On 11 June, the British Government delivered its Spending Review for 2025 (Spending Review).[1] Nuclear power featured as one of the cornerstone spending areas, with Chancellor Rachel Reeves describing the £30 billion in nuclear investments as a "commitment to our nuclear-powered future".[2] Following this, 23 June saw the publication of the UK's Modern Industrial Strategy and five of eight planned Industrial Sector Plans (including for the Clean Energy industry). These publications reiterate the Government's ambition to "build on [the UK's] status as a leading nuclear nation".[3]
In this Insight, Orrick's market-leading Nuclear Power experts discuss these announcements and what they indicate for Britain's nuclear power sector going forward.
A Closer Look at the Nuclear Power Spending Commitments
This year's Spending Review allocates the spending and capital investment budgets for British governmental departments up to 2028-29 and 2029-30, respectively. While allocations were made for low-carbon projects, nuclear power was the most significant area of new generation-related spending. Key announcements included:
- £14.2 billion in "financial investment" for the Sizewell C 3.2GW Nuclear Power Plant, located in Suffolk
- £2.5 billion for a small modular reactor (SMR) programme, with Rolls-Royce SMR selected as the preferred bidder to build the SMRs, in partnership with Great British Energy – Nuclear (formerly Great British Nuclear)
- £2.5 billion for research and development in nuclear fusion technology, including support for a prototype fusion plant in Nottinghamshire
What Does This Spending Review Indicate for the British Nuclear Power Sector?
Sizewell C and potential new nuclear generation projects in Cumbria
Whilst the Government's financial support is good news for Sizewell C, the project still awaits a final investment decision. The Government expects this will be taken "this summer, subject to value for money and relevant approvals". Orrick’s Nuclear Power team is currently advising the Nuclear Liabilities Financing Assurance Board in relation to its review of the funding plan for the Sizewell C project.
In her Spending Review speech to Parliament, the Chancellor also referred positively to the Government "making nuclear-approved land available in Sellafield to attract private investment".[4] While no firm projects have been formalised at the site, Cumberland Council (the area's local authority) recently announced it will kick off a market engagement process with nuclear and other clean energy developers this summer.[5] Evidently the area will be one to watch for new nuclear or other clean energy projects.
SMRs in the UK
The £2.5 billion SMR programme will be delivered by Great British Energy – Nuclear, with Rolls-Royce SMR being the Government's preferred bidder to develop the SMRs. The Government clearly expects further private sector involvement, stating that it intends to provide "a pathway for privately led advanced nuclear technologies". It remains to be seen how this intention will be enacted; but a new review framework is expected to be "published later this year"[6].
Meanwhile, the British National Wealth Fund is exploring investment opportunities for SMRs, and the Department for Energy Security and Net Zero is exploring revenue support options. As is the case for Sizewell C, new nuclear power projects, including SMRs, can be financed by the Regulated Asset Base model introduced by the Nuclear Energy Financing Act 2022. The Government has not yet confirmed whether the Regulated Asset Base model will indeed be utilised for SMRs or whether an alternative revenue support mechanism will be used, such as guaranteed pricing contracts like those used to finance the Hinkley Point C project.
SMRs and Data Centres
On the corporate and industrial offtake side, the Government has flagged the potential for SMRs to support Britain's growing data centre industry.[7] This is timely, as ongoing advancements in AI and continued growth of cloud-hosted technology solutions have contributed to surging electricity demand from the UK's data centre sector. National Grid's CEO recently predicted a six-fold increase in data centre demand for power over the next 10 years.[8] While the Government aims to unlock clean power supply for data centres through solutions like SMRs (an approach which is, amongst others, under exploration by a new AI Energy Council),[9] the increased energy demand is only one part of the problem; the location of that demand is also a significant contributing factor. Recent government data shows that about 65% of Britain’s data centre capacity is concentrated in the London region.[10] This clustering — which is driven by a demand for proximity to population and commercial hubs to reduce latency for end users — has contributed to major grid constraints. In some cases, grid connection delays for new data centre connections now exceed 10 years. Grid connection delay is a focus area within the 2025 Industrial Strategy (including through a newly proposed specialised connection accelerator process for certain demand projects).[11] Co-locating SMRs with data centre clusters could further assist in alleviating capacity constraints in areas of high data centre concentration like London, while also supporting data centres' constant power demands, and potentially reducing reliance on gas-fired behind-the-meter generation, which may otherwise be required.
Powering data centres through nuclear offtake arrangements would also be consistent with U.S. trends. Orrick's team of Nuclear Power and Offtake specialists recently advised Microsoft on its 20-year clean energy agreement with Constellation Energy in the U.S., which will pave the way for the launch of the Crane Clean Energy Center (CCEC) and restart the Three Mile Island Unit 1 nuclear facility in Pennsylvania. That deal marked a major milestone in Microsoft’s carbon reduction strategy. Amazon and Google have likewise recently announced deals for nuclear power in connection with the electricity demands of their respective American data centres.
2025 Industrial Strategy and Clean Energy Sector Plan
In the context of nuclear power, the Government's new Industrial Strategy and the related sector plan for the Clean Energy Industry reiterate the specific policy announcements of the Spending Review. Alongside these policies, the Government confirmed its continued support for a British Advanced Modular Reactor industry — including continuing its £300 million investment in the High Assay Low Enriched Uranium (HALEU) fuel programme, announced in 2024 — and a desire to increase collaboration and alignment between the civil and defence nuclear sectors given the shared requirements for technology, expertise and infrastructure. These policies will be supported by ongoing investment in skills and capacity building among the UK's nuclear workforce.
Looking forward, the second half of 2025 will see several other policy announcements relevant to the nuclear power sector, including further details of the SMR and nuclear fusion programmes, as well as the Government's Carbon Budget and Growth Delivery Plan.
[1] Unless otherwise noted, all direct quotes are sourced from: Spending Review publication.
[2] Source: Hansard, Chancellor of the Exchequer, the Rt Hon Rachel Reeves, during Spending Review.
[3] Source: Industrial Strategy: Clean Energy Industries Sector Plan (Clean Energy Sector Plan), pg. 8.
[4] Source: Hansard, Chancellor Reeves during Spending Review.
[5] Source: Cumberland Council.
[6] Source: Clean Energy Sector Plan, p. 51.
[7] Source: AI Opportunities Action Plan: Government response.
[8] Source: Speech by National Grid CEO, referenced by the BBC, with full text available on LinkedIn.
[9] Source: Industrial Strategy: Digital and Technologies Sector Plan, p. 36.
[10] Source: Estimate of Data Centre Capacity: Great Britain 2024.
[11] Source: The UK's Modern Industrial Strategy, p. 31.
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