The United Kingdom, the birthplace of commercial nuclear energy, is now aiming to reclaim its position as a leader in atomic power. However, it faces significant challenges in its ambitious journey.
Once a global producer, the UK now generates a mere fraction of its electricity from nuclear sources, with just 14% of its power supply coming from nuclear energy in 2023. This is a far cry from the days when it had more nuclear power stations than the US, USSR, and France combined.
The UK's nuclear journey has been riddled with setbacks. Despite significant investments, the country hasn't completed a new reactor since 1995. Today, it holds the unfortunate title of being the most expensive place in the world to build nuclear projects.
But here's where it gets controversial: the UK government is determined to unlock a 'golden age of nuclear'. They aim to have a quarter of the country's power come from nuclear by 2050. Nuclear energy is seen as a low-carbon, constant energy source that can provide a stable baseload to complement intermittent renewable sources.
"There's a clear momentum building," says Doreen Abeysundra, founder of Fresco Cleantech. This momentum is driven by geopolitical tensions and the need for energy security and independence.
However, the UK's Nuclear Regulatory Taskforce has identified "systemic failures" in the country's nuclear framework. They call for urgent reforms, citing fragmented regulation, flawed legislation, and weak incentives as reasons for the UK's decline as a nuclear powerhouse.
The UK is taking a dual approach to its nuclear ambitions. It's investing in both large, tried-and-tested nuclear projects and smaller, next-generation reactors known as Small Modular Reactors (SMRs).
British company Rolls-Royce has been chosen as the preferred partner for SMRs, which are essentially containerized nuclear reactors designed for factory manufacturing. Many SMRs use passive cooling techniques, touted as safer and cheaper by supporters.
Nuclear energy has long faced criticism from environmentalists due to radioactive waste and disasters like Chernobyl. The UK's own Windscale plant, which melted down in 1957, became the worst nuclear accident in British history until Three Mile Island.
SMRs, which use light water reactor technology, are seen as a potential game-changer. They can power individual factories or small towns, offering more flexibility. However, their commercial operation is still a way off, according to Ludovico Cappelli, portfolio manager at VanLanschot Kempen.
"SMRs probably have a role, but it will take time to roll them out," says Paul Jackson, Invesco's EMEA global market strategist. He adds that the UK's ability to lead in nuclear energy is questionable, given the head start of countries like France and China.
The UK government body Great British Energy-Nuclear is identifying sites for additional large-scale plants, having already acquired one in Gloucestershire and another in Wales.
"We are unlocking a new era of nuclear power, creating thousands of skilled jobs and attracting billions in investment," a spokesperson for the UK government's Department for Energy Security and Net Zero told CNBC.
The UK has a strong legacy to build upon. It pioneered fresh funding mechanisms to make large-scale nuclear projects more investible, reducing their reliance on direct government funding.
The Contract for Differences mechanism, used for Hinkley Point C, guarantees a fixed price for generated electricity over a long period, mitigating investment risks in an industry known for delays and budget overruns.
The Regulated Asset Base (RAB) model, first used for nuclear at Sizewell C, pays investors from the day they invest, not when the project starts operating. This model aims to reconcile construction delays, a significant risk in nuclear investments.
Private market investors are increasingly interested in next-generation nuclear to meet soaring energy demands from AI. Young companies like Oklo, backed by OpenAI's Sam Altman, are trying to build out facilities.
The UK's Newcleo, which uses lead for cooling, has moved its headquarters to Paris, aiming to deepen its European footprint. Meanwhile, UK-based Tokamak Energy and First Light Fusion focus on nuclear fusion, a technology yet to leave the lab.
The UK faces challenges in accessing relevant talent for scaling projects effectively. While it boasts world-class universities and technical know-how, real-world expertise is lacking due to the long hiatus in nuclear projects.
The UK government's Clean Energy Jobs Plan and national roadmap for nuclear skills aim to address this talent gap. Initiatives like the Energy Skills Passport support workers from oil and gas to gain green skills.
And this is the part most people miss: the supply chain. Uranium, the fuel for nuclear reactions, is dominated by just a few countries, including Russia. Global demand for uranium is expected to rise significantly by 2030 and more than double by 2040, according to the World Nuclear Association.
The UK government has allocated funding to build up the supply chain and committed to preventing the import of nuclear fuel from Russia by 2028.
"We need to build the value chain," says Cappelli. "Workers, expertise, and funding are required, but the supply chain is key. Otherwise, we'll face the same issues as with gas."
The UK's nuclear ambitions are ambitious, but the challenges are real. Can the UK unlock its golden age of nuclear? What do you think? Share your thoughts in the comments!
