After much political wrangling, with PM Boris Johnson’s penchant for White Elephants at odds with Ch8 Apr 2022 16:31
As a medium-to-long-term strategy, the document offers little by way of relief from the current cost-of-living crisis.
But with the UK cutting off Russian petroleum imports at the end of the year, and in wake of the COP26 climate summit, the political impetus is now firmly on increased energy security by way of a green expansion.Of course, this isn’t the first, and will not be the last, energy strategy. In 2009, the then Labour government produced its ‘UK Renewable Energy Strategy,’ to source ‘15% of its energy from renewable sources by 2020 – an increase in the share of renewables by almost a factor of seven from about 2.25% in 2008, in scarcely more than a decade.’At the time, this felt an implausible ambition. But in 2021, 39.3% of UK energy generation came from renewables. Technological advancement can happen faster than many presuppose.Conversely, the Johnson government released the ‘Build Back Greener’ strategy in October 2020, and the ‘Industrial Decarbonisation Strategy’ in March 2021. Politics can change faster than technology advances.
And with yesterday’s announcement a thrashed out political compromise, investors may be wise to take its long-term future with a spoonful of salt.
Nuclear: Rolls-Royce shares (LON: RR)
The new strategy calls for up to eight nuclear reactors to be built by 2030, a build rate increase of one a year instead of one a decade. This includes the two traditional plants at Sizewell in Suffolk.
The government plans for nuclear to supply 24GW of electricity by 2050, around 25% of predicted demand. And it promises that ‘Small Modular Reactors (SMR) will form a key part of the nuclear project pipeline.’
A new body, Great British Nuclear, is being set up, to be backed by ‘substantial funding,’ while the £120 million Future Nuclear Enabling fund is being launched this month to make entering the nuclear market easier.
Meanwhile, the Nuclear Financing Act includes provision for the Advanced Nuclear Fund, with £210 already made available to Rolls-Royce to design one of the first SMRs in the world. The UK’s engineering crown jewel plans to deploy its designs from 2029 ‘to turbocharge UK nuclear capacity.’
Rolls-Royce’s SMR initial designs envisage plants the size of about two football pitches, which can power 500,000 homes each, and are factory produced, so much cheaper to manufacture than traditional plants.
In addition to the government’s £210 contribution, Rolls-Royce is backed with £290 million from the Qatar Investment Authority, Perenco, and Exelon Generation.
SMR CEO Tom Samson, who recently spoke with Johnson about the company’s potential, believes ‘The Rolls-Royce SMR rema
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