Boris Johnson has told nuclear industry bosses that the government wants the UK to get 25% of its energy from nuclear power, in a move that would mean a significant shift in the country’s energy mix.
Johnson met on Monday with executives from major nuclear utilities and technology companies, including Britain’s Rolls-Royce, France’s EDF and America’s Westinghouse and Bechtel, to discuss ways to accelerate the development of new nuclear power plants.
The UK generates about 16% of its power from nuclear power plants, but several reactors are slated to shut down, while electricity demand is expected to grow steadily over the next decade. Just to keep the share of nuclear energy constant, let alone increase it to a record level of just over a quarter of energy consumption, that would require major investments in new plants.
The meeting also featured a range of major pension companies and insurers, including Aviva, Legal & General and Rothesay Life, as well as major foreign investors including Australia’s Macquarie and the Canada Pension Plan Investment Board. Ministers have struggled for years to attract private capital to invest in nuclear energy, but companies have struggled to put pension and insurance money at risk.
The cabinet is considering changes to insurance rules drawn up by the EU and adopted by the UK to make it easier for insurers and pensions to invest. The UK is moving to a regulated asset base model, which it hopes will give long-term investors more certainty about returns.
The government wanted to show the nuclear and investment industry that it had a “clear ambition for more nuclear”, in part to balance intermittent renewables, according to a government source briefed on the discussion.
Government energy policy oversight has increased in recent months following unprecedented increases in fossil fuel prices. The Russian invasion of Ukraine has added to the pressure, with oil and gas prices rising and Western allies considering restricting energy exports as they try to isolate President Vladimir Putin’s regime.
The prime minister met with oil and gas industry executives last week to discuss increasing investment in the North Sea, and it’s clear he will meet offshore wind industry executives next week to discuss plans for further expansion of renewables.
According to an employee who attended the meeting, Johnson told industry heads and financiers that there has been a “chronic absence” of leadership by successive UK governments on nuclear power and that the country was “left for dead” by others. countries, such as France, on the matter.
After the meeting, Tom Greatrex, the chief executive of the Nuclear Industry Association (NIA), said: “Accelerating nuclear projects is absolutely essential to keep energy costs low, reduce expensive gas imports and strengthen our energy security as we move towards net zero. to go. .
“That means we urgently need to invest in a fleet of large and small nuclear power plants, in addition to investments in renewable energy, to deliver the clean, sovereign energy we need.”
The UK has struggled to build new nuclear power plants in recent decades, with Japanese conglomerate Hitachi abandoning plans to build a new reactor in Wylfa, North Wales in 2020, and geopolitical tensions making the government less interested in building it. attracting Chinese investment in Sizewell C on the Suffolk coast.
Meanwhile, the existing nuclear fleet is steadily declining, with Hunterston B in Scotland retiring earlier this year, Hinkley Point B in Somerset to follow in the summer, and Heysham I and Hartlepool I shutting down in 2024.
At that point, nuclear capacity is expected to drop to 3.6 GW.
A cross-party group of MPs campaigning on nuclear issues has called on the government to increase its annual nuclear power capacity to 15 GW by 2030 and 30 GW by 2050, well above the 12.7 GW installed at nuclear power’s peak in 1995.
Major obstacles include difficulties in obtaining financing from private investors and a ban on new nuclear projects in Scotland, imposed by the devolved government, which prevents Hunterston B from being replaced.
The government is investigating a plan to overhaul the financing model for major projects, one of the factors thwarting the Wylfa project in North Wales.
Under plans for Sizewell being discussed by Whitehall officials and EDF, the government could take a stake in a development company that will take it through various stages of planning and bureaucracy, sharing costs with EDF.
Private investors such as the insurance funds L&G and Aviva would then be attracted at a later stage in exchange for a government-backed financing model, the Regulated Asset Base (Rab), diluting taxpayers and EDF. Legislation on Rab funding – the same model used to fund airports such as Heathrow and water companies – will be passed by parliament next month.