Mon. Dec 6th, 2021

The head of the consortium, which is developing a £ 30 billion fleet of mini-nuclear power stations, has indicated that it will have to rely on UK taxpayers to help fund the construction of the first of the new designs if there is not enough investor interest was not.

Kwasi Kwarteng, business secretary, confirmed on Tuesday that the government is committed to £ 210 million in state funding to a Rolls-Royce-led consortium developing a new generation of small modular reactors (SMRs) as part of a new push into nuclear power to help achieve the UK’s net zero target.

The government has previously seen that it was prepared to approve up to £ 2 billion in state funding to help start the program, which envisages the construction of at least 16 SMR power stations.

Consortium chief executive Tom Samson told the Financial Times that he had held talks with the government on the possibility of “putting in part of the cost for the first three or four units and then using it as a way to exploit private capital ”. .

Samson declined to comment on the potential scope of any further government investment and stressed that while it is an option, the aim was to “move forward in line with the technology that requires the least government funding”. He added: “It is our duty to bring this story to the [capital] markets. ”

The first five SMR power stations would cost £ 2.2bn each, with the price of subsequent units dropping to £ 1.8bn, according to Rolls-Royce. The consortium is looking to build the plants at operational and mothballs nuclear power plants in Britain.

The small modular design will allow parts to be built in factories ready for quick assembly at selected locations, making it much cheaper than traditional large reactors.

One business department official said the government would likely support the deployment of small modular reactors, but that it was too early to say what exact form it would take: “We could be years away from these decisions, which are for future budgets. is.”

Rolls-Royce has been working on SMR technology since 2015 and gained initial government support after raising £ 195m with two private investors: the US utility Exelon and BNF Resources, an investment vehicle belonging to France’s wealthy Perrodo family.

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Rolls-Royce is also in talks with a potential fourth investor who will commit a further £ 85m, bringing the total available funds to £ 490m.

But Samson acknowledged that the program would require long-term support from ministers. His preferred model is the use of so-called “contracts-for-difference” used to encourage the development of offshore wind projects.

The government has used CFD auctions to guarantee new wind projects at an agreed price per unit of electricity generated, which the developers can utilize to secure the financing for construction. Households pay a surcharge to help finance CFDs on their energy bills.

“With contracts for differences over the next 12 to 18 months, we can secure private capital. . . it will allow us to deploy the initial units, ”said Samson.

Some of the UK’s earliest offshore wind projects have been guaranteed up to as much as £ 150 per megawatt hour generated, but developers have offered to build schemes for guarantee prices below £ 40 / MWh in the latest contract auction in 2019.

Rolls-Royce estimates that with the support of a CFD, the generation costs for each 470MW power plant will be between £ 50 and £ 60 per megawatt hour. That equates to about half of the £ 92.50 the government has guaranteed to pay France’s EDF for power from Hinkley Point C, the 3.2GW full-scale nuclear power plant being built in Somerset.

Opponents of more nuclear power remain skeptical, arguing that regardless of the size of the plant, it is still too expensive compared to wind and solar power.

“The nuclear power industry has a long record of over-promising and under-delivery. This is just another example, “said Tom Burke, chairman of the climate think tank E3G.

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