1. Making Britain Great Again
Nuclear
Making Britain Great Again
Dr Tim Stone CBE

2. Why does it matter?
Friends of the Earth

3. Why does it matter?
Low Cost

4. Are we there yet…?

5. Are we there yet…?

6. Are we there yet…?

7. Are we there yet…?

8. But it’s SO expensive…

9. … or at least it doesn’t have to be…
But it’s SO expensive…
… no it isn’t
… or at least it doesn’t have to be…

10. But it’s SO expensive…

11. But it’s SO expensive…

12. But it’s SO expensive… Finding Cost Driver Category
Complete plant design prior to starting construction
Vendor Plant Design
Follow contracting best practice
Project Development and Governance
Project owner should develop multiple units at a single site
Innovate new methods for developing alignment with labour around nuclear projects
Labour
Government support should be contingent on systematic application of best practices and cost reduction measures
Political and Regulatory Context
Design a UK programme to maximise and incentivise learning, potentially led by a newly-created entity
Government must play a role in supporting financing process
Transform regulatory interaction to focus on cost-effective safety

13. How much will it really cost?
±£1bn capex
±1%-point WACC
±£8/MWh
strike price
±£13/MWh
strike price

14. So what needs to be done now?
Given sensitivities, need lowest cost of capital both for construction AND refi gain avoidance
Different financing mechanism for SMR FOAK and GW-scale NOAK
State-capital is always cheapest UNLESS you consider the risks properly – avoid PFI conversation!
RAB is one possible solution, but major problems

15. Low-carbon generation is (almost) all near-zero marginal cost
RAB - could it work?
Need to solve three horrors:
Actual construction cost vs. RAB – what happens to disallowed costs? Does anyone actually trust that the results will be “fair”?
How’s the WACC set in future – Ofwat has set WACC for PR19 at 2.6% – why would anyone trust any of the economic regulators?
Volume risk, esp in an era of ‘must run’ projects with no control over volume of them on the system
Big issue is System Design – pace & scale of change, complexity and limits to markets
Need EMR 2.0
Low-carbon generation is (almost) all near-zero marginal cost

16. … one more thing …
EPR and AP1000 have gone critical at Taishan & Sanmen 1 (with Haiyang 1 having loaded fuel)
Plan for the whole fuel cycle – just as the UK used to have!
China is leading the way
Expect some serious investment in SMRs late 2018/early 2019 – can’t promise or say more
But – HPC and Horizon (esp the latter) now show promise & HMG trust
Trust and confidence is now on an real uptick