Among the topics of concern to delegates at the Conservative Party’s conference in Manchester on Monday, energy will top the list.
Soaring global gas prices, shortage of wind power and soaring household bills have focused minds on Britain’s energy needs – and the role of nuclear power in particular.
Over the past decade, Britain’s ambitions to build more nuclear power plants have mingled with those of China. Hinkley Point C, the long-delayed, over-budgeted £ 23 billion power station in Somerset that will be the first new power plant in a generation, is being financed with Chinese cash.
China’s nuclear ambitions – at least as far as Britain is concerned – could be on the verge of colliding with a new political reality. Opponents of China’s involvement in Britain’s infrastructure are gaining traction following reports the government is considering ejecting the People’s Republic from Sizewell C – a £ 20bn sister of Sizewell B on the Suffolk coast, which is intended to supply 6 million homes.
Beijing’s international nuclear ambitions have suffered a “heavy blow,” according to Iain Duncan Smith. The former leader of the Conservative Party’s Inter-Parliamentary Alliance on China has successfully campaigned for telecoms giant Huawei to be kicked from the UK’s 5G network after pressure from Donald Trump’s administration.
“The UK government has learned the hard way that we will have to stand up to them,” he said.
Tom Tugendhat, chairman of the Sinosceptic China Research Group, praised the “more realistic approach”. “Chinese state-owned companies should not build nuclear power plants in Britain,” he said. “As the China Research Group has shown, Beijing’s attempts to intervene in other countries are increasing and the UK should not make itself vulnerable.”
The duo were reacting to suggestions, first reported in The Guardian, that officials were examining the methods by which China General Nuclear (CGN), which has a 20% stake in the Sizewell C project to be built by EDF in France, can be taken out of the equation. An announcement could arrive as early as this month, with taxpayer dollars being used instead.
CGN was to strengthen its involvement in post-Sizewell British nuclear power, by taking a majority position in Bradwell B in Essex, intended to be the showcase for the Chinese-designed Hualong One (HPR1000) reactor.
If China is forced out of a minority financial position in a power plant built by EDF, backed by the French state, the prospect of a China-controlled facility just 40 miles from London is sure to fail.
Bradwell would have been a major coup, demonstrating to the world that a major economy like the UK was open to Beijing’s proprietary nuclear technology.
Duncan Smith believes the UK’s move could derail the plan. “If we do this, other countries will follow suit and it will turn out to be a very big decision indicating the direction of travel with China. It’s a big strategic decision.
It also has the price on its side. Producing a kilowatt hour of nuclear power costs about twice as much as offshore wind and solar power.
But did the anti-China hawks start celebrating too soon? An industry source, who has watched China’s nuclear ambitions for years, sees no reason to believe CGN will bow to pressure to pull out. Expelling China would create a diplomatic row. “There was a sustained effort […] to make the atmosphere so hostile that the company will give up and go, ”the source said. “It sounds like a really heroic assumption.”
CGN is heavily involved in the 3.2GW Hinkley project, which could still exceed its current budget of £ 23 billion and its completion date in 2027.
“Of course he [continued Chinese investment in Hinkley] could be in danger, ”the source said. “CGN makes a great contribution [to the plant] but that’s not the big “welcome to the world” flagship thing that building an HPR1000 would be. “
Pressure on the UK government from its own MPs, but also from overseas, appears to be behind the decision to keep China at bay.
The opposition of Duncan Smith and Tugendhat is one thing, but the American intervention is another.
Former US Secretary of State Mike Pompeo last year urged Britain to look across the Atlantic for its nuclear future, saying the US “is ready to help our friends British for all their needs ”.
The Trump administration has strongly opposed Chinese technological forays into the West, and the Biden administration is no different. But abandoning China to please America leaves Britain with a problem.
The UK nuclear fleet has a capacity of 8.9 GW, around one sixth of peak winter demand and 20% of our average annual needs.
More than 7 GW of this capacity – seven of the eight existing plants – are expected to be decommissioned by 2030.
Hinkley is the only project with a completion date in sight, with one reactor up and running in 2026 and another in 2027, but it’s an optimistic assumption that no delays will occur. Even if Hinkley proceeds as planned, Britain’s nuclear capacity will still drop to 4.4 GW by 2030 if nothing else is done.
The upcoming Cop26 climate conference in Glasgow reminded everyone of the UK’s commitment to fully decarbonize the economy by 2050, while the gas price crisis has highlighted the risks of relying solely on fossil fuels and renewable energies. Large nuclear power plants and their rotating turbines provide the vital inertia needed to balance the grid and keep its frequency stable.
Business Secretary Kwasi Kwarteng is keen to stress that nuclear is part of the solution, but something must happen to accelerate these multibillion pound projects.
At Sizewell, the government’s big hope is funding for the Regulated Asset Base (RAB), an investment structure that offers potential investors safe returns but requires legislation.
A government spokesperson described it as a “credible model”, indicating that steps are underway to continue this as a means of financing Sizewell – not to mention projects such as Wylfa, on Anglesey, of which the Japanese Hitachi s recently dismissed, citing funding issues. The new financing model, used in water and electricity networks, could attract American investors like construction giant Bechtel.
If Beijing and London can find a diplomatic solution to withdraw CGN from British nuclear power, this funding model is a solution that could attract donors to replace the Chinese. If nuclear power has a major role to play in Britain’s carbon-free future, time is running out.
The UK has struggled to move its nuclear plans forward over the past decade, but it has options.
The first is to find investors for large new construction projects. With investors in Sizewell C already lined up, China’s involvement is in doubt after signals that ministers are preparing to buy back its stake in Bradwell B in Essex.
Providing more attractive financing options could be the key to starting the £ 20bn Wylfa project on Anglesey after Hitachi left last year. But the UK’s National Infrastructure Commission is cold on new large-scale nuclear projects.
Advanced Modular Reactors (AMRs), which use new refrigerants instead of water, are seen as a potential technological leap forward. Earlier this year, the government issued a call for evidence on launching a program to demonstrate their viability. However, even this pilot step will not be ready until the 2030s.
Rolls-Royce’s plans for small modular reactors (SMRs), called mini-nuclear nuclear, could, in theory, be deployed quickly and easily to increase capacity. The British engineering giant believes it will be able to connect them to the grid by 2030.
Then there’s the tantalizing prospect of a moonshine of cracking nuclear fusion, harnessing the power of the stars to create, in theory, limitless energy.