farm fleet of reactors in the UK, creating the shop window for the world. If they can build it in the UK and demonstrate it in the UK market, that can then be exported worldwide and the UK supply chain becomes embedded in that technology. For me, that would be the optimal way of our embracing this opportunity.
Professor Abram: I’ve got a slightly more optimistic take on some of the points that Martin raised. They are very strong points and difficult to argue with. I have a slightly more optimistic view of the time frame in which a small modular reactor could be deployed in the UK. One of the five designs that is currently being studied, in the frame of a DECC study being organised by the National Nuclear Laboratory, is a joint UK-Dutch design. The proponents of that design—the organisation pushing it forward, which is URENCO—have stated an objective of having the first demonstration unit operating before Hinkley C. That is a very stretching target but is, I think, reflective of the possible speed with which such units could be deployed if there was a will to do so.
In respect of the economic advantages that could flow from SMRs to the UK, Martin is exactly right. There is a potential—I emphasise the word potential—for UK businesses to supply a large component, maybe 60% or 70%, of a large reactor. It does not matter whether it is an EPR, a Westinghouse AP1000 or an ABWR. That is true; we have the industrial capability, with some investment, to supply perhaps 60% or 70% of the value of such a reactor. That does not mean, however, that we will supply 60% or 70%. The real value is likely to be much lower than that.
Compare and contrast that with small modular reactors—you will be taking evidence in the next hour from a UK company which does, in fact, build small modular reactors in their entirety. They will not tell you very much about them and nor should they. They spend most of their time under the sea. However, we can build reactors of the type of scale we are talking about. UK industry today has the wherewithal to supply most, if not all, the components for reactors of the size we are discussing, so the industrial opportunity for the UK is very large. We have not yet even discussed the intellectual property that could flow if these designs were developed substantially within the UK.
Q5 Mr Lilley: It is specifically that point that I wanted you all to elaborate on. Could the sort of technology used for Rolls-Royce submarine nuclear reactors be scaled up to a still small, but somewhat bigger, modular reactor or is it a totally different kind of technology that could not be used onshore?
Professor Abram: It is essentially a pressurised water-cooled reactor technology so yes, of the systems being proposed for SMRs, several—most, in fact—are small pressurised water-cooled reactors, not precisely of the design that Rolls-Royce employ but certainly much of the technology is very similar. We should not discuss sizes, but even the sizes are not a million miles away from the very smallest of the PWR designs being proposed. In fact, they are almost exactly the same as the uranium battery design.
Q6 Chair: Let us go back. Professor Freer, you talked about China. Are you saying that would be, in your view, the preferred partner for the UK ahead of America or even Russia?
Professor Freer: No. I think what one does is keep options open. The US are embarking on an ambitious programme and it is laudable that they, from the top level, have sought to invest very strongly in this area. They clearly see the opportunity, and 50:50 public-private funding is a strong signal that this is the way ahead. The UK has involvement in at least one of those reactors being developed. But if one sees the scale of ambition in China, that ambition is not just around reactor technology; it is around the whole nuclear fuel cycle. They intend to close the fuel cycle, which is—to be honest—the future. It will take the UK quite a long time to get there, because we are driven primarily around cost and closing the fuel cycle is not the cheapest option. But I believe that the Chinese are on a direction that the UK will eventually have to travel. I think it is about, as I said, keeping the options open.
We should be attempting to collaborate—funding collaboration—across the board, but at the moment, I would say that those kinds of funding opportunities don’t significantly exist; not on the level that can allow the UK to become a real player in these kinds of programmes. The level of research capability and capacity that we have in the UK is significantly behind that of our major international competitors.
Q7 Dr Lee: You mentioned the environment having been created here for foreign nuclear technology to be built here and that this was a good thing. I wonder whether you have any opinion about how much it has cost us to create that environment and whether, if perhaps we adopted a 50:50 public-private nuclear strategy for this nation that had a 20, 30 or 40-year span and was cross-party—I detect that there is a broad cross-party consensus on nuclear—that would be the most cost-effective way of doing it. Therefore we would then be able to plan where we put these reactors, the size of those reactors to fit in with the national grid requirements, and the likely population demand—all those sorts of things. I wonder if you had a comment about that, or on whether we are suffering from a short-termist view—throw a lot of money at it; more than the future of our children and so on—and that it is a very attractive environment for any private or state-owned company to invest in, necessarily in the best interests of our nation going forward.
Professor Abram: I will be quick. Personally I think that is a marvellous idea. If you look at where nuclear power flourishes—I hate to say this—but it flourishes in centrally planned economies; I almost include France in that definition. It is greatly encouraged by environments where there is very long-term political stability and settled political will to support nuclear power. At least for the last 30 or 40 years in France, such an environment has prevailed. It prevails today in China and India, and it has in the past prevailed in Japan. Arguably it prevails in a similar way in South Korea; all the nations I would suggest where nuclear is successful by just about any means by which you would care to measure it.
Professor Freer: That is absolutely right. We have got locked into market economics when it comes to energy. The scale that is required in terms of redevelopment of the energy markets is beyond that which can be driven purely by the markets. It requires vision and ambition. Centrally driven energy markets are clearly the way to go if one requires revolution. Unfortunately, I think the UK has found itself in a very hard place because of deregulation.
Q8 Mr Lilley: It is hard to think of a more centrally planned and less market-based energy system than the UK’s, but let us go on to the different types of technology. First, what role should Government play in facilitating the development of different nuclear fuels and technologies? Perhaps beginning with Professor Seviour, could you answer that and tell us what the state of play is on thorium-based SMR technology?
Professor Seviour: Okay. Thorium has been used commercially in the past, in the 1950s and ’60s in the US. At the Halden reactor in Norway, they are operating a thorium-MOX mix of fuel, and have been doing so successfully for the last 18 months in a 25 MW SMR that is powering a paper mill.
The state of the art is that we know the technology works and we know the fuel cycle works. Development needs to be done to industrialise things such as the reprocessing and production of the fuel itself, so it is not to say that we can roll these things out tomorrow, but we are in a good position, especially compared with everybody else, to capitalise on it and expand; however, I do believe it requires funding, as we were discussing earlier, from central Government. It would not be sensible for companies to invest heavily and carry the responsibility themselves for developing these new fuels. There is a need to make use of investment and research funded centrally and done in partnership with companies—for example, in the National Nuclear Laboratory and academic organisations around the UK.
The key point I would like to convey is that at this stage, with the options we have available to us, we should not dismiss any technology. We should explore all possible technologies and see which makes the most economic sense after we have a better picture of how they work commercially.
Q9 Mr Lilley: Are you saying we should wait and see—let other people develop them—or should we develop them all simultaneously?
Professor Seviour: No, we need to be actively involved.
Q10 Mr Lilley: All of them?
Professor Seviour: I think we need to have a diverse research programme that examines all possible options.
Q11 Mr Lilley: Isn’t that just going to spread the money? You said we haven’t got enough money to develop one technology, now we have enough money to develop all of them.
Professor Seviour: I’m not saying we have enough money to develop all of them.
Mr Lilley: Well, be realistic, please.
Professor Seviour: My personal opinion is that we should invest in thorium as a possible research direction, because of the abundance and security of supply of thorium.
Q12 Mr Lilley: I find the case for thorium very plausible. What worries me is that if it so good, why hasn’t it won? You say there were thorium reactors in the 1950s; why didn’t anyone follow on from that? You say there is a thorium reactor in Norway, which is interesting—I didn’t know that.
Professor Seviour: The Halden reactor is a test reactor.
Mr Lilley: How did they overcome the technical and commercial challenges, such as the low conversion rate of thorium-232 to uranium-233?
Professor Seviour: You wouldn’t use thorium on its own. You would always have an external source of neutrons, such as an ADS system that supplies neutrons. As soon as you have an external source, you can trigger the conversion to uranium-233; or, for example, you can do what they do in the Halden reactor, which is to dope it—they have a MOX fuel, so they put about 10% plutonium oxide into the fuel mix, which gives you the neutrons that drive the reaction. It has the added advantage that it enables us to manage our legacy waste, as well as producing new energy.
Q13 Mr Lilley: Would we therefore have to wait a long time to develop and refine these things before we build thorium reactors, or could we start building them soon?
Professor Seviour: No. You can use thorium fuel in its MOX form in many common reactors—for example, light water reactors. The Halden reactor is a standard boiling water reactor, so we could use the fuel in existing systems.
Q14 Mr Lilley: Why don’t we?
Professor Seviour: Because we have invested heavily in the infrastructure to support the uranium fuel cycle. We do not have the infrastructure in this country at the moment to do thorium on an industrial scale. For example, the NNL was key to the thorium MOX fuel that they currently have in the Halden reactor, so we have the capability here. It is more a question of industrialisation, I believe.
Q15 Mr Lilley: I’m not sure whether I have understood you. When you say we could use them in present reactors, do you mean existing reactors that are there on the ground that I can go and touch?
Professor Seviour: No.
Mr Lilley: You mean the type of reactor could be developed if we built a new one.
Professor Seviour: Agreed. You wouldn’t want to put them into the ones we currently have, bf, as we were discussing earlier, we needed a relatively quick response to deploying nuclear power and we were looking to be putting out a number of small modular reactors, you could see a case for making reactors specific for thorium, particularly as thorium fuel can last for a very long time compared with the standard uranium cycle.
Q16 Mr Lilley: I have a question for Professor Sherry. Is that you?
Professor Freer: He’s not here. Tim is in his place.
Q17 Mr Lilley: We received a submission from Professor Sherry on the safety advantages of pebble-bed reactors. Are there any other advantages to that technology? What disadvantages are there? What state of play has it reached?
Professor Abram: I would be delighted to answer that question, but before I do, can I make an observation on your previous question? I think it would be helpful for the Committee to make a distinction between small modular reactors for relatively short-term implementation and longer-term so-called generation IV systems. I detect some mixing of the two points, which is perhaps not entirely helpful.
If we are discussing the technologies for relatively short-term implementation, I would completely agree with you that that is not the right place to explore very novel new technologies. Almost by definition, if they are for short-term implementation, such technologies are pretty much excluded. For longer-term systems that might be deployed in 30, 40, 50 years’ time, the points that Rebecca was making are absolutely valid. The world will look like a different place then. I think you would be a brave man to say what it will look like, but it will be very different. Sustainability of fissile resource may well be a key issue. The uranium industry would argue, “Actually, there’s lots of uranium out there. We just haven’t bothered to find it yet.” The thorium advocates would say, “Why do you need to? We’ve got lots and lots of thorium in the world.” Both may be true. Nevertheless, resource sustainability and ever greater degrees of safety and security will come to the fore in 30 or 40 years’ time, but that is not now, so there are two very different arguments.
For the longer-term systems, Rebecca is absolutely right. A spread of portfolio to avoid an early picking of winners is probably the way to go, but, for shorter-term implementation, I agree that it is good to be focused on technologies that are already demonstrated.
On pebble-bed reactors: pebble bed is a particular design variant of a family of reactors that were developed, or first conceived, in the UK in the 1950s called high temperature reactors. There are two main design variants, one of which uses fuel in the form of pebbles slightly smaller than a cricket ball and slightly larger than a snooker ball at 6 cm in diameter, and the reactor core is composed entirely of these graphite pebbles with small coated fuel particles embedded in them.
There is another variant: a prismatic core in which the fuel looks like little fuel rods, but they are essentially the same material. They are made out of very small so-called TRISO-coated fuel particles embedded in the graphite matrix, but in that case, the fuel is stationary; it does not move. In the pebble-bed case, the fuel moves very slowly down the core and is discharged at the bottom of the core. The pebbles are checked for damage and for the amount of energy that we have extracted from them—something called “burn-up”. If they still have useful energy left in them, they are recirculated back to the top of the core.
The Germans pursued the pebble-bed reactor technology quite successfully during the 1970s and ’80s. The very first high temperature reactor was built on the south coast of England at a place called Winfrith. That was a prismatic core, and the Americans pursued the prismatic core design. Pebbles or PRISMs, it does not really matter. The point is, these reactors offer a very significant step increase in safety, because if you design the reactor right, which usually means designing the reactor small, the fuel is essentially indestructible. The reactor itself cannot, under any conditions, generate conditions that would threaten the integrity of the fuel. By that, I mean that we can turn off the gas circulators, we can vent all the helium—the coolant—we can pull out all the control rods and we can assume that all of the operators run away, and the reactor will get hot and then will gradually cool down again. At no point does the temperature that the reactor reaches threaten the integrity of the fuel. I cannot make that same comment about any other reactor that has ever operated to date.
I feel fairly confident in making that comment, because I stood on top of a Chinese pebble-bed reactor where they did just that. They turned off the gas circulators, pulled off all the control rods and then took us on a long and laid-back tour of the plant.
Mr Lilley: You are a brave man.
Chair: You didn’t run away?
Professor Abram: No. We didn’t run away. We are made of sterner stuff than that.
Q18 Sir Robert Smith: Back to the financing: at the moment, how do small modular reactors compare in economic viability with the large-scale designs that are on the drawing boards?
Professor Abram: That question invites speculation; nobody has ever built one.
Q19 Sir Robert Smith: I thought you said that there were already submarines running around with it.
Professor Abram: Is it really sensible to compare MOD submarine reactor economics with commercial civil reactors? I would suggest it is very definitely not. Nobody has built at any time in the recent past at least a commercial small modular reactor. A great many studies have been proposed and conducted; I won’t bore you with them now. The fundamental point that has been made—but, I would emphasise, not proven—is that is much easier to raise the investment needed if the investment is measured in hundreds of millions of pounds than if it is measured in billions of pounds. That is the fundamental point.
Q20 Mr Lilley: Why can we not just buy an extra submarine reactor and put it on shore? That is probably a stupid question, but it is not a stupid question because we don’t know the answer. If you give us the answer we will be better informed.
Professor Abram: You can. The French have proposed such a reactor, and the Russians will sell you such a reactor—it is barge mounted.
Q21 Mr Lilley: How much does it cost?
Professor Abram: I refer you to my friends in Rosatom for detailed price discussions.
Q22 Mr Lilley: You told Sir Robert that we could not know, but if they are commercially available we could get a rough idea of how much they are per megawatt compared with the £16 billion for however many megawatts we are paying EDF.
Professor Freer: I suggest you put that question to Rolls-Royce. There are a number of studies and universally they come in at saying that it is more expensive eventually than gigawatt scale. The question is how much more expensive.
There are two things you are fighting against. If we do gigawatt scale, you have the cost savings associated with that scaling. The other factor that drives the price down in the other direction is the ability to build one thing and then it build it over and over again. The UK has got itself into a bit of mess historically in that every reactor it built was a different design. We are about to repeat that mistake. We will have an EPR; we will have an AP1000; we will have a few Chinese-designed reactors; we will have a Japanese-designed reactor—we will have lots of different things. The ability to have a single design and roll it out over and over again can drive price down in the opposite direction. It is the degree to which those two things can play against each other that will eventually determine the price and so the scale at which you can deploy.
Having said that, I think all studies show that SMR technology will not be cheaper than gigawatt scale, but my belief is that it could still be much cheaper than unabated gas with a reasonable carbon price.
Q23 Sir Robert Smith: So it would compete against other non-nuclear fuels in your opinion?
Professor Freer: That’s finger in the air stuff.
Q24 Sir Robert Smith: You’ve got the hurdle of a start-up. So contracts for difference, the main financial incentive here, are not going to bring us more modular reactors on stream.
Professor Freer: There are companies—you have received evidence from at least one of them—that are interested in bringing foreign SMR technology to the UK. The barriers for them will be finance, the big step that you require associated with upfront costs. Being able to smooth out that step is attractive to such companies. If one wants to diversify the kind of companies which can break into the market through nuclear technology, SMRs could be the way.
Q25 Sir Robert Smith: I am still looking for the financial key. Is there a demonstration project, similar to the carbon capture and storage arrangement?
Professor Freer: So you’re asking how you demonstrate—
Sir Robert Smith: You are saying it is going to be better but financially it is not going to happen. What are the financial levers—
Professor Freer: —that the UK can pull?
Sir Robert Smith: Yes. Or needs to pull.
Professor Abram: It is like any first-of-a-kind project. Industry will step up to the plate and fund but it will not fund where there is a significant degree of risk. That is where Government has a role—in de-risking the initial investment and demonstrating the technology. Once that has been done, which might be possible with a public private partnership, as we were discussing earlier, and once the first unit has been demonstrated and the project effectively de-risked, then at that point I think industry will invest. It will not be that Government has to step up to the plate and start building these things itself, provided that there is an electricity market that by some mechanism fairly reflects the cost of carbon. I would leave such a mechanism to the other side of the table—
Q26 Sir Robert Smith: But it is going to need a demonstration.
Professor Abram: If you are looking to industry to step up to the plate and made significant investments then that initial chunk of risk at the beginning of the project—remember none of these projects has been built and demonstrated yet—has to be managed on behalf of industry. I think Government has a role in doing that, but it is not a very long, ongoing role unlike, as we were discussing earlier, investment in advanced so-called generation IV systems. They are many years away from the market and therefore Government certainly has a role in underpinning the research required for those systems.
Professor Freer: I wonder whether there are two things. I don’t know the answer, but if one looks at the US system, where they are putting in substantial investment, that will get the demonstrator technology up and running. Whether it will pull through to market is not entirely clear. You can see some of the companies beginning to feel a little bit nervous about what the future looks like. We have a rather interesting mechanism, contracts for difference, where we say, “If you can produce this technology and produce electricity we will buy it at this price.” This is a good incentive to nuclear technology—large scale—and whether it can be used at the smaller scale to convince companies that there is a longer term future in this technology is interesting.
Sir Robert Smith: Thank you.
Q27 Ian Lavery: Regulation, licensing and siting are serious issues. There are also the issues of safety, security safeguards and the environmental detriment. SMRs are subject to exactly the same nuclear regulatory requirements as the likes of Hinkley Point, for example. The Centre for Low Carbon Futures stated that the licensing of SMRs was “one of the biggest challenges”. Do you think it is the biggest challenge?
Professor Freer: That’s me. I don’t think it is the biggest challenge. It is a significant challenge for companies who wish to bring in foreign technology into the UK that they will have to convince the regulator that that technology is safe. The regulator at the moment is under resourced and they have many large-scale projects on their plate. The kind of approaches that you see, a lot of passive safety in SMR technology, is slightly different from what the regulator has seen already, although it is dealing with some of that for the AP1000. The mindset of the regulator is not perfectly aligned to dealing with SMRs. I think also there is possibly an opportunity here, given that the US is moving more quickly in this direction. The regulator there is already thinking about this technology. Broader collaboration internationally with international regulators could help the UK develop the right sort of regulatory culture and learn from international experience. I do not think it is the biggest challenge. I think it is a challenge for the small companies—there is a cost associated with getting new designs through the regulator. Perhaps some thought needs to be given about how to share that cost burden and incentivise companies.
Q28 Ian Lavery: The GDA is a huge process with larger reactors. Do you think that the GDA should be tailored for smaller reactors? Do you think that that is actually possible, to get the same result?
Professor Abram: I would hesitate, as I am sure you would as well, to tell the nuclear regulator how they ought to regulate for nuclear safety. First and foremost, it is their job to do that and we should not seek to influence them in that task.
That said, I absolutely agree with the thrust of your point: if it costs—let us pluck a number out of thin air, £100 million—to put large reactor through GDA, on the face of it, it will cost £100 million to put a very small reactor through GDA. The economics do not stack up at all. The question then becomes—it seems to me that we have two possibilities.
We either develop or encourage the regulator to develop a slightly less onerous version of GDA, which might be possible, but raises all kinds of issues in the minds of the public—in everyone—about safety and whether we are cutting corners on safety.
The other way, which seems preferable to me, is to develop reactors that simply do not have the same enormous number of safety systems because they do not need them. So in extremis, one could imagine—I spoke a little earlier and with great enthusiasm about the benefits of high temperature reactors. It is entirely possible to imagine a reactor system in which the number of safety systems is very small indeed, arguably zero. If it is not possible for the reactor to undergo any kind of serious accident, what is it that you are protecting against? Why do you need a safety system? To answer these questions, you have to go right back to the fundamental science and engineering. If you do not have a safety system, or let us be a little more serious, if you have a very small number of very simple safety systems, by definition the regulatory resource required to understand and oversee and license those systems is necessarily much smaller. My personal view would be that the solution to this conundrum lies in simplification and what we call inherent safety or in-built safety; a reactor that physically cannot undergo these very large accidents, such as we saw at Fukushima. I think that is probably where the best solution is to be found.
Q29 Ian Lavery: Is the siting of these small reactors going to be a problem, particularly in built-up areas? To be quite honest, I would not want one in my front garden.
Professor Abram: I have not visited your front garden, so I am not sure whether it would constitute a suitable site or not, but I take the point. I think we are straying from the realms of science and technology—where I think we can make a very convincing case that, actually, your front garden would be an entirely suitable spot for such a system—and into the realms of public opinion, where all bets are off, frankly. I think that there, the point to be made is a point that my colleague Andrew Sherry at Manchester is very keen on: the engagement with the public on issues of nuclear power. I think, ultimately, the way forward is—perhaps you would guess from the nature of the panel—through education and public understanding.
Q30 Ian Lavery: Do you see it as a barrier, seriously?
Professor Abram: We would be fools not to recognise that there is a barrier to the deployment of new nuclear power, even in the UK. The UK is probably more agnostic on the subject.
Q31 Ian Lavery: Maybe that comes back to what you said in answer to the previous question—that, really, if you take away lots of the safety mechanisms associated with the bigger plants, it will not be much of a problem.
Professor Abram: The trick is to demonstrate that the plants themselves—I take you back to my Chinese adventure and standing on top of the reactor when they pulled out all the control rods and shut off the cooling system. That is a very powerful argument to show that that reactor was perfectly, inherently safe. That is the kind of demonstration that I think we need to make in order to truly win the hearts and minds of the public.
Again, sorry to pick on a specific example but one of the aims of the uranium battery small modular reactor is that that system should be capable of being deployed on any industrial site—let’s say a refinery—and the reactor would not be the most dangerous thing on that site. That is where we ought to be heading.
Q32 Graham Stringer: Staying with safety—are small modular reactors inherently safer because of their size or is it to do with the cycle?
Professor Abram: Partly it is size. The problem of Fukushima was removing something called decay heat. The larger the reactor, the more decay heat there is to remove; it is not terribly difficult. The other solution is to be found in technology. If we deploy light water reactors, then, fundamentally, we have fuel that has to be protected under all circumstances. If we go for other reactor types, the burden of protecting that fuel against a range of possible accidents becomes, arguably, much easier. There is definitely a role that size plays, but there is also a role that technology plays.
Q33 Graham Stringer: Where do you hit the optimum?
Professor Abram: I’d be a rich man if I knew the answer to that. If you were my students, I would search you for what you meant by “optimum”.
Q34 Graham Stringer: Where does the balance lie in designing a reactor of a size that will be the safest?
Professor Abram: I’ve been speaking for an awfully long while so I’ll shut up and let my colleagues have a go.
Professor Freer: I’m not sure that we know the answer to that. The driver is, certainly, simplifying the systems inside the reactor. If one takes the current generation—well, the next generation EPR and AP1000—the number of pumps and bits of piping inside the reactors have been simplified considerably. Each one is a point of failure and that buys you extra safety factors because you are simplifying the design. Some of the SMR designs are taking the same approach—greatly simplified internals to the reactors—and the calculations show that the core failure rates will be correspondingly lower due to that engineering.
Q35 Graham Stringer: Given that you said that industry should decide what kind of reactors we have in this country and they have stepped back from that, I suspect the public would be more interested in the safety issues. Do you think the Government should be prioritising safety and the choice of reactors rather than just leaving it up to industry to decide on a commercial basis?
Professor Freer: I think the argument should be that nuclear power technology is incredibly safe already. Somebody constructed a rather useful way of looking at it, which is that, if one was to compare nuclear power with coal, for example, nuclear power has saved something like 1.8 million lives through its operation just because of its high safety factor.
It is about understanding risk. I don’t think the public properly understand the risks associated with different types of technologies. The job really is to frame the risks associated with nuclear power in an appropriate way. Historically, we have been linked in, in the UK, with the weapons programme when it comes to nuclear power technology. We are slowly emerging from that as a barrier in terms of public perception of the technology. There is a bit of work to be done on behalf of the Government, industry and academia in terms of education.
Professor Seviour: Just picking up on the point about safety, I have a nuclear reactor in my back garden—not actually, but not far away, in Heysham B. As Martin was pointing out, it is predominantly a problem of education. As we were just discussing, if you look at the deaths per terawatt hour of produced energy, nuclear has by far the lowest, even if you include the biggest disasters we have ever had. Even if you compare that to renewables in terms of death per terawatt hour, hydro, for example, has had a lot more deaths associated with it than nuclear. This is really one about education.
It is interesting to note some of the issues associated with medical applications. Nuclear magnetic resonance imaging found it easier to drop the word nuclear from in front to make it more acceptable to patients to accept. So I think the big issue is education, in which everyone has a role to play.
Q36 Graham Stringer: It is a huge issue, isn’t it? Some 20,000 people were killed by the tsunami in Japan, but nobody was killed by the nuclear power plant. All the nuclear power plants in Germany are switched off as a consequence. This is an odd reaction.
You hinted at this in your replies to Ian, but what work is being done to improve the understanding within the public of the risk factors associated with nuclear power?
Professor Freer: At present, there is a committee called public understanding of nuclear energy, which is about to report back. The constituency of that committee is industry. It also has academic representation and representation from BIS and DECC. Following on from that report, hopefully there will be a programme for public understanding and awareness of nuclear energy.
It is okay having recommendations, but one has to have funding. That is a challenge for Government, to make sure that this doesn’t die with the report, that something happens that continues on.
Q37 Graham Stringer: Just a final safety question. Are there any safety issues in transporting small modular reactors from where they are manufactured to where they end up? Are there safety issues if you have a lot of modular reactors close to each other?
Professor Abram: Let’s take that question the other way round: is there a safety issue concerned with clustering of reactors? It doesn’t much matter whether they are small, medium or large. Yes, Fukushima taught us that there is an issue—certainly to the extent that they have interdependent safety systems. For example, the siting of the emergency diesels or the fuel tanks for the emergency diesel generators may, if they are co-located, be subject to the same natural disasters, as we saw at Fukushima. So the industry has taken on board those lessons. I think it is very likely that any future deployment of plants, at whatever scale, would pay a great deal of attention to common failures due to siting, for instance. It is a very good point, an excellent point, but one that I think the industry has taken on board.
In respect of small modular reactors and either safety or proliferation concerns because of transporting them: for transporting the reactor itself, no. The reactor itself is a collection of pipework, vessels and wiring. That is not an issue. The issue is the fuel and the spent fuel, and we transport that already, under very stringent and very carefully licensed conditions. I would argue that we have in place already the infrastructure and regulatory oversight to ensure that we are able to transport and deploy the fuel for such systems safely and securely.
I completely accept that there is a question to be asked around the increase in numbers of such plants. So whether you deploy 10 or 20 GW as 10 or 20 large 1 GW units or a much larger number of smaller units, clearly there is a proliferation in terms of numbers of such units and questions to be asked about the security of a larger number of smaller sites. That is a very valid argument, but again, I would suggest that we have the regulatory oversight and infrastructure in place to make a determination on whether that is adequately safe or not.
I know I am sounding monotonous, but I would draw you back to the point of the technology. Not all technology is equal when it comes to safety and security. Some technologies are arguably easier to divert, for instance, or it is easier to get hold of the fissile material than for others. The choice of technology has a role to play here.
Q38 Christopher Pincher: The think-tank Civitas recently published a paper with the rather doom-laden title, “Use it or lose it: UK nuclear expertise under threat”, in which they said that we risk losing our £4 billion nuclear industry, but SMRs are one way of giving a boost to that industry. Do you think they have a point, Professor Abram? You were quite sanguine earlier, but do they have a point, or are they just overcooking their paper to grab attention?
Professor Abram: Perish the thought that anybody would overcook a paper to grab attention. I am sure they have a very valid point, and if I was being overly sanguine, I apologise. Nuclear skills and education is certainly at a very critical point in the UK.
I am sure you have seen evidence that has been brought before you already that suggests that within an alarmingly short period of time, 15 years or so, roughly half the current UK nuclear work force will have retired—the current nuclear work force, not the work force associated with an expanded programme of nuclear. So if we are to take on board the resources required for an expanded programme, even a modestly expanded programme, it is imperative that we get on with the business of training new scientists and engineers, bringing them into the field, and actually converting perfectly good existing engineers and scientists from whatever they are working on at the moment to nuclear technology.
I have to say, and I am sorry if this sounds like an admonishment, there is a very strong role for Government to play in this. I and, I am sure, my colleagues have noticed that undergraduates in particular react surprisingly quickly to signals coming deliberately, or even unintentionally, from Government. It has not escaped their attention that several years ago we trumpeted, very importantly, that new reactors were going to be built at Hinkley Point C and that anyone has yet to put a spade in the ground. That has not escaped their attention, and they are beginning to wonder whether it is all just bluster. Their careers are hanging on this, so they are voting with their UCAS forms. They were starting to migrate towards the new nuclear courses that Manchester, Birmingham and other places have been offering, but we have begun to observe a slow-down in the rate of take-up of those courses.
Q39 Christopher Pincher: Professor Freer, you will be keen to comment on that, given what Low Carbon Futures has said about Government involvement.
Professor Freer: Tim is absolutely right that this is drifting off young peoples’ agenda. Historically, young people were very excited about the opportunity, and we must make sure we don’t lose that enthusiasm.
The good news when it comes to investing in the future is that the kind of research we need to do for small modular reactors is cross-cutting. It is the kind of research that we need to do for large-scale—gigawatt scale—reactors, and that we will need to be doing for fast reactors in the future. It is about understanding materials’ properties, being able to predict that over time scales not of 10 years but of 60 years, understanding corrosion properties—these are all fundamental areas underpinning the reactor technology as it is deployed. Actually, it is an area in which the UK has a lot of latent strength, but it is currently underfunded. If you wanted to stimulate expertise in the area of small modular reactors, you would be doing it for large-scale reactors at the same time.
Q40 Christopher Pincher: The Centre for Low Carbon Futures said, “The Government should work as a broker between industry and academia, encouraging…SMR development…towards creating a demonstrator scale SMR”. What sort of time frame and cost do you think that will take?
Professor Freer: You could take the example of URENCO’s nuclear battery. If one is looking for the UK to create an opportunity here in a demonstrator, we do not want to be doing exactly the same thing as the US or the Chinese; we need to find a niche. The nuclear battery could be a niche area for the UK to develop research capacity around a small modular reactor. My suspicion is that you would not deploy it within the UK—it is very much for an overseas market—but there is an opportunity there.
In terms of brokerage, what does it require? It requires creating the right sort of environment from a research perspective, so research programmes associated with a particular technology should be actively funded. There needs to be a focused approach to delivering a well selected technology.
Q41 Christopher Pincher: You mention the battery as an example of a demonstrator project. What is the gap between where you need to be in terms of R&D to develop and deliver it, and where we are? You mentioned already that the guys are getting old and young people are not so interested, but in terms of specific skill sets, what are we missing?
Professor Freer: I should hand that over to Tim, since he is working on it.
Professor Abram: The uranium battery is essentially a gas-cooled, graphite-moderated reactor. We know about gas-cooled, graphite-moderated reactors in the UK—arguably, more so than any in other country in the world. If you were going to deploy such a system, you would be hard-pressed to find a country better placed to do it than the UK.
In terms of the technology required to bring to life a demonstrator, part of the remit of that project was, at least in the first instance, that the early demonstrator and the technology required to produce an early demonstrator would largely exist—sowe are not talking about a development of new alloys or fuels that have never been built before. The technology very largely exists; what has not been done before is the configuration of that technology in a new way—so taking the same heat exchangers, power conversion units, the fuel, the reactor circulator and configuring them in a rather novel way, that is new, but the fundamental technology is not.
That sounds like there is nothing for poor academics in universities to do any more. Happily, that is not true. The system has lots and lots of capability to go far beyond its current capabilities that the early demonstrator would satisfy. For instance, in Manchester we are working on new TRISO-coated particle fuels with even greater temperature resistance, and looking at understanding materials that could allow the reactor to produce even higher gas outlet temperatures that would make the heat that it produced useful for a whole range of industrial processes as well as just generating electricity. For instance, we might be able to use the high temperature heat in extremis to generate hydrogen, using thermo-chemical cycles for instance, where there are no emissions of greenhouse gases. That would effectively be a hydrogen generation machine that does not emit any greenhouse gases at all. I am not suggesting that is the only industrial process, but it is one that is generating a lot of interest around the world at the moment.
The basic technology can be stretched a good deal further than what exists now, but fundamental to the premise of that system was that the initial system could be deployed with very limited research and development beyond what we have at the moment.
Q42 Christopher Pincher: One last question on deployment. In other inquiries we have often heard that a lot of Government money goes into R&D and we are quite good at that, but where we fall down is in the deployment of the R&D into commercially viable projects. Do you think that is an issue with SMR deployment?
Professor Abram: I do and I would refer you back to my earlier comment that you are right that some good ideas—and perhaps some less good ones—come out of universities. On the fuel side of things, the National Nuclear Laboratory is an excellent vehicle for taking those ideas from academia and moving them forward up the technology readiness levels to the point where industry can pick them up.
We don’t quite have the same thing in other areas. There is the famous TRL valley of death of ideas coming out of universities and not quite getting to the point where they are ready to be picked up by industry, where we have managed to de-risk the technology to the point where it makes a sensible industrial case for investment. That is the crucial role that Government have to play here: to allow us to bridge that gap between ideas coming out of academia and developing them or de-risking them to the point where they are suitable for industry to pick and take forward.
There are many industries in the UK that would be eminently well suited to act as a vehicle for integrating a UK interest in that area. You will be talking to one shortly: Rolls-Royce would be a perfect vehicle for doing that. I ought to allow Rolls-Royce to make the point, but to pave the way, the technology is probably not at the point where Rolls-Royce could justify that investment off its own balance sheet. Its own board would probably not allow it to make that investment case. So there is a role for a modest amount of Government investment, just to take that initial risk out of the programme and take it to the point where industry could make a solid case to its shareholders for investment.
Chair: Robert, did you want to say something?
Sir Robert Smith: Given the talk of low carbon and so on, I should remind the Committee of my entries in the Register of Members’ Financial Interests to do with the oil and gas industry, in particular a shareholding in Shell.
Chair: I should remind the Committee of my interests in a company trying to develop a hydrogen fuel cell.
Thank you very much for coming in. We have reached the end of our time. We have another panel waiting to discuss these issues.
Examination of Witnesses
Witnesses: Paul Stein, Chief Scientific Officer, Rolls-Royce plc, Dr David Clarke, Chief Executive, Energy Technologies Institute, and Peter Haslam, Head of Policy, Nuclear Industry Association, gave evidence.
Chair: Good morning. Thank you very much for coming in. Could you just introduce yourselves briefly, for the record?
Paul Stein: Paul Stein, chief scientific officer of Rolls-Royce.
Dr Clarke: David Clarke, chief executive at the Energy Technologies Institute.
Peter Haslam: Peter Haslam, head of policy at the Nuclear Industry Association.
Q43 Chair: Thank you. I start with the same general question we had earlier on: what do you think is the role for small nuclear power in the UK?
Paul Stein: I was handed a few questions by the previous witnesses and will follow on from some of those in answering your question. Perhaps to reverse the view that the UK does not have any capability in this area, Rolls-Royce is actually one of the few companies in the world that has been designing and manufacturing small nuclear plant for 40, 50 years. We make and build all the small reactors for Her Majesty’s submarines. The designs are quite different to civil designs but the reactor physics, the material science, the know-how and the manufacturing technology are very much read across.
To support us, we have a network of university technology centres in the United Kingdom, including one run by Tim Abram at Manchester and one at Imperial College. We design and make all the instrumentation and controls at the heart of many civil reactor systems globally—in fact, half the world’s reactor fleet has Rolls-Royce control systems in it. We service reactor fleets and do plant life extension globally. We produce back-up generator systems for civil nuclear power. We are working with the big reactor vendors intending to build in the UK, to support them with high-value manufacturing here. We are actually working on small modular reactors. We made public our relationship with NuScale, one of the American vendors. It is not an exclusive relationship but they came to us for manufacturing know-how, interestingly, not because they wanted to enter the UK market but because they want to know how to manufacture SMRs in volume, which is the key to making the economics work.
The opportunity for the UK is significant in terms of economics, meeting our climate change obligations, the skills and capability in the UK, and energy security. Our position is that we have to get on with building the large reactors, because they are here and now, and we need to get on with conversion to nuclear power to reduce our CO2 emissions, but hot on the heels of that will come small modular reactors—not in a 15 to 20-year time frame but more like a five to seven-year time frame, as long as we use existing, proven designs. That can then take nuclear power on from, say, the first 16 GW up to the next 24 GW of nuclear power that the UK needs and will also provide an exportable product for the UK.
In the longer term, there may be a place for some of the more esoteric reactor physics that previous witnesses talked about—fast reactors or thorium reactors—but, in the short term, our view is that pressurised water reactors are the technology we know how to do and we have 40, 50 years of experience. That means everything in the nuclear industry, which is hugely conservative, understandably.
Dr Clarke: At ETI, we look at the question in the context of the whole UK energy system, across power, heat, transport and infrastructure. When we carry out that analysis, we see that nuclear—whether large or small, ignore that for a second—inevitably forms an important part of a cost-optimised energy mix in the UK in the future and delivers security of supply as well. There is a challenge that comes with that, though, as Paul alluded to. There is a strategic plan at this stage that would get the UK potentially to 16 GW of new nuclear build; that uses existing sites, in the main, or sites adjacent to existing licensed sites. When you look at all those new sites, realistically, with the possible exception of Hinkley Point C, they all have some physical constraints, whether it is ground conditions, access to cooling water in terms of distance out to sea, pipe runs and so on.
The challenge you have above 16 GW—in terms of our modelling, we would suggest that up to 40 GW looks like a financially sensible roll-out plan for the UK—is where to put those additional 24 GW of reactors. The likelihood is that there simply aren’t sufficient major sites with access to all the things you need, particularly cooling water, where you could site that much new nuclear using large plants.
One of the important issues with small nuclear power in the future is the potential ability both to use it on sites with limited cooling water—by which I mean major rivers, rather than coastal sites—and to use the waste heat off-site. If you can site these things in locations that are closer to major centres of population—Bradwell is 50 miles from here—pipe runs for district heating using major industrial sources of tens of miles, certainly 20 miles, have been demonstrated elsewhere in the world. The concept of using a remote site that is a significant distance away from a centre of population for a heat network is well proven, but if you use SMRs, you obviously potentially bring that capability closer to centres of population, so you can use the waste heat more effectively.
Fundamentally, we see the small module opportunity driven by economics in terms of the potential for low-cost energy and reduced need for cooling water compared with big nuclear plants, meaning that you open up more opportunities for sites on which you can build these units, and then there is potential for siting them closer to centres of population so that you can use the waste heat off-site.
Peter Haslam: We see SMRs as a complementary technology to the current programme, very much as Paul and David just said. We think the priority must be the current 16 GW new build programme on which we are about to embark. We have spent a lot of time preparing for that and we have gone through the various processes to get to this stage. We now have to get state-aid clearance for Hinkley Point, but assuming that comes through in the next couple of months, we are about to embark on this programme. The industry is very supportive of that.
As Paul and David said, there might be the possibility that there will be a requirement for new nuclear plant over and beyond that programme, and we believe it makes sense for the UK to look carefully at what the technological options might be to ensure that we can meet that demand in a safe and secure manner. If SMRs are going to be developed in the UK, they will need to be financially competitive and they will clearly have to meet all the safety and environmental requirements, but most of all the prospective developer would need to be absolutely clear that the design was viable from an economic and regulatory perspective.
Q44 Chair: So it has an important role to play, but it is not going to bring on nuclear as a contributor to achieving our climate change targets any sooner than the existing programme; it does not give us a short cut. In terms of the commercial potential, can we do this on our own or do we look for a partner? We talked with the previous panel about China and America. Do you have the same sort of view that we will need to collaborate?
Paul Stein: I think the UK has a choice. We have the capability to do our own, if that is what we wish to do, and maybe that is the right thing to do, but we could also consider partnership with America, France, China or other nations that have similar designs. We need to look at the political landscape, at affordability and at what intellectual property the UK wants to end up with as a result of such a collaboration to give us the ability to create wealth and export, as well as to meet our climate change objectives. Right now we are not closing off any options.
Dr Clarke: It is very important in this that the export opportunity is kept well and truly open. In that context, a design that is accepted in other countries is clearly going to be hugely important in getting the IP into the market quickly. In that context, it will probably push you towards seeking some form of collaboration, rather than an exclusively go-it-alone model.
Peter Haslam: I know the Government have commissioned a study involving a number of UK companies and NNL to look at the potential options for taking it forward from a UK perspective. We support that very much. It is due to report in the next couple of months. I hope that that will elicit what the potential options are for the UK going forward. On the face of it, international collaboration would appear to make sense. Some of the American companies are having difficulty at the moment securing the funds to carry on with their research, and there might be opportunities there. But I think we ought to wait for this report to be published and then look to see what the options are.
Chair: Right. Peter?
Q45 Mr Lilley: Do you all agree that we should focus on an existing technology, or do you think we should wait until we have developed one of these more novel technologies? There is no need to waste time if the answer is yes.
Paul Stein: The answer is: we should focus on what we know.
Dr Clarke: Absolutely: focus on what we know both from the point of view of getting into the market quickly, but also engaging public confidence in terms of the technology base as something that is understood and is not wildly new and different.
Peter Haslam: I agree with that.
Q46 Mr Lilley: In the previous panel, the only person who ventured a view on the cost of this said that small nuclear would be more expensive than big nuclear. I spoke to someone at Rolls-Royce: he may not have been authorised to offer me a power station, but he thought that small nuclear could be provided at less than the contracts for difference price being offered to EDF.
Paul Stein: I don’t know who that would have been. The truth is no one really knows the answer to the question, but what we do know is this: the manufacture of small modular reactors is a completely different approach to that of the large reactors. The large reactors are built as big civil engineering projects on site; for small modular reactors, to make the economics work we would have to build a big factory and flow-line them down the factory, so it would be more like a jet engine production line than a nuclear power station manufacturing plant. One could envisage such a factory making, say, one reactor a month in order to make the economics work, and we would bring to bear all of our know-how in manufacturing technology to get the price down and to engage the supply chain in a way that could make the whole unit cost-effective.
There have been some studies looking at the economics of small modular reactors, assuming all the latest manufacturing technology is brought to bear in the way that I have said, that have suggested we should be able to make the economics work, meaning that, as a minimum, we hit the same price point per kWh as the large reactors. But, as a company, we are not certain of that yet. We still need to go down the route of taking a closer look.
Q47 Mr Lilley: So potentially, the economies of modular repetition can outweigh that of singular scale.
Paul Stein: In the world of engineering, volume is everything. We make a big jet engine a day: 30,000 parts have to come together to make that engine flow out the door. Frankly, it is the scale of manufacture that lets us get the economics and the price point right, just as much as baking into the design value engineering.
Dr Clarke: I might add a caveat to what Paul just said, if he doesn’t mind. He said that volume is everything in engineering. Volume is everything in manufacturing. In the power station operation, I think we have to be fair and say the efficiency in the generation on a big plant will almost certainly be better than the efficiency of generation on a small plant, but the difference is quite small. So when people say the big plant will be more efficient and cost less, that is quite likely a true statement, but—exactly as Paul said—the up-front capital and manufacturing cost is driven by volume and scale. This is where the opportunity really lies to make a big difference.
Paul Stein: May I build on David’s answer? We should not underestimate the cost of capital. If one has to raise £7 billion or £8 billion—whatever it costs—for Hinkley C, that is quite a lot of money to raise. If one is looking to raise, say, a tenth of that sum for a small modular unit, the cost of capital and the ease of access to capital is far less. It is that economic argument that has driven the case for SMRs. If you have to raise, say, a tenth of the money—I am grossly approximating—and then you can sell the electricity on a first small modular unit and use the income to pay for the next one and the next one, you can make an economic model for electricity generation work far better than if you have to wait seven or eight years and then reap the income from a large reactor.
Q48 Mr Lilley: Don’t you actually need to commit a lot of investment for the manufacturing plant of your jet engine analogy? Even though the costs of a jet engine may be individually quite small—
Paul Stein: The development costs, you mean?
Mr Lilley: The costs of setting up. If you are going to manufacture one of these a month, building the factory and associated engineering works to produce one a month is going to involve a huge amount of capital.
Paul Stein: It does, yes. There is a lot of up-front cost to get you going in this area.
Dr Clarke: Paul said that there is uncertainty in the market over the future costs of these devices at the moment. At ETI, we are funding a third-party independent study right now, which will conclude later this year, to look specifically at the cost of SMRs to try to get a robust market view as to what the reality of this is likely to be.
Q49 Mr Lilley: Is there a potential market to justify serious production of these things that will bring the costs down, and how much of that market is in the UK? What overseas market would we have to win as well to make it worth while?
Peter Haslam: At the moment, there is not a market in the UK. There will only be a market once people have more of an idea of what the costs and so on are. At this stage, it is too early to say, which is why we very much look forward to the independent report that the Government have commissioned and also the report that your body is doing, Dr Clarke. I think we need it fleshed out. A utility will not invest in a new project unless it is already there and it is proven that it is going to work. They would regard this as R&D, I think, at this stage.
Q50 Mr Lilley: One final question. I am amazed at the leisurely approach people have to these things—perhaps from you, as a panel, rather less than from others. During the war we did the Manhattan project and developed from scratch a nuclear weapon, but we now seem to take 10, 15 or 20 years to build something that we have been doing for 40 years. It seems incredible to me. Why do we not just bang on and do it? Bang is probably not the right word—[Laughter.] If there was a sense of urgency behind it, and if you could get a Government that really had some drive behind this, how many years would it take before we were producing one a month?
Paul Stein: Government funding backing us—that would be the key issue here. The reason for the leisurely attitude of the industry has been that the market economics have been changing according to public opinion, because of events such as Fukushima, so it is a hard market to invest in from a private perspective. If we wanted to crack on with it, to get to a first-of-a-kind reactor within about seven years would not be unreasonable.
Q51 Mr Lilley: It is still longer than the second world war, and indeed almost as long as it took from the second world war to build Calder Hall.
Paul Stein: We have different views now on safety and quality. Perhaps in the wartime environment—I was not around then—there was possibly a different attitude towards safety and quality. I am guessing.
Dr Clarke: I think that Paul, in seven years, would be reasonably assured of delivering you a viable plant.
Mr Lilley: Reasonably sure?
Dr Clarke: Well, I am speaking for him, but—
Paul Stein: I am trying not to be too—
Dr Clarke: Rather than one that goes bang.
Q52 Sir Robert Smith: Has Rolls-Royce got some experience of thorium in the small modular reactor?
Paul Stein: No. Our experience as a company has been, in terms of manufacturing, entirely in pressurised water designs. In terms of research, we are working with the French Astrid programme on their fast neutron reactor, which is their reactor type to burn plutonium and turn it into lower-order actinides. We believe that that is quite a good design for the longer term. There is a rival design from the States called PRISM. We also have some experience in terms of nuclear fusion, on which we work together with the centre for fusion research in the UK. We are doing heat extraction technology with them to work out how we turn a fusion reactor into a power station.
Q53 Sir Robert Smith: Do the other witnesses have any views on fuel processes? We are talking about large-scale reactors in the different debates about which kind—whether thorium, PRISM or whatever. Does the same debate apply to small modular reactors?
Dr Clarke: Can I return to the comment we made a few minutes ago? There is a range of alternative—gen IV, as they are probably called—type reactor technologies, but the reality is that they are many, many years away; hence the important debate is really about using the current technologies—the gen III and gen III+ technologies we have—and utilising those more effectively in the market.
Q54 Sir Robert Smith: In terms of the way the market is working, the previous witnesses suggested that because of the start-up costs, there will have to be, rather than just a contract for difference to tempt people into the market, some kind of Government demonstration project.
Peter Haslam: I think there needs to be a demonstration project of some kind before the utilities will come in and invest in it, which is why we ought to be looking at whether we should be co-operating overseas with other companies.
Q55 Sir Robert Smith: This is one suggestion. I think that at Sellafield the combined heat and power plant is due for replacement. Would that be a suitable site for a—
Paul Stein: There are quite a few potential sites. In Wales, Trawsfynydd, which is a decommissioned Magnox reactor site, is due to be completely decommissioned in 2016, and we know the Welsh authorities are very interested in seeing whether that could be a site for an SMR, because we have all the skills there. I understand there are several hundred nuclear-qualified people there. There is a connection to the grid. Quite a few sites in the UK could be candidates for a first-of-a-kind small modular reactor.
Q56 Sir Robert Smith: Who picks the winner? Where is the skill set for appraising what the best demonstration project would be?
Peter Haslam: The study that is under way at the moment involves quite a few of the leading companies, including Rolls-Royce and AMEC. That is looking at the potential options that are out there. As you say, there is a whole range of SMRs of one kind or another. It will, I hope, produce a list of options that can then be looked at further.
Dr Clarke: In terms of the more general aspects of site selection—business case and so on—DECC are experienced in either having those skills or bringing people in to enable them to run that kind of process, certainly; but the detailed technical expertise around particular designs and so on, as Peter said, is covered in elements of the industry and in the various trade groups.
Peter Haslam: For the current nuclear programme, there was a strategic siting exercise, which ended up identifying the eight sites that are going to be developed by the nuclear industry. Something similar would probably need to be done to look at sites for SMRs.
Dr Clarke: The ETI are funding a site assessment, not just for nuclear but to look at future major power plants more generally. That includes big thermal plant as well in the future. We are funding an activity at the moment to look at where the potential sites are in the UK for large power plant in the future. That will conclude towards Christmas, and all the results from it will be available to the UK Government and to this Committee. We anticipate that it will identify some of the lead sites in terms of options, and then clearly a view can be taken as to what the preferred sites would be.
Q57 Sir Robert Smith: Let’s go back to Mr Lilley’s question about the start-up costs of creating a production process. How many small modular reactors would have to come off the production line for you to start to get your money back—roughly?
Paul Stein: We have not done an in-depth study, but if you just want a back-of-envelope calculation, if one envisaged a plant capable of producing a 150 MW reactor a month, it would be producing 1.8 GW a year, which is the equivalent of producing one big power station, in terms of energy output, a year. Obviously I am grossly simplifying: it wouldn’t be one physical site. I am just trying to caricature to answer your question as best I can. A model of that kind would strike me as a starting point to make the economics work, but we haven’t studied this in detail.
Dr Clarke: Bear in mind that if Paul is talking about 150 MW units, then we think there is probably the opportunity for at least an additional 24 GW in the UK of nuclear capacity above the 16 GW that is currently in process. So that is 150 units straight away at that scale.
Q58 Ian Lavery: The licensing of the SMRs will generally be the same as the much bigger reactors. Do you agree that the licensing and regulation of the SMRs is likely to be a huge challenge?
Paul Stein: It is going to be a challenge. It would certainly help industry if there was some additional collaboration between international partners in the nuclear sphere, so that there was an easier way of exporting nuclear power technology between nations who at least are signatories to the appropriate agreements. But I agree with you: yes, the licensing and the licensing regime need to be thought through carefully in the light of SMRs.
Q59 Ian Lavery: You mentioned collaboration with international regulators on this. Can you describe how that could be advantageous to the UK?
Paul Stein: It has been suggested that one option—and a perfectly viable option—is that we form a partnership with another nation to produce SMRs. If we were to do that, then as part of that intergovernmental package we would perhaps agree a joint statement on regulation and a joint way of regulating the export of them, which at least would then create a joint market for SMRs between those two countries without having to go through the full GDA assessment, but that would be a minimum. We would have to try to take this as far as we can.
Q60 Ian Lavery: I think you were here for the first panel. I asked a question about the generic design assessment. It was apparent from the answers that if SMRs are to proceed, then it would be imperative that the GDA was tailored towards that. Is that your understanding?
Paul Stein: I agree with the first panel. Peter might wish to comment.
Peter Haslam: You would need to get the view of the ONR on that. As the witnesses said earlier, safety is a sensitive issue. We need to be sure that anything that is agreed maintains the high standards that we have in the GDA process. The ONR would need to look to see how it could be changed and whether it was appropriate to change it.
Q61 Ian Lavery: Do you think it would be difficult to tailor the current GDA process to this one?
Peter Haslam: It might be possible to tailor it but you would need to get their view on it.
Q62 Ian Lavery: What about the siting of these smaller reactors? Do you think there will be a problem in terms of the environment and educating people, and getting them to accept that this shouldn’t be problematic?
Peter Haslam: There again, as I said earlier, the Government would need to look very carefully at the siting requirements for SMRs and should undertake some sort of siting assessment or something like that, as they did with the current nuclear programme, but in deciding how to take that forward, they would need to look at the specific characteristics of the SMRs that were identified as options.
Paul Stein: Some of the designs are capable of being put below ground, which perhaps would improve the environmental impact. There are many old Magnox sites in the UK which are too small for the large, current generation reactors, but might be suitable for SMRs; but, frankly, public perception and siting are things that will have to be addressed properly.
Q63 Ian Lavery: Would you be happy to have one in your back garden?
Paul Stein: I would be happy to have one in my back garden. As long as I can sell the electricity that came out of it, I would be happy to have one in my back garden.
Q64 Ian Lavery: Would that be the same for the other panellists?
Peter Haslam: I am not sure that my back garden is big enough, to be honest.
Dr Clarke: I think that is the point. You open up a whole different range of siting opportunities—not necessarily back gardens. As Paul said, there are many old sites that we are now sort of semi-decommissioning, or are mothballed, which have the potential to offer the cooling capabilities you need for this size of units. They couldn’t take an EPR, for instance. There are quite a lot of options.
Paul Stein: Some of them have local skills. In areas where we are decommissioning old reactors, it would be rather good to be able to give jobs to the people—precious nuclear-qualified people—in those areas. If SMRs can be sited there, but not the large reactors, it would seem an ideal combination of meeting our energy obligations plus employment.
Q65 Graham Stringer: I was not quite sure from your previous answers—maybe I should have been—whether or not you are completely ruling out thorium as a future fuel source.
Paul Stein: Mr Lilley commented that we have to get going on these reactors, and he is completely right. We now have to start ramping up to some first-of-a-kind demonstrator, and we have to do that with reactor technology where we really understand how to manufacture them and what the long-term effects of operation are—and so on and so forth. For that reason, we have been firmly of the view that it has to be the pressurised water design, which we know how to build.
In slower time, the world and the UK might want to look at some other technologies. Thorium is a candidate; changing over to fast reactors is another view that other people have—in other words, plutonium-burning, fast-neutron reactors that are sodium cooled. That is another option. I am sure there are other candidate designs, but there is a difference, as I think one of the previous witnesses said—Professor Abram—between the here and now and what we have to do to change the economics, and the long-term research that should be done for generations beyond the current one. I would put thorium in the longer-term category.
Q66 Graham Stringer: So essentially—if I can put words into your mouth—you are saying that the benefits of understanding pressurised water reactors outweighs the potential benefits of the safety of thorium or other technologies.
Paul Stein: Yes. Absolutely right.
Q67 Graham Stringer: To go back to a question that I asked the previous panel, I’d be interested in your views on whether, because of their size, the small modular nuclear reactors are inherently safer than other reactors.
Paul Stein: I would not say they are inherently safer because of their size, but their safety comes about because we understand the physics of the reactor quite well. Because the world has made pressurised water reactors for a long time, we know how they age and work, and we know what safety systems are required to keep them safe.
One shouldn’t underestimate, in the world of nuclear technology, just how long it takes to learn lessons—this was perhaps Mr Lilley’s point from earlier. It is not an industry that moves at the pace of greased lightning, unfortunately. The lessons we have learned from running pressurised water reactors for 50 to 60 years have made us understand the safety case to the point where we feel confident that we understand it. That would be our response to your question.
Q68 Graham Stringer: Do you agree with the previous panel about the safety issues associated with clustering and transport?
Paul Stein: Yes. I think I heard one of the panel members say that transport is not necessarily an issue. We would not transport a fuelled reactor; it is a lump of metal when it gets moved.
Q69 Graham Stringer: It was the extra amount of transport of the nuclear fuel and the waste that they were concerned about.
Paul Stein: On the transportation of the waste, in both cases I would not rate the safety cases any differently to the large reactors.
Q70 Graham Stringer: Where in the national choice of where to go with nuclear power should safety be, as opposed to the commercial decisions the industry will make?
Peter Haslam: Safety is always going to be the No. 1 priority, both for the Government and the industry. We have a long-established safety regulatory regime in the UK that has worked well over many years. Clearly we need to ensure that any station of any kind meets those safety standards. No one is going to put forward any proposal that does not meet those standards.
Q71 Dr Lee: A question on security: do you have any concerns about working with foreign-owned companies—predominantly owned by Governments—and sharing your technology and expertise in the development of reactors in general?
Paul Stein: Are you able to be more specific?
Q72 Dr Lee: I personally have publicly expressed concerns about Chinese involvement in Hinkley. I view nuclear generation as critical national infrastructure, so I harbour concerns. If we are going to go down the small nuclear reactor route—as we were leaders in nuclear technology and have a lot of experience in the past—I wonder whether you have any commercial concerns about the involvement of the Chinese and, dare I say, the French in our nuclear industry, in view of the fact that the companies involved are essentially arms of the state.
Paul Stein: We have some key customers in those specific countries you mention across our entire product range. We are proud to supply many Chinese airlines with our products. We have to defer to Government to think about security issues in the way that you have just described. Turning to small modular reactors, the key issue is what amount of intellectual property the UK wants at the end of the SMR story. That is the key issue. If we want to be able to do the whole thing ourselves, we have to invest heavily as a nation ourselves to get there. If we don’t want to invest heavily as a nation, we are going to have to accept some degree of input and sharing of the cake with other nations. That is inevitable if we choose not to fund the whole thing.
Q73 Dr Lee: Are you confident that the intellectual property can be protected, even in a shared arrangement? If I can cite an example, I represent a constituency that has significant information technology business. It has been said to me on more than one occasion that companies in my constituency do not seek to enter the Chinese market because they cannot protect their intellectual property. Do you share that concern in regard to your technology in your sector?
Paul Stein: We would turn to Government for advice on such issues.
Q74 Chair: The Government might like some advice from you. This is an interesting line of questioning. I think Dr Lee was explicitly trying to get at whether you would be comfortable about Chinese or possibly Russian participation in a civil nuclear programme.
Paul Stein: As part of the delegation that China brought to London recently, we signed an MOU with the Chinese as a company to supply instrumentation and control systems and to work with them on some specific issues of those Chinese reactor designs. Clearly we are more than happy to work with Chinese companies.
Q75 Dr Lee: I sense that this is a commercially sensitive and difficult line of questioning. Do you have a forum in which you can express any concerns that you might have—if you do have them—which is in a private setting?
Paul Stein: As a company, we have a good relationship with Her Majesty’s Government. We have a number of ways of communicating with them.
Chair: I am sure the Government would be delighted to know that.
Q76 Dr Whitehead: To follow on from the back garden question. Security of smaller sites that would be involved in modular nuclear reactors would presumably need to be at the same level as larger sites for traditional reactors. Those sites, certainly in terms of the production line discussion, would be fairly dispersed and far more localised, but with the security that was needed for nuclear reactors in general. Would that add any particular complications to a roll-out of smaller nuclear sites? Would it particularly add to the cost of those sites or are there changes that could be made in terms of the security of more local sites?
Peter Haslam: That is again something that you need to talk to the ONR about. They are responsible for enforcing security standards in the UK around nuclear power stations. I think it is something that Government and ONR would need to consider together, but I don’t think it is anticipated that there would be SMRs dotted all over the UK.
Paul Stein: There are a number of deployment choices. From the so-called eggcrate approach, where you put a number of SMRs on a single site that could be a nuclear qualified site or a decommissioned nuclear power station, through to perhaps thinking of deployments in airports or something of that sort. The ONR is going to have to reach a view on the safety and security of deployment. We will be working with the ONR, which is part of NIRAB now and hence fully engaged in this small modular reactor study, to seek advice from the regulator.
Q77 Christopher Pincher: I think the diplomatic service is missing three very deft members. Your points previously about R&D capability have been pretty well aired so I only have one question. Given that you seem to say there are lots of opportunities for SMRs and for our nuclear industry generally and that there are deployment sites being considered, is it really the case that the industry faces a threat in terms of future R&D capability—scientists and technicians—because there is not a throughput of young people coming into the industry? If so, why?
Dr Clarke: I think Tim Abram and Professor Freer have perhaps the best evidential base, by the sound of it, in what they said earlier. The comment was that they are seeing UCAS applications for new entry into the graduate training programme drop. There are no two ways about it. If there is a pipeline demanding graduates and skilled technicians, people will train to be part of that pipeline. If there is a hiatus and a gap, such as we saw prior to about five years ago, for 10 years, the pipeline vanishes; there aren’t any graduate training programmes at that point.
Peter Haslam: That is right. There has been a large increase in the number of people applying for nuclear-related courses at universities since nuclear came back on the agenda in 2008. But I think there has been frustration that we have not made as much progress as people had anticipated and the comments made earlier related to people being nervous about whether we are moving ahead as quickly as we should. That makes it all the more important that we get on with the current 16 GW nuclear power programme. I would hope that once Hinkley is approved and we have the final investment decision on it, and we start moving ahead and recruiting people for that, that will send a message to the whole supply chain that we are really moving here. I think that will change the atmosphere straightaway.
Q78 Christopher Pincher: Paul, what graduate development schemes are there at Rolls-Royce? You are hardly a minimum-wage employer so there must be lots of opportunity and, one would hope, enthusiasm. Is it a problem that you don’t have those schemes? Is it a problem with our education system?
Paul Stein: As Tim Abram said earlier, right now we have to train our own people. We have a very intensive graduate training programme and about 2,000 engineers working in our nuclear business but we are concerned, as the nuclear industry ramps up—as previous speakers have said—about whether we have the pipeline of young people able to take up the challenge of designing and developing small modular reactors plus looking after all the interesting work that will go hand in hand with the 16 GW new build. We are quite worried about the skills pipeline. As Tim Abram said, it is all part of confidence.
When you talk to young people, they would love to work in nuclear power. They are passionate about climate change and many of those I engage with do not have the sort of stigma about nuclear power that perhaps some of the generation—dare I say it?—represented here might have. They are very keen but they are not going to go into an industry where they do not know if they are going to get a job.
Q79 Christopher Pincher: Mr Haslam said that the pipeline growth is not quite where you would like it to be. Can you put your arms around it and come up with a number? What sort of percentage are you down on the sort of skills you need?
Paul Stein: We have actually done some analysis, but if I could come back to the Committee, I think we would be prepared to give you our perspective. I guess the Nuclear Industry Association must have some data as well.
Peter Haslam: I am not sure that we have but we can talk to—
Paul Stein: I think we can probably give you some estimate of where we see the need for skills growth over the coming period, if that would help.
Q80 Mr Lilley: I was surprised, earlier, by the emphasis that was put on cooling water as a constraint on location and development of the nuclear industry. I had not realised that. Does nuclear require more cooling water than conventional power stations?
Dr Clarke: Calibration, on cooling water—in the EPR it will use something like this room full of water every 10 seconds, which means that, basically, you have got to put it on a coast because there is not a river in Britain that can guarantee that.
Q81 Mr Lilley: Why is that the case more than with a coal-fired power station?
Dr Clarke: The majority of nuclear plants, for various reasons, we have sited on what would be classed as a once-through cooling system—we do not recirculate the water. That is for all sorts of reasons to do with volume and efficiency, which have driven them towards coastal sites. For historical reasons, we have generally elected to site big gas turbine plants inland on rivers. They want about half the cooling water of one of those units.
Q82 Mr Lilley: Still, it seems odd to me. I thought they were both basically just ways of heating up water and I do not see why you need more water for nuclear than coal. Someone is nodding or laughing in the background—I don’t know if it is at the question.
Paul Stein: You can make closed-cycle systems in nuclear if you wish. The easiest thing to do is suck water out of a river, use it to boil in the heat exchanger, power the steam turbine and put it back again, but there are closed-cycle solutions as well.
Dr Clarke: The French operate river systems, for instance, but they do run into temperature problems periodically.
Q83 Sir Robert Smith: The French had to reduce their output in the hot summer.
Dr Clarke: Correct. It comes down to local, environmental considerations, generally, around the temperature rise you can see and the dispersion you can get in the water, which is why we tend to use coastal-based systems for the big reactors in the UK, so you can get the dispersion of the heat—the hot water—out into a big volume.
Q84 Mr Lilley: But you said even there, there was a constraint. Again, why can we not just pipe it out further out?
Dr Clarke: You can. Bradwell, for instance, has a very long pipe that runs out in the Thames estuary—very long. That comes at a cost, both a pumping cost and an installation cost, but you can do it, Peter. It’s just local economics.
Chair: Okay. Thank you all very much indeed.
Oral evidence: Small nuclear power, HC 347 2