Ed Miliband stresses that nuclear power will be an ‘essential’ part of the Government’s net zero plans – Carl Court/Getty Images Europe
Ed Miliband has opened the door to tech companies building privately-financed nuclear power stations in Britain, as a host of companies race to develop the first mini reactors.
In a speech to industry executives, the Energy Secretary stressed that nuclear power would be an “essential” part of the Government’s net zero plans, arguing that projects funded by taxpayers – such as the proposed Sizewell C and small modular reactors (SMRs) – could offer “big returns” for the country.
But he also confirmed that ministers are exploring how to support smaller schemes championed by private companies, many of them with links to the tech industry.
Amazon-backed X-Energy and Bill Gates’s Terrapower are among those seeking to build so-called advanced modular reactors (AMRs) to power data centres for artificial intelligence (AI), or provide heat to industrial businesses.
These projects are seen as easier and less risky to finance than full-scale nuclear power plants because of their smaller scale and “modular” design, which should allow factories to produce them for quick assembly on site.
Companies, including Rolls-Royce are racing to build the UK’s first small modular reactor – Rolls-Royce
There has been a flood of interest in mini-nuclear reactors from Silicon Valley’s biggest tech giants – including Amazon, Facebook, Google and Microsoft – as they look for ways to meet the rapidly growing electricity demands of developing AI software.
On Thursday evening, Mr Miliband told the Nuclear Industry Association (NIA) conference that interest in nuclear had “been supercharged by the rise of AI”.
He said: “Of course, it’s early days but we should be open to the potential of SMRs to power the fourth industrial revolution, just as coal powered the first.
“My message is clear: if you want to build a nuclear project in Britain, my door is open.
“On funding, we are exploring how Government can help private developers bring advanced nuclear projects to market.
“On planning, we will be consulting on a new nuclear planning framework and siting policy next year.”
His comments came after Clay Sell, the chief executive of X-Energy, said his company was keen to press ahead with some £20bn of investment in Britain but currently lacked the clarity to do so.
The company wants to build a fleet of up to 32 AMRs in Britain, with the first going in Hartlepool, plus potentially a fuel manufacturing facility as well.
On Thursday, Mr Sell told The Telegraph that he saw the UK as a potential “beach head” to make AMRs for all of Europe.
However, X-Energy and others have said they need to know how sites will be approved and whether they will be guaranteed a minimum return from the projects.
Mr Sell told the NIA conference: “We have great aspirations about what we can and should do in the UK, and I think we have a view and a vision that is shared by many in Government as to how AI, nuclear power and electricity that goes with it can truly transform and re-industrialize this great, great nation.
“But the opportunity is going to have to be seized. It’s going to have to be seized relatively quickly.”
Currently, there are just eight Government-chosen nuclear sites identified in the national planning framework.
But an alternative process, consulted on by the Government earlier this year, would let nuclear developers bring forward their own sites instead if they met strict safety criteria. This would pave the way for plants that are located closer to cities or on industrial parks.
Bosses are also pushing ministers to offer some kind of financial support to guarantee a minimum return when mini reactors are built.
Whitehall sources said it was too early to say what that would look like but potential options include allowing plants to use the regulated asset base scheme or contracts for difference that are currently awarded to wind and solar farms. Both would see households and businesses pay for power and some project costs through their bills.
It is understood that the Government is preparing to publish a consultation response for nuclear site selection next year, but there are no current timescales on proposals for funding arrangements.
One Whitehall source said the Government was “open to a lot more private sector dynamism on nuclear” but stressed the idea would only work if it involved “less taxpayer funding and more private funding”.
A key concern is understood to be ensuring that privately-financed plants are kept off the public books so that they are not counted towards total government debt.
“What they want to do is find a way to help private nuclear projects in a way that doesn’t give Rachel Reeves nightmares,” one person familiar with the conversations said.
The regulated asset base (RAB) model is seen as one of the cheapest routes to financing. It allows investors to begin recouping costs via consumer bills before a project is complete.
It was used to fund the £5bn Thames Tideway project, also known as London’s “super sewer”, which is generally viewed as having gone well. The scheme has been completed and is due to fully open later this year.
However, the way such financing schemes are designed can decide whether or not they are included on the Government’s own balance sheet.
The long periods nuclear power stations are operated for, plus the risks associated with the decommissioning process, have also made civil servants wary of taxpayers being left on the hook for winding them down.
A senior civil servant told the NIA conference: “When we look at nuclear projects, we absolutely see the benefits but we’re also conscious that each nuclear programme carries a high degree of public risk that ultimately sits with His Majesty’s Government as the decommissioner of last resort.”
Industry sources stressed that these problems are manageable though, pointing to arrangements adopted for the under-construction Hinkley Point C project or methods used to cover decommissioning costs in the oil and gas sector.
