The UK had a great opportunity to be seen as ‘the place’ for nuclear technology, said Coalition Energy Minister Charles Hendry at a fringe event earlier this week.
Specifically on decommissioning Mr Hendry said there was an opportunity to take the UK’s expertise to other countries and work towards seeing the 140,000 tonnes of plutonium as a resource rather than a problem.
Former business minister and chair of the NIA, Lord Hutton, was in agreement with the minister reflecting on how Britain used to lead the world in civil nuclear technology and that it had the opportunity to reclaim the title.
Investment in new base load power generation was necessary, reminded Mr Hendry, as the next decade will see a considerable amount of old nuclear and coal power stations taken off line.
He said that although a mixture of different technologies and solutions would be required - including investment in gas and new interconnectors - nuclear still offered the best low carbon solution.
Whilst praising small modular reactors (SMRs) the minister said the UK should focus on using proven and existing nuclear technologies. Mr Hendry said he aimed to have nuclear providing more than the current 20 percent of total electricity generation.
Lord Hutton said there was ‘enormous potential’ for the Government to support SMR development and that the technology offered an opportunity for the UK to build its own nuclear reactors.
On the economics of nuclear power Lord Hutton said that nuclear stood up to comparison with the price of both gas and renewable technologies. Furthermore, in the case of gas, Hutton questioned where it would be sourced from and at what cost in the future.
Striking a provocative tone, Peter Atherton of Jefferies International said that nuclear power was ‘uneconomic’ and that investors were hesitant to touch it unless the state takes the risk.
He cautioned that the long project lead-in, up to ten years, required a lot of capital and therefore a high rate of return which in turn would push up consumer bills.
Nevertheless, Mr Atherton said that just because the economics were unfavourable that does not mean projects like the Hinkley Point power plant should not be built, as it can arguably create a return on investment through the creation of public goods such as a secure, low carbon electricity supply.
However he argued that this exchange should have been laid out to the public to see if they were willing and happy to pay for it. He said he feared that without full public support the proposed subsidies for nuclear power ‘could go the same way’ as subsidies for renewable power had recently done.
Conservative peer Lord Matt Ridley said that support for nuclear ‘depends on the price’.
The peer warned that although nuclear compared favourably to wind and solar technologies, the Hinkley project risked falling into an ‘expensive trap’ and a case could be made to pull the plug if cheaper options were available.
He said it now seemed clear that the Government should have gone for gas, as DECC’s strategy didn’t allow for the possibility of fossil fuel prices falling.
Lord Hutton warned that if the Hinkley deal did not go ahead it would be ‘catastrophic’ for the nuclear industry and reiterated Mr Hendry’s point that there was great potential for new jobs and skills development in the sector.
Answering a question on when a coherent energy policy to be developed, Mr Hendry said he expected to see clarity it by the start of 2016 and predicted that once detail on the levy control framework post 2020 was published there would be clarity in the sector.
The panel was asked if Jeremy Corbyn posed a risk to the industry. Peter Atherton said the real political risk was in fact from the Government of the mid 2020’s not honouring their contracts with nuclear developers.