Innovative financing models and technologies to stimulate investment in a new wave of low-carbon energy
- a new financing approach could help deliver nuclear energy and carbon capture technologies, essential for achieving net zero emissions, at the best possible price for consumers
- up to Â£ 18million in investment to develop the UK’s first mini-reactor that could power up to 750,000 homes
New nuclear power and new technologies to reduce emissions across the economy could be deployed as part of a new model of public funding and investment to decarbonise the UK’s energy sector.
The government presented today (23 July 2019) proposals to explore the use of the regulated asset base (RAB) approach aimed at attracting significant private investment for the future nuclear power plant in the United Kingdom.
Regulated asset base approach
Already used in large infrastructure projects like the Thames Tideway Tunnel, the alternative model could reduce the cost of financing infrastructure and risk for developers while limiting the impact on consumers’ bills in the long run.
Business and Energy Secretary Greg Clark said:
Achieving net zero emissions will require action from all areas of society – from innovators, governments, regulators and civil society. We will all need to act together to ensure we reduce emissions and build a vibrant and innovative economy that can continue to reap the economic benefits of clean growth.
A critical step in achieving net zero emissions will be transforming the energy system so that the economy can be powered by affordable, secure and clean energy. We will need to change not only the way we use energy in our homes and businesses, but also the way it is produced and delivered. We must do this in a way that keeps the cost of energy as low as possible and ensures that our energy security is never compromised.
Through our modern industrial strategy, we are building on our international leadership in clean growth to invest and develop the technologies and financing models that we will need to achieve net zero emissions. This new funding model has the potential to help UK industry meet the global challenge of the low carbon transition by building the infrastructure we need, while delivering value for money for consumers and taxpayers. .
The RAB This approach could also be used to reduce the costs of transporting and storing carbon dioxide. A financing model similar to the Contracts for Difference program, which offers developers a fixed price for low-carbon electricity, will be explored alongside other options for making investments in the use and storage of electricity capture. carbon (CCUS) fuel projects while reducing emissions. The government’s ambition is to deploy the technology on a large scale by the 2030s, subject to lower costs, as part of its leading commitment to become a net zero emissions economy by 2050 .
Other announcements today include:
Financing of advanced small modular reactors
To give the nuclear industry a boost, we are proposing to invest up to Â£ 18million of public funds in the creation of innovative mini nuclear power plants that are smaller and cheaper to build than traditional nuclear power plants. A consortium led by Rolls-Royce has proposed a significant joint investment of over Â£ 500million focused on the design of a one-of-a-kind small modular reactor (SMR). The consortium expects to more than match any government funding both through direct investment and fundraising from third-party organizations.
A working model is expected to be operational by the early 2030s, creating 40,000 jobs at its peak, with each plant producing enough clean energy to power 750,000 homes.
In addition, we are supplying up to Â£ 40million via the Advanced Modular Reactor (RAM) and are currently studying project offers. Up to Â£ 5million will also be provided to the Nuclear Regulatory Office and the Environment Agency to prepare SMR and RAM, subject to the outcome of the RAM R&D competition.
Support for heavy industry to decarbonise
The government has committed Â£ 170million for the deployment of technologies such as carbon capture and hydrogen networks in industrial clusters to support our mission to establish the world’s first net zero industrial cluster by 2040.
In addition, the industry will consider investing up to Â£ 261million in new technology to reduce emissions from heavy industry cores such as steel, chemicals and refineries in the North East, from the North West, South Wales and Scotland.
Reuse oil and gas infrastructure for carbon capture
Plans have also been announced to facilitate the recycling of oil and gas infrastructure for the purpose of CCUS projects, including the use of some of the 20,000 km of depleted oil and gas pipelines and reservoirs to transport and store carbon dioxide. This could cut construction costs by over Â£ 100million in some cases.
Reuse existing oil and gas infrastructure to CCUS will help tackle industry emissions and help people working in the oil and gas industry transition to the green economy as the UK moves away from fossil fuels.
Today’s consultations follow strong government support for carbon capture technologies, which includes the recent Â£ 26million investment in 9 programs. One, in Cheshire, will soon become the UK’s largest carbon capture project, with the captured carbon dioxide capable of being used to make a range of products from eye drops to instant noodles.
Britain has already spent more than 2,500 hours without using coal to generate electricity this year – around 4 times more than in 2017 as a whole.
We will continue to phase out coal and no longer be used to keep Britain’s lights on in the dead of winter, according to new proposals. Limits on the carbon emissions that power producers can produce when operating in the capacity market could be introduced to support the government’s ambition to completely remove coal from the energy system by 2025.
Notes to Editors
1. Today the government released a package of proposed measures to support the decarbonization of the UK’s energy system. These include a:
2. Small modular reactors (SMR) and advanced modular reactors (RAM) are part of the advanced nuclear technologies sector which covers a range of new innovations under development. Modular reactors are smaller than reactors in conventional nuclear power plants and are designed so that a large part of the plant can be built in a factory and transported to the site for construction. They generally fall into 2 categories – either smaller water-cooled reactors which are evolutions of existing nuclear power plant reactors (called SMR), or advanced modular reactors (RAM) which use new cooling systems or new fuels and potentially offer new uses for nuclear energy.
3. A UK consortium led by Rolls-Royce proposed a jointly funded industry and government challenge worth around Â£ 500million to support the design of a standardized small modular nuclear power plant. The government can now confirm that the Consortium’s proposal was accepted in wave 3 of the Industrial Strategy Incentive Fund. The government plans to make an initial allocation of up to Â£ 18million to the Rolls-Royce-led consortium in early fall 2019. This is subject to a final investment decision, including with analysis business case and other approvals, and this consortium being the best option to pursue this technology. Further questions on the approach to this challenge are welcome until August 16. If you would like more details, please contact [email protected] – further information will also be available on the website UKRI website.
4. Phase 2 of the Advanced Modular Reactor program will award up to 4 R&D grants of up to Â£ 10 million, subject to a positive evaluation of the proposed studies.
5. Up to Â£ 5million will also be provided to the Nuclear Regulatory Office and the Environment Agency to modernize the Generic Design Assessment (GDA) and continue to prepare to make future licensing decisions on SMR and RAM subject to the outcome of the RAM R&D competition.
6. Since its establishment in 2016, the Department of Business, Energy and Industrial Strategy has already taken significant steps to reduce emissions from the energy sector, including:
- become the first major economy in the world to legislate for net zero emissions by 2050 to end the UK’s contribution to climate change
- commit to completely phasing out coal by 2025 from our energy system, with only 3% of electricity coming from coal in the first 5 months of the year
- the launch of the Powering Past Coal Alliance with Canada, encouraging more than 80 members to pledge to phase out coal
- launching the Clean Growth Strategy to ensure the UK can seize the benefits of transitioning to a greener and cleaner economy with the potential for 2 million jobs and Â£ 170 billion in exports annuals by 2030
- announcing up to Â£ 557million in support for renewable electricity projects like offshore wind under the Contracts for Difference program
- reach an agreement with the sector through our industrial strategy to supply a third of our electricity from offshore wind by 2030
- commit to deploy carbon capture technology on a large scale in the 2030s, subject to lower costs, and invest up to Â£ 170million to create the world’s first net zero industrial cluster by here 2040
- supporting the continued installation of solar panels – currently 850,000 – providing up to a quarter of the UK’s electricity supply and introduced a new subsidy-free scheme to encourage re-use
- bid to host crucial global climate talks COP26 in the UK next year in partnership with Italy to encourage other countries to step up the ambition of their climate goals