Boris Johnson has told nuclear industry bosses that the government wants to the UK to get 25% of its energy from nuclear power, in a move that would signal a significant shift in the country’s energy mix.
Johnson on Monday met executives from major nuclear utilities and technology companies including the UK’s Rolls-Royce, France’s EDF, and the US’s Westinghouse and Bechtel to discuss ways of helping to speed up the development of new nuclear power stations.
The UK generates about 16% of its power from nuclear power stations, but several reactors are slated for closure, while electricity demand is expected to rise steadily in the next decade. That would mean large investments in new power stations would be required just to keep the share of nuclear constant, let alone increase it to a record level of just over a quarter of energy use.
Also present at the meeting were a series of big pension companies and insurers, including Aviva, Legal & General and Rothesay Life, alongside major foreign investors including Australia’s Macquarie and the Canada Pension Plan Investment Board. Ministers have wrestled for years with how to attract private capital to invest in nuclear – but companies have balked at putting pension and insurance cash at risk.
The government is considering changes to insurance rules set by the EU and copied by the UK to make it easier for insurers and pensions to invest. The UK is switching to a “regulated asset base” model, which it hopes will give long-term investors more certainty on returns, a change it hopes will address limitations to the current rules, known as Solvency II.
The government wanted to show the nuclear and investment industries that it had a “clear ambition for more nuclear” in part to balance out intermittent renewable power sources, according to a government source briefed on the discussion.
Scrutiny of the government’s energy policies has increased in recent months after unprecedented increases in fossil fuel prices. Russia’s invasion of Ukraine has added to the pressure, with oil and gas prices surging and western allies considering restricting energy exports as they try to isolate president Vladimir Putin’s regime.
The prime minister last week met oil and gas executives to discuss increasing investments in the North Sea, and it is understood that he will next week meet executives from the offshore wind industry to discuss plans for further expansion of renewables.
According to an aide who was present at the meeting, Johnson told industry heads and financiers that there had been a “chronic absence” of leadership by successive British governments on nuclear energy and that the country was “being left for dead” by other nations, such as France, on the issue.
Speaking after the meeting, Tom Greatrex, the chief executive of the Nuclear Industry Association (NIA), said: “Accelerating nuclear projects is absolutely essential to keep energy costs down, cut expensive gas imports and strengthen our energy security as we move towards net zero.
“That means urgently investing in a fleet of large and small nuclear stations, alongside renewable investment, to deliver the clean, sovereign power we need.”
The UK has struggled to build new nuclear power stations in recent decades, with the Japanese conglomerate Hitachi in 2020 pulling out of plans to build a new reactor at Wylfa, north Wales, and geopolitical tensions making the government less keen on attracting Chinese investment to Sizewell C on the Suffolk coast.
Meanwhile the existing nuclear fleet has been in steady decline, with Hunterston B in Scotland retiring earlier this year, Hinkley Point B in Somerset due to follow suit in the summer, and Heysham I and Hartlepool I due to shut down in 2024.
At that point, nuclear capacity is expected to fall as low as 3.6GW.
A cross-party group of MPs that campaigns on nuclear issues has called for the government to increase its annual nuclear power capacity to 15GW by 2030 and 30GW by 2050, far above the 12.7GW installed at nuclear power’s peak in 1995.
Major obstacles include difficulty in securing funding from private investors and a ban on new nuclear projects in Scotland, imposed by the devolved government, which prevents Hunterston B being replaced.
The government is examining a plan to revise the financing model for major projects, which was among the factors that scuppered the Wylfa project in north Wales.
Under plans for Sizewell being discussed by Whitehall officials and EDF, the government could take a stake in a development company that will push it through various stages of planning and bureaucracy, sharing the costs with EDF.
Private sector investors such as the insurance funds L&G and Aviva would then be lured in at a later stage in return for a government-backed funding model called the regulated asset base (RAB), diluting the taxpayer and EDF. Legislation on RAB funding – the same model used to fund airports such as Heathrow and water companies – is due to progress through parliament next month.