UK government spending review will be key to new nuclear projects

The UK government's 2025 Spending Review, to be conducted in the late spring, will be key to the funding and success of several new nuclear construction projects in the country, industry participants said.

Chancellor of the Exchequer Rachel Reeves had previously "confirmed departmental budgets for 2024-25 and set budgets for 2025-26" in October, but the spring Spending Review will set actual government budgets for the next three years and "prioritise delivering the government's missions," the UK Treasury said on its website

Tom Greatrex, the chief executive of the Nuclear Industry Association UK, said that items likely be detailed in the Spending Review include government funding prior to a final investment decision for the proposed 3.4-GW Sizewell C nuclear plant in eastern England, in which the UK government owns around 76%, as well as funding for contracts for one or more small modular reactors designs. The designs are to be selected in an ongoing competition and deployed in the early 2030s.

Greatrex said in an email Jan. 7 that "this next period up to the Spending Review is one the most critical in our 70 year history as we await final decisions on Sizewell C and the Small Modular Reactor competition, which should pave the way for more projects, like Wylfa on Anglesey, that can give the industry certainty of more secure, clean power up to 2050."

An executive at a UK reactor development company that is participating in the SMR competition, agreed with Greatrex on what was likely to be included in the review. The executive said in an interview Jan. 7 that there was "effectively no money for SMRs or nuclear in the previous [Oct. 30] budget statement, so we can't do anything properly until the Spending Review is held later this year." The executive spoke on the condition of anonymity to discuss commercially sensitive matters.

The executive said the funding likely to be made available in the Spending Review for the SMR competition would be "in the hundreds of millions of pounds."

"You are not talking about billions. This Is not huge Sizewell C type-money," the executive said, adding that the funding "is required to complete site specific design work."

GE-Hitachi Nuclear Energy, Holtec International, Rolls-Royce SMR Ltd. and Westinghouse were selected in September to enter contract negotiations in the SMR competition. State-owned GBN is running the competition on behalf of DESNZ, the government department in charge of nuclear energy policy in the country. NuScale Power and EDF were also initially shortlisted for the competition, but NuScale was eliminated in an earlier round and EDF did not submit a bid.

Stephen Thomas, professor of energy policy at the University of Greenwich in London, noted in an email Jan. 6 that Great British Nuclear had already listed GBP1 billion ($1.24 billion) of contracts that it wished to place in the period 2025-28, "so that sounds multi-year and major, so logically it ought to be part of the Spending Review."

Sizewell C decision delayed again

A final investment decision on Sizewell C had been expected in the second half of 2024 but has, in the latest of a series of delays, been postponed until after completion of the Spending Review, according to DESNZ. Sizewell C is the sister plant to the 3.4-GW Hinkley Point C, the only nuclear plant now under construction in the UK.

Thomas said a final decision for Sizewell C "has been said to be months away for about four years....I think Sizewell C is a long way short of the investors it needs and if EDF briefing is to be believed. The process seems to be being re-opened up to new investors, so that suggests the Spending Review will come too soon" for the project's investment decision.

The reactor development company executive added that the government and EDF Energy, which owns the balance of Sizewell C not owned by the UK state, "are spending money on Sizewell C aggressively and at pace, with long lead items being ordered. They are acting, with taxpayer money, as if FID has already happened." The executive emphasized that he was giving an outside perspective as his company was not directly involved in the project.

DESNZ and EDF Energy did not respond to requests for comment.

Asked if it was possible that the government would not provide funding for the SMR competition and Sizewell C in the Spending Review, the executive said that it was "always possible," but that it was unlikely and would not make sense.

Greatrex added that the "nuclear renaissance has been a long time coming."

"We now need to see action and a clear, fully funded plan so that we can keep pace with the long list of other countries also building out their nuclear capacity like the US, France and Sweden," he said. "The Government has promised action. They must now deliver."