The nuclear industry has pledged to deliver a 30 per cent reduction in the cost of new build projects as part of a wide-ranging ‘sector deal’ with the government.
The Nuclear Industry Council, chaired by former secretary of state for trade and industry Lord Hutton, has submitted a set of ambitious proposals designed to bring down the cost of designing and building new facilities.
The council, whose members are drawn from across the nuclear industry, has earmarked an initial 30% reduction in the cost of electricity generated by new nuclear plants by 2030.
The council’s report said that new technologies, lower cost reactor designs and supply chain improvements could deliver further cost reductions beyond 2030. Costs could be saved by reusing approved designs and equipment and through greater cross-sector collaboration on construction.
Further improvements to programme delivery and risk management will lead to “continued reductions” in the costs of capital, continued the report.
The council has called on government to become more involved in the financing of nuclear projects on lines proposed by the National Audit Office in its recent report on the value for money of the Hinkley Point C nuclear plant.
The NIC said that reducing the perceived risk surrounding new nuclear projects will help to reduce future cost of capital, which comprises 15% of the cost involved in their construction.
The NAO calculated that a 1 per cent reduction in the cost of capital could translate into a 10 per cent fall in the value of strike price contracts for generating electricity from nuclear power stations.
In return for Whitehall exploring new financing models for nuclear new build, the proposed deal would see the industry commit to reduce new build costs and support government-led supply chain development initiatives.
The proposal for the sector deal also included plans for a nuclear construction innovation and best practice centre.
The NIC’s report was published on the same day that the government published its long delayed techno-economic assessment of small modular reactors (SMRs) by consultancy EY and engineers Atkins.
The study estimated that SMRs, which used mini-versions of the pressurised water reactors (PWRs) standard across the industry, would generate more expensive electricity than their larger counterparts.
The study calculated that the power produced by a small PWR reactor would cost £101/MWh, higher than the £92.50/ MWh strike price agreed for the Hinkley Point C plant last year.
But it said that the cost of SMRs could drop below those of larger plants once 5-8 GW of capacity has been rolled out worldwide due to the greater economies of scale achievable by developers.
The assessment also concluded that smaller PWR-powered plants could be deployed by 2030. But it warned that more innovative SMR technologies would not be ready for roll out until 2035 at the earliest.
Commenting on the NIC report, David Oliver, a consultant at energy consultancy Inenco, said: “We are particularly pleased to note that the Nuclear Industry Council has placed more emphasis on reducing the costs of future nuclear energy, which has been a key concern for the Hinkley Point C project.”