New nuclear features strongly in government's energy planning
Geoff Davies of WWAM Writers Ltd. outlines some current plans and consultations.
The Department for Energy Security and Net Zero (DESNZ) began a consultation – one of a flurry of consultations begun over three months – seeking to examine what steps government could take to enable different routes to market for new advanced nuclear technologies. It stressed that while the consultation was open to all, the Department would like responses from the nuclear industry, including technology vendors, developers, the supply chain, and industrial consumers of heat and power; also, from the whole spectrum of the public realm, including local communities, local government, devolved administrations, science, academia, the financial sector, and members of the public.
Introductory events were held on three days during February – a virtual session and two in-person events in London. The Department said that later in the consultation period, it planned to additionally hold a series of 'deep-dive workshops' on each of the major topic areas.
The provisional locations for these sessions were London, Manchester, Cardiff, and the named topic areas were:
Interested parties were asked to register their interest in attending these sessions, indicating a choice of session and location.
Maintaining this focus on nuclear power, DESNZ announced a ￡300 million investment for a high-assay low enriched uranium (HALEU) programme to support the domestic production of the enriched uranium needed for the next generation of nuclear reactors. It noted that most advanced reactors required this fuel, which currently is commercially produced only in Russia. The first UK plant is scheduled to be operational by the early 2030s, and to be located at the north west of England's nuclear fuel production hub. An additional ￡10 million will be provided for developing the skills and sites to produce other advanced fuels. DESNZ also noted that at the COP28 summit meeting, the UK had restated its commitment to working with G7 nuclear partners to reduce global dependence on Russian fuel.
Looking further ahead, the Department additionally announced a Civil Nuclear Roadmap which, it said, would 'give industry certainty' of the future direction of the UK's nuclear programme. Its plans were described as including 'next steps for exploring a GW-scale power plant as big as Sizewell or Hinkley', while the underlying aim was defined as being 'to increase nuclear generation by up to four times, to 24GW by 2050'. Two consultations began on alternative routes to market for new nuclear projects, and on a new nuclear national policy statement: siting strategy.
An additional ￡1.3 billion was allocated to support the construction of the Sizewell C nuclear power station, following a Development Consent Order triggered this month. The Department said this consolidated the Government's position as the majority shareholder in the project, following a ￡700 million funding pledge in November 2022 and a further ￡511 million agreed in the summer of 2023. A final investment decision is expected later this year.
EDF said because of project costs rising towards ￡46 billion and construction progress being delayed, the Hinkley Point C nuclear power plant would not be ready for start-up before 2029 at the earliest – two years later than previously announced – and even then, only the first of the two reactors would be ready. The company, which is owned by the French state, also blamed inflation plus shortages of labour and materials. EDF and the French Government were both reported to be asking for support funding from the UK Government, proposing a 'solution' would include funding issues for Sizewell C. China's CGN had committed to providing a minority share of the Hinkley Point C funding at the start of the project but was reported to be unwilling to accept additional new costs. (The developing situation can be seen as beginning to echo the increased costs – five times over budget – and the lengthy delays at EDF's Flamanville 3 EPR reactor in France, which in December 2023 was scheduled to be loaded with fuel in March 2024, ten years later than originally planned.)
Labour in the spotlight
The statement made by Sir Keir Starmer – reported as being in response to pressure from Shadow Chancellor, Rachel Reeves, – that a Labour Government's green spending plan would involve spending ￡4.7 billion a year rather than the originally announced ￡28 billion a year ensured there would be some adverse comment from the Prime Minister and industry, plus some detailed scrutiny in the media. Since the change has already received widespread coverage, no attempt is made here to repeat the complex political arguments for and against, firstly, the scale and practicality of the original spending plan, and secondly, the reduction in its size.
As part of the main announcement, it was noted at this time, Labour still intended to go ahead with:
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Regulatory moves
Energy regulator, Ofgem, said in 2023, it had recovered a total of ￡77.2 million in fines, customer refunds, compensation, and alternative action payments – up by ￡50.5 million compared with 2022's total of ￡27.3 million. Examples of breaches included three electricity generators unfairly raised consumer bills, poor customer service including unacceptable call waiting times, and failure to automatically provide compensation for delays in final billing when switching. Ofgem had additionally made energy companies pay ￡13 million to customers for poor service.
Back in December, Ofgem began a 'major' consultation to decide the 2026–2031 electricity transmission and gas network price controls, describing it as 'a key step' in agreeing the proposed RIIO–3 price control methodology to invest in the system into the next decade. The Regulator defined it as being based on four main principles establishing: infrastructure fit for a low-cost transition to Net Zero; secure and resilient supplies; high quality of service from regulated companies; and system efficiency plus long-term value for money. Ofgem also set out how the Future System Operator would implement the new Centralised Strategic Network Plan (CSNP) from 2026, which it said would be critical to targeting investment under RIIO–3.
Ofgem urged energy suppliers to do more to protect customers as energy theft and scams could occur in several different ways – including fake emails or websites pretending to be Ofgem. The Regulator noted the costs of energy theft in Great Britain were estimated at between ￡830 million to ￡1.388 billion per year, equating to an additional ￡29 to ￡48 annually to each domestic consumer's energy bill. There were over 12,000 reports to Crimestoppers in the 12 months to April 2023, compared with approximately 8,000 reports in the 12 months to April 2022. Ofgem had found the overall performance of suppliers against their targets had fallen short over the past two years. Deputy Director, Melissa Giordano, had written to all suppliers to inform them that Ofgem was currently undertaking a review of this issue and remind them of the strict conditions of their licences.
What else?
A report from the National Audit Office said while the Government had provided more than ￡20 billion of support over the past two decades to businesses using biomass in the power and heat sectors, it (the Government) could not currently demonstrate its approach was adequate for making sure generators complied with the sustainability requirements.
The Head of the NAO, Gareth Davies, said if biomass was going to play a key role in the transition to Net Zero, the Government needed to review the assurance arrangements to ensure it had provided adequate resources.
In December, the Foreign Affairs Committee published a report stating the UK's critical minerals supply chains were vulnerable due to a continuing dependence on autocracies – in particular China – and the inaction of successive UK Governments, including a failure to recognise the importance of these minerals, plus a lack of foresight to respond to the aggressive capture of large parts of the market. The Committee viewed the Government's Critical Minerals Strategy as too broad, failing to convey the sense of urgency and the need for decisive action.
Energy Secretary, Claire Coutinho, said the Government would provide funding of ￡2 billion over the next 15 years for 11 projects aimed at producing green hydrogen through the electrolysis process, and confirmed suppliers would receive a guaranteed price from the Government for the green energy they supply. She added in return for this support, the successful projects would invest over ￡400 million in the next three years, delivering 125MW of new hydrogen for businesses including Sofidel in South Wales, InchDairnie Distillery in Scotland, and PD Ports in Teesside. Ministers had, however, decided not to proceed with a hydrogen trial in Redcar, because the main source of hydrogen would not be available.
A joint announcement by DESNZ, the Department for Transport, the Treasury and the Welsh and Scottish Governments invited comments from industries and wider organisations on proposed changes to the UK Emissions Trading Scheme – which is to run until at least 2050 – and its role in supporting decarbonisation. The proposals covering two consultations include options for a new mechanism aimed at managing the supply of carbon allowances in the market and considering the support available for energy intensive industries under the Scheme.
DESNZ announced its plan for what it described as 'a new competitive market' in Carbon Capture, Usage and Storage by 2035, to be named the CCUS Vision. It set out how the UK was to transition from early projects backed by government support to becoming a competitive market in this area, meaning UK companies would compete to build carbon capture facilities and sell their services 'to the world'.
This article appears in Buying and Using Utilities 2024
Read more ?? https://meucnetwork.co.uk/buu-spring-2024/