UK to source 25% of power from nuclear energy by 2050

The Prime Minister met executives from major nuclear utilities and technology companies this week.

Boris Johnson announced a plan to source 25% of its electricity from nuclear power by 2050. This announcement comes in a move that would signal a significant shift in the country’s energy provision.

The PM held the meeting with executives from companies including Rolls-Royce, France’s EDF, and the US’s Westinghouse and Bechtel. This included discussions of ways of helping to speed up the development of new nuclear power stations.

Closure

Currently, the UK generates about 16% of its power from nuclear power stations, but several reactors are slated for closure. Conversely, electricity demand is expected to rise steadily in the next decade.

Also present at the meeting were a series of big pension companies and insurers, including Aviva, Legal & General and Rothesay Life. In addition, major foreign investors were also present including Australia’s Macquarie and the Canada Pension Plan Investment Board.

The UK has struggled to build new nuclear power stations in recent decades, with the Japanese conglomerate Hitachi in 2020 deciding against a new reactor in north Wales.

Scrutiny

Scrutiny of the government’s energy policies has increased in recent months after unprecedented increases in fossil fuel prices. Following Russia’s invasion of Ukraine, oil and gas prices have surged. Western allies are considering restricting energy exports as they try to isolate president Vladimir Putin’s regime.

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.

Energy Security Strategy

The meeting comes ahead of the publication of the government’s energy security strategy later this month. This strategy will involve increasing the UK’s use of renewable energy, nuclear power and domestic gas.

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 government is examining a plan to revise the financing model for major projects. This was among the factors that scuppered the Wylfa project in north Wales.

Push

Under plans for Sizewell being discussed by Whitehall officials and EDF, the government could take a stake in a development company. This in turn will push the project 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. This would be 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.

Last month, the UK Government announced £6.7m of funding for 24 renewable energy projects across the country as part of the Longer Duration Energy Storage (LODES) competition.

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.”