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Home/New nuclear in the future GB power system: Value for money and financing options

New nuclear in the future GB power system: Value for money and financing options

In order to meet its 2030 decarbonisation target, the UK needs to procure over 100 TWh of electricity from low-carbon sources that do not yet exist, and are yet to be commissioned. With multiple options on the table, spanning nuclear, renewables, CCS, and demand reduction, the central policy challenge is in minimising cost and the potential for regret.

The decarbonisation strategy of the pre-Brexit government was founded on two major pillars – nuclear and offshore wind. But the new PM’s recent unexpected move to delay the final sign-off on Hinkley Point C – the first new-build nuclear project in the UK in over 20 years – increases uncertainty over nuclear’s role in meeting the carbon challenge.

Nuclear proponents see a clear case for a new generation of reactors – they could provide secure, low-carbon baseload generation, would have a relatively small geographic footprint, and can act as a like-for-like replacement for the existing fleet of reactors set to retire in the coming decades.

The case against nuclear recognises that the world has changed dramatically since the nuclear programme was restarted by the Blair government ten years ago. Both the cost of renewables and battery technologies have come down rapidly since then, and could potentially act as viable alternatives. Additional safety measures in the wake of Fukushima have also increased the costs of nuclear. The massive scale of today’s projects makes them difficult to finance without strong government involvement.

An economic analysis of the costs and benefits of nuclear and its potential alternatives is complex – involving technological, temporal, and public safety dimensions. Hard economic evidence is unsurprisingly scarce. However, robust modelling can shed light on the trade-offs between different technologies, enabling a shift away from unsuitable metrics like LCOE.

In this report, we address the current evidence gap by analysing the value proposition of the nuclear programme relative to its alternatives. We answer the following questions:

  • Taking into consideration full system costs, does nuclear offer good value for money in reaching GB decarbonisation goals relative to alternatives?
  • How does this depend on the speed of cost reduction in renewables?
  • What role do cost reductions in batteries play?
  • If the government does decide to go ahead with the nuclear programme as planned, is there a more optimal way of financing it?
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