How times change. Secure, baseload generation has been the main selling point of nuclear power for decades: the promise of a reliable source of electricity, generating constantly around the clock, 24/7, has mesmerised UK energy policymakers since the first civil nuclear power station came online in the 1960s.

Today, nuclear power’s cherished inflexibility is turning into a liability. As the world pivots to variable output wind and solar and an increasingly electrified economy, other generation sources must be able to respond to huge supply and demand fluctuations by quickly ramping up and down to match the requirements of the grid.

EDF Energy, the UK arm of French state-controlled utility EDF, can feel the winds of change. The company last week sought partners to add technology for the production of hydrogen and ‘direct air capture’ of carbon dioxide to its 3.2 GW Sizewell C atomic power project in Suffolk, England. This kit would harness some of the considerable excess heat generated by the project’s twin reactors, as well as some of the electricity it produces, so could introduce a degree of flexibility to Sizewell’s generation profile.

The European pressurised reactor (EPR) proposed by EDF for Sizewell C is only around 32% efficient. This means that around two-thirds of the thermal energy released during the nuclear fission reaction is wasted, with only one third converted into electricity. The EPR’s thermal output is rated at 4,590 MW, but electrical output is closer to 1,700 MW.

Experts say it is thermodynamically impossible to harness more than around one third of that wasted heat energy. And even though it is waste heat, capturing this proportion for carbon capture would detract from the amount of electricity that each reactor can generate and sell.

According to a recent study by the Swedish Royal Institute of Technology, making use of 10% or 30% of a fission reactor’s waste heat for direct air capture (DAC) of CO2 would reduce the amount of power available to market by ~7.6% and ~22.8%, respectively.

This loss of power is beneficial because it is controllable. The plant operator, rather than the market, decides when to divert atomic power and heat into removal of CO2 from the atmosphere, or the production of hydrogen via electrolysis.

Incorporating CO2 capture and H2 production could thus be seen as a flexibility ‘hack’ for Sizewell C. On sunny, windy summer days when demand is low and the grid is awash with excess electrons, the nuclear plant could divert some of its electrical power (and waste heat) into activities that are more economically useful than exporting more electrons onto a saturated network.

If backed up by a robust carbon price and constraint payments from the system operator, capturing CO2 and producing hydrogen could become lucrative ‘side hustles’ for Sizewell C. In the meantime, the proposal gives EDF some energy transition buzzwords to throw around as the UK government mulls whether to cut an enormous subsidy cheque for the project.

Approaching criticality

Despite the many sound arguments against newbuild nuclear, the UK government remains ostensibly wedded to its atomic agenda. Some observers inferred a cooling in official tone in prime minister Boris Johnson’s recent ‘Ten Point Plan for a Green Industrial Revolution’—which mentioned R&D funding for small and advanced modular reactors (SMRs and AMRs). Big conventional plants such as Sizewell received only rhetorical support. “We are pursuing large-scale new nuclear projects, subject to value-for-money,” the plan states.

That caveat is notable. The government is yet to make any concrete funding commitment to conventional newbuild nuclear, save for EDF’s Hinkley Point C project that is under construction in Somerset. EDF hopes to replicate Hinkley C’s twin EPR design at Sizewell C, but only if the government shoulders nearly all the risk.

Hinkley C is backed up by a Contract Difference (CfD) that will pay sponsors EDF and China General Nuclear Power Group (CGN) a fixed ‘strike price’ of GPB 92.50 per megawatt-hour (MWh) over 35 years, regardless of the prevailing wholesale price. If Sizewell C is also built, the CfD strike price for Hinkley C drops to GBP 89.50/MWh. These prices are in 2012 money and rise with inflation, so are today in excess of GBP 100/MWh.

This has been described by some as a ‘dreadful’ deal for UK consumers. It is around double the average UK wholesale price and reportedly 64% more than the price that French consumers pay for their nuclear power. The deal earned Hinkley C the unwelcome accolade of being the most expensive power project on the planet.

A long-overdue Energy White Paper, due before year-end, should shed some light on whether British consumers will be forced to pony up for Sizewell C in the same way they did for Hinkley C. The government last year consulted on using the regulated asset base (RAB) model to essentially socialise the enormous risk of cost blowouts and late delivery of nuclear newbuilds. The RAB model would pay investors a relatively modest but iron-clad return as soon as construction starts, rather than eight or ten years later when the first electrons are finally produced.

Shifting these multi-billion-pound liabilities onto UK consumers would, if structured in the ‘right’ way, enable risk-averse pension funds and other institutional investors to bankroll enormous nuclear projects. This could unlock crucial funds for EDF, which has made it very clear it can’t afford to finance Sizewell C on its own—even though, rather cynically, it views the UK newbuild programme as a convenient way of kick-starting France’s own nuclear renaissance at the expense of British consumers.

Adding an electrolyser or CO2 air capture demonstrator to Sizewell C presents an interesting technical innovation that, if successful, could be rolled out at other sites in the UK and further afield. The US, for example, is funding R&D into atomic-powered hydrogen. If the world is to build new nuclear plants, best make use of as many low-carbon therms and electrons as possible rather than letting them go to waste.

But these initiatives will have no bearing on the huge questions facing the UK’s beleaguered nuclear newbuild programme. Nor should they influence the government’s willingness to stump up the eye-watering sums required to underwrite Sizewell C—which is estimated to cost GBP 20 billion. Hinkley C costs have reportedly risen to GBP 22.5 billion (and counting), and construction is running many years behind schedule.

Out with the old

There is a school of thought that, despite these evident shortcomings and the perennially overlooked problem of radioactive waste, newbuild nuclear remains a necessary evil in the UK’s portfolio of low carbon power sources. The UK is staring down the barrel of successive plant retirements: by 2030, all but one of the UK’s decrepit fleet of existing nuclear power stations will be permanently closed:

These plants in aggregate represent 11.6 GW of gross generating capacity, according to data from the International Atomic Energy Agency. Merely replacing this lost capacity in 10 or 15 years with low carbon technologies is a tall order, let alone expanding overall supply to cover likely increases in demand too.

Electrification of heat and transport can only drive peak power consumption higher throughout the 2020s and 2030s, stoking the need for ever-greater volumes of reliable low carbon supply. Nuclear can’t be easily switched off, but other sources can—and designing a system prone to curtailment will always be preferable to one that runs on thin reserve margins and risks supply shortfalls.

The economic and political fallout from load-shedding or brownouts would be much worse than wasting public money on unnecessary infrastructure, which successive British governments have appeared quite happy to contemplate. (Look no further than the High Speed 2 rail project and third runway at Heathrow airport.)

Energy transition evangelists believe the wholesale shift to wind, solar and battery storage technologies will render any investment in new nuclear stranded this decade or next. They might well be right, but decisions need to be taken now due to the long lead time to build big infrastructure.

If Hinkley C is anything to go by, Sizewell C might start generating power some time in the early 2030s—but only if the government grants planning permission and enough sovereign guarantees for EDF and CGN to take a swift investment decision early next year. The scope for delays seems almost endless.

In with the new

This creates a window of opportunity for wind energy to tighten its grip on the UK power market. Unlike nuclear, offshore farms take three or four years to build and rarely run late or significantly over budget.

Also, there is a healthy pipeline of wind projects poised to come online this decade, and ambition is growing in tandem with the industry’s capabilities.

Government last week unveiled plans to contract up to 12 GW of new capacity in next year’s fourth CfD allocation round—double the amount in the previous round. This came hot on the heels of an increase in the UK’s offshore wind target from 30 GW to 40 GW by 2030.

According to the UK government’s energy projections, wind and other renewable power capacity will reach 62 GW by the end of the decade, when they will be generating 176 TWh per annum. This is more than nuclear and gas-fired power combined: in the official ‘reference case’ scenario, 6 GW of nuclear capacity will be generating 55 TWh by 2030, while 37 GW of gas will generate 67 TWh.

If the UK were to increase its renewables ambition by around 70%, it could theoretically do away with gas and atomic power plants entirely by 2030. But this would require cost-effective storage solutions to come forwards to bridge the low-wind, high pressure periods that occasionally cast swathes of Britain into a state of surreal calm for days on end.

The fact that the awesome potential of British wind power has not quite convinced policymakers in London to bet on a 100% renewable grid speaks to the unsolved energy storage challenge. Unless officials and ministers are prepared to take a leap of faith on battery technology development advancing exponentially, their negotiating power against EDF and CGN will remain limited and Sizewell C will be sanctioned on incredibly generous terms to investors. Just like Hinkley C, there will be grumblings, inquiries and damning op-eds, but ministers will stand firm in their conviction that this was the right decision based on the facts available at the time.

In the meantime, it is conceivable that utility scale batteries will accelerate their already precipitous descent down the cost curve and ascent along the capability curve, in tandem with greater than expected deployment of renewable power capacity. If so, Sizewell could turn out to be an expensive and redundant insurance policy foisted onto UK consumers to hedge against energy transition technologies failing to achieve their full potential quickly enough, even though there are clear signs that this is already happening. Given the under-appreciated pace and scale of disruption rippling through the energy system, a high-risk visionary approach to policy-making might ultimately prove to be the the most cost effective.

Seb Kennedy | Energy Flux | 30th November 2020

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