Chancellor Rachel Reeves unveiled a £16.7 billion investment in the UK's nuclear energy sector during the 2025 Spending Review, marking a pivotal moment in the nation's energy strategy. Specifically, £14.2 billion was allocated to the Sizewell C project in Suffolk, with an additional £2.5 billion designated for the development of Small Modular Reactors (SMRs).
Announcing the news, Ed Miliband, the Secretary of State for Energy Security and Net Zero, said the investment in nuclear would “protect family finances, take back control of our energy, and tackle the climate crisis”.
The industry welcomed the government’s investment, with Tom Greatrex, Chief Executive of the Nuclear Industry Association, saying they will “kick-start a programme of new nuclear building not seen in this country for decades, helping to build the nuclear workforce of the future and revitalise Britain’s industrial might.”
However, the success of such a momentous strategic shift hinges on securing private investment and maintaining cost control to avoid burdening consumers with excessive bills, making the next decade of nuclear energy research and integration critical in terms of shaping the future of the UK's energy landscape.
The government's approach to financing these projects uses the divisive Regulated Asset Base (RAB) model, introduced under the Nuclear Energy (Financing) Act 2022. Under this model, electricity consumers are required to pay a levy on their bills during the construction phase of nuclear projects.
The RAB model has garnered some criticism because it transfers the financial risks of cost overruns and delays from developers to consumers, which could encourage investors and developers to make financially risky and self-serving decisions.
The government has been accused of reallocating £2.5 billion of £8.3 billion in funding reserved for Great British Energy by cheekily renaming the separate nuclear power body from ‘Great British Nuclear’ to ‘Great British Energy – Nuclear’ only one day before the spending review.
Critics argue this move confirms long-held suspicions of the government's willingness to sacrifice advancement in alternative clean energy sources, such as solar and wind, to propel its nuclear energy strategy forward.
Despite ‘taking’ from the stash of alternative clean energy, nuclear funding is indicative of the government's commitment to its net-zero goals. Nuclear energy produces considerably less emissions when compared to other non-renewables, with the British Energy Security Strategy aiming for nuclear to meet around 25% of the UK's electricity demand by 2050.
The same day the government renamed Great British Nuclear, it was revealed Rolls Royce SMR had been selected as the preferred bidder to develop the nation's first small modular reactors (SMRs), beating rivals GE-Hitachi and Holtec International following a two-year selection process.
Initially, the government suggested it would select two or even three successful bidders, raising competition and establishing a ‘plan-b’ if one company were to run into trouble. However, Rolls Royce SMR emerged the sole victor, largely due to cost-cutting pressures.
Although the SMRs received considerably less funding than that of Sizewell-C, it is arguably a much riskier investment. These smaller versions of traditional nuclear power plants might boast lower price tags and significantly reduced construction periods, but they are very much still in an experimental stage of development, having yet to be proven in a commercial setting.
Despite funding concerns, the government has, in some respect, put its money where its mouth is by investing in nuclear. However, whether Labour delivers on its promises of revitalising the nuclear sector, achieving net-zero and establishing the United Kingdom as a leader in science and innovation will rely heavily on significant continued investment – which will result in difficult spending decisions in the future.