Power Play: New Technologies that will Revolutionise the Energy Sector

Nuclear fission: there is no alternative

The political classes of most western nations have harboured reservations about nuclear power for decades, due to a series of mishaps in the industry; but now two things have happened which have caused them to reconsider their risk aversion.

First, the climate “emergency” declared at the COP-26 conference last year (which I wrote about here) has accelerated the need to find alternatives to burning hydrocarbons to generate electricity. That means that we must urgently turn to renewables or nuclear power − or, ideally, a judicious combination of the two. Renewables are intermittent and therefore require backup from a continuous source of power generation.

Second, we have woken up to the fact that hydrocarbons are mostly generated in countries which have unsympathetic political systems. As we know, the Germans decommissioned their four nuclear power plants after the Fukushima disaster of 2011, then became calamitously dependent on Russian oil and gas – and that now must change.

Why has there been so much reluctance to embrace nuclear power in almost every western country − apart from France, which has around 58 nuclear plants and where over 80 percent of the nation’s power consumption is generated by nuclear power? The reason is that its opponents have long memories. In the UK, between 1954 and 1957, about 12 kilograms of uranium escaped through the stacks of the Windscale plant in Cumbria. It is estimated that about 300 people might have died from cancer as a result. Then, in the US in 1979, a nuclear core melted inside the reactor on Three Mile Island, Pennsylvania, although there was no radiation fallout.

The deadliest nuclear accident of all time occurred in 1986, at Chernobyl in Ukraine, then a constituent republic of the Soviet Union. The explosion killed 30-40 people outright and since then the severe radiation fallout has killed an estimated 4,000 people (though the accuracy of such an estimate seems doubtful to me). Incidentally, Ukrainian forces are now back in control of the defunct Chernobyl plant which fell to the Russians in the first month of the war. Not that it is of any strategic value: the entire area, with a radius of about 30 kilometres, has effectively been sealed off for the last 35 years, turning it into a huge nature reserve.

And then there was Fukushima. Its reactors went into meltdown after being hit by a tsunami. That tsunami was propelled by a gigantic earthquake, measuring 8.9 on the (logarithmic) Richter Scale, which made the entire planet wobble − and which jolted the whole of Japan a metre or so westwards. And yet there was no significant and sustained radiation fallout.

In a recent book, Atoms and Ashes, Serhii Plokhy estimates that, for comparison, the oil industry has killed 264 times as many people as the nuclear industry. Again, I don’t know how that statistic can possibly be verified – but I get the point. Moreover, nuclear power is more efficient than renewable energy because carbon emissions are generated when photovoltaic panels and wind turbines are manufactured. Plokhy thinks that nuclear power generates just 60 percent of the carbon emissions associated with solar-energy production and four times as much energy.

Normally, technologies become safer, cheaper and more efficient as they mature. Consider the jet engine. But the problem with nuclear technology is that the development of better reactors has been hampered by a lack of investment as the politicians have hummed and hawed. And numerous developing countries have clambered onto the nuclear bandwagon on the cheap, building reactors with inadequate safety standards.

At the beginning of April, Boris Johnson announced that the UK would reverse “decades of underinvestment” and “lead the world once again” in nuclear power. The Government even set up a new body − Great British Nuclear − to oversee a dramatic expansion of the UK’s nuclear capacity. It envisaged an additional 24 gigawatts of capacity by 2050, equivalent to another six Hinkley Point Cs, each costing £20bn and collectively providing 25 percent of the country’s electricity. This would come from eight new reactors, built on existing sites, with one approved each year until 2030.

The problem is that the UK has become overly reliant on French and Chinese technology and finance at a moment when China Nuclear General (CNG) is likely to be expelled from Britain’s nuclear programme. Under a nuclear-collaboration deal struck between Xi Jinping and David Cameron in 2015, China agreed to help develop a new generation of plants in the UK, starting with Hinkley Point C in Somerset and Sizewell C in Suffolk, in both cases as a minority partner to France’s EDF. In return, CGN would be allowed to build and operate a third plant in Bradwell, Essex, using its own yet unproven technology. Since then, the Taishan 2 pressurised water reactor in China has had to be decommissioned due to a design flaw. Now, what with China’s record in Hong Kong and its stance on Ukraine, it is unlikely that CNG will be permitted to proceed at Bradwell.

Hinkley Point C, the UK’s first new nuclear plant for three decades, will soon be nine years late and £7bn over budget. Scheduled for completion in 2017, it won’t be operational before 2026, while construction costs have rocketed from £16bn to £23bn. Furthermore, Toshiba has scrapped plans for a new plant in Cumbria and GE Hitachi Nuclear has mothballed two new plants at Wylfa, Anglesey and Oldbury, Gloucestershire.

On 2 May, Kwasi Kwarteng, the business secretary, met with state-owned Korea Electric Power Corporation to discuss investment in the UK’s nuclear industry. South Korea is the number five, civil nuclear power globally with 24 reactors. It is a sad irony that the UK, which pioneered the use of civil nuclear power in the 1950s, is now beholden to foreign technology and investment to boost nuclear-generating capacity.

Currently, Johnson’s nuclear ambitions look optimistic. But the good news is that Rolls-Royce’s small modular reactor (SMR) division is hiring like crazy. The government has supplied £210m in grants. Rolls-Royce thinks that if it can get regulatory approval by 2024 then these reactors will be powering the grid by 2029. SMRs can be built in a central factory, transported in containers and then assembled onsite. Each SMR will occupy a site no bigger than two to 10 football pitches (opinions vary) but will be able to power one million homes. A 470-megawatt SMR operational unit will cost around £1.8bn.

It is also notable that Rolls-Royce’s electric aeroplane, Spirit of Innovation, is said to have a battery pack with the highest power density of any other used in aviation. This was developed in collaboration with Gloucestershire-based Electroflight. The single-seater, electric aircraft achieved a speed of 387 mph in tests last November.

Nuclear power currently provides about 18 percent of the UK’s annual electricity output. At the time of writing (Thursday), its contribution to the grid amounts to 14.7 percent according to Gridwatch). But this is set to fall unless new stations are built. All but one of the UK’s roster of ageing nuclear plants is set to close by 2028, with only Hinkley Point C due to come onstream by then. Some of those sites would be ideal locations for Rolls-Royce’s SMRs.

Nuclear fusion: getting closer?

In the leafy and congenial Oxfordshire village of Milton, which could be the setting for Midsomer Murders, British start-up Tokamak Energy has built a reactor which, terrifyingly, mimics the atomic reactions that take place inside our sun and other stars. Stars run on nuclear fusion. The doughnut-shaped reactor generates a plasma cloud at unimaginable temperatures which is held in place by powerful electromagnets. Until now, the power required to operate the electromagnets has exceeded the energy generated by the plasma cloud – but Tokamak Energy thinks it is on the cusp of reversing that equation.

Tokamak Energy has been backed by Lord Wolfson, chief executive of high-street, retail chain Next. He has been joined by several big-hitting investors including the hedge-fund manager Sir David Harding; the Swiss-German industrialist Hans-Peter Wild; Joel Cadbury; Lord Feldman; and Baroness Mendelsohn, a vice president of Meta. The company is said to be planning a funding round to raise several hundred million pounds later this year.

Jeff Bezos has invested in a Canadian firm, General Fusion, which has built a reactor just down the road from Milton at Culham − another village where Miss Marple would have felt at home. General Fusion reckons that it will know if nuclear fusion is viable as an energy source within five years.

A third Oxfordshire-based start-up, First Light Fusion, claims to have developed a unique “projectile” technology to facilitate fusion at its laboratory in Kidlington. The company, spun out of Oxford University science park, aspires to build a 150-megawatt power plant in the early 2030s. In February, it raised an extra $45m from backers including the Chinese technology giant Tencent.

Meanwhile, Bill Gates is backing a Massachusetts-based company called Commonwealth Fusion Systems. Gates has backed the company via his Breakthrough Energy Fund. Its investors include Sir Richard Branson, Alibaba founder Jack Ma and Prince Alwaleed bin Talal.

If tokamak reactors were to become viable as a means of generating electricity, they could either be connected to the national grid directly, or could be applied to generate green hydrogen, which could then power vehicles that use hydrogen fuel cells and possibly domestic boilers.

Regular readers will recall that I have observed here in the past that if nuclear fission was going to happen, then it would have happened already. Cynicism aside, the volume of investment by canny players in this space seems to be growing. It just might be possible – and those who back it early, if it works, will become as rich as Croesus.

The hydrogen economy: slow but sure progress

Equinor, the Norwegian, state-owned energy giant, is planning to build a new hydrogen plant in the Saltend Chemicals Park on the north bank of the river Humber. The project is backed by several key players including Sir Jim Ratcliffe’s Ineos and British Gas owner Centrica. The 600-megawatt plant will distil hydrogen from natural gas and the carbon emissions from this will be sequestered in empty gas caverns beneath the North Sea. Hydrogen generated thus is called blue hydrogen, as opposed to green hydrogen which is generated by renewables.

A British company called HiiROC is developing a process whereby methane is turned into hydrogen, but instead of creating CO2 gas it produces solid carbon ‘rocks’ which can then be buried, negating any carbon emissions. This is termed turquoise hydrogen and is reportedly cheaper than green hydrogen.

Some engineers argue that the best way to make hydrogen is from nuclear power – so-called pink hydrogen. The electrolysers used to strip water molecules of their hydrogen atoms need to run continuously to be efficient. Nuclear power is continuous; renewables are intermittent.

Ineos announced last year that it will open green hydrogen plants in Norway, Belgium and Germany – but not yet in the UK. Sir Jim Ratcliffe argued in an article in the Sunday Telegraph last October that Germany is ahead of the UK in terms of the infrastructure for the hydrogen economy because they have widely invested in it.

Rolls-Royce recently signed a deal to develop hydrogen engines for Britain’s trains. A joint venture with leasing company Porterbrook could significantly cut emissions from the UK rail network which is still heavily dependent on diesel-powered trains. Also, Rolls-Royce is working with Heathrow airport and GKN (owned by Melrose) on a project to refuel future, hydrogen-powered aircraft. Melrose has developed a system to store combustible hydrogen safely. Currently, aviation accounts for about 2-3 percent of total global CO2 emissions. If hydrogen-powered flight could be made viable, those emissions could be slashed.

In February, Airbus unveiled a hydrogen-powered concept aircraft. The European aircraft maker will work with CFM International, a joint venture between General Electric and French engine-maker Safran, to develop an aero-engine that can run on hydrogen. Airbus aims to have a modified A380 in the air by 2026. The plane will keep its four conventional engines while a fifth hydrogen-powered engine will be mounted on the rear fuselage.

Europe’s second-biggest container port, Antwerp-Bruges, is pioneering the use of hydrogen for shipping. Its chief executive has even proposed a cross-Channel hydrogen pipeline. I’m yet to be convinced that this is feasible, even if it were desirable. Hydrogen is the tiniest of all atoms and can easily escape confinement. Therefore, pipes must be much thicker than those carrying natural gas, and hence more costly. And the risk of explosion is significant. Australia’s first hydrogen-powered ship set sail for Japan last month – and promptly caught fire.

With hydrogen, the safety issue is never going to go away. That said, I predict that hydrogen boilers will become mainstream for domestic heating – because they are much more cost-effective than bulky, noisy, inefficient and disruptive heat exchangers. And house explosions will occur. But we shall just learn to live with these as an occupational hazard – just as we know that the convenience of people driving cars cost us 1,460 deaths on Britain’s roads in 2020; and that as a society, we believe that is a fair price to pay.

Last November, the British engineering company Johnson Matthey closed its battery division, declaring its intention to focus on a new hydrogen plant in Teesside. That may be a signal of where things are going.

Tidal barrages

Tidal barrages is another area where our politicians have never had the courage to bite the bullet. The La Rance Tidal Barrage in northern France has been operational since 1965. Reportedly, its undersea turbines have required minimal maintenance. The money expended to build the suboptimal and increasingly controversial HS2 rail line could have been used to construct tidal barrages on the Severn estuary and elsewhere.

The Severn Barrage, which could harness the tidal energy of Britain’s longest river and produce enough electricity to power all of Wales, was originally proposed in 1925, only to be shelved because its cost of £25m was considered too expensive. Then, in 1971, it was estimated that a barrage could be built at a cost of £500m. But because North Sea oil and gas were coming onstream the incentive to invest in tidal power diminished. Various proposals have been put forward recently, both on the Severn and in Swansea Bay, but the cost is estimated in billions of pounds and is now opposed on “environmental” grounds.

Solar arrays in space

Kwarteng has ordered his department to assess the viability of putting solar arrays in low-Earth orbit. Such arrays could convert sunshine into electricity 24/7, and would avoid building solar farms on prime agricultural land in densely populated countries such as the UK (which I wrote about last week). However, the South Koreans now float buoyant solar panels on their dam-lakes. Check out the Hapcheon Dam in Gyeongsang Province, South Korea. Over 92,000 floating panels manufactured by Hanwha Solutions generate enough power for 20,000 homes.

An orbital solar farm could be launched in small pieces and assembled in orbit. Next month, the UK is set to become a space power (again) with the launch of a satellite from Spaceport Cornwall near Newquay.

But how would the electricity be transported back to Earth? We could charge a modular battery which could be returned to Earth (expensive). Or the electricity could be converted to electromagnetic energy, beamed towards Earth, captured by a dish and then converted back into electricity and fed into the national grid. I have no more insight as to whether that is viable than the Right Honourable Mr Kwarteng.

Saharan solar

An undersea, high-voltage, direct-current (HVDC) cable is in prospect which will carry electricity about 2,300 miles from the Moroccan coast to Devon. The electricity will be generated by solar arrays in central Morocco and wind farms on the Moroccan coast. This will happen thanks to the efforts of the £16bn Xlinks Morocco-UK Power Project, which is chaired by former Tesco chief executive Sir Dave Lewis.

The principal solar farm will be just south of Agadir where the sun shines for 10 hours a day, even in winter. Modern HVDC technology has much reduced the power wastage experienced with previous generations of this technology.

And why not at home? I’ve been arguing for a long time that all new homes should be well insulated and should have integral solar panels on their roofs. It seems that planning laws will now be eased to encourage existing homeowners to erect solar panels. Not before time.

Profiting from the energy revolution

KFC, Toby Carvery, the hotel chain Premier Inn (owned by Whitbread) and LIDL have all installed rapid chargers so that electric-vehicle (EV) drivers can recharge their cars while they enjoy a meal. LIDL now has chargers at 300 stores. A 30-minute charge will cost around £6 and will give a 100-mile range to the average, small electric car. Capitalism is becoming greener.

The SDCL Energy Efficiency Income Trust (SEEIT) has built up a £1bn portfolio which includes solar panels for Tesco supermarkets; EV chargers for BP garages; low-energy LED lighting for Santander; and an onsite generator for St. Bartholomew’s Hospital in London. In the US, SEEIT powers one of the biggest business parks in the country in New York State and steel mills in Indiana. In Sweden, SEEIT energises much of the Stockholm gas grid with methane generated from waste. The trust is already paying a decent dividend.

My best guess is that the UK will do just fine in the coming energy revolution – even as many of us are hissing about the hikes in our direct debits. The UK is well placed to ride out the energy revolution with a clutch of world-class companies pushing the frontiers of these emergent technologies. Rolls-Royce is a strategically vital company, which carries a market capitalisation of just one ninth of its American analogue, GE. It must be undervalued. The AUKUS pact also promises to benefit both Rolls-Royce, which is a leader in marine propulsion and Babcock, which currently services the UK fleet of Polaris submarines.

The problem is that many politicians here and abroad are mainly concerned about flaunting their green credentials in a frenzy of virtue signalling to poorly informed electorates. There are very few engineers in power; and even fewer engineers who understand economics.

Let’s be clear about our objectives. We need to cut Russia and China and their acolytes – and that means Saudi Arabia and Qatar as well as Iran – entirely out of our energy mix. Further investment in renewables is necessary as well as viable, low-carbon, backup generation – though the net zero carbon by 2050 target is an unnecessary policy ‘straitjacket’. We need to become hugely more efficient and less wasteful.

Along the way there will be massive opportunities.

Listed companies cited in this article which merit analysis:

• Rolls-Royce PLC (LON:RR)
• Melrose Industries PLC (LON:MRO)
• Johnson Matthey PLC (LON:JMAT)
• Whitbread (LON:WTB)
• SDCL Energy Efficiency Income Trust PLC (LON:SEIT)
• Babcock PLC (LON:BAB)
• Hanwha Corporation (KRX: 000880)