The Chancellor said driving forward nuclear power was ‘always the right thing to do’.
The Chancellor said the signing of a contract to further develop the UK’s first mini nuclear reactors was “more important than ever” amid the Middle East crisis.
The Government-owned firm Great British Energy – Nuclear (GBE-N) announced the deal with a firm owned by engineering giant Rolls-Royce on Monday, allowing work to start immediately on creating three small modular reactors (SMRs).
These are small nuclear power stations designed to be installed on site as prefabricated modules, with hopes the technology can be built faster than more traditional plants, such as Hinkley Point C.
The Government said the project will support UK efforts to roll out clean power, which it argues will bring down prices and boost energy sovereignty.
It comes as UK homes and businesses face surging costs as the ongoing Iran conflict drives up global fossil fuel prices.
Speaking after the contract signing at the Treasury on Monday, Rachel Reeves said: “In the context which we are today, it shows how important a contract like this, technology like this, is.
“If we can produce more homegrown electricity here in the uk, that takes us off the rollarcoaster of global oil and gas prices.
“If we have greater control over the energy that we need here at home, it makes us less vulnerable in the face of shocks like we’re seeing at the moment.
“And so this was always the right thing to do but in the world in which we live today, where there is less security and there is more volatility, this deal is more important than ever.”
The Government said the three SMRs should be able to generate enough low-carbon electricity to power the equivalent of around three million homes, with expectations they will be operating by the mid-2030s.
The project will also support some 3,000 jobs at the peak of construction as well as thousands across the supply chain, ministers say.
Ms Reeves’ comments came after a ceremonial signing at the Treasury on Monday between Simon Roddy, chief executive of GBE-N, and Chris Cholerton, chief executive of Rolls-Royce SMR.
Mr Roddy also signed a contract with Oliver Holbourn, chief executive of the National Wealth Fund, which plans to invest up to £599 million to support the next stages in designing the SMRs.
The push for new nuclear capacity marks a shift from decades of underinvestment in the UK’s nuclear sector, leading to ageing infrastructure as old plants approach the end of their lifespans.
Energy Secretary Ed Miliband, who also attended the signing, said reducing the UK’s exposure to volatile fossil fuel markets is the “unavoidable lesson of this war”.
“That is why this Government is doubling down, not backing down, on our clean power mission, drive for renewables and nuclear,” he said.
“We’re ending years of delay with the biggest nuclear building programme in half a century from Sizewell C to this first fleet of SMRs.”
The Chancellor and Energy Secretary also met apprentices from both GBE-N and Rolls-Royce SMR at the event.
“Hope for the future is what I think this project can provide,” Mr Miliband said.
“It brings hope to communities seeing investment to those areas. I can see the hope in the young apprentices that we have here.
“And building clean power meets the hopes of parents and grandparents who want to know we’re doing the right thing for future generations.”
The Government selected Rolls-Royce SMR as the preferred partner for delivering the modular reactor technology in June last year after a competitive process.
Ministers allocated £2.6 billion for the programme and later announced that the first SMR nuclear power station would be built at Wylfa in North Wales by GBE-N.
Since June, Rolls-Royce has been working with GBE-N to finalise the contract, which will require the two to deliver the project against a set of key milestones, ministers said.
This starts with site-specific design, regulatory engagement and planning processes, before a final decision will be made to approve the capital investment to proceed with construction.
Over the years, critics have pointed to nuclear’s high costs and lengthy construction periods as well as concerns over the disposal of nuclear waste.
