Welcome to this morning’s session of the Energy Security and Net Zero Committee inquiry, revisiting the nuclear roadmap. We have one panel today in front of us. I will ask you to introduce yourselves, please?

Good morning, all. I am the director of corporate affairs for Rolls-Royce SMR.

Morning, everybody. I am the senior director of UK corporate affairs for X-energy.

Good morning. I am a partner at the law firm Freshfields. I advise clients in the nuclear space on development, operation, and decommissioning of civil and defence nuclear projects.

We look forward to what you have to tell us. I will start by asking some questions about the role of emerging technologies in nuclear. Alastair, perhaps you could say a few words about what advanced nuclear technologies are and the distinct functions of SMRs and AMRs that are not covered by large reactors?

Yes, of course. I am happy to. I will talk specifically about the Rolls-Royce SMR and our solution because there are over 80 different designs of SMR, and each company interprets it slightly differently. S for us is small, so a smaller footprint, about the size of two football pitches. M is modularisation, which is at the core of what we are doing. We have seen challenges with large nuclear and delivering on time and on budget. Much of that is down to the on-site work. We are moving much of that into factories and delivering it within factory facilities, putting components into modules and moving them to site. R is reactor, which for us is a pressurised water reactor, the type of which you would see in the majority of nuclear stations anywhere in the world, the same as Sizewell B in the UK. It is a proven, known fuel route, a known decommissioning route. It is the heritage of the Rolls-Royce business, which has 65 years of producing reactors for the submarine fleet. It is a small footprint, with heavy utilisation of modularisation, using a proven reactor and fuel route. That is our solution and our way forward.

That is helpful. Vanessa, how should the Government balance investment between gigawatt-scale reactors, SMRs, AMRs, and indeed, a broader investment into low-carbon or lower-carbon technologies?

I am not an economist. I should just start by saying that my role is to help commercial players in the market bring technology to market. What we know from the actual experts who have modelled the GB electricity grid is that the best balance in terms of cost, time and competitiveness in terms of capacity, involves a grid that is very balanced and has a mixture of intermittent and baseload. Nuclear is the best form of low-carbon baseload. It is proven. We have an established market. What the economists have shown through various studies, which has been supported by sophisticated studies within Government—particularly within DESNZ—is that the best way to achieve that and to get the most capacity of nuclear on to the grid at the lowest cost, is to have a mix of technologies. I have been working with EDF now for quite a few years, particularly on the building of the Sizewell plant. In terms of bringing costs down and the speed of construction by building essentially a mirror image of what was built at Hinkley, we have seen that the fleet effect is very important. The best way to expand that is to build into modularisation and to take advantage of the developments in the SMR and AMR market globally.

You are advocating a combination of SMRs and AMRs as well as large-scale? Is that what you are saying?

Indeed. We have established expertise in both areas, through some investments in the submarine programme on the defence side that Rolls-Royce has brought, but also through the interest of the global market in the very attractive regulatory, economic, and stable geopolitical environment that the UK offers to the global SMR market, as well as our homegrown and well-established gigawatt-scale industry. As we have seen through a number of different studies, the best way to secure that is to pursue both.

Leon, we heard from Professor Fiona Rayment that most mature AMR designs could be online by around the mid-2030s or maybe 2040. Nuclear is renowned for its long delays. Do you agree that mid-2030s to 2040 is about right, or is that being overly optimistic?

It is not being overly optimistic. Probably the first point to make is that, as Alastair said, there is a wide range of SMRs and AMRs out there in the market, and they are all at differing levels of maturity. But there is no question that there are one or two technologies in the Advanced Modular Reactor space that are at least as well advanced, mature and ready to come to market as the traditional light-water Small Modular Reactors. I would say ours is one of them. The proof of that is that we are already under way with two projects in the United States. The first is on the Gulf Coast in Texas, providing electricity and steam for a Dow Chemical plant. The second will be developed in Washington State, with Amazon as a customer taking electricity for data centres. We are now looking at a fleet rollout here in the UK starting at Hartlepool, and we have partnered with Centrica. That first plant is due to come online in the early 2030s. It was identified by the US Government for support for a first-of-a-kind project back in 2021 and should get its construction permit at the end of this year, ready to begin construction next year. In the US, the first SMRs will be AMRs. We are very much mature and ready to come to market, and that is what we want to bring to the UK.

What needs to happen to ensure you hit your early 2030 deadline for Hartlepool, and indeed, timeframes more widely?

The early 2030s timeframe is for the first plant in the US and potentially the second plant in Washington State. We will be a fast follower in the UK. We are looking at the mid-2030s for delivery. The benefits of not being the first-of-a-kind technology are huge because although it will be the first Xe-100 reactor technology in the United Kingdom, we will be able to take the learnings from the first project in Texas and the second project in Washington State, which is very similar in its configuration, and deploy those here in Hartlepool. To answer directly the question of what we need, our fleet rollout of Xe-100 plants in the UK, which could be up to 6 GW of plants, will be majority privately led and privately financed. But for the first project, we know that investors want to see the Government having skin in the game, if you like, demonstrating support for the first project in country to get that under way and get the ball rolling. We are having constructive discussions with both the regulators and the Government under the new framework that they have established, to look at what the nature of that support could be to unlock the private investment that we know is there. That is really what gets the ball rolling. In the meantime, we are working with Centrica, our partners, on developing the deployment plans, including a new company that will be created to deliver these power stations, starting at Hartlepool.

We will return to all your comments in the next hour or so.

The price of net zero for many people is too high because it leads to de-industrialisation. To what extent do you think advanced nuclear technologies can enable us to counter the need for de-industrialisation in attaining our net zero commitments?

I will start. If I look at the Anglesey site where we will be building our SMRs, on Anglesey you have an aluminium smelter that was attracted to the region because it was able to access firm power from an existing nuclear power station. The vision we present is exactly the same. Again, we will have SMRs being built on Anglesey for grid power, and we will have the opportunity to attract inward investment for follow-on units. Nuclear is a long-term, stable, secure form of power. It is a 60-plus year delivery of low-carbon—but more importantly, secure—power. We see nuclear exactly as Vanessa explained: it is a core part of the mix, it is an enabler of decarbonisation, but it is also an extremely strong enabler of secure supplies of power.

Can I come in on that as well? You have hit the nail on the head, actually. One of the big benefits of nuclear, and in our case the Xe-100 reactor, is that it contributes to re-industrialisation because as well as producing electricity, the evolution of the technology that is incorporated in our reactor operates and produces higher temperature steam. You can use that steam to replace the steam that is generated by fossil fuels in heavy industry, whether those are existing process industries—that is what we are doing for Dow Chemical in the United States; we are replacing all its boilers with nuclear combined heat and power—or new industries such as the creation of hydrogen, synthetic aviation fuel, and so on. As well as employing a lot of people in construction and operations and the supply chain, nuclear is also a pathway to de-industrialising areas such as Teesside, where we are looking at putting our first plant.

You said, “De-industrialising,” did you mean re-industrialising?

I meant re-industrialising.

I thought it was important.

Beyond cost, it is worth also noting that the current global environment is making us very conscious of the fact that energy security involves having local, secure energy. One of the key advantages of nuclear is that the fuel is sourced from friendly Commonwealth countries, and we have a home-grown enrichment capacity that is one of the biggest in the world. The energy security benefits of nuclear cannot be discounted.

Do you think we should stop our policy of de-industrialisation at the moment because we know that just around the corner you have these advanced nuclear technologies that can actually solve the problem? Is there not a danger that if we carry on de-industrialising as we are at the moment, it will be too late to recover when these new technologies are actually on stream?

I am not sure if it is my position to say whether we have a de-industrialisation policy, but if you are talking about the mix of energy that we are looking at currently, the fact remains that there is no silver bullet solution to this. We need a bit of everything. We need renewables, and we need an orderly transition from fossil fuels, but nuclear is an absolutely critical core part of that mix. It can deliver the secure and low-carbon energy, but also the jobs and economic growth. It is not the answer to everything, but it is an absolutely core part of that balanced energy mix, which is the best way to deliver our policy goals.

One of the issues at the moment is around AI and the demands that AI imposes upon the electricity grid. Do you think that we should be encouraging AI data centres to be dependent upon advanced nuclear technology, rather than imposing demands upon the existing grid?

I suppose the challenge is that mid-2030s is a rough timeframe, as we have already talked about. The data centre companies you are speaking about want power now or next year, if not sooner. There is a gap in that timeframe, but it is about investing now to make sure that in the 2030s you have that growing nuclear contribution. Let us remember, all the nuclear stations, apart from Sizewell B, will be switched off by 2030. All we are doing with Sizewell, Hinkley, Rolls-Royce SMRs and follow-on units is getting us back to the level where we are at today, with 15% of nuclear in the mix. It is a longer-term plan.

Would you suggest that these big data centres should in the short term rely upon gas, for example, with a view to being able to embrace the advanced nuclear technologies in the longer term, without actually having to put a burden on the national grid in the meantime?

That is what is happening. As I mentioned, we have a partnership with Amazon, which is an investor in X-energy and is putting capital into our project in the United States. That is because of the demand from hyper-scalers, cloud computing, AI, and so on, and the data centre demand that will arise from that. Electricity demand projections across the board are going up, even with improvements in energy efficiency. It makes sense for nuclear to be there to deliver that baseload, secure electricity that data centres and other customers, chemical plants, and so on, need to be able to rely on 24/7. These companies are forward-thinking. They know that they are not going to get nuclear off-take contracts tomorrow from this new fleet of SMRs and AMRs, but they have interim arrangements with renewables, gas, and so on. They are looking to plan for the longer term, where they see this demand going up.

There are advantages in economies of scale. The investment that AI companies and off-takers from data centres are providing to the energy industry globally to reduce the cost curve is a huge benefit, in terms of bringing down the cost for the benefit of all consumers.

The Government recognise this challenge. I am sure we will come on to it. That is exactly what the Fingleton reforms and the Fingleton review are setting out to do. It is about identifying, why does it take so long to develop a project in the UK, and what can be done to make it faster? Government recognise the challenge and are taking steps to try to make it faster.

This is one for Alastair: should advanced reactors primarily connect to industrial users through private wire arrangements or be integrated into the national grid?

From my perspective, it will be both. For my first project on Anglesey with three units now under contract with GBEN, that will be predominantly for grid utilisation, but there is clearly the opportunity for follow-on units to either go into the grid or for off-grid application. We see it as a mix, but that is ultimately a decision for the owner of the asset, which in my case would be Great British Energy - Nuclear, to decide.

What upgrades or new infrastructure would the national grid require to support this deployment?

Let me focus on the Anglesey site again. For our first units, they can be built and plugged into the existing grid connection. Once we get to three units and beyond, from our initial studies, we believe you will have to have grid upgrades. As I say, from the first units, you will be able to use the existing grid. That is why there is a benefit to developing on existing and known nuclear sites because they often have the benefit of that significant grid infrastructure already there.

Obviously, one of the main advantages of bringing in a variety of different technologies that are small and modular is that they can be deployed in more places. That means that you can bring generation closer to demand, which will bring down the cost of the need for grid reinforcement.

Can I add to that as well? Much as Alastair said, in our first project in the UK, we are looking at Hartlepool, which is another existing nuclear site and has a grid connection that we can take advantage of. Again, we also are able to look at private wire connections potentially as an option. Interestingly, our technology comes in smaller reactors that come in clusters of four. We would have four 80 MW reactors. If you look at our first project in the United States, two of those reactors provide a combination of electricity and steam directly into the Dow Chemical plant on the fenceline of which it will sit. The other two are putting electricity into the grid but are available to be drawn on in case of unplanned outages to the first two units. That gives the security to the chemical plant of knowing that it has that availability, but you have that flexibility of use that comes with our smaller modules. As well as private wire and direct-to-grid, you can have a combination of both, which is what our first plant will be.

Following on from that, can you tell us what you think the main challenges are in linking AMR developers with end users? How can we address those?

Obviously, what all end users want, whether it is from nuclear or any kind of electricity generation, is as much confidence as possible on delivery at the right time, in the right volumes, at the right price. That is nothing new. Obviously, nuclear timeframes have historically been longer. We are looking to accelerate them in terms of delivery with Small and Advanced Modular Reactors. In terms of the overall cost trajectory, it is important to note that one of the big benefits of SMRs and AMRs is that because they come in smaller units, smaller deployments, they are more easily financeable, and you get the cost reductions in repeat builds that can come faster. Once you get going and you are rolling these off the production line, the costs come down as well, and you have that de-risking of the delivery programme, in effect. All end users want to know where the electricity is coming from, and that it is going to be there when they need it, at the right price, in the right timeframe. That is the nature of the discussion.

Is there a role for Government in this?

Absolutely, and Government are already showing a huge commitment to assisting with this process. The reforms that NESO is implementing through grid reform are already showing. We are seeing investors having much increased confidence in investing because they know that they are going to have a guaranteed route to market, in a way that has been a genuine barrier to investment until now. That is just one example. All the recommendations of the Fingleton review have now been accepted, and there is an implementation plan. That is also attracting a lot of confidence from investors. We are working with clients across the investment community who have never shown interest in nuclear before, and they are looking at the UK. A lot of investors are looking at only the UK because of the Government’s creation of confidence in committing to some reforms.

Just to confirm, Vanessa, the improved confidence comes from Government certainty around their commitment to nuclear in the wider sense. Is that what you are saying?

It is building on a very strong foundation where we have an environment that is already very attractive to investors, particularly in the infrastructure space. Our regulated and RAB-based investment environment has always attracted investors in infrastructure from all over the world. English law—obviously one of our greatest exports—also attracts a lot of investment. Building on those strong foundations through showing a genuine commitment to bringing down the cost curve, as Leon explained, and offering a way to essentially help projects get through the regulatory process, is just adding to that confidence.

I want to just come back to Alastair, for a start, on what you were saying about the grid upgrades. You said that the third unit and onwards would mean extending the grid. This is not cheap. One of the challenges the Government face is how to pay for increased capacity, or indeed, upgrading existing capacity. Do you have a sense of who should pay for this? It is a challenge for Government, when they have this commitment to reduce bills.

It is an issue that Great British Energy - Nuclear will have to determine and to decide. It will obviously work with NESO, Ofgem and the grid itself to put in place the most effective way of getting the power from Anglesey into the central grid, as well as looking at local usage itself. Ultimately, it is a question for GBEN as the owner of the asset to determine.

Yes. Do you think there is a case for investors contributing to the costs of the grid upgrades, rather than it going on to consumer bills?

It would not be for me to say. Ultimately, the SMRs we are delivering at Anglesey will in the first instance be for general utilisation for grid power and not for AI utilisation. It will be the consumer who is directly benefiting from the grid upgrades.

Okay. Vanessa, perhaps that is something you could give a wider answer to, about who should pay for grid upgrades? Should it be consumers, the taxpayer or private investors?

At the end of the day, grid upgrades are just a cost of getting a megawatt-hour into sockets. Whether that is borne through the cost of the generation or the supply levies, at the end of the day, it is all borne by a mixture of consumers and a return to investors. The cost of attracting that investment needed to create those megawatt-hours is spread across a whole number of different costs, one of which is grid upgrades. Government essentially control where the projects are built through planning and siting. One of the consequences of building in the locations that Government identify as allowing generation to be built, is that you need to connect those to demand. All we can do is optimise the best places to put those so that you are reducing those costs as far as possible, to reduce the amount of cost that flows through to consumers. One of the best ways of doing that is to look at technology that is able to be put closer to demand. You cannot do that with offshore wind; you can do that with modular nuclear.

I would like to talk about the SMR design competition: what went well? What lessons can be learned? I would like to start with you, Alastair. Other than you winning, obviously, what went well for you in the process, from your perspective? What lessons can we learn, especially from the withdrawals by EDF, NuScale and Westinghouse?

The most important thing to say is that the Government ran—or GBEN ran—a rigorous, robust process. What went well was that it successfully delivered a complex procurement process. It attracted a range of competitors to that selection process. That is not dissimilar to the way we have also seen them run in the Czech Republic, where we were also successful in its procurement process. Unsurprisingly, as industry, I would say if things had moved a little faster—I am sure that GBEN and parts of Government would say this themselves—that would have been in everybody’s interest. But by the nature of the rigour and the process within it, it is normal for it to take time.

Can you identify any particular parts of the process that caused the delays? I am also interested because prior to the decision, talking to people in the industry, there seemed to be a widespread assumption that you would probably win as the UK competitor. Why did it take so long?

It took so long because it was an independently run and rigorous process, with significant input and advice from independent legal counsel, the Cabinet Office, and external reviewers who were looking at the cost, schedule, commercial deal, and social value that would be provided by the bidders. It was an incredibly rigorous process, and that is why it took as long as it took. That is right. It had to be robust, and it had to be robust to legal challenge. Again, one of the elements that you will see in the Fingleton review is the nature of judicial review and challenge to decisions, and the way that they can slow down processes. Rightly, GBEN prioritised ensuring that it remained rigidly within process and within understood structures, to make sure that the procurement was legally robust. That is why it took as long as it took.

What about the withdrawals by some competitors? Do you think there is anything to be learned from that?

SMR companies are in different stages of development. I cannot speak to why others would withdraw, but we are very pleased to have been successful in it.

Vanessa, do you have any perspective on that?

The process reflects the way that very complex procurements have been done for a long time in a range of different industries, including across energy and in the nuclear space, on the decommissioning side. There are probably lessons to be learned from a number of those processes. We know that lessons were learned, for example, around some big extended procurement processes we have seen in the decommissioning space, particularly the Magnox inquiry. Some lessons could be extended into this space to try to bring down some delays.

Can you briefly summarise what those are, or give examples, maybe?

It is difficult to go into details without talking about commercially sensitive and privileged information, but what I can say is that Alastair’s reference to the fear of judicial review within Government is something that has driven a lot of those delays. The Fingleton review has focused a lot on the culture of fear around judicial review. I do not know whether the solution to that is to reduce rights of judicial review, or to empower decision-makers with stronger policy so that they are not in a position where they have to make such difficult decisions, so that they have slightly more cover. It is probably a mix of the two, but the implementation plan following the Fingleton review includes a number of solutions, which should hopefully help.

I was just going to say that we were not involved in the GBEN competition because it focused on the more traditional forms of reactors, rather than the evolutionary reactor that we are deploying. However, there have been lessons already learned, which are being implemented by the Government in establishing the new UK Advanced Nuclear Framework, and the assessment process by which the Government will consider the technologies and projects, importantly, coming forward for potential support. The differentiating factor is that we are not looking to be procured by the Government, and we are not looking for a grant from the Government. X-energy crossed that bridge several years ago in the United States. As I mentioned earlier, we can have a privately led programme. However, we need some support from Government, be it policy support or the measures they have indicated they are prepared to consider, such as potential support from the National Wealth Fund and policy support to underpin some risks that will bring in private investors. Because it is not a procurement, it means you do not need a years-long, winner-takes-all procurement process, with set timeframes and an enormous amount of time taken up to address those risks that Alastair and Vanessa were identifying. Instead, the Government are doing a robust process to put technologies that want to come forward through an assessment. They then have the right to sit down and have detailed discussions about the way they are going to deliver their projects and what Government support might be appropriate. That can be gone through more quickly. We are in that process now that the Government have launched. It is much more fit for purpose than another competition, given that you do not need it because it is not a public procurement.

Do you see there being a role for future competitions in the nuclear space?

If you are talking about research and development, bidding for government grants and funding, and so on, then that will always continue to be the case, and the Government will continue to elect contracts. But in terms of delivering projects, we have always taken the approach that we will build our own development company. We may work with GBEN in the assessment and advice and so on, but we are not looking for GBEN to develop, find us a site, raise the financing, and so on and so forth. For power plant project delivery, we have moved on from the competition for government procurement, and we are now into the privately led world. Yes, there will always be a role for government procurements in nuclear, but perhaps not in the projects we are looking at.

Can I just add a point? The reason the procurement was as complex, detailed, and rigorous as it was, is that the outcome is that the successful project will sit on the Government’s balance sheet. It is a funded project, so there are protections there, whereas if you are delivering a privately led project, it will not sit on the Government’s balance sheet. There may be protections such as nuclear third-party liability, but the access and exposure to the taxpayer is significantly less. That is the material difference as to why—as Leon said—you could run a faster process or get an engagement with it because it does not involve a project sitting on the Government’s balance sheet.

My next question to Vanessa is maybe redundant because I was going to ask about how the Government can ensure that developers outside formal competitions are not excluded from the emerging nuclear market, but it sounds like the way things are developing, that will not really be an issue. Would you agree?

The process that completed successfully yesterday for Rolls-Royce SMR needed to be competitive because it was sitting on the Government balance sheet. Whether that needs to be repeated depends on how the market develops. As we have seen with offshore wind, for example, we started out with a grant of investment contracts, which were essentially pre-statutory CfDs, and we have ended up with a really successful competitive process that is run for CfDs every couple of years. That has actually brought the cost curve down significantly, and it has created one of the world’s best offshore wind markets. If we ended up in that space for modular nuclear, it would be incredible. You could see a place for competition there. In the meantime, the Government’s proposals to support advanced nuclear through a framework where it is essentially provided with a Government concierge, rather than running a process where projects are competing with each other, seems to be the most efficient way forward. Particularly within DESNZ, we can tell that the Government have given a lot of thought to the most efficient way of doing that. Right now, it seems to be attracting a lot of confident support from investors and developers.

Just looking back at the process that was gone through, do you think there would have been an argument for—as initially was considered—having two different technologies chosen to allow a competitive evaluation of different technologies? Or is there more advantage in going all in on one technology, from the overall UK energy markets point of view?

It is impossible to tell. It is probably impossible to make a better decision than the decision-makers, who had all the information in front of them around whether they were better off going with one or two based on the submissions that came in.

The UK is not an outlier in choosing just a single technology for its SMR partner. In the Czech Republic, we are progressing with a small project; the Koreans are developing a large project. In Sweden, it will choose from two small technologies, and it will then progress as a partner in that technology. The UK is by no means an outlier in selecting one partner to work with.

Let us move on to the siting choice. Given Wylfa is one of the UK’s strongest strategic sites for gigawatt-scale nuclear, was it right to select it for the UK’s first three Rolls-Royce SMRs rather than a large-scale reactor?

First, there is nothing that makes it specifically suited to large or small. It is a very large site, and it is able to be built on by SMRs or large units. We identified Anglesey and the Wylfa site as our preferred site in the procurement process, which bidders were able to do. We selected it as our preferred site because it is the largest site, it is the best understood, it has an EN-6 designation, it has a supportive community, and it is the site that we believe we can move fastest on. It is the right choice for the Rolls-Royce SMR to be on Anglesey, and it creates optionality for the future. We are contracted for three units, but GBEN itself has said it would be right to deliver maximum build-out there. It has secured funding to enable the site to be prepared for multiple further follow-on units: up to eight. That is a really important point: this is not about just a 1.5 GW one-off commitment; this is about a fleet programme on Anglesey and then building out from there.

Do you think prioritising SMRs at Wylfa sends a message about the Government’s long-term strategy in prioritising SMRs over gigawatt scale?

You still have Bradwell, Heysham, Hartlepool, Oldbury, and Moorside, which is an extremely large site up next to Sellafield. There are still a number of sites that are deployable and have communities that are calling out for projects.

You would feel they were all suited to gigawatt scale rather than SMRs?

I could not comment on the specifics of it but let us look at the Moorside site itself: it is over 300 acres, an extremely large site. I was working on a project to build three large reactors there, and it is a perfectly viable site. The same at Bradwell, which you could deploy large units on.

I am going to turn to Vanessa now. Do you think that EN-7 will ensure that siting decisions do not concentrate new technology solely in these traditional nuclear regions, as Alastair has just been talking about, but also support deployment in grid-constrained industrial areas where there is no nuclear legacy?

It provides optionality, which we did not have under EN-6. EN-6 did a brilliant job of identifying the best sites that allowed nuclear to be deployed quickly. There were other reasons why that did not happen. Alastair and I both worked on the project in Moorside, the Westinghouse project, which did not proceed for various reasons, including that the CfD replacement with the RAB probably did not come through quickly enough. We lost investment interest in that project, which was incredibly disappointing. It would be brilliant to see a return to interest in building gigawatt scale on the EN-6 sites. One of the advantages of EN-6 is that there was a very sophisticated siting assessment process completed. There was strategic environmental assessment. It was designed so that the planning and environmental assessment process would be de-risked from a lot of the risks that held back Sizewell B. It was successful. EN-6 still exists. It can still be used. One of the key advantages is that those sites have excellent grid connection and supportive communities, but it does not mean that they are the only sites, now that we have new technology. EN-7 does not necessarily deliver those key advantages around de-risking in terms of strategic environmental assessment, but a lot of those were driven by European law, which we are now not constrained by. It creates optionality. We now have an ability to identify sites that might have other benefits that are better for newer technology. It allows developers to make a case.

Are there any particular examples of European law that you now think we should disregard?

It is less that we should disregard it and more that there are processes that needed to be followed pre-Brexit. For example, we were driven by the need for strategic environmental assessment of a programme, which is what drove a lot of the strategic siting assessment that EN-6 was designed to help us overcome. It also allowed the Government to embed policy to get through the justification requirements, which were driven by the Basic Safety Standards Directive. Those requirements are driven by broader principles, which are still good principles, but it allows us to take a different procedural approach to meeting them, rather than necessarily having to follow the process that had been designed in Brussels.

My residents who are hearing that may be inclined to hear that as, “These standards won’t apply,” but you are saying you will still end up with the same end result, you just think there are different ways to achieving it.

It gives us more flexibility and more routes to achieving them than we had pre-Brexit.

Can I come in on EN-7? It is a very welcome development. It is the right thing to do. The raison d’être for Small Modular Reactors and Advanced Modular Reactors is that they are more flexible in terms of where they can be deployed, both in terms of the land take and footprint, which is somewhere between a quarter and a 10th of the size of a gigawatt scale in our case. Also, at the end of the day, we want low-cost energy as well as secure and clean energy. Putting power stations close to the point of demand, even if they are not connected by private wire, is a sensible thing to do in terms of reducing the costs. Looking at our fleet plans, we have considered industrial clusters, potential old coal sites, the AI growth zones where there might be data centres to connect to, and so on, as well as the other EN-6 sites that are currently on the list. There will still be a rigorous process where we need to identify that we meet the eligibility criteria to bring forward a project. But it is what is needed because we are a small island, there are not that many sites, and the original list was identified as sites that were earmarked for gigawatt scale. There are plenty more out there. Studies have been done—not just by us, but independent studies for the Government and so on—that demonstrate there is an opportunity there. Finally, with the advanced safety cases—in our case particularly inherent safety that relies on the laws of physics, rather than lots of interventions to keep a nuclear power station safe—and the smaller footprint, there is evidence of a public appetite for these projects. They create good quality jobs, they can tackle environmental issues, and so on. There are a number of SMR sites that have gone into the public domain as potentially being developed outside the traditional nuclear areas, which have not created controversy. None the less, dialogue with the host communities is going to be very important. That is something we will be focused on as we rollout our fleet plans.

Can I just ask you, what factors make a site ideal for AMR development? How do these differ, if at all, from the requirements for SMRs or large-scale nuclear?

A lot of the criteria will be similar. You need to make sure that it is constructible, you can have the right safety case, the environmental impact is manageable, you can bring socioeconomic benefits, and obviously it is commercially viable. You can build nuclear in most places if you have unlimited time and money, but it needs to work on a commercial basis. As I said, the difference is really that you can locate in more places closer to the point of use. In our case, for example, even if we have a connection to the grid through electricity, we would be looking at sites where there might be potential to connect to existing process industries to make use of the steam, or new process industries could be attracted, such as synthetic aviation, fuel generation, and so on.

I will try to be brief. I want to talk about my favourite subject, the semi-urban population density criteria. Leon, you touched on the new technologies and how they are different from the older technologies. How do you think the difference in the new technologies should affect how the semi-urban population density criteria are reviewed?

If you look at what has happened in Finland, the United States, and so on, rather than inheriting the same population density criteria that applied to reactors that were designed 40 years ago, the onus is being put on the technology, the project proponents, and the regulators to establish that the safety case—not just in theory but drawing on evidence—demonstrates that you do not need the same size exclusion zones as you have needed with traditional nuclear, with a different approach to safety. In our case, for example, the fuel pebbles we make—these have been in development for 50 years, we have just managed to perfect them and they are ready to come to market now—retain the fission products. They cannot melt down. In effect, heat dissipates on its own, and the reactor shuts down on its own if it warms up, if there has been an interruption to cooling. For all those reasons, a lot of the protections that the broader emergency planning zones and semi-urban population density criteria were designed to address do not apply, due to the laws of physics. It makes sense for that to be recognised, provided we can make the case to the regulators, to allow for more flexible siting. That has been put forward by the Fingleton review. The Government have said they will look at the semi-urban population density criteria, to look at these new so-called passive safety systems and how those make the siting more flexible.

I 100% agree with everything that Leon has said. In fact, the implementation plan that Government published in response to the Fingleton review suggests an indication to go even further than John Fingleton suggested on reforming the criteria, not just for AMRs but for gigawatt scale because our criteria are basically outdated.

Yes. Government were intending not to look at this but rightly they are now going to, following the Fingleton review and pressure from other areas. It is right that you update where you should, exactly for the reasons Leon has outlined.

Perhaps not surprisingly, Sizewell C told us, “If SMRs are focused on sites that are better suited to host gigawatt scale, it is likely that this deployment will make it more difficult to achieve the Government’s 24 GW policy. Conversely, if sites are uneconomic for gigawatt-scale deployment, SMR fleets will allow space utilisation to be maximised.” Vanessa, does it have a point?

It is difficult to understand where that has come from, as Sizewell C is a single site operator as opposed to a technology provider. I do not necessarily think that—

Its investors are looking at more than a single site, which goes back to what you said about fleets earlier.

Quite. I take your point. At the end of the day, one of the key advantages of modular reactors is that they bring down the cost of capital because you can start generating electricity, offtake and revenue earlier in the process. You can build one module and start operating it while you are building the rest. The capital cost at Hinkley Point C was close to 80% of the ultimate cost borne by consumers. Obviously, Sizewell C’s cost has been brought down hugely through the RAB, by reducing that cost of capital by delivering revenue from day one. If we can do that without putting 100% of that construction phase cost on consumers by modularising the build, then there are huge advantages to that. Whether that is going to result in displacing the ability for gigawatt scale to be built is a question for the market. I am not sure that we have any gigawatt-scale developers wanting to put gigawatt-scale projects on the sites that are currently being looked at by SMR developers. If we do, then I guess it is a question for the competitive market to resolve.

I think it wanted to put them at Wylfa, Alastair.

That site is owned by GBEN alongside the Oldbury site. It is for GBEN to determine what goes there, not Sizewell C.

We have worked with two different technology-providing developers that wanted to put gigawatt-scale projects at Wylfa. Neither of them managed to get to an FID. Rolls-Royce SMR achieved that yesterday.

Is the market big enough to support multiple SMR technologies in the UK, or is it inevitable that everyone will end up using the same Rolls-Royce one? I take the point that you are doing something different with AMR, Leon.

Our view on this is that the size of the challenge is so great in terms of delivering secure, clean and affordable electricity that there is ample demand to have a mix, not just of forms of energy generation across the board, but within nuclear. Hence, we have gigawatt scale with Hinkley Point C and Sizewell C, and potentially another one based on siting assessments that are being done to look at further opportunities, so that is not off the table. There are Rolls-Royce SMRs and then this new framework that has been established by Government for future SMR and AMR projects that we are a part of. That seems like a sensible mix. There will eventually be a finite number of projects that want to come to market. You cannot water all the flowers in the garden. Hence, this process that the Government are now running is a filter to look at those that look most likely to be in a mature position to deliver projects, not just a nice technology that is looking for a potential route to market. Yes, there will be more than just Rolls-Royce SMR, Sizewell and Hinkley Point C. We intend to be one of those. That is the right approach because it then gives you the large-scale baseload, the flexibility the SMRs bring, and then the additionality that we can bring in terms of additional heat and the flexibility of deployment.

To bring the cost down in the market, one of the key advantages is to take advantage of the global market. If we are limiting ourselves to the UK market, then the cost curve will not come down as quickly. One of the key ways of doing that is to make sure that we are harmonising our standards for the approval, licensing and safety case processing of SMRs, in a way that takes advantage of international harmonisation efforts. That way technologies such as X-energy’s design can be an nth of a kind and not a first of a kind, as was required for the EPR reactor deployed at Hinkley, which could have been the same as those deployed in France and China but was required to be changed. Harmonisation is the key.

Can I add two points? First, there is also a benefit to having sovereign solutions. This is the first time the UK has had a domestic technology nuclear design for 30 years. It creates a green energy export opportunity for the UK to work with Rolls-Royce SMR. Rolls-Royce PLC—our majority shareholder—has its own AMR, so that is another opportunity to create a sovereign solution and a further export opportunity that would be based on UK deployments. Secondly, I always reflect on Andrew Sherry, the professor at Manchester University, who sat at the table here 15-odd years ago when Hinkley Point was being talked about. He said his courses in nuclear energy were five, six, seven times over-subscribed when Hinkley started to be talked about. When it began to wane, the numbers fell off. The fact that we are here talking about nuclear projects—Leon has an exciting project at Hartlepool, we are progressing at Anglesey, Sizewell is happening, Hinkley is happening—creates that really positive momentum for the industry. That is attractive for the supply chain, and that is attractive for getting young people into the industry and retaining people in the industry. For skills, having a prosperous nuclear industry is a real boom.

I am just trying to understand the global perspective here. You have talked about the Czech Republic and America; I have just done a quick search, and Rolls-Royce is working in Turkey; there is SMR in Canada, India, and the Middle East, all of which are first of a kind. Why is the industry delivering so many pilot schemes around the world? Everyone has talked about fleet capability, rollout and scale, but what seems to be happening is the industry is taking global Governments, with each individual one having to invest in their own pilot project. No one is seeing any fleet scale at all on a global level. Do I have that wrong? Are we already seeing economies of scale through your global rollout, Rolls-Royce, and Leon’s rollout?

Yes. We have certainty in the UK on three units, we will shortly have contractual certainty in the Czech Republic for four units, and we are hopeful that we will be successful in the Vattenfall selection process in Sweden. That creates that critical mass and scale; it creates a European fleet. I am no longer going to the UK supply chain talking about a single unit or two units. I am talking about three units in the UK, up to six in the Czech Republic, and three units in Sweden. I am giving it an order that is of significant magnitude. It has scale. This is not a one-off, a demonstrator, or an attempt. This is a genuine fleet from the outset. That is our position as Europe’s leading—

Are we paying for the first of a kind, in terms of the Government investment to support you? Is the Czech Republic? Is Turkey? I have just read on your website that it has an SMR programme with Rolls-Royce. Are all the Governments paying a bit of money to you to fund your R&D?

Let me go through those points in order. Rolls-Royce SMR has secured grant funding previously and a significant contribution of equity to get us to the point we are at today. The UK has ordered its first units, the Czech Republic has ordered a series of units, and Sweden—if we are successful there—will order units. It is not about first of a kind. The first project will inevitably be in the UK, but the Czech project will flow six months to a year behind, and Sweden on a similar timeline. We will have a number of projects moving forward simultaneously. I should clarify that we do not have a project in Turkey.

Can I just add my perspective on that? The fact that there are multiple firsts of a kind potentially being pursued in different countries is a factor of where the market is currently, but it does not mean that fleet programmes are not under way. As Alastair has just said with regard to Rolls-Royce, we would echo my remarks at the start. We have our first project in Texas, the second one in Washington State, the next one here in the UK, and we expect to move on to a fleet rollout here in the UK. Those projects are up and running and under way. I just wanted to reflect something Alastair said earlier as well about export opportunities, which is an important point. If we are able to establish a fleet rollout here in the UK, building on the existing skills and expertise we have with the advanced gas reactors that are already here—potentially that would support fuel fabrication facilities in the UK as well—that maintains that potential export opportunity for a fleet rollout elsewhere across the globe.

I just want to come back to something you said, Vanessa. You reminded us of the way that the Hinkley C EPR was of a different design in the end to what we have seen elsewhere. Do you think that lesson has been learned; that we have assurance that we will not repeat the significant costs incurred, as a result of the decision not to use as close as possible a technology elsewhere?

I hope so. I should say that this is no criticism of the UK Government. This is a mistake that a lot of international Governments have also made around wanting to exercise sovereign power, to have their own safety regulators impose standards on designs that are imported from abroad. It is something that the SMR international regulatory community has recognised is a missed opportunity. Because SMRs are newer technologies, they are presenting an opportunity for greater harmonisation to be embedded from the beginning. There are a number of international bodies supported by the ONR and other international regulators, and through some international bodies such as the World Nuclear Association, CORDEL and the International Nuclear Law Association. A number of different industry bodies are supporting harmonisation efforts, so that all countries can work together to create greater standardisation. Some lessons that we have learned from other industries where safety is incredibly important, such as aviation and pharmaceuticals in particular, are being deployed through some international bodies. The Fingleton review has focused on this quite significantly, and the implementation plan has a lot of promise.

This is one of the areas that is really exciting in nuclear at the moment. Every 10, 15 years or so the planets align in nuclear to make a real difference, and this feels like one of those moments. Our technology is going through regulatory review in the US. We are having discussions with both the regulator there and the regulator here about how to translate the work that has been done in the US in practical terms, so we do not have to do do-over work that is costly, lengthy and unnecessary, while still giving the UK regulator the sovereignty, control and authority to be confident in its own determinations on safety, security, and so on. We are actually working on that now with the support of the Government and the regulator. We are looking forward to seeing the improvements that are being made to the generic design assessment process that we are about to enter. This is no longer just wide-scale discussion, it is practical: how do we actually do this? That is a great step forward.

The advantages are not just for deployment of projects in the UK. The harmonisation efforts will also be to the benefit of companies such as Rolls-Royce SMR to support the export because while we are involved in international harmonisation discussions, we are also assisting other markets to adopt the same standards so that we can export more readily.

All three of us have been sitting in those sorts of discussions for 15 years. Things are moving slowly, but to give a practical example, we are in the final step of the generic design assessment in the UK. We have had five other regulators from international markets—Czechia, Netherlands, Sweden, and others—sitting in on that regulatory process, understanding decisions we are taking in the UK. They cannot intercede in decisions that are taken in the UK, but they can then understand why and the justifications. They can challenge it directly to us, and say, “If you take that decision, this is the impact it might have in Sweden.” As we finalise designs, we can think what the impact would be, and how to make sure that we are designing a product that can genuinely be exported efficiently and effectively because, exactly as Vanessa says, it is in everybody’s interest to not redo this work over and over again.

Something else that might be in everybody’s interest is having a funding model that enables increased take-up of emerging technologies. Should we be extending the RAB or the CfD model to SMRs and AMRs, or should we be looking at an alternative, Vanessa?

The Advanced Nuclear Framework identifies CfDs as a potential support mechanism. Whether that is necessary will depend on each project, fleet and technology. One of the key benefits of the framework is that there is flexibility provided, so that Government can assess each technology and proposal that comes through the pipeline on its merits, to identify what the best route will be in terms of producing value for money for consumers and taxpayers. Whether that involves CfD, RAB, or just normal market-based funding remains to be seen. What is encouraging is that there is flexibility provided, and through the NWF, through the provision of debt. We are also seeing UK Export Finance showing interest in helping to support the development of supply chains. There are a number of different mechanisms that might be attractive, depending on the model.

This is at the crux of the Advanced Nuclear Framework and the discussions that will then follow for us. There is a difference here between your first one in the country and then the nth of a kind, in terms of the potential framework that will support that. If you look at the RAB model, it has some significant advantages, not just in terms of bringing investment to make sure companies such as ours get their projects away, but it reduces that cost of capital significantly because the money that you borrow does not cost you so much. That ultimately drives down costs long-term for the consumer. At the end of the day, this is what we all want. Once nuclear is up and running, it is incredibly cheap. This is a way to actually overcome those additional costs from the cost of capital that you get at the start. We will have those discussions with the Government—we hope, if we pass through the assessment process, which we are confident of doing—and look at the nitty-gritty of what those support mechanisms are. There is definitely something that will work for us and for investors, which the Government will be capable of getting behind within their own framework.

Yes, the Government and we as MPs with constituents are very keen on anything that brings down costs to consumers. Alastair, where it comes to first-of-a-kind cost risk, who should bear that cost risk? Should it be taxpayers, developers or consumers? This is a similar question to the one I asked about grid, but this is for your technology.

Yes. The way our project will be delivered will be that GBEN will place a contract on us to build the units, and GBEN will, in all likelihood, work to secure a RAB. That is a cost that will sit on every bill, in the same way that Sizewell is being delivered. The reason for that is it delivers the lowest cost of capital, and that has been one of the major factors in the significant costs of nuclear projects. Ultimately, as Vanessa says, wherever you allocate the risk, that is how you determine the cost of the overall project. In this case, those that can best bear the risk would be the consumer and the RAB.

Yes. Rolls-Royce spent £1 billion on share buybacks in November. That is right, is it not?

I am employed by Rolls-Royce SMR. Rolls-Royce is the majority shareholder, but I have four shareholders in the Rolls-Royce SMR business.

That is a neat way of you avoiding having to answer that question. Leon, I know you obviously are here to promote X-energy. Are you confident that the Government are going to make the right decisions about the technology they choose for their alternatives to large-scale nuclear?

There are two things. First, the commitment is definitely there to take forward this mixed portfolio that we are talking about, with the different legs of gigawatt-scale SMRs and then looking at the opportunities from advanced nuclear. I have been in nuclear for quite a long time, and the going is not always good. At the moment, the building blocks are in place to actually create the opportunities for us. The Advanced Nuclear Framework is the right way of going forward, provided it is prosecuted quickly and thoroughly. Secondly, the commitment politically from the Prime Minister down is there to make nuclear a core part of the mix, including advanced nuclear, which has not always been the case. That augurs well for us. Finally, these practical steps, such as the acceptance of the Fingleton Review recommendations, are important, and they are going to help bring things forward more quickly and effectively. We are confident. I do not want to start anticipating results, but we feel we have a good opportunity, and we are pursuing it.

The selling point for SMRs and AMRs is the lower capital cost at the beginning, but obviously that is only part of the cost of running a nuclear system; there is operation, defueling, decommissioning and so on. We have not yet been able to get a whole-life project cost estimate for SMRs and AMRs. Vanessa, do you think it is currently possible to produce that projected whole system cost for SMRs and AMRs? If so, how do they compare to large-scale gigawatt reactors?

I am not qualified to answer that; I am not sure, Alastair, whether you are better placed.

As you have rightly said, there are a number of elements that make up the eventual cost of the project. The commitment to the Rolls-Royce SMR is for the product. GBEN will take on the responsibilities of the developer, clearing the site, prepping it, securing the DCO, getting the nuclear site licence in place, and getting the operator set up. Then, of course, the funded decommissioning plan has to be established. We are now going to work with GBEN to refine all those figures. We have estimates of what they could be, but we do not know what GBEN’s estimates are; we only signed our contract on Monday this week, so we will now use the years ahead to develop and finalise those costs.

At what point do you think you could come back here and say, “This is what the whole-life cost is going to be?”

Once we have determined all those factors and know what it is going to cost to prepare the site fully, once we know whether we are delivering—

How long will that take?

We are going to work with GBEN now. It will be before we get to FID, the final investment decision.

It has been reported by ISAR Global that the parliamentary record still does not hold this information; we have not been able to find it, so that is helpful. We in Parliament have to be confident that we know what these costs are, especially when public money is involved, so how accurate do you think that process will be? Before we get to FID, will you be confident to come to us and say, “This is what we think the whole-life costs are going to be?”

As a project, we will likely sit on the Government’s major project review board, and we will be assessed on a quarterly basis. We have to go through KPI metrics and monitoring processes with GBEN as our counterpart. We will have regular review processes with both the Cabinet Office entities, NISTA and GBEN, but it is likely that GBEN will present the whole picture of the total cost.

The modularity, the fleet production and the lower capital costs are meant to offset the fact that you produce less energy in an SMR and AMR than you do in a gigawatt plant. But we have seen projects that have not gone ahead, such as NuScale in Idaho and EDF Nuward in France. Do we have any real-world evidence that this is actually a more efficient way to deliver that baseload energy, or is it all still a bit theoretical? Would Leon like to start?

I should state for the record that we have filed for a listing on NASDAQ in the United States. I therefore need to be careful about making forward-projecting comments because we are technically in a quiet period. But what I can say is that we already have projects under way; I am at risk of repeating myself, but there are two in the United States, and in terms of technology this will be the third of its kind. There are Small Modular Reactors up and running—there is one in China, for example—and there have been a number of test reactors across the world. There have been submarine reactors. The market has not been in a position where it has made sense to bring these forward, but it is now. The fact that some projects are not going ahead does not mean that doubt should hover over the whole class. Everybody will have different technologies, different approaches, different commercial models and so on. Due diligence has been carried out on us by the US Government, by Amazon, by Dow and by Centrica, and we have a third project in the UK that we are looking to pursue, so we are very comfortable and confident that this is going to be a success.

Vanessa, do investors hold the view that we are in a good position for this to work? Obviously Government investment is one thing, but private investors are looking to make a profit.

Absolutely. Project cancellation is not unique to SMRs. Many more gigawatt-scale projects have been cancelled globally than there have been SMR projects, and many more other types of electricity generation projects cancelled than there have been nuclear projects. That is normal, and it is just a test of whether it is a good project. Ultimately, the cost of getting to FID and building is usually borne on the balance sheet of the project; it is not something that investors or consumers bear. The risk is only crystallised at FID, as we have seen with Sizewell C. There has been a lot of DevEx expended on balance sheets by a number of developers over the years; what the Advanced Nuclear Framework promises is to make that DevEx investment less risky so that we see more developers willing to expend money at risk. They will then bring in decisions that can deliver benefits to consumers. The truth is that consumers and taxpayers are protected until that point. This is something that developers are doing at their own risk, and Governments recognise that. Both the implementation plan of the Fingleton Review and the Advanced Nuclear Framework recognise that reducing that risk will be to the benefit of everyone.

Alastair, we are going to talk a bit about the supply chain, starting with Rolls-Royce SMR. Can you explain to us what a 70% British-built supply chain means in layman’s terms?

It means that the whole project has a target of achieving 70% UK content.

Is that by volume, as in the number of contracts, or by value in terms of pounds?

Sorry, by value; that is, the total cost of the entire project. That is not just the Rolls-Royce SMR piece; it is the GBEN piece, operations and the whole element of the fleet—all that would be 70% UK.

The whole delivery, including construction and operations?

Correct.

Of the contracts you have placed to date, what percentage are with British firms? You can always write to us if you do not know this.

It is 70%.

I should declare a potential or perceived conflict; I worked in the supply chain bidding for work with Rolls-Royce SMR and some of the others that have given evidence. My former firm is one of the firms named on the latest press release. Looking at your online presence, it depends on how you define British content. Your programme manager is an American firm; your construction partner is an American firm. The latest big announcement on your website is that you are partnering with a Swedish firm, Studsvik AB; I do not know what it does, but it sounds good. When I look on LinkedIn, I see that Japanese nuclear specialists are involved. In reality, is there a UK supply chain to support this, or are you having to rely on the established global supply chain? Is 70% realistic?

Let me start with the examples of international businesses that you have provided. We have placed a series of contracts with companies like Amentum, which is a major global company; I believe it has around 30,000 people working in the UK. That work will be delivered by Amentum’s UK business. Yokogawa is a Japanese business that has a significant presence in the UK, and its work will be designed, delivered and manufactured in the UK. It is the same with a number of the businesses that we are speaking to at the minute; we impress upon them the importance of localisation. They know that they have to step up in terms of localisation when they are working with us because it is an expectation of this project.

When you say localisation, do you mean built in Britain rather than built by British-owned companies?

It will be a mix. To give you another example, one of the major components would have been developed in a European-based factory; I cannot name the business. We now have the investment case for it to establish a UK facility because it can see the fleet principle, so you have a significant reshoring opportunity of the really big elements of the project.

Going forward, at the moment you are procuring consultants and advisers—who we know exist in the UK at scale—but you now need factories and others. Is there enough Government support to develop that part of the supply chain in the UK? It is a supply chain that does not currently exist.

That is a great question. We have broken down the supply chain for our UK project into a simple red, amber, green: red, the UK does not do it; amber, the UK could do it; and green, the UK does it day in, day out. There needs to be more support to move those ambers into greens, and we need help to do that. There also needs to be a strategy around any reds that are identified. Which reds does the UK think can be turned into greens in the longer term, with the fleet, a significant commitment and a long-term plan? To give the example of pumps and valves, there is £250 million-worth of pumps and valves on each SMR. It is a lower-priced commodity, but taken in aggregate, it is a significant set of contracts. You have three sets of those contracts for our first UK units. If a UK supplier secures that and works with us on export for the Czech programme or the Swedish programme, a really significant business can be established there.

We had numerous evidence suggesting that when you go to speak to the Czechs you say, “We will have a Czech-built SMR”, and when you go to the Swedes you say, “We will have a Swedish-built SMR.” As you scale your fleet, you potentially only need one factory for this solution; you said earlier that you are telling your supply chain now that there is UK content, UK sovereignty exporting. Which is true? Are we are going to see a Swedish supply chain for Sweden, a Czech supply chain for the Czech Republic, and UK for the UK? Or is it going to be UK exporting? From the evidence of what you have said, I cannot work it out.

You will always have some elements that are localised; digging holes and delivering concrete employs a lot of people. But you will also be able to create and use existing skills. We benefit from having the Czech Republic State Utility, CEZ, as one of our shareholders. CEZ owns 20% of the business and has an existing supply chain that we will use because it produces high quality products. We have said to the first mover countries that we will prioritise their supply chain; we want to prioritise UK, Czech, and hopefully Swedish products. When we go to the follow-on countries, we are not going to be basing things around the heavy utilisation of further factories, but we want to use and export from these first mover countries. The benefit for follow-on countries is that they will get a lower risk product that is proven and deliverable.

Why would you put the manufacturing capability in the UK, given that we have really high energy prices and a relatively low manufacturing base compared even to other European countries? As a committee, we have heard that the UK is a very difficult place in which to manufacture at the moment. So why would you do it here?

Because you already have existing skills, existing capabilities and existing manufacturers that we want to work with. We know the Rolls-Royce submarine business, and there are a range of companies working on Hinkley Point and on Sizewell. We are speaking to them all.

One final question and I will let you off the hook, Alastair. You and I both know that your headline contract may say 70%, but what actually matters is what is in your supply chain. For your top five contracts by volume, let us say, what contractual terms are you pushing on to suppliers to make sure that they have UK content, and what contractual terms are you pushing on to them to make sure their own suppliers have UK content? Frankly, I have played the public procurement game. You can have UK content for the headline supplier, but how that headline supplier delivers is a very different matter. Do you have those contractual mechanisms in place to make sure that your UK supply chain is buying its supply chain in the UK as well? You do not have to answer this now; you can write to us.

Subject to the agreement of my procurement team and legal team, I am very happy to share the contract terms you are talking about. We do have flow-down requirements. That exact point was a key part of the negotiation that we went through with GBEN, and subject to my legal colleagues agreeing, I am more than happy to share those contractual terms.

Vanessa, just quickly on the factory model; we have had evidence questioning why you would have the factory in the UK, not just for Rolls Royce but for others as well. Does shifting to factory-build reactors actually risk UK job losses to overseas, cheaper manufacturing?

That is probably a question for Alastair and Leon around the commercial aspects of what you build in a factory and where. It also depends on what you are actually building. The modules need to be built near the project. At the moment, the gigawatt-scale projects are largely built on-site. There are massive components, for example, for Hinkley and Sizewell being built in France and shipped across. A lot of that major development can be brought domestically for SMRs through the Rolls-Royce programme in a way that has not been possible for the EPR, and in a way that secures the benefits of economies of scale because Framatone’s factories are in France. That is just the way it is. If we are building from scratch, then we can build the equivalent here because it does not exist yet, and that has huge advantages. Obviously, it will make sense for Rolls-Royce, SMR and other developers to build factories elsewhere as well, but that is detail that I do not have to hand.

I would probably add a few perspectives here. One reason why the UK market is attractive to us is, as Alastair said, the capability that exists in the supply chain and the skills base, particularly due to a historical coincidence that our gas-graphite modern technology is similar in many ways to the advanced gas reactors that are currently operating; we have that expertise. The issue is capacity. For example, when it comes to modularisation, we are looking at our strategies now, but we might choose to invest not only in potential factories but in increasing capacity in certain production lines and within the existing supply chain. So there is an opportunity through making sure that there is the certainty of a fleet rollout so that people have the confidence to invest, linked into the Government’s industrial strategy and with targeted strategic investments to increase that capacity. In fact, we have produced studies jointly with the Government, looking at that manufacturing base and what the supply chain can and cannot do. As Alastair said, there are certain components that need to be delivered by the global supply chain, particularly early on. Nuclear is a global supply chain, particularly if you want the certainty of delivery and to bring costs down. There is stuff that will always be done locally, but then there is a middle bucket which is the long-term opportunity. That is where you need to work together; the supply chain wants to know that there is an order book coming along so that it can invest, it wants to know what help is needed, and it wants a clear procurement strategy from the developers so that it can tool up in readiness.

Sorry, Chair, I have one more very quick question. How does your commercial model look at encouraging an SME market? The suppliers we have talked about today are all large global firms; for both your firms, what is your strategy around engaging UK SMEs?

Again, we have targets and metrics within our reporting requirements to GBEN on both SMEs and VSMEs, so we will be providing monthly data on exactly that point to GBEN.

Did you say you have targets?

We do. I will write to you on the specifics.

How about yourself, Leon? Are you developing the UK SME supply chain?

We will be. As things stand at the moment, we are still at the point of making sure we have a route to market and we are bringing our supply chain leadership on board in the near future, when we will set out more details on the procurement pipeline. But absolutely, it is always the case that you need to understand how to articulate the route to market for suppliers and the tier where people need to come in. The events we have held so far have spanned the large global and national UK supply chain companies as well as SMEs. The opportunities that we need to look at as well are, for example, strategic partnerships. Some SMEs will never have the capability to meet a need on their own, but if we can co-ordinate a partnership with other people in the supply chain, they can reach a much bigger addressable market from our projects. It is very much in our thinking and will be part of the procurement strategy as we move forward.

What happens if you do not meet the targets on all the SMEs?

We will put improvement plans in place to make sure that we do in time.

In time? How long do you have for corrective activity or action to be taken? Is there any financial penalty attached?

I would have to check if there is a financial penalty, but within the metrics we have overall requirements on social value broken down into four different areas, of which SME utilisation is one. I believe it affects the payments. But if you do not mind, I will write on that specific point.

In other energy sectors, what we find with supply chain versus developers is that we end up in a chicken and egg situation, where we cannot get investment until we have certainty, or we cannot commit to things that you say you have already committed to unless we know that it is already available to us in some way, shape or form. Do you think that nuclear is ahead of the game, or that your project is ahead of the game in tackling that?

I hope so. The contractual certainty we have with GBEN today means we are building three units at Anglesey, so I can go out to the supply chain now and talk about long-lead items and, in particular, make sure that it prepares in good time to work with us to secure contracts. There has been a stop-go, stop-go process for new nuclear projects where suppliers get themselves ready and secure all the various licensing and regulatory requirements, which are very costly for suppliers to hold, and then projects do not come forward, so you have a frustrated supply chain. But the fact that the Government approached the Rolls-Royce SMR process differently, giving upfront clarity and certainty on the initial three units, means that we can work with the supply chain now and build that confidence again.

Sometimes the supply chain will come back and talk about scale; it is not worth the investment if the scale is not there. Do you think that three SMRs will address that?

Having signed a contract for three on Monday, I do not want to be immediately ungrateful to the UK Government; three is the starting point and they are likely to prepare the site for eight. But I can also offer suppliers contracts in the Czech Republic, and if I am successful, contracts in Sweden, so we have that scale.

Do you have an estimate of the total value of the contracts for the three projects?

Not at this time.

Alastair, I am going to come back to the factory-build element of the modular reactors. We have been told that this is a global endeavour; you have confirmed that. We have also been told that there are likely to be global factories, one in Europe, one in Asia, and one in the US. Is that right?

The strategy is to develop a UK Rolls-Royce SMR factory. We would expect the supply chain to develop its own existing assets or to establish— as I talked about earlier—that a particular component will be developed using a UK factory. Rolls-Royce SMR will identify a site for its first UK factory this year; we are looking at doing something similar in the Czech Republic.

So there will be more than one in Europe?

There will be one somewhere in the UK, and potentially one in the Czech Republic as well.

Okay, but not one in Sweden?

That is not currently within our thinking.

We might sell our modules to Sweden.

That is the hope.

But there will definitely be a Rolls-Royce SMR factory in the UK.

We have teams looking at sites across England and Wales today.

I highly recommend Northampton.

Heysham is lovely.

Anybody else? No? Then we have two sites to choose from.

I want to talk about the Advanced Nuclear Framework. We have already touched on it, so do not feel you need to repeat points that you have already made. Vanessa, do you expect the Advanced Nuclear Framework to accelerate the development and deployment of advanced nuclear technologies, and if so, how?

It has promise, but that will obviously depend on how it is implemented. The idea is to have a pipeline assessment process, filtering good projects up front. The DESNZ-led Government team will assess whether a project is viable and whether it can deliver all the different requirements that align with Government policy, so that it can be assisted through the process. Whether that process will achieve the planned efficiencies will depend on the detail of how it is implemented. One of the things we have seen from regulatory reforms attempted in the past—particularly the 2008 changes—was that some, such as GDR, were incredibly successful, but others such as the justification regime were less so. We need to make sure that this does not create just another gateway that projects need to pass before they go through the existing processes. We need to avoid duplication; any assessments that are done up front will need to be robust. There will need to be proper diligence to make sure that the projects that enter the process are the right projects. What we do not want to happen is for that process to be extended and then repeated again by other regulators. There will need to be streamlining and learning from other industries, but also from projects in other countries where similar pipeline processes have been used successfully and where project-specific streamlining measures have been implemented. One of the great examples, from my personal experience, was the effort that the Government made to deliver the London 2012 Olympics on time; that involved the Government taking a leadership role and aligning the different regulatory processes so that none of them were diluted, but they were aligned in a way that avoided duplication and met the immovable delivery date.

Leon, do you think that the project readiness assessment will ensure that only credible, timely and cost-effective projects will progress?

From what we have seen so far, we like it; we think it is a robust approach, but not unduly bureaucratic. Let us face it, although we are looking at privately led projects, we need an element of Government involvement and support with the first one to breed investor confidence. Therefore, it is only to be expected that the Government need to have a robust process to assess which are the correct projects to take forward. It is a gateway and an assessment that then allows you to get into conversations about those support mechanisms and what that will enable you to do in terms of delivering a project and bringing in investment. We like it; it is a fairly high bar, but so it should be. Provided the timetable keeps up the pace—there is a global market and there is a lot of demand, and we want to be building here in the UK, so we do not want to be complacent—we think it is the right process and we are looking forward to going through it.

Obviously, no process is ever perfectly going to pick out the correct projects, but do you think there is any danger that it will prematurely rule out things that could have been?

I can only speak from our perspective. The questions that we are being asked are pretty robust and the right ones you would want to ask of a project. This is not about, “Do you have a nice technology?” It is about, “Do you have a robust organisational structure, a project plan, and security in your supply chain?” Those are all the right questions; if you cannot answer them reasonably thoroughly, then you probably need to go back and spend a few more years developing your approach. We shall see, but these are questions perhaps for GBEN and the Minister.

If we turn to part two, which sets out enabling conditions in regulation, planning skills and the supply chain, which of those currently poses the biggest risk to timing deployment, and what actions are needed to address that?

Those are all boxes that have to be ticked, and I am not sure if I could single out one of them. It is interesting; for a long time, we have had concerns that, if we do get a nuclear renaissance—which now looks like it is a real thing—do we have a supply problem? Skills are another concern. However, the issue has actually been more of a demand signal problem than a supply problem, and that is why it is important to take clear steps such as getting through this framework, and Rolls-Royce signing the contract. That will give confidence, if not absolute certainty, that there will be something worth gearing up for. So that addresses the supply chain and the skills piece. In terms of the regulatory piece, again, it is no secret that the process in nuclear has taken over from outcomes, but as I mentioned earlier, the planets now appear to be aligning with Government, the regulators and the industry to make commitments to make sure that we get the right outcomes and speed things up without bogging ourselves down in process. That is an opportunity, particularly with the international harmonisation element. For me, it is about getting that route to market nailed down; this framework is about making sure we can have this conversation with the Government. We know we have a basis on which we can deliver these privately led projects. I do not know if that really answers the question, but those are the challenges and what we are looking at in terms of the status of how we are doing in addressing them.

Given that Rolls-Royce is also looking at AMR, do you have any comments on this process, or is it something you have not considered yet?

We have looked at it as Rolls-Royce SMR, and I believe Rolls-Royce PLC has looked at it for the AMR. It is the right step. As Leon mentioned earlier, it is a slightly iterative process, so it is not all or nothing. It enables you to engage and understand what HMG need you to have, and you can keep coming back; that is the right way of approaching it.

Vanessa, the framework expects projects to be privately financed, but it does allow for revenue support or risk protection. How should the Government ensure that you have proper accountability for public and private investment?

It depends on the form of revenue support and the form of risk protection. There are some basic risk protections that almost all Governments are providing now and that have been needed on all the projects, including insurer of last resort. Now that the UK has taken the helpful step of acceding to the Convention on Supplementary Compensation, nuclear pools in the UK are some of the most developed in the world, so that risk is incredibly remote; but we know that investors need to have that back-up so that if the insurance market over the very long term life of a nuclear project does not respond, the project is not prevented from operating on the basis of insurance failure. That is a given. I do not think there is a Government in the world that are not providing backstop insurance and protection against political shutdown. After Fukushima, we saw investor confidence in nuclear wane largely because of the actions taken on shutdowns across the continent and particularly in Germany. Given how long it takes to recoup the investment on nuclear, it is therefore incredibly important to provide contractual support in the long term and demonstrate that policy will support the continued operation for the life of the investment. Those are both a given; Government support around those issues is fairly well established. Revenue support will depend on the cost and the market; whether it is RAB or CfD is a question for each developer. We have a very robust subsidy control process that will ensure that this is only provided in situations that meet all the UK’s established principles around value for money and so on.

Do you think there will be additional need if you are in a situation with only revenue support?

If we ended up in a situation where we had enough entrance into the market to run a competition—as we have seen with offshore wind—it would be fantastic. But that is a long-term goal. In the meantime, our subsidy control process has shown itself to be robust and will protect consumers and taxpayers appropriately.

I want to talk about decommissioning and waste. Over the lifetime of nuclear energy, we have seen the nature and type of waste change quite a lot, from the very problematic stuff at the beginning to a much better picture now for the defueling of, for instance, Heysham 1 and 2 in my constituency. I want to know whether the emerging reactor technologies that we are talking about today reduce the waste and decommissioning burden, or simply change how we need to decommission and store waste. I will go to Alastair first.

The main point to start with is that we are now designing a reactor for decommissioning; that is part of the process, whereas the very early units were not designed in that way. Decommissioning is a core element of how we think about the design. For example, 99% of the waste from the Rolls-Royce SMR is spent fuel that is safely stored on site; it is no different than a PWR reactor, as you would see at Sizewell B, so there is a known, well-understood and proven decommissioning route. We would comply and follow exactly the same strictures as we have in the UK to decommission the reactor. It would be no different to a Hinkley Point C, a Sizewell C, or a Sizewell B model for decommissioning. The only other thing is the funded decommissioning plan I talked about earlier; you would only be able to proceed with the project with a fully agreed funded decommissioning plan to show that you have that pension pot to pay for decommissioning in the fullness of time.

I would echo what Alastair says. The nuclear industry has by far the most robust requirements in terms of both funding and technically managing spent fuel and waste. The pebble bed reactors have a pebble fuel form. We have already done studies with nuclear waste services to look at whether those are compatible with interim on-site storage and disposal in a geological disposal facility, and there are no showstoppers to that. The fact that our fuel has lower residual heat from high burn-up rates and the way it is packaged means that it does not need to be water-cooled; it can be dry-stored on-site before eventually being moved to a geological disposal facility. As Alastair said, we will be expected to make provision for our elements of the funded decommissioning plan and the handover to a geological disposal facility, and that is consistent with the direction that we are taking in terms of the policy for waste disposal.

I would repeat the point that the Government have recognised for quite some time, which is that the cost of disposing of new-build nuclear fuel is incremental to the cost of building a GDF to deal with our legacy waste; the SMR contribution to that will be relatively small.

So essentially, we already have a problem or a thing that we need to do, and your view is that this does not materially add to it.

It is a small incremental cost on top of the cost of the GDF we already have to build.

If it does turn out to be harder to deal with or costlier, where should the accountability for that lie?

The funded decommissioning regime that has been established and proven—a similar one is already in place for Sizewell B and for the entire existing EDF generation fleet—is that the costs are assessed initially on an incredibly robust basis and then reviewed every five years, as is the sufficiency of the fund. If the fund is insufficient then it needs to be topped up by the operator, and that is a cost borne by the operator. In a CfD world, that eats only into the return on investment. It does not flow through to consumers because the strike price is the strike price. It is slightly different in a RAB scenario, but Ofgem’s incredibly tight oversight of costs ensures that the risk is managed as efficiently as possible.

We have heard evidence that quite a lot of waste already in the UK could be reused for various things; for instance plutonium could be used as a fuel in a mixed oxide reactor, and it could also be used in nuclear medicine or in space batteries for long-term space exploration. But the Government policy—certainly for plutonium—is to treat it as waste, vitrify it and put it in a GDF, which has yet to occur. Do you think the plutonium policy should be reviewed and the potential use of radioisotopes from that waste should be reviewed?

That is a question for Government.

Government have made their policy decision. I am not sure it is up to us to question it.

I concur with that; it is not one for us to comment on.

We cannot do a session on nuclear without talking about Fingleton. The Nuclear Regulatory Taskforce said that the UK’s nuclear planning regulatory framework is tailored to traditional large-scale reactors, making it difficult for innovative designs to gain regulatory approval. The Government have committed to implementing the Fingleton Review recommendations by the end of 2027. What will that look like in practice for SMRs and AMRs?

The purpose of the Fingleton Review and the Government’s response to it has not been so much to deal specifically with new challenges coming from AMRs and SMRs, but to remove unnecessary bureaucracy and time taken out of the overall nuclear regulatory framework landscape. In terms of the impact on AMRs in particular, it is extremely helpful for us because it is effectively pushing in the direction that we are already travelling in. For example, the ONR and the Environment Agency have introduced a new concept of early engagement for evolutionary technologies like ours so that we understand the design, the fuel, the safety case and so on early on in the process. That ensures a smoother pathway through to, for example, a successful generic design assessment. That has been very helpful to us; that engagement has meant that there is familiarity there to set us up for going through a speedier regulatory pathway. The Fingleton report has, in effect, greased the wheels even further by looking at international harmonisation pathways, and the Government are supporting that. It is good news for us and, in combination with the fact that our technologies are an evolution rather than a revolution, we are well set up to have that smooth pathway.

Alastair, what about SMRs?

We have put in our evidence to yourselves, and are making the case to Government that they should use the Anglesey project as a test case. Fingleton set out 47 recommendations. We now have a project that is under contract; let us show how those 47 recommendations can deliver the earliest possible scheduled date. You asked what needs to happen; it is implementation. If the 47 recommendations have been accepted, how they will be implemented is the crux of it. Legislation would have more impact on the change that is being progressed, but it is obviously much faster for Government to deliver guidance to a regulator. Therefore, if you are using this as a test case, you might sway towards guidance in the first instance.

If Government are saying that all reforms will be expected to be completed by the end of 2027, how confident are you that they will achieve that?

The first test is to establish the implementation board. They stood up the Fingleton body very quickly; they did their report and put out their documents extremely efficiently. We have not yet seen who is going to be on this implementation board, so we need to see that determined pretty quickly. But you have an extremely compelling roadmap there for how you can do this faster. It is in the Government’s interest to work with industry and Fingleton to make sure this is delivered effectively.

Leon, do you have confidence that this will be achieved by the end of 2027?

Yes. I agree with what Alastair has said; we have the big picture acceptance. Five or 10 years ago, we would have fallen off our chairs in delight if these proposals had been put forward and the Government accepted them. We do not want to be the people who cannot take yes for an answer. But we do need to see the detail of the implementation to have that next level of confidence in seeing when these things will flow through.

Vanessa, do you agree that the Government have been very quick to do the review but are dragging their feet on implementation?

We are seeing the intention from Government to do it, but industry is also committed to help—we are working through the Nuclear Industry Association, for example—and that will be an important piece.

That is a good point. The Chancellor of the Exchequer has written to all of us to say, “Come back with a detailed plan of what you are doing to make sure you play your part as an industry in changing the culture that puts process before outcomes.” That is something that is beholden to us to do as well as the Government.

We have also had evidence around security; as a Committee, we have been very interested in the link between defence security, energy security and sovereign security. How can we ensure that in a more distributed energy system—particularly for SMRs and AMRs—we are safe from physical and cyber-attacks?

I will start with physical attacks. The designers of our reactor have to work with the design basis that is set by the regulator and independently assessed by the relevant secret security elements. We have to design with that in mind to make sure we can deal with the hazards that could emanate. Cyber is fundamental; it is a core part of our programme of work. We have established a very large cyber team and we draw on the experience of our shareholders to make sure we are as robust and resilient as we can be.

I agree with that. The cybersecurity element has obviously been a significant development in recent years in terms of the regulatory landscape, but ultimately—from a security and environmental safety point of view—we have to meet those tests from both the ONR and the EEA through the generic design assessment and then the site-specific case. That will be the same for SMRs and AMRs. It will be rigorous and robust, but hopefully more efficiently handled.

We are benefiting from the fact that the UK has refreshed our security and safeguards regimes post-Brexit; we have not only one of the best security regulatory systems in the world, but also the best regulators.

The AMR and SMR programme definitely brings nuclear reactors closer to home. For example, I have spoken to a developer who would love to build one in the Docklands in London. Should the public be concerned?

The truth is that, if there was a massive attack on nuclear, it would not really matter if it were 10 kilometres away or 100 kilometres away. That is just the nature of nuclear risk. One of the key advantages of smaller reactors is that the fuel inventory is smaller so the target is more distributed, so there are security benefits to having a distributed form of nuclear generation in the same way that there are disadvantages.

Do you think the Government should therefore be making a clearer argument that there is a defence and sovereign security element of investing in distributed energy generation—not just for renewables but also nuclear as well— in that it makes us a harder target for adversaries such as Russia?

All our technologies, regardless of whether they are large or small and wherever they are located, need to meet very high standards. I do not think there is much to be gained by comparing one to the other. The truth is that they all have to be very safe, and our standards will make sure that they are.

I would add that this is not new; in Hartlepool and Heysham people can see the reactors from their doorstep. So this is not a new or a novel idea.

I would be getting one, but they are a bit short on the ground today. Turning to the workforce, we are looking at employment models and how you predict your future workforce. We have had evidence that in a fleet-based model, the multiplying effect means fewer jobs per gigawatt. In our previous panel, Sue Ferns told us that Sizewell is expecting around 10,000 jobs per 3 GW of energy. At Wylfa, you are expecting 3,000 jobs per 1.4 GW of energy. Those numbers may be slightly wrong. Should we be assessing and looking at employment created through this at fleet scale rather than people talking about individual projects? Leon, we will start with you.

Even on the smaller scale, nuclear projects are still going to be multibillion-pound projects, creating thousands of jobs during the construction phase and hundreds of high-quality jobs for three generations of workers. That is just in terms of the construction and operation of the plant itself; then you have knock-on benefits in the supply chain. In our case, if we look to do fuel fabrication here, that will mean thousands more jobs and billions of pounds of investment. So in the round, there is no question that this is going to be a high-value industry in terms of jobs. On the point about gigawatt scale versus smaller reactors, yes, of course, if you have an SMR that is considerably smaller, it is going to have a smaller operational workforce. But I agree that when you look at the economic benefit and the impact not just of fleet rollout but also potentially modularisation factories and facilities and so on, that is going to create significant numbers of jobs.

If I can just explain that 3,000 number; that is 3,000 at the peak of our workforce on Anglesey where we are building three units. But we also have 5,000 jobs created in disparate factories in the supply chain across the UK. That avoids the boom-and-bust nuclear model where there are 10,000 or 15,000 people at a site and then it all tails off again and causes significant disruption. The fleet effect means you are putting jobs into centralised factory facilities, and you have continuity of employment rather than the boom and bust of large nuclear.

So the big job creation is in the factories and in the supply chain?

In the supply chain, yes.

If I can give a concrete example, at Hartlepool, alongside our partner Centrica and various local authorities and colleges, we are already planning to develop a nuclear and electrical trades academy in order to feed that pipeline of skills that we are going to need. Those people may well be working on the plant itself, but they may also be backfilling into the supply chain when we start to draw people out of other industries that might otherwise be using those workers. That is something we are already planning for.

Leon, do we have the specialist skills required to advance nuclear technologies? What gaps persist, and should Government or industry be accountable for funding and delivering the necessary training?

We have a strong skills base, but we will have a capacity constraint, particularly in construction, if we are not on the case and making sure that we understand what the demand is. Some of it is, “If we build it, they will come,” but some will need interventions from developers, from the supply chain, and from Government. The single most important thing we need to do is to not leave a gap between the existing fleet closing and a new build generation coming on. One reason we have gone to Hartlepool is that there is an existing advanced gas reactor site with a first-class workforce, with a nuclear safety culture, and a supply chain that understands the materials and the operational regime. That will be closing in around 2028; we will be starting to ramp up at that point if all goes according to plan. A planned transition of those skills will maintain the momentum and the expertise, and we can then build around that. So promptness—minding the gap—is a critical point.

Vanessa, we have a rule as a committee that we will not have a panel formed purely of men. We have found that there are very few women in positions of seniority in the advanced nuclear and SMR space, to the extent that it is almost impossible to hold a panel. What can be done about this? Is SMR and AMR a bit of a nuclear boys’ club?

It is quite telling that when you are at nuclear events a lot of the older people in the room tend to be men, but it is incredibly encouraging that a lot of the younger people are women; more diversity is being seen across the younger generation. When you look at the investment in apprenticeships being made at the EDF projects, at Hinkley Point C and at Sizewell, and the investments on the professional and trade side, there is a lot more diversity across the piece. It is attracting people from a STEM base, but also from professions around all the different skills you need to build nuclear. The industry is conscious of that. We cannot change the past, but an investment is being made in the future.

In terms of broader industry schemes to encourage a more diverse workforce, are there any good examples that we should look to in this inquiry? Does anyone have any opinions on that? Vanessa?

I might have to get back to you on that.

Women in Nuclear is doing extremely well. It is a global model with a significant chapter in the UK and is very well supported by many businesses across the nuclear industry. But as Vanessa has so eloquently said, we have to start to change the industry now, and it is going to take time.

I turn to my final question. When selecting reactor technology, how should Government weigh the workforce implications of choosing a design with an existing foreign supply chain versus one that could anchor manufacturing and skills domestically? Vanessa, can I start with you?

I probably should not start by questioning the question, but I am not sure that the UK is actually selecting a design technology anymore. The GBEN process has completed now. Going forward, the framework allows anyone to come forward with a technology. There are criteria that will be applied; there is no selection of one over the other. If you meet the criteria, the Government have committed support.

It is a bit of a false dichotomy. If we bring our projects to the UK market as we intend, we will be investing in UK companies, creating UK jobs, boosting the skills based on the supply chain and creating export opportunities as well. So the fact that X-energy retains the IP and earns its revenues through licensing is a small fraction of that overall economic benefit flowing into the UK as a result. You can have both.

Alastair, you were very bullish about the prospects of women in nuclear just now. When will we see women in the Rolls-Royce nuclear boardroom?

We have Anna Mascolo as a non-executive director. We have Nikki Grady-Smith—a representative from Rolls-Royce PLC—as a board member. We have the new general counsel, Maria Varsellona, who is an incoming board member, and Silvana Jirotkova, who is a CEZ representative board member. So I believe our board is 50-50.

Very good. Thank you. Now, we have existing nuclear in Hartlepool and Wylfa. Communities there are very keen on nuclear; you have already talked about this. What needs to happen to engage with communities where nuclear is a new technology?

My day job is in stakeholder engagement. I have done a lot of work in community engagement on nuclear projects and fusion projects as well. Ultimately, you have to be able to allay people’s concerns and address traditional questions about nuclear safety, environmental impact, and so on; but increasingly, the most important thing is to make sure you understand the community’s aspirations and concerns, that you are in a genuine dialogue with them and that you demonstrate that your projects can meet their aspirations and allay their fears. That is as much about behaviours and the willingness to communicate and be properly integrated into the host community as it is about winning arguments about millisieverts and so on. The same concerns apply with big non-nuclear infrastructure projects in communities as well; you have to show that you understand the community, you are not going to cause horrendous disruption, and you are going to bring benefits to the local population. We would be fools to take for granted the fact that evolutions in safety and smaller reactors automatically mean people will love them. But as I mentioned earlier, when you look at the projects that have been announced—when I was doing fusion work, a lot of the sites that were being discussed were not in traditional nuclear areas—there is an appetite. People are starting to see that nuclear is on the right side of the argument in job creation and in bringing environmental benefits. So it is really about making sure you are committed to dialogue with the community and not doing something unto them.

That is a very plausible answer. How would you prove to my constituents that they would benefit enormously from having an AMR cited there?

I might introduce them to people in the existing nuclear communities whose main complaint about new build is, “Why can you not do it faster and why is it taking so long?” because they have seen the benefits that nuclear can bring. Everybody knows somebody who works there, or whose company has contracts with the nuclear company; this links back to the diversity question and getting younger people as well as diversity into the industry. People are now excited about nuclear in a way that—when I used to work on renewables in a past life—they were excited about renewables. There is almost a triple attraction. There is career satisfaction, there are economic benefits to the community and there is the ability to be part of something that is doing good; that motivates a lot of people for nuclear. Tapping into that is going to be important, but at the end of the day, it is all about dialogue; you cannot do a decide and defend point of view. It is not just about the statutory process of going through a planning application, it is about preparing to be part of a community for 100 years.

We have been talking about the demand for energy for AI data centres and private wire. If an SMR and AMR is predominantly for industry and not for domestic benefit, how do you take the community with you?

If you are building a nuclear power station primarily to support data centre demand, then you are taking that data centre’s demand off the grid, which would otherwise create supply constraints. The overall system benefits from being able to meet that demand for electricity that can otherwise go to homes, hospitals, schools and so on; you are helping to solve the problem. But perhaps more importantly, you are still creating employment opportunities and investing in the community by having a Small Modular Reactor in that area and opportunities for the supply chain, so it is still an economic good as well as meeting the growing electricity demand. If we do not think we are going to have AI and data centres, there is still a demand for SMRs and AMRs. But the fact that those are increasingly being seen as an important part of the landscape means that we are there to help meet that demand.

We can learn some lessons from other parts of the nuclear industry, particularly in defence. We are seeing some really innovative community engagement happening in Barrow, for example, with Team Barrow investing through—

Yes, but they are used to nuclear, are they not?

They are, but they are not taking a direct benefit from the grid. It is to create defence, which is remote from the community in the same way that a data centre might be.

I wonder if we can go back to one of the earlier answers, which is about who pays. Is it a different proposition if you are going to the public and saying, “We are putting this money on your bills for all the costs and R&D and development to make sure that you get this fantastic technology for all the brilliant benefits it brings. But actually, the benefits it brings will not impact you directly. It will be going to an industrial purpose.” Why should consumers pay for that?

Consumers will not be paying if it is on a private wire.

Through their bills, they will be paying.

Not if it is on a private wire because they only pay—

But they are still going to be paying for the development of nuclear. We are still going to have a levy element that will be part and parcel of that.

Only if you had access to RAB plus a private wire, so that way you get the cross subsidy.

We have heard today—we do not hear it very often—that private wire is being seen as a solution that does not have any regulatory burdens. But that is not necessarily true, is it?

It does have regulatory burdens, but it is behind the meter, so you would not potentially be paying policy costs. That is something that Ofgem will have to look at.

Ofgem is looking at that.

Exactly.

So the private wire solution may not be something that is as straightforward as it is currently.

You are potentially smearing the existing policy costs over a smaller number because you are taking industry out. You could potentially be smearing higher costs over the public as a whole. That is exactly why Ofgem is looking into it.

Thank you very much for joining us today. Thank you for your evidence. That is the end of our session.