Small Modular Reactors – UK Global Leadership ambitions

Bill Roberts, Former CFO of the Nuclear Decommissioning Authority
Bill Roberts, Former CFO of the Nuclear Decommissioning Authority

Positioning the UK as a global leader in Small Modular Reactors (SMRs) will take much more than good design.  George Osbourne’s November 2015 Budget, set out in detail in the Spending Review, is ambitious for Nuclear, and includes not only a continuation of the accelerated expenditures at Sellafield introduced in 2008 but also a £250m package for Small Modular Reactors. This is a three card trick aimed at delivering for UK Science and Technology, for the Northern Powerhouse, and for Energy Innovation.

“1.202 As part of this, the Spending Review and Autumn Statement invests at least £250 million over the next 5 years in an ambitious nuclear research and development programme that will revive the UK’s nuclear expertise and position the UK as a global leader in innovative nuclear technologies. This will include a competition to identify the best value small modular reactor design for the UK. This will pave the way towards building one of the world’s first small modular reactors in the UK in the 2020s. Detailed plans for the competition will be brought forward early next year.”

But it will take more than a competition for good design to position the UK as a global leader and revive the UK’s nuclear expertise. The UK’s nuclear knowledge and experience was held by the CEGB for decades. But without demand from global customers for the UK’s gas cooled reactor designs, the UK’s leading edge deteriorated. The Government stepped in to rescue British Energy, and took the policy decision to dissolve BNFL, UKAEA and NIREX into the new NDA. DECC then sold British Energy to EdF, and BNFL Westinghouse to Toshiba. It seemed that policy-makers were content for the British to be consumers of technologies developed elsewhere, with no emphasis on British technologies or supporting any British nuclear champion.

Against this background, a revival of British nuclear expertise seems ambitious, to say the least.  However, this is exactly what is being sought, as according to George Osbourne’s Budget: “2.95 The government’s doubling of investment in DECC’s innovation programme will help position the UK as an international leader in small modular nuclear reactors, and deliver commitments on seed funding for promising new renewable energy technologies and smart grids.” Not only that, but as nuclear revival is a key part of the Northern Powerhouse project: “Opportunities for South Yorkshire and the North West through £250m small modular reactor development and nuclear research programme.”

As a long established public servant I can say that £250m is not easy to justify with DECC under enormous spending pressure and that therefore such a policy will have been considered only after very serious consultation with the UK’s experts. The prospects might be much better than they appear, with the UK having an extremely valuable expertise in small reactors for the submarines, now ripe for commercial development. In addition the National Nuclear Laboratory, established in 2005 as the smaller sibling to the NDA, is now punching far above its weight by working collaboratively with Manchester University, Imperial College and others to provide business incubation. These factors suggest that there is a very high inherent probability that British engineers will be able to utilise the £250m for the creation of a design that will rival the American SMRs where their government is also running a competition for the best design. However, this can only convert to genuine leadership if the design can meet a market demand.

The bottom line for any innovation is whether it is useful, and whilst the best technical design may be what the British excel at (think Dyson or Hovercraft), they are dead ends unless there is a market (think Dyson or Hovercraft). The competition organisers should also have to consider how to match any SMR design to potential markets, and perhaps more importantly, how to make these capable of being financed, and ?nally, who would want to take the risk on the first 20 SMRs. Considering the markets for SMRs is fundamental to good design. National grids and multiple SMRs do not fit comfortably. Large grids prefer large reactors, with their substantial economies of scale over SMRs, even at Hinkley prices. Instead SMRs would be a better fit for smaller, stand alone grids. Prime candidates would be more isolated communities, without easy access to gas, or with strong restrictions or reservations about CO2 emissions.

Whilst Arctic and subarctic communities and installations may be prime targets, the UK does not have a presence there in power supply and lacks political leverage. However, the UK does have considerable leverage in Africa and Asia through its extensive commitment to development and financing climate initiatives. The UK is already a global hub for energy development in Africa and Asia. Small cities in Africa and Asia need the baseload power, do not have the extensive grid connections, and are determined to avoid CO2. Another advantage for the UK is that they would be prepared to outsource the fuel cycle back to the UK which presents an additional identifiable source of future commercial activity and hence investment. Access to these markets can be enhanced by UKTI for any successful British design, assuming that the design can get into production mode.

It used to be popular to consider SMRs as most useful for embedded generation, providing combined heat and power to larger industrial processes, emulating their use in boats and ships. However, making headway here seems unlikely, as the SMR would have to beat the already very effective gas powered generators that industry currently sues on cost and maintenance. A more likely candidate could be mining and resource extraction, where gas transmission is expensive and dif?cult, especially if the reactor were portable and the energy demands were enormous. DECC have their work cut out to ensure that the £250m is used effectively, not only to provide a brilliant design, but also to engender success factors for a potential British Nuclear Champion in the SMR arena. The best designs are customer centric. The good news for the industry is that Budget ambitions can be realised as long as enough attention is directed towards making the design not only technically brilliant, but also capable of being commercially financed.