NUC0023

 

Written evidence submitted by Terrestrial Energy Limited

 

 

Introduction

 

  1. Terrestrial Energy is pleased to respond to the Welsh Affairs Select Committee inquiry into nuclear in Wales. Terrestrial Energy is a disruptive technology company committed to developing reliable, clean, and cost-competitive energy that will change how the world produces energy.

 

  1. Through our innovative, small, modular plant design, the Integral Molten Salt Reactor (IMSR®), Terrestrial Energy has developed fission technology that decarbonises industry, the 30% hardest to abate sector of the economy, by delivering ‘high quality’ heat and electricity at a low cost to enable an essential pathway to Net Zero. Terrestrial Energy is fission with an industrial mission.

 

  1. The IMSR® reactor has been developed with a clear market focus – industrial users. It is not driven by proponents of a particular reactor technology. The business case drives the development not the technology.

 

  1. Terrestrial Energy has already raised $100m of capital based on the economic business case of the energy production for future clients. It is the business case that drives the competitive performance of our IMSR® combined heat and power plant.

 

  1. The technology that Terrestrial Energy has chosen utilises existing proven and operational technology and builds upon this to simplify and enable faster development of a commercial IMSR®. The company is not trying to invent a new reactor, rather we are utilising existing proven technology.

 

  1. Wales has, in Trawsfynydd and Wylfa, two world class nuclear sites with licence for new build nuclear reactors. Wales has a long heritage in nuclear power, benefitting from the jobs, investment, economic growth and energy security that these sites have provided. Wales, and communities in the nuclear sites in Wales, understand the value of nuclear power.

 

  1. Terrestrial Energy is committed to working with the Welsh Government, Cwmni Egino and local stakeholders around these sites to develop a future with new nuclear. There is clearly increased activity by these stakeholders in Westminster already which, alongside the formation of Cwmni Egino, is to be welcomed for the delivery of Welsh nuclear.

 

Responses

 

What role can, or should, nuclear power play in achieving net zero and UK energy security?

 

  1. UK industry, which faces the highest energy costs in Europe, is urgently in need of affordable, reliable energy.  It is vital that we address the challenge not only of decarbonised power, but decarbonised thermal energy costs, the vital heat needed to support our industrial users. This is the “30% question”. 

 

  1. Terrestrial Energy’s IMSR®, which provides flexible thermal power and electricity, is ready to be deployed with plans underway for plants to operate in the UK by the early 2030s. With costs and build-time at a fraction of conventional nuclear plant, the IMSR® is an enabler of a Net Zero industrial future.

 

  1. With the ability to provide thermal power and the heat required for many of the UK’s core industry sectors, Generation IV molten salt reactors can create clean hydrogen for industry. They can answer the challenge of hydrogen at scale and more importantly because of the economically competitive provision of thermal power from molten salt reactors, hydrogen can be produced at a long-term economic price.

 

  1. New Generation IV modular reactor technologies mean that there is no longer a trade-off between economic prosperity and energy security. With global crises becoming more frequent, we must urgently future proof our economies.

 

  1. Advanced Modular Reactors (AMRs) / Small Modular Reactors (SMRs) will be fundamental to enabling Wales (and other developed economies) to reach net zero by 2050 (the existing UK Government target). With their inherent economies of scale, they offer an accelerated timeframe for new nuclear to be connected to the grid.

 

  1. In addition to grid connection, the IMSR® allows for increased flexibility including the ability to support:
    1. Low cost, high heat users
    2. Low cost, high electricity users
    3. Integration with renewables
    4. Support load following demands
    5. Provides low carbon energy
       
  2. Importantly, the IMSR® is undergoing VDR (Vendor Design Review – an assessment of the suitability of a potential nuclear reactor technology) in Canada; it is deployable with plans underway to operate in Wales by the early 2030s and is the pre-licensing technology review which in the UK is the Generic Design Assessment (GDA). The VDR Stage 2 that IMSR® is reaching the conclusion of is about equivalent to GDA Phase 2.

 

What are the main challenges to delivering the UK Government’s commitment to bring at least one large-scale nuclear project to final investment decision by the end of this Parliament?

 

  1. The main challenge for any new large-scale nuclear project is the economic performance of these reactors when considering total lifecycle of project delivery. The scale of construction raises challenges on construction deliverability and risk and therefore the projects’ ability to raise investment. With the availability of Advanced Nuclear Technologies such as our IMSR®, questions are being raised as to the strategic direction for new nuclear. Is Large-scale nuclear the fastest, most efficient, most economical solution to satisfy future energy demand and energy security at an economic price that will drive the UK economy’s industrial competitiveness? These questions further compound the challenges to investor confidence on large-scale nuclear and will impact on the ability to get to final investment decision by the end of next Parliament for any new large-scale nuclear project(s).

 

How important is the finance model to ensuring a successful nuclear project, and is the regulated asset base (RAB) model the best one to deliver this?

 

  1. Terrestrial Energy welcomes the regulated asset base (RAB) model, which is a common-sense approach to delivering new nuclear projects. This model is also likely to result in speedier approvals for new nuclear projects. However, Terrestrial Energy’s Generation IV IMSR® is not dependent on government financing. To date, the business has raised £100m towards the development of our reactor. Since previous barriers to new nuclear in Wales have been financial, we view our technology as ideal for Wales.

 

  1. The RAB model works well for first-of-a-kind projects, though is less well suited to supporting innovation in 2nd and nth of a kind project, indeed it can play into the hands of the incumbent developer by passing capital costs onto others (including the taxpayer). Industry providers with the right product ought to be self-financing. If the RAB model does not seek to include ongoing innovation (particularly cost) by fundamental technology choices, then the economic cost of energy will not be optimised.

 

What practical steps can the UK Government take to support the nuclear industry in developing a range of nuclear technologies, including small modular reactors?

 

  1. Terrestrial Energy welcomes the UK Government’s recently announced Future Nuclear Enabling Fund, Nuclear Fuel Fund and the formation of Great British Nuclear (GBN) and the linking to the British Energy Security Strategy. Government rhetoric seems to be moving in the right direction. However, we understand the focus on GBN is likely to be on delivering large scale (24GW) new nuclear for electricity demand. Instead, Terrestrial Energy argues that what is required is a range of SMR and AMR technologies. These provide shorter build time scales than conventional nuclear plant, and are balanced with dispatchable and affordable “thermal heat” and electrical power that will not only support electricity demand, but also support the heat required for industrial decarbonisation. For example, Terrestrial Energy is discussing with a leading Ammonia technology producer (KBR) the integration of IMSR® to ammonia production, utilising the molten salt capabilities to support decarbonisation of both the hydrogen and the ultimate ammonia production. The coupling technology that is being developed in the UK with KBR may be directly applicable and support the coupling to other industrial heat and electrical power users.

 

  1. For all these reasons, Terrestrial Energy’s Generation IV ISMR® must be part of the consideration of Cwmni Egino and GBN in Wales as a realistic near-term option not only for electricity generation but for the decarbonisation of industries within Wales.

 

  1. Practically, the UK Government must show a greater interest in a wider set of technologies as the US and Canadian Governments are already doing.

 

  1. Further, by favouring high temperature gas reactors (HTGR) through the implementation and roll out of the AMR RD&D (Research, Development and Demonstration) programme, over the panoply of options (including Terrestrial Energy’s IMSR®) the UK Government and Welsh Government potentially risk disincentivising privately funded solutions which are deployable by the early 2030’s. This has a follow-on impact of ruling out options for technologies that address both economical heat and electricity production and loses the opportunity for molten salt UK IP to be developed within Wales, whereby potential freeports can take advantage of new export market opportunities in a growing energy market.

 

  1. At present, effectively excluding non-HTGR technologies from certain grants and communications negatively impacts the Government’s ability to reach the already-stretching target of Net Zero 2050 by limiting technology development and investor confidence across technologies that are non-HTGR.

 

  1. The UK, like other developed nations, is in a race to decarbonise. It is essential the Government considers available technologies other than HTGR including providing for this within Government communications and Research and Development (R&D) programmes to remain technology agnostic.

 

  1. Practically, the Government is relying on outdated data / evidence[1] with regard to non-HTGR technologies. Terrestrial Energy’s IMSR® is approaching pre-licensing regulatory approval with the CNSC (Canadian Nuclear Safety Commission), and the CNSC and the US NRC (Nuclear Regulatory Commission) have conducted a successful joint technical review. The company has established an existing supply chain, national laboratory programmes in the UK, Canada and the US, and has multiple industrial programmes worldwide to de-risk and validate programme delivery confidence.

 

  1. Ultimately, electricity and thermal power will be paid for by the consumer (domestic and industrial). Therefore, the success of any programme will hinge on the economics – it is not clear that the UK Government has considered whether its current approach will factor in the most cost-effective provider for long term energy production for these high heat industries. For Wales, Terrestrial Energy’s IMSR® has the potential not only to provide energy security but also to create low-cost energy to the country.

 

What would the likely cost be to the taxpayer of the UK Government supporting the development of a new nuclear power station at Wylfa?

 

  1. Not all development at Wylfa would require UK taxpayer funding. Funding structures remain to be settled; potentially the Regulated Asset Base mechanism may be used, or alternatively a PPA (Power Purchase Agreement) structure with a utility or commercial customer. Terrestrial Energy is committed to delivering its customers heat and electricity solutions on a commercially attractive basis and is partnering with leading industrial parties such as KBR, the world’s leading ammonia technology provider, to supply heat and power to be the zero-carbon engine of tomorrow’s industry in the UK and worldwide.

 

 

 

What is the potential economic impact for Wales of a new nuclear power station at Wylfa?

 

  1. Terrestrial Energy is well acquainted with the socio-economic challenges in North Wales and around the Wylfa and Trawsfynydd sites specifically. Both are situated in a region with some of the lowest economic GVA in the UK. We acknowledge the need for whomever develops these sites to create wealth, jobs, provide for inward investment and develop lasting partnerships with the local ecosystem. There are important educational and academic institutions locally such as Bangor University which would be harnessed to deliver the project. Our investment is not simply about building an SMR or AMR but an ecosystem of highly skilled, high paid, long-term jobs and opportunities for the local area and wider supply chain to supply and service a fleet of IMSR® Power Plants in the UK and worldwide. Terrestrial Energy would welcome the opportunity to work with local communities to understand the best development approaches, where potential new supply chain be developed, existing supply chain utilised and new facilities such as the national thermal hydraulic facilities are embedded into forward IMSR® deployment programmes that will secure the region long term economic stability. 

 

 

August 2022

 

[1] https://assets.publishing.service.gov.uk/government/uploads/system/uploads/attachment_data/file/1006752/niro-217-r-01-issue-1-technical-assessment-of-amrs.pdf