Nuclear power set to take a boost after pension fund reform

Pension fund reforms will help spark a wave of investment in nuclear power, senior industry sources say

Pension fund reforms will help spark a wave of investment in nuclear power, senior industry sources say.

Chancellor Kwasi Kwarteng on Friday announced a plan to unlock billions of pounds of cash that could be invested in major infrastructure programs and innovative businesses.

The government is trying to launch energy projects after the Russian invasion of Ukraine.

Green light: Former Prime Minister Boris Johnson has endorsed Sizewell C

The war sent energy bills skyrocketing and aggravated the cost of living crisis. Ministers want to avoid creating new fossil fuel power stations, instead turning to low-carbon technologies such as nuclear and wind.

Boris Johnson has given the green light to the £20billion Sizewell C nuclear power station in Suffolk before stepping down as Prime Minister. It could power six million homes and produce electricity for 60 years, although it will take between nine and 12 years to build.

French energy giant EDF is developing Sizewell C and has received backing from the UK government. But the project has yet to mobilize billions of pounds of private investment.

Kwarteng’s plan will relax the rules to allow fund managers to invest in assets that will potentially take a long time to generate a return.

The details of the changes will likely be closely watched by regulators and pension activists.

Tom Greatrex, chief executive of the Nuclear Industry Association, said the pension money “will boost the prospect of building new nuclear power plants to solve our energy security crisis”, adding: “The first major infrastructure project where this will have an effect may well be Sizewell C.’

He said it was a “very significant step” alongside two other major industry-shaking changes. The first is a new financing model, called a “regulated asset base”, which allows investors to collect returns during the construction phase of major projects.

The second is a planned renaming – expected later this year – of nuclear as green energy, which it is hoped will attract backers who are currently barred from investing in the sector.

Kwarteng’s plan could also help boost funding for a fleet of mini nuclear reactors being developed by engine maker Rolls-Royce.

Each Small Modular Reactor (SMR) would be about the size of two football fields – about a tenth the size of a normal power plant – and could power a million homes.

They cost around £2billion each and are considered faster to build and more flexible than large-scale nuclear reactors.

A Rolls-Royce spokesperson said: ‘This widens the pool of funding for vital infrastructure in the UK. SMRs are perfectly sized for retirement investments due to lower project costs of around £2 billion.

“Rolls-Royce has spoken to a number of potential investors, including in the pensions market, who could support our move from development to deployment.”


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