Can the Nuclear Industry Step Up to Drive Down Costs?
In the same week that the offshore wind industry smashed expectations with astonishingly low prices – £57.50 per MWH for new build starting in 2022/23 – other low carbon technologies were playing catch up.
Emma Pinchbeck, director of Renewable UK had the good grace to point out that despite the offshore wind industry now clearly leading the pack on price “We still think nuclear can be part of the mix – but our industry has shown how to drive costs down, and now they need to do the same.”
I couldn’t agree more. Can the nuclear industry step up to drive down costs?
Decarbonisation represents a massive growth opportunity for the electricity sector. If we want to achieve the fastest, most cost-effective and feasible path to decarbonisation then we need a mix of technologies. Solving climate change can be boiled down to a simple strategy: clean up electricity generation and then electrify everything.
So, whilst we have a large enough challenge to replace our ageing fossil fuel infrastructure, and the focus often lands on power production, power only accounts for around 24% of total carbon emissions in the UK. The rest is transport, heat, buildings, industry and other sectors. We are likely to see electrification on a grand scale and the 21st century grid will be smarter and more flexible than that of our parents’ generation. Government plans to ban new petrol and diesel cars by 2040 in favour of electric vehicle development will drive more growth in clean electricity generation.
The Energy Technologies Institute (ETI) has modelled scenarios to show how the UK can achieve 2050 carbon reduction targets. ETI’s lowest cost scenario for decarbonisation, taking into account a wide range of economic, technical and social parameters is the ‘Clockwork’ scenario. In this scenario around 40 GWe of nuclear capacity is installed by 2050 as part of a balanced mix of energy technologies. However, the ETI concludes that in order to achieve 40 GWe of nuclear by 2050, confidence in the ability of the nuclear industry to deliver new nuclear plants is key.
Right now, it’s fair to say that confidence is low. In their report published this week: UK SMR: A National Endeavour, Rolls Royce rightly identify three major barriers to overcome. Firstly, financing very large capital projects is expensive. Secondly, conventional nuclear plants are large and complex, bringing very significant construction risks; and thirdly, low confidence that these projects can be delivered on time.
The nuclear industry therefore needs to undertake a radical transformation if it is to rebuild trust and credibility that it can deliver on time and on budget, provide certainty to investors, and confidence to support a political mandate as well as regaining public support.
There some green shoots of hope that nuclear energy can still step up to the challenge. Companies such as Rolls Royce, NuScale and others are pitching plans to build a fleet of new mini reactors priced at around £60 per MWh. Given the fact that one SMR can power a city the size of Leeds, or charge more than 62,000 electric cars, such high volume, reliable, yet flexible output at that price is not to be sniffed at.
To test such claims, a deep, independent analysis of contemporary cost claims by a range of innovative new nuclear companies was recently carried out by Energy Options Network in the United States. The report – “What Will Advanced Reactors Cost?” published by the non-profit Energy Innovation Reform Project, found that next generation reactors do offer the potential to achieve potentially ground-breaking cost reduction.
Advanced nuclear companies are forecasting cost targets at nearly half the cost of conventional nuclear plants. This would dramatically improve the value proposition of and, importantly, a highly cost‐competitive alternative to gas and coal.
The study found several common cost‐reduction strategies that the surveyed companies are pursuing to achieve these drastically reduced cost projections, including:
- Simpler and standardized plant designs
- Incorporation of factory‐ and shipyard‐based manufacturing
- Lower materials requirements
- Reduced scope for engineering, procurement, and construction firms
- Shorter construction time
- Higher power density
- Higher efficiency
The Carbon Trust illustrated very well the power of innovation, collaboration and drive to identify and demonstrate cost reduction in offshore wind across key areas including foundations, high voltage cables, electrical systems, access in high seas and wind measurement. No magic wand, just hard work paid off.
Learning from the success of the offshore wind industry: collaboration; cost and risk sharing between Catapults, supply chains and developers will be critical in realising the strategic priorities for the nuclear sector: to tackle construction delay; cost over-runs; slow build rate; and high financing costs. The future lies in modular build and shipyard assembly of mass-produced units that can be manufactured and shipped to sites for installation rather than custom-built, thereby speeding up construction times and lowering direct and financing costs. Technological innovation must be coupled with a laser-like focus on accelerating commercialization of climate solutions, at scale, within mid-century timescales.
Photo Credit: IAEA Imagebank via Flickr