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UTILITY WEEK | 1ST - 7TH APRIL 2016 | 19 Finance & Investment Analysis T he troubled Hinkley Point C nuclear project was once again in the headlines last week, with EDF Energy chief exec- utive Vincent de Rivaz assuring the Energy and Climate Change Select Committee it would go ahead. However, he added that the long-awaited final investment decision on the £18 billion nuclear plant would be made only aer an agreement on funding was reached with the French government. The troubles of Hinkley highlight the problems of big nuclear projects and make small modular reactors (SMRs) look more attractive. The UK government is starting to back the nascent technology, although man- ufacturers and investors say they need more clarity – and stable regulation – to enable the sector to establish a foothold in the UK. SMRs offer quicker construction times and "less capital investment before produc- ing returns", according to a 2014 National Nuclear Laboratory (NNL) feasibility study. This has caught the government's eye, especially because the country needs a low- carbon alternative to help fill the looming capacity gap as coal goes offline. In November last year, chancellor George Osborne pledged to spend £250 million on nuclear research and development, includ- ing on a competition to find the best value SMR design for the UK. The first phase of the competition has now been launched. This will seek to "gauge market interest among technology develop- ers, utilities, potential investors and funders in developing, commercialising and financ- ing SMRs in the UK". Industry figures have welcomed the com- petition, telling Utility Week the government is heading in the right direction. However, they said that to avoid past mistakes clarity will be needed when the government pub- lishes a competition roadmap later this year. NuScale Power has already announced that it will put forward its SMR design to the competition. Managing director for the UK and Europe Tom Mundy says the technology will be based on a design being developed and licensed in the US. "We're many hundreds of millions of dollars into it at this point," he says, before adding that the SMR design would need to be adapted for the UK market. "There will be a cost associated with that," he says. "But we're not talking about a substantial amount of money. It's not like we're redesigning the facility all over again … It's just an adaptation of a base design we have already." Mundy says that if a generic design assessment process was started in 2017, NuScale could first expect to deploy units in the UK in the mid-2020s. Another company that will be entering the first phase of the competition is Westing- house. Simon Marshall, key account director for Europe, the Middle East and Asia, says the company made an unsolicited offer to the government in October to form a partnership for the deployment of SMRs. "Our offer was targeted at moving the UK from being a buyer of technology to being a provider to technology," says Marshall. "So we would create a UK entity, and partner with government and UK industry to … com- plete the basic design, license it [and] com- plete the detailed design so it was ready for construction." Marshall says the potential for funding offered by the competition is "a step in the right direction", aer the government had previously said it was up to the private sector to finance the development of SMRs. "They have indicated there is some money for development, but it is not clear how much and for how long," he notes. He says state funding is essential because nowhere in the world is new nuclear tech- nology being developed without it. Asked whether the £250 million pool for nuclear research is enough, he responds: "Bluntly, that on its own is probably not sufficient to get an SMR to market." So how much is needed? "It depends what the partnership between government, UK industry and Westinghouse would look like and what equity stakes those various partners may be willing to take," he says. The launch of the competition was also welcomed by Nuclear Industry Associa- tion chief executive Tom Greatrex: "I think, broadly speaking, the government is taking exactly the right approach and there are a number of essential SMR technologies and vendors that are interested." He adds: "I expect to see that quite a number of them will express an interest by the deadline of 6 May and start to engage in that dialogue with government to see what's achievable, what's practical, what's possible and what suits the need of the UK in terms of our own needs." Greatrex says the announcement of fur- ther details and a roadmap for the compe- tition are key. But he cautions: "There are some very obvious warning signs about unsuccessful competition processes in the past – and I'm thinking particularly of the carbon capture and storage one." The initial response to the competition seems promising, with companies planning to increase their investment in SMRs to tailor their offering to the UK market. The first rum- blings are that the government appears to be heading in the right direction – and that the prospect of funding is welcome. If it wants a viable alternative to big, risky nuclear pro- jects like Hinkley, it will now need to make sure it gets the roadmap right. The small nuclear family Traditional nuclear plants are big – with costs and risks to match. But the government seems to think small reactors might offer a way forward that reduces both. Tom Grimwood reports. 15ft COMPARATIVE SIZE OF TRADITIONAL NUCLEAR REACTORS AND SMALL NUCLEAR REACTORS 120ft 200ft Containment NuScale's combined containment vessel and reactor system 76ft Source: NuScale