By the time the UK’s first new nuclear plant at Hinkley Point becomes operational in 10 years’ time Penultimate Power UK hopes its own generation of nuclear reactors will be producing electricity in the North East.
Technology entrepreneur Candida Whitmill joined force with Newcastle-based Ian Fells, a world renowned energy expert, to launch Penultimate Power UK last year with the aim of making the North East the global centre of the Small Modular Reactor (SMR) nuclear industry.
Their aim is to tap into the expertise of the 150 or so North East firms already involved in the nuclear supply chain.
Whitmill, managing director of Penultimate Power UK, said: “We are working with Government and our aim is to take the project forward by establishing a pilot project here in the North East.
“Our aim is to capitalise on, and sustain, the UK’s nuclear supply chain and fuel cycle capabilities, while providing low carbon, affordable energy for industry.
“We are working with a consortium of leading UK and North East companies and our aim is to build small modular reactors in the UK for the domestic market and export.”
By August a Government inquiry into the long-term viability of SMRs will be complete and Penultimate Power UK hopes this trigger a move into development mode.
A Department of Energy and Climate Change spokesperson said: “SMR technology has the potential for shorter delivery times and lower costs of nuclear power for consumers and the Government is investigating the potential benefits SMRs could deliver to the UK.
“We have commissioned a consortium of industry firms to assess the economic, commercial and technical case for SMRs which will provide an understanding of the scale of opportunity.”
SMRs are also receiving support from industry body the Nuclear Industry Association, its chief executive Keith Parker said: “It is crucial to keep a wide range of technological options open so the UK can build more nuclear plants should demand require it.
“Small reactor technology could bring a number of benefits to the UK civil nuclear industry.
“This latest inquiry on small nuclear power is encouraging; it shows the Government’s recognition and understanding that the UK’s requirements for nuclear power may exceed current plans for new build, perhaps substantially.
“However, it is extremely important we do not lose sight of our primary focus and immediate priority – the new build programme and ensuring the EU Commission agrees State Aid approval for Hinkley Point C.
“It is very important we see new build succeed, which will help the public perception and confidence in nuclear power continue to increase.”
Earlier this year Government gave the go ahead to EDF Energy to construct two new nuclear reactors at Hinkley Point, Somerset.
The £16bn scheme will create 25,000 jobs during construction and 900 jobs when in operation and provide 3.2GW of carbon free electricity.
There are also plans for a further two new nuclear plants in the UK. Toshiba wants to build up to three nuclear reactors at Sellafield, with a combined capacity of 3.4 GW and fellow Japanese company Hitachi is looking at sites in Anglesey and Oldbury near Bristol.
One concern with the three proposed schemes is they are all being built by companies which are partly owned by foreign Governments.
Whitmill said: “While there have been assurances that more than 50% of the content will come from the UK we remain to be convinced on this point. By developing our own SMRs in the UK we can support our homegrown supply chain and help it grow and prosper and create hundreds of new jobs.”
As well as concerns over the source of content there are also concerns over the cost of the European Pressurised Reactor (EPR) technology chosen by EDF Energy.
It currently has one EPR plant under construction at Flamanville, near Cherbourg, in North West France.
This had been due to open in 2012 but is not expected to open until 2016 with the budgeted cost of £3 billion rising to more than £7 billion.
A second plant at Olkiluoto in Finland has seen costs rise while being behind schedule and a further two are being built in with Areva at Taishan, China, and these are two years behind schedule.
Whitmill added: “Not one EPR is actually built and generating electricity and the feasibility of such capital-intensive, high-risk projects in today’s economic climate has to be questioned.”
Whitmill, who previously advised the Government on energy policy as a member of the Small Business Council, says Penultimate Power sees SMRs complementing the existing and planned larger nuclear plants.
SMRs are generally smaller than those power stations, in a range between 45MW and 300MW, and this can help cut construction lead times from ten to three years.
Manufactured off-site, SMRs can be fabricated, fuelled and sealed in the factory then delivered to the site ready for use.
While the first SMRs are likely to be expensive Whitmill remains convinced that as production is ramped up, and becomes standardized, costs will reduce.
She said: “Capital cost estimates for SMRs are in early stage development, but in analyzing costs, it is important to make comparison with other similar-sized, low carbon technologies.
“Initial calculations suggest that CAPEX costs are comparable with offshore wind. Signiﬁcantly, the load factor for offshore wind is around 30% and the equipment would need replacing after 20 years, compared with 92% for a nuclear plant with a life expectancy of 60 years.”
Whitmill added: “With so much generating power retiring in the next decade, and carbon targets to meet, there is a sense of urgency to replace it.
“However, outsourcing nuclear power projects that the UK will be committed to for the next 60 years must be handled carefully if our indigenous industry is not to be diminished.
“Short-term myopia on complying with carbon targets could obscure the vision to sustain the long-term economic well-being of a key industry.
“International investment is welcome, if in collaboration with UK businesses.
“The government has two options; let the UK become merely a host nation whence other nations can springboard their global nuclear ambitions and lose our own nuclear capability; or choose to let the start of a new-build programme of nuclear power reignite the UK’s nuclear supply chain, expand our fuel cycle facilities and showcase our world-class R&D capability.
“Supporting a programme to bring smaller, affordable secure, small modular reactors to UK-based commercialisation could do just that.”
Small modular reactors – the global picture
More than 100 countries are looking at potential of Small Modular Reactors with the United States, Korea and China currently leading the way.
In the US a comprehensive programme supporting SMRs through to commercialisation is being implemented by the US Department of Energy.
In January 2012 it announced a competition to incentivise the ﬁrst commercial SMR, offering $452m over ﬁve years on a 50% match-funding basis for successful projects. And since then it has awarded cash to Babcock & Wilcox and the Fluor Corporation for their respective SMR projects.
These awards support the expensive process of engineering, design certiﬁcation and licensing. Signiﬁcant work is simultaneously being undertaken and funded by the US nuclear agencies to work with industry to resolve some of the SMR licensing issues.
Whitmill said: “The US acknowledges that not having built nuclear plant for some time, there has been erosion of US nuclear manufacturing capacity and the need for strong government assistance, such as manufacturing tax credits and loan guarantees, specifically for manufacturers. In trying to rejuvenate a domestic nuclear industry, the UK is in a similar situation to the US.
“The rewards are high in terms of a panoply of jobs across design, manufacturing, construction, services and R&D activities, coupled with economic growth, but it is recognised that the market alone will not open up this opportunity due to unsustainably cheap shale gas and international government-owned corporations with access to cheap ﬁnance capital.”
Changes ahead for UK nuclear industry
The UK Government wants to see 16GW of new nuclear to replace the existing 12-strong fleet, most of which will come off-line in the middle of the next decade.
Earlier this year it struck a deal with French company EDF Energy to construct two new nuclear reactors at Hinkley Point, Somerset.
The two parties agreed a “strike price” for the electricity of £92.50 per MW/h, however the European Commission has concerns over the level of financial support for, what is, an established technology.
The EC is expected to make a decision on whether the deal can proceed later in the year.
Keith Parker, chief executive of the Nuclear Industry Association said: “The European Commission is in the process of assessing the investment contract agreed between EDF Energy and the British Government to deliver Hinkley Point C. This was an expected step in the process towards delivering market reform in the UK. As part of a far-reaching reform of the UK energy market, it is right that the European Commission should examine the contract.
“Hinkley Point C is the first example of a new kind of agreement to unlock investment in low carbon energy. Several other EU member states are considering a similar market mechanism to bring forward investment in new nuclear. We expect the decision is made before the autumn.”
Advantages of small modular reactors
Financing: The UK Government is having to provide a £10 billion loan to EDF Energy to support the Hinkley Point scheme, and it will be over 10 years before it generates revenues. SMRs are built more rapidly and income from each completed unit can support further construction.
Manufactured off-site: SMRs can be fabricated, fuelled and sealed in the factory then delivered to the site ready for use cutting the construction costs and risks associated with larger reactors.
Non-proliferation: Many of the designs being considered operate on fuel with less than 5% enrichment, satisfying international concerns over proliferation.
Safety: SMRs are smaller with simpler components. Many are small enough to be installed underground for added safety.
Refueling and decommissioning: Depending on design, an SMR would only need refueling every two to seven years. Decommissioning can also proceed on a modular timetable, easing the ﬁnancial burden.
Markets: For the domestic market a set of SMRs would be highly beneﬁcial to the National Grid in balancing supply against intermittent renewables. For export markets SMRs are ideal for countries without the robust infrastructure required for large reactors.
Replace fossil fuel: SMRs could be a low-carbon replacement for retiring coal plant, to take up to 40% of base load electricity currently provided by coal, which renewables will be unable to achieve.
UK supply chain: Few countries have the capacity to produce the huge steel forgings required by large reactors, a market dominated by Japan with contributions from Russia, China and France. However, the UK could supply the necessary forgings for SMRs and already has the capacity to supply around 70% of other nuclear components; this opportunity increases with SMRs.