Possible Cuts to Smaller Reactor Budget

Rachel Reeves eyes cuts to nuclear in spending review. Energy industry insiders fear the Chancellor could target Britain’s mini-nuke programme. Rachel Reeves is eyeing cuts to Britain’s £20bn mini-nuclear reactor programme amid a scramble to slash government expenditure, insiders fear. Sources believe the Chancellor is considering approving a smaller number of reactors than previously expected in an attempt to reduce the costs of the programme, which is part of wider efforts to transform Britain’s power grid. The competition to design and build the first small modular reactors (SMRs) entered its last phase on Friday, with four finalists – Rolls-Royce, GE-Hitachi, Westinghouse and Holtec – told to submit final bids by mid-April. It was previously suggested that up to three winners would be chosen by Great British Nuclear (GBN), the quango in charge of running the contest. But sources said there was concern this has quietly been scaled back to a “maximum” of two – raising the possibility that only one winner will be chosen. Fewer reactors would be built overall as a result. GBN previously advertised contracts worth £20bn in total for SMR “technology partners”, a figure that is understood to be based on the assumption two winners would be chosen. Bidders have been told to prepare to build three to four mini reactors. Going down to only one vendor would potentially halve the cost to £10bn over 15 years, with the biggest annual costs expected in the late 2020s and early 2030s when construction actually starts. Separate contracts worth around £2bn for construction, project management and engineering audits have also been mooted by GBN, again based on an assumption of two vendors. Ms Reeves and the Treasury are in negotiations with Whitehall departments over their settlements for the forthcoming spending review, which is expected to be published in June. SMRs are seen as a potential breakthrough in nuclear power because they would be made predominantly in factories and then assembled on site, cutting building times from around a decade to a few years. They would also cost far less than large plants. However, the nascent technology remains commercially unproven, with a string of European countries and the US all currently pursuing their own individual competitions to fund the first examples of the technology. Scaling back Britain’s SMR programme would represent a significant retreat for Sir Keir Starmer, the Prime Minister, who this month announced plans to speed up the development of the mini reactors and vowed to “build, baby, build”. Officials at both GBN and the Energy Department, run by Ed Miliband, are understood to be pushing for the Government to stick with the original ambition to pick two SMR developers. There are fears that Mr Miliband, the Energy Secretary, is under pressure to choose which energy schemes he will prioritise as he scrambles to deliver Labour’s promise of a clean power system by 2030. Alongside SMRs, there is competition for cash from wind farms, carbon capture projects and various hydrogen schemes, among other things. This week it emerged there had been yet another delay, with the deadline for final bid submissions moved back from the end of March.