Notice

Nuclear Fuel Fund (NFF): questions and clarifications (added 27 January 2023)

Updated 18 July 2023

About the Nuclear Fuel Fund

The Nuclear Fuel Fund (NFF) aims to support the UK’s nuclear fuel supply chain to develop the capabilities needed to meet current and future fuel demand in the UK and globally. This is in recognition of the value of maintaining a strong domestic fuel supply chain to support our ambition to increase civil nuclear deployment to up to 24GW by 2050 and protect our energy security. The NFF will seek to support projects which will develop the front-end supply chain (excluding mining and milling) for relevant uranium and fuel products. The fund aims to overcome barriers to investment in the UK’s front-end fuel cycle supply chain by offering match funding to promising projects which support the establishment of new capabilities to produce or handle uranium and associated fuel products.

Find out more about the fund in the NFF guidance document

Questions and clarifications process

Stage 1 of the guidance document outlines a process through which interested parties and potential applicants can pose questions and request clarifications to the guidance. This is a report of the clarifications received by BEIS, through the process outlined in the guidance document. This page only contains answers to questions submitted that BEIS judged to be materially significant.

If interested parties and potential applicants consider that the department has omitted any materially significant questions through this process, interested parties and potential applicants are encouraged to contact the department with their questions and this document may be updated if required.

The questions in this report have been anonymised. Where similar questions have been asked by more than one interested party, they have been combined. Questions have been categorised according to subject.

Following the opening of the fund application window on 2 January 2023, the NFF team held a series of events targeted at interested parties and potential applicants. The first of the events was an in person and online ‘NFF workshop’ to provide more details on the scheme, held on 25 January 2023. On the 26 January 2023, potential applicants were also invited to join a session on the Economic Assessment. This online workshop focused on how to demonstrate the value for money for project proposals (Section G). It covered how this section fits within the wider application, how it will be assessed and provided guidance on completing this section.

General Administration

Could you postpone the ‘Application window closes’ deadline?

We will not be extending the NFF deadline. This is to ensure that projects have sufficient time to draw down funding and deliver their objectives.

If there is no change in the application schedule, what is the process to receive a direct award?

We will not be issuing any further direct awards and any project wishing to apply for funding must do so through the main NFF competition.

Please confirm whether a Parent Company Guarantee will be required and if the answer is affirmative, please provide us with a copy of the form of Parent Company Guarantee for our consideration.

Where the applying company has a parent, the ultimate parent will be required to provide a Parental Undertaking and Guarantee (PUG). Applicants who are unable to do so will be required to provide rationale as to why a reasonable guarantee cannot be signed by the ultimate parent company. Further information will be provided to successful applicants at the due diligence stage.

We note that an NDA will not be entered into and the provisions of the Freedom of Information Act 2000 and the Environmental Regulations Law 2004 will apply. We would be grateful if you could confirm that it is not envisaged that any commercially sensitive information (including pricing) will be disclosed to a third party?

All applications, and information contained within will be treated with confidence. However, applicants should note all information provided as part of an application may be disclosed in accordance with any applicable law. All information provided will be handled in accordance with the conditions set out in the guidance document (see page 29 of the guidance) and in line with the department’s legal commitments.

We may acquire the services of contracted delivery partners at the assessment, monitoring and evaluation stages of the process. Delivery partners will be required to adhere to confidentiality requirements and must declare any potential conflicts of interest. They will treat applications in the strictest of confidence and adhere to relevant data protection rules. The department will not disclose the names of delivery partners to applicants. If we do engage these services, we will make successful applicants aware in advance of this happening.

Eligibility

What are the possible legal forms of partnerships recognised by BEIS (e.g. joint-venture, consortium, subcontracting)? Do these need to have been legally established before applying?

BEIS does not have a preference for the legal entities applicants choose to form, however the lead entity must be a registered company in the UK under the Companies Act 2006 (CA06). Applicants must confirm that they are already registered in the UK under the CA06, or able to make the necessary arrangements to do so by 1 May 2023, if their application is successful. Applicants can form a consortium, and this does not need to be as a formal legal partnership. Only one application covering all consortium partners is required.

What is the minimum value of match funding that will be required?

The guidance states that the minimum level of grant funding will be £1m per project. As such any project seeking funding will require at least £1m of match funding in addition to this.

The guidance states that projects have the be Technical Readiness Level (TRL) 4 and above. If the majority of the project is TRL and above, but some elements less than TRL, with the average comfortably above TRL4, can this project still be considered?

The NFF is focused on supporting the development and, ultimately, the commercial deployment of new front-end fuel cycle capabilities in the UK. Costs must be capable of being capitalised and/or treated as capital expenditure in line with the Consolidated Budgeting Guidance.

In relation to technological readiness, the majority (by majority we mean 50% or more) of a project’s deliverables must also be at TRL4 or higher prior to project commencement to be eligible for funding. This means the product/service should have received basic technology validation in a laboratory environment (UKRI definition). To meet this definition, the product/service only needs to have received basic technology validation somewhere across the globe, rather than being validated by the specific bidding entity/entities.

The technological readiness of a project will also be taken into account as part of the strategic assessment at evaluation stage. Projects with lower average TRLs, or which have a large number of deliverables below TRL4, may score more poorly.

Could you confirm if feasibility studies, pre-FEED, FEED are still limited at £500,000 as stated in the original Request for Information?

Based on feedback from the RFI process, we have decided to remove the proposed cap on spend for development proposals. BEIS intends to fund multiple projects through the NFF. The minimum grant per project is £1m; based on evidence from the RFI, BEIS suggests a maximum individual grant size of £30m.

The guidance states in Section E1 part (c) Technological readiness – ‘the proposal should demonstrate how the project would advance the readiness of the fuel product/service for commercial deployment in the UK by March 2025’ - Our interpretation is that the ‘proposed project’ would ready the fuel product/service for commercial deployment in March 2025, however, it could also mean that ‘proposed project’ would advance the readiness of the fuel product/service for commercial deployment from its current position to one which is closer to commercial deployment.

The proposal should demonstrate how the project will take a fuel product/service from its current position to one which is closer to readiness for commercial deployment. As set out in the guidance, proposals will be evaluated on the strategic fit with government priorities but also on the level of additionality of the grant funding (i.e. that the project would not take place without government funding, or would be significantly accelerated if awarded funding).

Capital spend on procurement of major items can have long lead times which could challenge the timescales of the delivery window, especially when considering payment to supply chain must be held until successful install and commission etc. Is there an option for accruals to be valid as spend committed for the purposes of accounting for spend prior to March 2025.

The NFF has a budget until 31 March 2025. This budget cannot be rolled over into the next year. Any eligible, defrayed spend up until and including 31 March 2025 can be submitted as part of a grant claim. This can be accrued so that the payment comes after 31 March 2025, but any spend after the 31 March 2025 is not eligible for a claim.

The guidance states “proposals will be scored on their ability to demonstrate the technological maturity of the product or service” (page 16), is this the technical maturity of the product/service now or at the end of the project?

Proposals will be scored on both their ability to demonstrate the technological maturity of the product/service at the start of the project and what it is envisaged to be by the end of the project. The closer a proposal takes a product/service to readiness for commercial deployment in the UK, the higher it will score on this criterion.

Page 13 of the guidance states “Costs must be capable of being capitalised or treated as being capitalised in line with the Consolidated Budgeting Guidance. Please can you provide some additional information on which elements of this guidance are applicable to the NFF costs?

This is a capital grant and must meet government accounting definitions of capital. Broadly, if the cost can be capitalised under UK General Accepted Accounting Practice (GAAP), it should meet the NFF requirements of a capital cost. Revenue costs will not count as eligible match funding. As this is a capital grant, the match funding must be against eligible capital costs only. However, some costs could be classed as either capital or revenue items. The key consideration for applicants is whether they would usually capitalise these project costs as part of their normal accounting practices. In addition, applicants will have to set out an explanation of why something should be considered eligible, which the department will consider and will test as part of the due diligence process. Applicants should consider the following:

• Can the cost be capitalised under UK GAAP?
• Does your organisation normally capitalise these project costs?
• Can you provide a satisfactory explanation of why this cost should be considered eligible?

Are studies (e.g. techno-economic analysis, site screening, site suitability, pre-licensing) performed in view of the construction of a plant and/or manufacturing asset eligible to receive funding?

To be eligible for NFF funding, project costs must meet the eligibility criteria and be capable of being capitalised and/or treated as capital expenditure in line with the Consolidated Budgeting Guidance. Feasibility studies, pre-FEED and FEED studies, and proposals to progress licensing and siting may fall within this definition, so long as the majority of the project is focused on developing and/or deploying a fuel product/service in the UK.

The guidance states that projects cannot have mixed oxide fuel, does this include RepU fuel?

To be eligible for NFF funding, projects must focus on solely uranium-based fuel products or services. This includes reprocessed uranium fuel. Projects that focus on fuels that contain other actinides capable of supporting nuclear fission (including plutonium and thorium), in combination with uranium or not, are out of scope and will not be eligible for funding.

Economic Assessment

Annex C, Economic Assessment. The guidance in Annex C (annual profile of expenditure tab) states that NFF can only be used to support capital spend, this is reiterated in the NFF guidance (page 14). However, under the R&D tab it is clear that NFF includes R&D expenditure (“…R&D expenditure which can be applied for under the NFF falls under the following categories….”). However, under the R&D tab, it is not possible to list any NFF government funded R&D, as the template cells are locked with 100% private funding. Please can you confirm that the R&D categories listed are included in NFF as detailed in the spreadsheet.

The NFF can only support capital spend, however there are some instances where R&D expenditure can be classified as capital spend and can therefore be supported. This should be captured in the summary tab.

Where this is the case, we have asked applicants to provide us with more information on the details of that R&D spend in the R&D tab.

Please can you provide additional guidance on how to record internal expenditure in Annex C.

Guidance on how to record an itemised list of expenditure can be found at the bottom of the ‘itemised list of expenditure tab’ in Annex C. This should be an itemised list of proposed expenditure on work to be undertaken during the NFF period (to March 2025) and for the two financial years beyond. Please itemise in as much detail as possible. For each item, please include a short description of what the expenditure is for, including how it relates to the planned work and outcomes.

Supporting Evidence

Please can you provide clarification of what evidence is acceptable to demonstrate market need? We note that there is a 5-page limit. Are appendices acceptable for this section? MoUs have been provided as examples of evidence, are we able to include these as appendices to Section E?

As the guidance states, market need may be evidenced by potential contracts, customer commitments (e.g., in the form of a memorandum of understanding), market data and analysis of global supply/demand. Applicants should provide any explanation for how they demonstrate market need within the 5 page limit and evidence to support that explanation can be annexed.

On page 22 of the guidance, it states ‘Board minutes that demonstrate: The approval of the capital investment project (subject to grant approval).’ In our case, approval for the intended match funding does not need to go to board level but one level below. Please can you confirm this is an acceptable level of approval?

The guidance provides examples of the types of information you will be required to submit as part of the due diligence process. If those examples are not appropriate in relation to the project in question, please provide the relevant evidence based on your organisational approach and give any reasons for differing from the guidance’s suggestions.

What sort of information would be expected to support risk management other than the project risk level and mitigation approach?

We would like to see evidence of a mature risk management process in place for the project.

Useful documentation to demonstrate this could include:

• A risk management strategy and/or process documentation
• A risk register to document risks, analysis and responses, and to assign clear ownership of actions
• Overall Delivery Confidence Assessment which is based on the project risk profile
• Scenario planning

Grant Terms and Conditions

Is it possible to propose amendments to the Annex F - BEIS terms and conditions?

Annex F is a copy of the BEIS standard grant offer letter terms and conditions. The T&Cs are non-negotiable; however, BEIS reserves the right to alter these should we deem this necessary.

Please confirm to what extent these terms and conditions are intended to apply and (that in line with legislation and market norms) a variations procedure, the Nuclear Indemnity, a reasonable cap on the Grant Recipient’s liability and a full exclusion of indirect and consequential loss will be addressed in the Grant Offer Letter?

As the guidance states, the grant offer letter will be drafted in line with standard departmental grant offer letter and terms and conditions, modelled on the Cabinet Office’s Guidance for General Grants. The terms of the grant offer letter are not negotiable. The department reserves the right to adapt the terms of the offer letter and agreement in respect of the relevant project.

We would expect the Grant Recipient (or their ultimate parent) to provide a guarantee that would cover the full grant; there would be no cap on liability or exclusions.

In Annex F (section 15), states that ‘the Grant Recipient grants to the Secretary of State a non-exclusive irrevocable and royalty-free, sub-licensable, worldwide licence to use all the IPR Material for the purpose of supporting the Funded Activities and other projects.’ Please can you confirm what is meant by ‘other projects’? Please can you confirm that ‘funded activities’ refer to the NFF funded project? Also, would it be possible to provide examples of how this licence would be used, i.e. non commercial purposes?

Annex F is a copy of the BEIS standard grant offer letter terms and conditions and this includes the section relating to IPR material. Funded activities would refer to the activities covered by the NFF grant. The use of IPR will depend on the specifics of the funded project.

Annex F/3.1: Please confirm that the Grant Recipient will be allowed an extension of time to the Commencement Date and/or Completion Date for delays outside the Grant Recipients power and/or control?

All eligible expenditure for NFF projects must be completed by 31 March 2025. If there are delays to the agreed funded deliverables beyond this date, BEIS may work with the grant recipient to agree a remedial action plan, although further budget will not be available. BEIS reserves the right to claw back grant funding if the agreed deliverables are not achieved within the project monitoring period.

Annex F/16.1: Which environmental policies do you require the Grant Receiver to adhere to. Could you provide is with a copy of these?

Annex F (16.1) states that ‘the Grant Recipient shall perform the Funded Activities in accordance with the Department’s environmental policy, which is to conserve energy, water, wood, paper and other resources, reduce waste and phase out the use of ozone depleting substances and minimise the release of greenhouse gases, volatile organic compounds and other substances damaging to health and the environment.’

Next steps

Applications must be submitted by 12 noon 20 February 2023 via the online system link provided to bidders.