On Wednesday 30th October, the new Labour government will release its first budget. The Autumn Budget is expected to be a one-year settlement followed by an additional three-four year settlement next year. The government has repeated talked about the important role nuclear will play in reaching net zero and providing energy security to the UK. At this critical time for the nuclear sector, with key decisions expected in the next six months, we examine some of the key issues.
"For our Reflections on the Budget, see SWNH Reflections: Autumn Budget 2024"
Nuclear New Build
The previous Conservative government’s promise to reach the Final Investment Decision (FID) for Sizewell C was not realised, but Labour have taken up the plans, with EDF expecting the FID in early 2025. The Department of Energy Security and Net Zero made £5.5bn in August 2024 through the Sizewell C Development Expenditure (Devex) subsidy scheme. The purpose of the funding was to get the project to FID, but held the ominous caveat the scheme “will be provided subject to relevant approvals, including the upcoming Spending Review”. While the government and EDF began the process for finding private finance last year, the continued delays to the FID are now filling the market with confidence. Strong government support is needed to get this over the line and benefit from the significant ‘fleet-build’ benefits following Hinkley Point C.
Great British Nuclear (GBN) are aiming to complete their Small Modular Reactor competition at the end of the year. A period of negotiation will follow, with contracts expected in summer 2024 and the first SMR FIDs in 2029 – at the end of this budget period. The expectation is that GBN will award contracts with two reactor vendors for a fleet of SMRs, although how many comprise a fleet is to be determined. With GBN owning two sites and expected to contract two reactor vendors, we should start getting excited about the prospects of SMRs at Oldbury. In fact, at last week’s Western Gateway conference, the GBN stand proudly proclaimed “Nuclear New Build is coming to Oldbury”. Let’s hope the budget ringfences the funding to realise this promise.
Advanced Modular Reactors (AMRs) are gaining an increasing amount of interest with demonstrations in Japan in March 2024 showing High Temperature Gas-cooled Reactor (HTGR) stability even with a total loss of coolant. The inherent safety aligned with the opportunities for dual-use with high temperatures provide a compelling narrative. The UK’s plans for AMRs are spearheaded through the AMR RD&D programme, where around £60m has been awarded for HTGR design and advanced fuel developments. Phase B of the AMR programme is ending in March 2025, and with initial plans for a demonstrator HTGR in the 2030s, government funding is needed to secure that pathway.
Existing Nuclear Programmes
As a timely example, Sellafield Ltd has been in the news this week as their lifetime plan has increased by £21.4bn. Considering the broader Nuclear Decommissioning Authority, there are a number of key milestones anticipated in this budget period, including reactor dismantling at NRS Magnox’s lead and learn site Trawsfynydd and Nuclear Waste Services' plans to downselect communities for the geological disposal facility and begin deep borehole investigations. In order to have a new generation of nuclear, we need to demonstrate we can deal with the past. Sellafield, NRS and NWS’s programmes are crucial to future success of the sector. However, news articles like this (which highlight the growing challenge as we learn more about our legacy facilities), may inadvertently negatively impact the image of the sector, especially when funding is on the line.
The UK Atomic Energy Authority’s Spherical Tokamak for Energy Production is entering the next phase of its development with the budget period providing the underpinning design, site characterisation and demolition of the old coal power station at the West Burton site. Perhaps more pressing is UKAEA’s ambition to support the UK’s fusion industry. As a number of private fusion companies are predicting fusion power before 2030, the growth of the fusion sector’s supply chain, skills and infrastructure will be vital in securing the UK a world-leading position in this sector.
The setup of the Defence Nuclear Enterprise has simplified nuclear defence funding pathways through the Ministry of Defence. The next budget period will deliver a replacement of the Vanguard submarine class, a replacement of the UK’s nuclear warheads and the AUKUS submarines. The continued commitment of the new government shows we can expect nuclear defence funding to be ringfenced, and this ringfenced funding will likely benefit the nuclear defence and civil nuclear sectors.
Research and innovation funding
From a strategic perspective, the last government target in research and development (R&D) expenditure was set in 2017, with the aim to increase R&D funding to 2.4% of GDP by 2027. This target was reached in 2020, with a reported 2.9-3.0% figure and repeated in 2021. The peculiar circumstances of the Covid-19 pandemic might partly explain this achievement, and commentary on R&D funding has been fairly quiet.
UK Research and Innovation (UKRI) is the primary funding route for academic research and industrial innovation in the UK. There was worrying news earlier this month with an update to UKRI EPSRC’s website on the fellowship scheme, stating “these opportunities will be closed from 12 December 2024”. The fact this announcement has comes before the budget suggests severe budget cuts and reduced funding. The stark situation has led the Campaign for Science and Engineering to write an open letter to the government (signed by the University of Bristol as part of the GW4 consortium), urging them to “use the budget and spending review to commit to continued investment in R&D”. In normal circumstances, we can expect targeted activities (i.e. calls) to be cut first, with core funding schemes protected, but the fellowship updates throws that into question, and it is unclear what will happen after the budget.
Skills
Skills is arguably the biggest challenge facing the industry over the next five years, with nuclear jobs increasing year on year and the need to recruit 40,000 people into the sector by 2030. The government published the National Nuclear Strategic Plan for Skills (NNSPS) in May 2024 which outlined 13 programmes to help plug the nuclear skills gap. Three programmes are already underway, with contracts being signed for the rest. While the plan is fully funded by the leading employers of the sector, five of the ten companies are government owned and funded. So, while we might not expect any further announcements on nuclear skills, we might see further commitment through the Nuclear Skills Delivery Group (NSDG) and the NNSPS.
The South West Nuclear Hub supported the development of the NNSPS through the Nuclear Skills Taskforce and is looking forward to working closely with the NSDG and their regional hubs to deliver the plans.
Industry Strategy
This month, the government released Invest 2035: the UK's modern industrial strategy, outlining their plans “to deliver the certainty and stability businesses need to invest in the high growth sectors that will drive our growth mission”. While the plan does not explicitly refer to nuclear, there will be opportunities through the Advanced Manufacturing and Clean Energy Industries themes. The government has launched the strategy as a consultation, so there is an opportunity to advocate for the importance of the nuclear sector to UK industry, and to influence any subsequent funding announcements behind the strategy.
If you want to contribute to the South West Nuclear Hub’s response, please get in touch at enquiries@southwestnuclearhub.ac.uk with email subject: “Invest 2035 response”.