Small modular reactors could play a “crucial role” in the decarbonisation of the energy system, according to a new report from Policy Exchange.

The think tank argues the reactors could provide a much-needed source of low-carbon heat by producing hydrogen for the gas grid or feeding district heating networks.

The report, titled Small Modular Reactors: The next big thing?, says the UK faces a “daunting” challenge in decarbonising its energy system over the coming decades.

“By 2030, 14 of the UK’s 15 nuclear power plants will have closed,” it warns. “Combined with the government’s decision to phase out coal power by 2025, this means that around 40 per cent of the UK’s reliable electricity capacity will have disappeared.

“The risk of blackouts can be managed in the short term, but in the medium to long term large quantities of new low-carbon electricity capacity will be required.”

The report says relying solely on renewables for energy, although possible, would be “unnecessarily expensive and perhaps unsustainable”.

It notes that the month of January typically sees at least one week where “virtually no electricity is produced by either wind or solar compared with what is needed”.

Importing electricity from neighbours to fill the such gaps will become increasingly difficult as they too switch to renewables and using battery storage to provide back up capacity could cost up to £1 trillion. Whilst biomass could provide some help, it is “unlikely to be a sustainable solution for more than a small part of our electricity system”.

Report author and energy and environment research fellow at Policy Exchange, Matt Rooney, said: “In the next decades, we are going to need previously unthinkable levels of new low-carbon electricity capacity for charging electric vehicles and to replace coal and gas.

“Whilst the cost reductions of solar and wind power have been impressive, their very nature means we can’t rely on them without investing huge amounts in storage technology.

He continued: “There is no other low-carbon energy which can match nuclear power for scale and reliability, as well as the potential to use it for other services like district heat and hydrogen production.

“The failure of the nuclear industry to prove that it can finance and build large reactors on time and to budget means that the development of small modular reactors must be one of the central goals of government energy policy.”

The report urges the government to fund detailed design studies for at least one small modular reactor based on third generation nuclear technology to enable deployment during the 2020s. The reactor should be chosen on the basis of the simplicity of its design, its potential for cost reductions and its ability to be deployed speedily, although with no compromise on safety.

It says there is a strong argument for taking forward a second design to reduce development risks, although spending constraints and the ability of British industry and nuclear regulators to cope with this workload would need to be taken into account. The Office of Nuclear Regulation should be given the resources needed to conduct multiple generic design assessments simultaneously, for reactors both large and small.

It also recommended that government consult with heavy industry to gain a better understanding of how SMRs could help to meet their energy needs. Any vendor receiving innovation funding should be required to submit plans detailing how their reactor could be used to support flexible, low-carbon energy system. Extensive polling should be conducted into public perception of SMRs, particularly amongst the populations closest to potential sites for the reactors.

The report was produced by Energy and Environment Unit at Policy Exchange and includes an acknowledgement of the support it has received from Rolls-Royce. The company is leading a consortium of British companies developing an SMR design.

Background

The idea behind SMRs is that, by virtue of their size and modular design, the reactors could be built in a controlled factory environment before being transported to where they are needed. Developers claim mass producing the reactors in this fashion would enable them to lower the costs of nuclear power.

In March 2016, the government launched to a competition to find the “best value” SMR design for the UK. The results of the first phase to gauge market interest were due to be published the following autumn alongside a roadmap for the development of the technology. Both failed to appear.

Following a long period of radio silence, the government announced in December that the competition had closed following the completion of the first phase and that a roadmap would not be published.

Speaking at the Nuclear Industry Association’s annual conference, energy minister Richard Harrington said the government had set aside £44 million for an advanced modular reactor programme to support the development of up to four fourth generation reactor designs over the following three years. He said regulators would receive £7 million to boost their assessment and licensing capabilities, and perhaps a further £5 million.