Energy Technologies Institute (ETI) Submission to Energy and Climate Change Committee Consultation on Small Nuclear Power

Size: px
Start display at page:

Download "Energy Technologies Institute (ETI) Submission to Energy and Climate Change Committee Consultation on Small Nuclear Power"

Transcription

1 Energy Technologies Institute (ETI) Submission to Energy and Climate Change Committee Consultation on Small Nuclear Power New nuclear - key role in UK decarbonisation and security of supply 1. ETI s ESME modelling highlights new nuclear as a key component of a future low carbon energy system, providing a core low carbon power generation capability and increasing security of supply by increasing diversity of supply and establishing a baseload generation capability alongside fossil fuel plants with CCS. Without investment in a major new nuclear build programme, the cost and difficulty of meeting the UK climate change targets will rise very significantly. 2. ETI estimates that the cost to the UK of meeting national carbon targets in the period up to 2050 would rise by a minimum of 50bn without investment in a material programme to build new nuclear generation capacity. This cost increase is driven by the need to implement alternative, higher cost, solutions, principally a higher level of renewables (particularly onshore and offshore wind) together with an associated increase in backup capacity from fossil fuelled plants (the majority with Carbon Capture and Storage capability CCS ), to manage intermittency and sustain security of supply. A delay of 5 years in starting the roll-out of a nuclear new build programme increases the national cost of meeting the 2050 targets by ~ 5bn. ETI ESME analysis of optimised pathways to meeting UK 2050 energy and climate change targets with and without new build nuclear. Hinkley Point C assumed to be first new plant and on-line from Interconnection is a key element of both scenarios ETI response to Energy & Climate Change Committee consultation on small nuclear power Page 1 of 10

2 3. ETI analysis highlights that UK energy system transition pathways to decarbonisation which exclude new nuclear continue to rely heavily on fossil fuels as the main primary source of energy, even in These would also require substantial investments in carbon capture and storage (CCS) and gasification technologies on an extremely large scale (for example up to 60GW of power generation with CCS). The practical, economic and societal deployment risks and challenges around such a strategy would be substantial. Without investment in new nuclear, costs could rise even higher if key substitute baseload technologies (principally CCS) prove difficult to deploy. 4. UK Government plans currently anticipate a new nuclear build programme of 16GW largely adjacent to existing licensed sites. ETI s assessment of a cost optimal UK energy system consistently suggests the UK should seek to maximise long-term roll-out of nuclear capacity. Within plausible constraints on build rates and site availability ETI s system modelling suggests 40GW of new capacity would be developed. 5. These results are robust against wide changes in the capital cost assumption of new nuclear (up to +40%) and support decarbonisation of much of UK power delivery by This early decarbonisation of the power sector (in context of a % greenhouse gas target) is necessary to support subsequent investment in low carbon heat and transport systems both of which are anticipated to utilise increasing amounts of low carbon electricity. 6. Both the rate at which the UK can build new nuclear and the maximum capacity that can be deployed practically in the UK are therefore key drivers of the design and cost to consumers of the future UK low carbon energy system. 7. The maximum new nuclear capacity that can be practically deployed is constrained for large scale nuclear reactors by a number of factors, including: Location specific issues (such as proximity to both cooling water supply and electricity transmission infrastructure, and environmental and ecological impacts). The interplay with other end use demands in the energy system (such as the supply of hot water for district heating or process heat demand). Competition for construction sites with other thermal plant (such as CCGTs or coal with CCS). The growing need for more flexible generation to balance both renewables supply and more fluctuating demand for electricity in the future. The ability to attract sufficient capital investment into the UK market to underpin a pipeline of projects (and supporting investments in supply chain capability) at a socially and politically acceptable cost of capital The need for a supportive policy environment with clear solutions to long term policy risks (e.g. via long term contracts) and an overall risk mitigation profile which is acceptable to investors and developers ETI response to Energy & Climate Change Committee consultation on small nuclear power Page 2 of 10

3 8. ETI is carrying out work to understand more fully the constraints that these factors place on the maximum capacity of large scale nuclear that can be deployed in the UK. This work will also identify the level of additional nuclear capacity that could be deployed if these constraints were reduced and, the specific characteristics sought for any further generating capacity (such as small nuclear power plants) to integrate it effectively into the UK energy system. 9. It is clear that a cost effective supply-base and capital finance effectiveness are key to enabling a long-term nuclear new-build programme beyond the current plans for 16GW of new capacity. Small Nuclear Power (or Small Modular Reactors SMRs ) could play an important role in this and the ETI work during 2014 on economics and siting constraints for new plant is aimed at providing a more robust evidence base for evaluating this point. 10. ETI considers that SMRs may have a potential role in the UK future energy system in concurrent deployment alongside large base-load Generation III+ designs. SMRs would offer the additional potential to energise major heat networks through waste heat recovery, and provide electrical network balancing through provision of more agile and flexible electricity output than large nuclear plant. 11. Once licensed, small nuclear power also has the potential to be deployed more rapidly than large scale nuclear due to fewer constraints in its supply chain (such as the very limited number of manufacturers who can produce the large scale steel pressure vessels for large plant). Responses to specific questions in the consultation The Benefits Of Deploying Small Nuclear Reactors In The UK 12. SMRs should not be pursued as a technology in their own right, but as a potential part of the solution to meeting the UK s future energy system challenges. The potential benefits offered by deploying SMRs in the UK include a further parallel technical solution to be deployed from the 2020s to decarbonise the UK energy system. 13. These potential benefits require further evaluation but include: greater capacity and diversity in low carbon reliable electricity independent of weather conditions more potential flexibility in location because of their smaller size low carbon heat to energise future heat networks flexibility in operation to help balance the electricity transmission grid which is expected to be more dynamic in future decades deployment through a new supply chain independent of big nuclear, in which UK manufacturing and construction content can contribute to UK economic growth. ETI response to Energy & Climate Change Committee consultation on small nuclear power Page 3 of 10

4 Development of Small Nuclear Reactors in The UK 14. In the event that further work confirms the benefits of deploying small nuclear in the UK for potential deployment between 2020 and 2035, development is likely to involve repackaging and integrating existing and proven nuclear technology into units of around 300 MWe output or less, which is within the scope of SMRs as defined by the IAEA and the World Nuclear Association. Such technology would require regulatory assessment and probably the construction and operation of a prototype to increase investor confidence. The logic for relying on current and proven technology is explained in more detail later. There may also be a case for SMR development incorporating future advanced nuclear technologies, which are together known as Generation IV. However the associated timescales for development and demonstration of Generation IV nuclear technologies mean that few such plants would be built before Therefore, such technologies may have an important role in delivering sustainable and secure energy into the long term future but too few plants would be built in time to have a significant role in the reduction of CO2 emissions to meet the UK s 2050 legal commitments. The Use Of Thorium In Small Reactors And Applicability To The UK 15. Thorium based reactor technology will be increasingly important in delivering energy security for countries with access to economically accessible thorium deposits. The majority of demonstrated thorium reserves are located in USA, Australia and India. In the long term it is likely that that thorium will become an increasingly valuable and internationally traded commodity in support of energy production. Another application of thorium reactor technology is in the Molten Salt Reactor which is a technology being explored under the Generation IV umbrella. As described above, this is a long term technology requiring significant R&D and unlikely to deliver a commercial SMR solution for deployment between 2020 and Pebble Bed Fuels In Small Reactors 16. The pebble bed reactor is another Generation IV technology under the umbrella of Very High Temperature Reactor (VHTR) technologies. As described above, this is a long term technology requiring significant R&D. The Use Of Nuclear Waste In Small Reactors And What Role Can Reactor Designs Such As PRISM Play? 17. One of the attributes of the fast reactors amongst the Generation IV technologies is the claimed capability to burn long lived nuclear wastes, which would ultimately otherwise need to be packaged and stored in an underground repository. 18. For reasons of nuclear safety any burnable waste materials are likely to be required to be locked in to the core of the reactor either within reactor components or the reactor fuel and would be produced from a by-product of a potential next generation reprocessing facility. This could reduce the size and cost of the UK s future Geological Disposal Facility. Although of significant long term interest and potential value, such technologies will not be deployed before 2040 and are therefore unlikely to have a significant role in the reduction of CO2 emissions to meet the UK s 2050 legal commitments. ETI response to Energy & Climate Change Committee consultation on small nuclear power Page 4 of 10

5 19. The PRISM technology could be used as part of the UK Government s plutonium disposition strategy, noting that the UK stockpile of plutonium is designated as a zero value asset rather than waste. However, this is separate from PRISM s potential role as a waste burner which would require the supply of waste from a future spent fuel processing plant which is unlikely to be available until 2040 or later. Utilisation Of Small Nuclear Power In The UK 20. The ETI has a primary interest in identifying and promoting the lowest cost pathway for meeting the 2050 energy system needs and CO2 emission reductions when balanced against risk and resilience. To this end, SMRs need to deliver solutions to the UK s future energy system requirements at a cost which is competitive with other technologies, otherwise deployment of SMRs would not be part of an efficient pathway to low carbon energy security. SMRs may have a potential role in the UK future energy system for concurrent deployment alongside large base-load nuclear designs, but with the additional potential to energise future heat networks, and also with the potential for electrical network balancing through flexible electricity output. SMRs may also be increasingly important in later decades should the deployment of current designs of large base-load plants become constrained due to issues around site availability or capital availability. These issues are being examined in more detail in ETI s programme of work for Potential barriers and how they might be overcome are identified in the table below. Potential Barrier Approach Lack of clarity of role of SMRs in UK energy market Create clarity of perceived issues faced by future energy systems and evaluate SMR technologies to determine if they are likely to provide technical and cost competitive solutions. Economic and business case Evaluation of expected costs and revenues and comparison with other technologies. This can best be revealed through energy system analysis (as opposed to narrower electricity sector modelling). Such an evaluation would also help to inform the design of market support/intervention mechanisms for a technology which simultaneously delivers flexible low carbon power alongside low carbon heat supply. Siting criteria and site availability An update to the UK Government Strategic Siting Assessment process and associated National Policy Statement for nuclear to enable SMRs access to future development sites. Public Acceptability Public consultation on the deployment of small modular reactors in England and Wales. ETI response to Energy & Climate Change Committee consultation on small nuclear power Page 5 of 10

6 Potential Barrier Approach Cost of Technology Development and Demonstration All power reactor technologies have their roots in development programmes funded by governments or government owned companies. Investment would be required to bring existing SMR technologies to the UK and UK Government financial support to such a programme is a likely pre-condition to making progress. Further work is required to underpin the potential benefits of SMRs to inform a future business case for UK Government support. ETI s planned work will help with this and will be made available to HMG. Societal Risk Safety, Security & Environment 22. All forms of energy generation and distribution involve risk. To independently demonstrate that such risks have been mitigated, proposed SMR technologies should be subject to the same process and standard of scrutiny and regulation as other UK nuclear power applications, including the consideration of Justification by the UK Government. UK Nuclear Infrastructure And Risks Falling To The Taxpayer 23. An issue that is a frequently neglected around nuclear power is the requirement for a supporting national nuclear infrastructure, particularly to take receipt of spent nuclear fuel and nuclear waste. Over the next 10 years, the UK Government is committed to enabling up to 16GW of replacement nuclear capacity. At the same time the UK Government is committed to progressing decommissioning at the UK s legacy sites and the Geological Disposal Facility programme, which recognises this potential for 16GW of nuclear replacement. These 2 commitments should remain compatible. 24. Earlier in this response it was stated that, for potential deployment between 2020 and 2035, SMR development is likely to involve re-packaging and integrating existing and proven nuclear technology into units of around 300 MWe output or less. This is partly because of the need to reduce risks and timescales before deployment. However, another risk associated with deploying other less-proven technologies in this timeframe is that they may create waste streams and waste disposal challenges beyond those already being managed across the UK Nuclear Decommissioning Authority estate. In a period when the UK s civil nuclear decommissioning liabilities are not yet under control, it would be imprudent to introduce a new nuclear technology where the future spent fuel, waste streams and decommissioning challenges were not well understood. This suggests that SMRs deployed in the UK between 2020 and 2035 should be based on current proven technologies. ETI response to Energy & Climate Change Committee consultation on small nuclear power Page 6 of 10

7 Opportunities For The Domestic UK Supply Chain Opportunity Creation of new UK Intellectual Property in Nuclear Generation The lack of UK Intellectual Property in Gen III+ nuclear cannot be reversed but a UK organisation which supports the development of the technology for deployment between 2020 and 2035 will be in a stronger position to develop and secure long term Generation IV IP through R&D investment and participation in Gen IV forum. Export opportunity Potential export opportunities should exist to markets with similar challenges and constraints, and with concurrent requirements for heat, power and flexibility in power delivery. Challenges For The UK Domestic Supply Chain Challenge Economic Model Demonstration of robust economic model and business cases to demonstrate UK potential for SMRs secure investor participation. Delivery model including supply chain Identifying and building the leadership and vision to create and secure a UK supply chain with competitive UK content for SMRs which is parallel to the developing supply chains for the large Gen III+ base-load plants. Programme Governance There is a need to avoid the pursuit of interesting nuclear technology an SMR activity should not be viewed as a science project but rather as an industrial and energy system development focused activity. The need to apply private sector governance to follow the money of future markets. Loss of focus on delivery of large base-load plant There is a need to avoid dilution of commitment and capability to large base-load nuclear construction in the near term (next 10 years). SMRs should be expected to be an additive nuclear technology rather than an alternative. Role For Government In Supporting British Industry Opportunity Future energy market Energy Market interventions need to reflect the value to the energy system value of technologies which may span multiple elements of the energy market (eg; electricity AND heat delivery). ETI response to Energy & Climate Change Committee consultation on small nuclear power Page 7 of 10

8 Opportunity Development funding Funding for development as defined earlier in this submission through to construction and operation of a technology demonstrator. Such funding is dependent on evaluation of the potential SMR benefits and the associated business case. Lessons Learned From International Experiences Of Deploying Small Nuclear Context Small nuclear and heat Reliable supply of heat to remote communities has been a frequent feature of previously deployed small reactors. Commercial model Small nuclear has not previously been widely adopted by commercial utilities; it is presumed that there were previously more cost effective and profitable methods of generating electricity when there was no value in avoiding carbon emissions. Investment in small nuclear should only be considered against the future expectation of a positive business case. Technology development and demonstration Experience of historic and current nuclear technology development programmes (US, UK, Russia, France, China) suggest that it is only Government owned companies or Government funded programmes which have developed nuclear reactor IP with associated demonstrator programmes Export through demonstration Although not a lesson from small nuclear deployment, it is clear that the success of projecting Japan s domestic Hitachi capability into the UK market through the acquisition of Horizon has been the ability to demonstrate the successful design, build and operation of contemporary technology in a western style regulatory environment. The same potential benefit applies to the successful UK deployment of an SMR where there is significant UK content. ETI response to Energy & Climate Change Committee consultation on small nuclear power Page 8 of 10

9 Should Government Do More To Ensure That SMRs Are In The UK s Future Energy Mix? 25. As previously stated in this submission, the ETI has a primary interest in identifying and promoting the lowest cost pathway for meeting the 2050 energy system needs and CO2 emission reductions when balanced against risk and resilience. To this end, SMRs need to deliver solutions to the UK s future energy system requirements at a cost which is competitive with other technologies. These issues and opportunities are being examined in more detail in ETI s programme of work for By the end of this year we will be better informed on whether SMRs are likely to feature in the ETIs lowest cost pathway to 2050 and would be pleased to advise on the conclusions and recommendations from this work. 26. It is clear that a cost effective supply-base and capital finance effectiveness are key to enabling a long-term nuclear new-build programme beyond the current plans for 16GW of new capacity. SMRs could play a key role in this and the ETI work during 2014 on economics and siting constraints for new plant is aimed at providing a more robust evidence base for evaluating this point. 27. Should it be established that SMR s should form part of the UK energy mix then some of the issues for Government to consider will include: Context Technology selection For reasons described above, the UK should focus on one or possibly two technologies for development for deployment between 2020 and This will involve a process of technology appraisal. Access to sites Implementation of a further strategic siting assessment process to inform the suitability and location of potential development sites. GDA timing Consideration of a timely slot for assessment through the Generic Design Assessment process. Delivery Consideration should be given to the delivery model and the organisations involved in developing the technology ready for deployment. Response submitted by Energy Technologies Institute LLP, Loughborough, UK Enquiries to Nigel Richardson, Public Affairs Manager - nigel.richardson@eti.co.uk ETI response to Energy & Climate Change Committee consultation on small nuclear power Page 9 of 10

10 Background on ETI The Energy Technologies Institute (ETI) is a public-private partnership between global energy and engineering firms and the UK Government. ETI carries out three primary activities: modelling and strategic analysis of the UK energy system (power, heat, transport, infrastructure) to identify the key challenges and potential solutions to meeting the UK s 2020 and 2050 energy and climate change targets at the lowest cost, investing in major engineering and technology demonstration projects through targeted procurement to address these challenges with the aim of de-risking solutions both in technology and in supply-chain development for subsequent commercial investors providing support to enable the effective third party commercialisation of project outcomes. Recognising the need to focus and target investments to ensure value for money and leverage from public sector support, the ETI s techno-economic modelling and strategic analysis of the UK energy system is a critical tool for supporting effective system planning and innovation delivery. The ETI approach is termed ESME and is now used by DECC and the Committee on Climate Change to aid with policy development, planning and effective investment targeting. Insights from ESME analysis have been reviewed with the European Commission and the JRC. With their support ETI have now developed a prototype tool for use in assessing energy system design for the European Union area using the same approach used for the UK. A local (urban area) energy system planning tool EnergyPath is in development as part of the ETI Smart Systems and Heat programme. The UK energy system development and decarbonisation priorities identified by ETI are: Efficiency introducing systems and technologies to reduce cost and improve buildings and transport efficiency. Nuclear establishing a new build programme based on new supply chain capacity and increased investor confidence. Bioenergy informing the science, technology and business cases for decisions on how to optimise the use of sustainable bioenergy resources as solid, liquid and gaseous fuels. Carbon Capture and Storage providing system demonstration and strategic insights for capture, transport and storage building investor confidence. Gas enabling long-term use of a critical fuel for power, heat, storage and potentially transport ( gas = natural gas, synthetic combustion gases, biogas and hydrogen). Offshore renewables reducing cost and building investor confidence. ETI response to Energy & Climate Change Committee consultation on small nuclear power Page 10 of 10