Climate Change and Nuclear Energy:

The World in 2020

Action not words...

In 2020 time isn’t on our side. Preventing dangerous irreversible climate change requires a much bigger and faster response than anything previously achieved. So 2020 must be a year of more action and fewer words.


Reality not fantasy...

In 2020 energy policy must be anchored in reality. Indulging in energy fantasies is dangerous. It discourages, and can even prevent, investment in desirable solutions. In 2020 providers of low carbon electricity should work together. The nuclear lobby is ready to cooperate with the renewable energy industry, whose growth we welcome.


So in 2020 let nuclear start to play its part ...

Historically only two countries, France and Sweden, have ever cut carbon emissions in the past as fast as every country must now do in future. Both did so in the wake of the 1970s oil shock and achieved those cuts by investing heavily in nuclear. This lesson is particularly relevant in 2020. Nuclear should be treated equally alongside other low carbon sustainable energy sources. The case for including nuclear energy within the EU Taxonomy is overwhelming and should be accepted in 2020.

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Small Modular Reactors:

Delayed Privatisation Financing Structure

Small modular reactors offer significant potential advantages compared with traditional large nuclear power plants. These include the likelihood of shorter build times, simpler designs requiring fewer structures and components, greater flexibility of location, enhanced compatibility with smaller local load profiles, easier
refuelling and maintenance schedules at multi-unit configurations, lower decommissioning and site restoration costs, and savings from repeat in-factory construction.


A further important benefit is the much smaller initial capital investment required for an SMR. This brings SMRs within the reach of a wider range of investors, including many who could not contemplate the huge upfront capital cost of larger plants, and should help to improve the terms on which finance is available.

However, SMRs are still at an early stage of development and have some of the characteristics of first of a kind (FOAK) plants. For example, during the initial phase, even if the fundamental reactor technology is not itself innovative, there remains a need to build and operate a prototype plant to shows that its design can capture the benefits of series production and operational efficiency, satisfy both regulators and licensing agencies, as well as being integrated into a developing supply chain.

Furthermore, even though the danger of serious construction delays should be less than for large scale plants, until a successful FOAK SMR plant has been successfully completed the risk of such delays is not entirely eliminated. If privately financed, this is translated into a cost of capital that may prohibit many projects from going ahead.

Experience shows that conventional project finance, which usually relies on cash flow generated by the project itself, has not worked well for new nuclear plants because of uncertainty about when revenue will start to be received and the track record of recent projects regarding cost overruns and delays. Attempting to mitigate this risk has been part of the reason for the high CfD strike price at Hinkley Point C.

As for the Regulated Asset Base model used to great effect in other industries by the UK government while this could work in theory its structure is complex and it has never yet been used to finance FOAK energy infrastructure.

This makes the “Delayed Privatisation” model, proposed in this report, in which government is directly involved in providing equity funding during the construction period, attractive. Under this model once the plant has been completed the government exits its holding and the project becomes wholly privately financed.

This report illustrates how Delayed Privatisation could work in practice for SMRs. Direct participation by government in the first phase of a project can be justified by the fact that SMRs are an emerging technology that if successfully developed will be an important tool in meeting climate and emission targets. In addition, there is an opportunity for the UK to establish a valuable supply chain in a sector of the nuclear energy industry where a substantial potential export market exists.

The False Economy of Abandoning Nuclear Power:

Techno-Zealotry and the Transition Fuel Narrative

This in-depth report analyses the often-made assertion that the use of natural gas as a 'bridge fuel' to back up intermittent renewable generation represents the cost optimal approach by which to bring about power sector decarbonisation while nuclear power is no longer affordable and so ought to be abandoned.


It presents a stark warning that attempting to do so would not only impose high financial costs on industry and consumers alike but also lead to a substantial increase in carbon emissions, rendering the achievement of climate targets all but impossible.

It considers both the environmental impact and the financial costs of phasing out nuclear and relying instead on a combination of renewables and gas. It compares this impact and these costs with an alternative approach designed to minimise the cost of decarbonisation. This alternative involves keeping nuclear in the energy mix, together with renewables and a small but diminishing role for gas as a balancing fuel.


The conclusions are stark. Abandoning nuclear power leads unavoidably to a very big increase in carbon emissions which will prevent Britain from meeting its legally binding climate change commitments. It also raises the cost of electricity. 


These conclusions are consistent with the experience of Germany after its decision several years ago to phase out nuclear. They emphasise the folly of following the German example and the need for choices about the energy mix in all countries to be made on the basis of objective analysis.

The Electricity Market of Southeast Europe:

The Impact of new Trends and Policies

This report presents an impact assessment of new polices and trends – principally those related to the data economy and the post-Paris Agreement climate action consensus – that have recently emerged. These have far-reaching implications for the energy markets, especially the electricity market, of southeast Europe.


Impending demand-side disruptions, including the rapid spread of electric vehicles and the widespread adoption of electricity-intensive data-processing technologies, together with the progressive introduction of more stringent climate and environmental policies, pose significant risks to the security of energy supply. Their full effect has not yet been quantified or factored into established projections.


Underestimating the impact of these factors leads to a complacent view on the need for more electricity generation capacity. This could lead to generation shortfalls as early as 2027 and disrupt the region’s electricity balance, transforming it from an exporter of electricity into an importer. This will drive up electricity prices and make the low economic growth forecasts used in other publications self-fulfilling. Underinvestment today and higher electricity prices in the near future will act as a brake on future economic growth.

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