UK government study finds electricity would be nearly one-third pricier than it would from plants such as Hinkley Point C

This article is more than 2 years old

This article is more than 2 years old

Electricity from the first mini nuclear power stations in Britain would be likely to be more expensive than from large atomic plants such as Hinkley Point C, according to a government study.

Power from small modular reactors (SMRs) would cost nearly one-third more than conventional large ones in 2031, the report found, because of reduced economies of scale and the costs of deploying first-of-a-kind technology.

The analysis by the consultancy Atkins for the Department for Business, Energy and Industrial Strategy said there was “a great deal of uncertainty with regards to the economics” of the smaller reactors.

However, the authors said such reactors should be able to cut costs more quickly than large ones because they could be built and put into service in less time.

Advocates have argued that the reactors could be built in factories and achieve savings through their modular nature.

While the report covers the technology being used by several of the international companies seeking government support, it does not apply to the design being pushed by businesses including Rolls-Royce.

A government source said nuclear companies had told officials that the cost of the technology had come down since the report, which was finished in July last year but only published on Thursday.

As revealed by the Guardian earlier this week, ministers confirmed that SMR developers would receive £56m of public funding for research and development over three years. A further £86m was announced for work on nuclear fusion.

Greg Clark, the business secretary, said the backing would help the nuclear sector compete globally.

Chris Lewis, infrastructure lead at the big four consultancy EY, said the government research showed there was a case for SMRs.

“While the study recognises that the economics to build SMRs are challenging, measures can be taken to achieve greater cost reduction through the standardisation of technology, greater modularisation, and the ability to standardise design and repeat manufacturing,” he said.

The government also defended Britain’s need for new nuclear power in the face of falling renewable costs.

Richard Harrington, the energy minister, said the record low subsidies recently awarded to offshore windfarms emphasised the challenge for the French, Korean, Chinese and Japanese companies building the UK’s new generation of nuclear plants to be competitive on price.

The minister argued that the lower cost of wind did not spell the end for new nuclear. “We are trying to avoid … this simplistic view – well, as some people say, oh well, with the way the price of offshore wind has gone down that means bye bye nuclear and bye bye everything else,” he told an industry conference in London.

“We know this is not the case. That’s a very naive and very simplistic way of doing it.”

Lord Hutton, the chairman of the Nuclear Industry Association, criticised “simplistic” comparisons of the guaranteed prices awarded to nuclear plants and windfarms. He also described wind and solar as “intermittent and unpredictable”.

However, green groups and politicians accused the government of talking down renewables.

Doug Parr, the policy director at Greenpeace UK, said: “Instead of downplaying the rapid advancement of UK renewables, the government should concentrate on the export opportunities for this UK success story.”

Caroline Lucas, the Green party co-leader, called the UK’s energy policy a mess. “Ministers are ploughing huge sums of money into supporting overpriced nuclear, while retaining a de facto ban on onshore wind and failing to give solar the support the sector needs,” she said.

Ministers also announced that they would be looking in the new year at plans for a long-term underground nuclear waste dump.

The government has been searching for several years to find a community willing to play host to a so-called geological disposal facility, but without success.