While France generates most of its energy from nuclear, Britain has the highest industrial electricity costs in the world. The upfront costs of small modular reactors are high, but so is the return on investment, says John Caudwell
Last month was the hottest January on record globally. It was unexpected because the natural weather phenomena known as ‘La Niña’ should have produced a cooling effect. That suggests that La Niña might be losing its ability to keep global warming in check – a terrifying reminder of the escalating climate crisis.
Countries around the world stand at a crossroads in deciding how to deal with this challenge. They can choose to create meaningful, sustainable jobs in the clean tech sector and, by doing so, stimulate economic growth and help protect our planet. Or they can choose to opt out of this race and watch others reap the rewards as they build the green infrastructure and technology of the future.
Last week, the government gave us further evidence that it is choosing the former. The prime minister is standing up for Britain’s future by pledging to reform the UK’s planning rules to make it easier to build nuclear power plants. These reforms will also make it easier to build small modular reactors (SMRs). This is good news and should be welcomed as a decision long overdue.
In 2010, the then Leader of the Liberal Democrats and soon-to-be Deputy Prime Minister Nick Clegg dismissed the tremendous opportunities offered by nuclear power because its benefits would not be apparent until 2022. Well, in 2025, such thinking appears very short sighted.
In the middle of the 20th century, Britain was the world leader in nuclear power. In fact, in 1965, the UK had more nuclear reactors than the rest of the world combined. But Britain’s nuclear engineering expertise has since disappeared as our nuclear industry atrophied, in part through our reliance on gas.
And now in Britain we look over the Channel in envy at France, who – for decades – have generated most of their energy, many times the world average, from nuclear power.
It’s because of our short-term approach that Britain now has an energy problem. We have one of the highest domestic electricity costs in Europe, and we have the highest industrial electricity cost in the world.
Nuclear would be good for the economy, energy independence and national security
There are many parts to solving this problem, such as regional energy pricing, but nuclear power also has to play a key role. That would not just be good for the economy and our energy independence and national security, it would bring electricity costs down and help tackle climate change.
Electricity from an SMR could be generated at just 5p per kilowatt hour (kWh).
Of course, there’s a substantial upfront cost. Britain will need thousands of SMRs – in addition to larger nuclear plants such as Hinkley Point C and Sizewell C, where economies of scale are greater still – and, if the build cost is roughly £500bn to provide 50 per cent of the UK needs, the total price is huge.
But so is the return on investment. At current electricity prices, I think the initial investment could be covered in two years.
Savvy investors should happily stump up the short-term costs to, in the Prime Minister’s words, “build, baby, build” and seize the long-term opportunity this offers
Savvy investors should happily stump up the short-term costs to, in the Prime Minister’s words, “build, baby, build” and seize the long-term opportunity this offers.
The UK could become a world leader in nuclear power – and SMRs are a crucial part of that vision. We should not pretend that nuclear power is a panacea for all our energy woes, but they do have a central role to play in boosting our energy independence and resilience.
Environmentalists should welcome this too. If the UK is ever to wean ourselves off fossil fuels and meet our Net-Zero targets, then safe, clean nuclear energy – particularly from SMRs – is essential. And we need it faster than ever.
By City AM
