Britain’s nuclear lag could cost its AI crown
Britain’s AI boom is running straight into an energy wall, and nuclear power was supposed to act as its crutch to get around it.
Instead, the government has hit pause, just as data centre demand is set to explode, leading investors wondering whether the UK risks talking itself out of its opportunity.
Recent analysis from the Nuclear Industry Association and Oxford Economics warned that data-centre electricity demand will jump more than fivefold by 2030, swallowing nearly nine per cent of the UK’s total power use.
The AI labs and hyperscalers behind that surge want plug in-ready, 24/7 power, all within two years. Britain currently hands out grid connections on a ten year timetable.
This forms the backdrop to Rachel Reeves’ decision to stall a sweeping package of planning reforms that had promised to finally streamline nuclear development.
Consultancy firm Fingleton’s review, which coined the now-infamous ‘fish disco’ as a symbol of regulatory overreach, was meant to clear undergrowth.
But instead, concerns raised by one adviser sent the whole thing into the long grass for so-called “further work.”
George Borovas, head of Hunton Andrews Kurth’s global nuclear practice, told City PM: “Nuclear projects are always difficult. They take a long time and the costs are enormous… so you need consistency, you need predictability.”
Predictability isn’t what investors are seeing right now. “Whenever governments create situations where things are unpredictable, that creates nervousness”, he said. “You want everything else to be smooth.”
He added that this is happening at exactly the wrong moment. A few years ago, hyperscalers obsessed over renewable sources.
“Now they’re focusing on nuclear”, Borovas added. “Using nuclear is no longer an option, it’s kind of a must.”
Still, Britain is competing with countries willing to guarantee the power AI firms need. “If a country does not offer 24/7 predictable power, they will go to other countries”, he said.
Wylfa finally moves
On a brighter note, the government has picked Wylfa, in Anglesea, to host the UK’s first three Rolls-Royce small modular reactors (SMRs) – which are used to deliver more reliable, low-carbon nuclear power.
After years of false starts and Hitachi’s £2.1bn write off, it’s a step in the right direction. It could anchor thousands of jobs on British soil, as well as a UK SMR supply chain.
But these SMRs won’t serve as a silver bullet. “The challenge is putting the project structures together so you can keep replicating and keep building them”, said Borovas. “Fleets tend to be successful. Individual projects are difficult.”
Investors have been wooed by the idea of SMR firms. But, “if you’re investing in a project, that’s a tougher sell.”
And, the UK’s construction timelines remain stubbornly at odds with the AI sector’s. Data centres need power now, to match demand.
Yet, “if you tell any nuclear developer in 2025, you’re going to have a plant running by 2030.”
UK financing model
Still, the UK has a genuine advantage, in the form of its nuclear financing model.
In that sense, “the UK is actually at the forefront”, Borovas told City PM, praising the CFD structure and the move toward Thames Tideway-style risk-sharing.
Which is why today’s pause hits at such a prime moment, with Britain having built a model the industry respects, and now hesitating on the reforms needed to scale.
If ministers want the UK to lead in the AI race, nuclear has to move faster to keep up pace. And to facilitate that, clearer planning, shorter timelines and clear regulation are needed.
“If you don’t supply the energy, the companies are just going to leave”, added Borovas. And it looks like the UK has seen enough of that alread.y