UK invests in high-tech nuclear fuel

Democratically elected governments are bad at anticipating the next crisis in energy markets. Half a century ago, oil prices quadrupled in four months as OPEC saw a chance to exploit the West’s growing dependence on imported oil from the Middle East. Two generations later, Europe’s complacent reliance on Russian gas had painful consequences for millions of consumers.

In both cases, obvious risks were ignored. Politicians chose not to warn voters of the threats to their nations’ energy security.

Russia and China’s dominance in uranium enrichment

Today, another crucial energy market is dominated by Russia and China: nuclear. Together, these two countries control more than half of the global uranium enrichment capacity; by 2030, this proportion will have risen to almost two-thirds.

Many countries imposed sanctions on Russia after it invaded Ukraine in 2022, but exports of enriched uranium continued unabated: the world simply could not do without Russian supplies. This dangerous situation will soon worsen with the expected rollout of advanced small modular reactors (SMRs).

The importance of SMRs and the need for HALEU

Although the New Nuclear Watch Institute’s (NNWI) recent study Scaling Success warns that SMRs will not be deployed at scale before 2030, there are high hopes that they will shorten reactor construction times and cut costs, as well as bringing reliable, low-carbon nuclear-generated electricity to small or remote communities for the first time. The study confirms that SMRs can eventually contribute significantly to cutting CO2 emissions and helping the world meet its net-zero targets by mid-century.

The problem is that Generation IV nuclear reactors, including SMRs, depend on supplies of high-assay low-enriched uranium (HALEU). HALEU may confer benefits such as smaller reactor cores, longer core lives and refuelling cycles, and reduced waste volumes, but it is not yet widely available. Only Russia and China currently have the infrastructure to produce it at scale, and the only commercial supplier is the Russian company Tenex. One company in the US, Centrus Energy, began operating a pilot HALEU cascade in October 2023.

UK response: developing HALEU production capacity

Against this background, the UK plans to develop HALEU production capacity both for its own benefit and to reduce Western dependence on Russian supplies. The UK government’s announcement of the Civil Nuclear Roadmap in January 2024, described as the “biggest expansion of nuclear power for 70 years”, is welcome.

 The Roadmap includes plans to invest “up to £300m” into HALEU production capacity – wording that cynics may suspect leaves open the possibility of a smaller amount being spent. The government claims this will make the UK the first country in Europe to launch a HALEU programme, and hopes to have the first production plant “operational early in the next decade”. According to Secretary of State for Energy Security and Net Zero Claire Coutinho, this will “further weaken the Kremlin’s grip on global energy markets”.

Challenges and doubts surrounding UK’s nuclear policy

The Roadmap’s aims are laudable; they dangle the prospect of growing a skilled UK workforce and creating supply chain opportunities. However, there are questions about how likely they are to come to fruition within the timetable indicated. Even with £300m in taxpayer funding, the construction of major new HALEU production capacity will require additional private sector investment, which will not be easy to attract.

Neither ministers nor officials seem to understand the damage caused to investor sentiment by constant policy change. Private sector companies, however large and strong their balance sheets, now build a risk premium into the terms on which they are willing to invest alongside government on the basis of policy promises whose fulfilment is in the distant future.

A decade ago, the UK government promised the Chinese nuclear company CGN that if it paid part of the cost of EDF’s new reactors at Hinkley Point and Sizewell, it could build its own plant in Essex once its Hualong One technology was approved by the UK’s Office of Nuclear Regulation (ONR). After five years of ONR scrutiny, funded by CGN, Hualong One got the nod – whereupon the UK government changed its mind and kicked CGN out.

This decision was driven by geopolitics, not by UK consumers’ energy needs, and it did not serve UK economic interests. Its effect was to warn potential investors in UK infrastructure projects not to trust the government’s word, and to make funding the Hinkley Point and Sizewell C reactor projects more difficult.

Further doubts have been raised by the unnecessary announcement of fresh consultation on where new reactors may be built. The UK already has plenty of sites approved for nuclear installations, and this consultation opens the door for every objector to nuclear energy to force years of delay before SMRs can begin to be built.

What is HALEU?

High-assay low-enriched uranium (HALEU) is uranium enriched to higher levels of the U-235 isotope than is in the standard low-enriched uranium used in most nuclear reactors

Typically containing between 5% and 20% U-235, HALEU is gaining attention for its potential in advanced reactor designs including SMRs, offering enhanced performance and efficiency. It also presents advantages such as reduced fabrication costs and waste production. However, its production and use entail technical, regulatory, and proliferation-related concerns.

Establishing a supply chain to produce and deliver HALEU will necessitate significant capital investment. Governments must lead in this effort, providing support until commercial demand grows to attract private investment.

300g of HALEU, or about 1.5 tablespoons, can meet an average UK household’s electricity needs for life

UK risks losing mini-nuclear race

Competing SMR designs are being developed in other countries besides the UK. The NNWI study stressed that first-mover advantage will be a huge factor in determining which SMR designs will achieve meaningful global market share, and it is likely that only half a dozen will do so. Doubts about attracting private sector capital and the prospect of planning delays make it hard to be optimistic about the UK’s chances of being a world leader in the SMR market.

This is disappointing given that the world’s first civil nuclear reactor began operating in the UK almost 70 years ago. Over the past century, the UK has been a significant player in the nuclear energy industry, providing well-paid, secure employment for thousands of skilled workers. Taxpayer money has been spent supporting the development of SMR designs by UK companies, including Rolls-Royce; recent announcements increase the risk that this money will be wasted.

Call for bipartisan approach and action

There is time to rectify this. A General Election must be held before 28 January 2025. A sensible step would be for Claire Coutinho to call in her shadow, Ed Miliband, and suggest that agreement is reached between government and opposition parties to adopt a bi-partisan approach to nuclear policy until the election’s outcome is known.

By Tim Yeo, Chairman of the New Nuclear Watch Institute

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