Nuclear Research and Technology (Science and Technology Committee Report)
(Limited Text - Ministerial Extracts only)
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The Parliamentary Under-Secretary of State, Department for Business, Energy and Industrial Strategy (Lord Prior of Brampton) (Con)
My Lords, I begin by thanking my noble friend Lord Selborne and the members of his committee for an exceptionally good report. I would like to read out a paragraph from the summary at the beginning, because in a sense it underlies the big question behind this debate. It says:
“The decision the Government must make is whether the UK should be a designer, manufacturer and operator of nuclear generation technology or alternatively whether it should restrict its interest to being an operator of equipment supplied by others from overseas”.
That is the big question that we are talking about this evening. If I may put it slightly less eloquently than she did, the noble Baroness, Lady Bowles, asked whether we are going to be a maker or a taker.
The noble Lord, Lord Hennessy, asked whether we have lost our nerve. I may be wrong, but I do not think he was directing that question at the Government today but rather was looking at it historically. The truth of the matter is that we did lose our nerve in the 1980s. The incidents at Three Mile Island and Chernobyl did not help, and Fukushima since then has not helped. The noble Lord, Lord Hennessy, described the history of civil nuclear power in this country, and I will talk about that myself. It is true that we were a leader in this technology, but in the 1980s we lost our nerve—it goes without saying. And we lost our nerve for 30 years.
The question this evening is whether we have regained that nerve and to what extent, especially given that this is not a no-risk, zero-sum game. Civil nuclear power is fantastically expensive. As the noble Lord, Lord Broers, mentioned, the technology being used at Hinkley is not yet on stream in China or France; it is running four or six years late and over budget. Let us not pretend that this is an easy decision. When people say, “Make up your mind; make a decision”, let us at least be realistic. The sums of money we are talking about are massive—the budget for Hinkley is more than £20 billion.
Sometimes, especially at this time of night, our glass is half empty. Therefore, I thank the noble Lord, Lord Grantchester, for reminding us that carbon emissions are 42% lower than in 1990 at a time when we have had economic growth of 67%. That is a remarkable achievement. No one can say that our energy policy has been all bad over that time.
To start, I will talk a little about the history. We have long experience of working in the civil nuclear field going back to the 1940s, coming out of the Manhattan Project in 1945. The UK Atomic Energy Authority was set up in 1954 to oversee the development of nuclear power in the UK. The first reactor was Calder Hall in 1956. This led to the construction of the Magnox fleet of reactors in the 1950s and 1960s, followed by the AGRs in the 1960s and finally the PWR at Sizewell B, which began operating in the 1990s. As the noble Lord, Lord Hennessy, reminded us, the Dounreay Nuclear Power Development Establishment developed fast-breeder reactor technology. It is true that until the mid-1980s, we were at the forefront of nuclear research and development and were world leaders in many areas. Throughout that time and subsequently, nuclear power provided reliable, low-cost, base-loaded electricity to the UK, producing about one-fifth of all our electricity.
That brings us to the mid-1980s. Since then, publicly funded research and development, and the people working in the nuclear sector, have contracted as the UK facilities landscape was consolidated and global interest focused on the deployment of evolutions of existing light-water reactors. Since the early 2000s and the renaissance of interest in civil nuclear power, it has become apparent that those with the skills to take forward a nuclear programme in the UK are getting older and the R&D facilities and skills required would be lost unless we embark on a major reinvestment in nuclear. That is where we found ourselves in 2010 and 2011.
The UK’s nuclear research landscape and supply chain are increasing again due to the Government’s £180 million nuclear innovation programme to meet the challenges brought about by the national resurgence in interest in nuclear energy. In the wake of the House of Lords Science and Technology Committee’s reports of 2011 and 2017, and the 2013 nuclear industrial strategy, which set out the Government’s aims for a world-leading nuclear research landscape, the Government have also put in place the necessary advisory and co-operative frameworks to support such aims. The 2015 spending review followed this with an announcement of funding for,
“an ambitious nuclear research and development programme that will revive the UK’s nuclear expertise and position the UK as a global leader in innovative nuclear technologies”.
As some noble Lords have pointed out, last week we announced the clean growth strategy, which reiterated the Government’s commitment to nuclear and outlined our ongoing investment of £460 million in nuclear innovation, covering both fusion and fission. For the avoidance of doubt about where that money is coming from, £180 million is coming from BEIS for nuclear fission, £131 million for fusion, £61 million is coming from Innovate UK, £68.3 million comes from research councils and £20 million has come from the industrial strategy challenge fund. That is where the £460 million comes from.
BEIS launched the initial phase of its £180 million nuclear innovation programme in November 2016 with over £20 million of funding covering five areas of research on future fuels, fuel recycling, reactor design, materials and manufacturing and a strategic toolkit to underpin decisions on which emerging technologies are brought to market. The first £20 million tranche is progressing well and is providing evidence and information that will set the foundations for further funding to be announced in November.
The £180 million nuclear innovation programme was developed based on the recommendations of NIRAB, which ran from 2014 to 2016 as a three-year temporary advisory board comprising 26 experts, chaired by Dame Sue Ion. The Government are working in partnership with the Nuclear Innovation and Research Office to convene a new advisory structure, under the banner of NIRAB, to provide independent expert advice on research and innovation. A process of seeking people to join this board has commenced and we expect that to conclude in November.
In view of the central question posed by the committee’s report—and to ensure that there is no misunderstanding on this—we are not currently in the business of designing and building our own conventional reactors for new build. That is self-evidently the case. It is not a realistic short-term proposition. That said, the UK supply chain has a number of niche capabilities that makes it attractive to international partnerships. In particular, modular and advanced reactor technologies present an opportunity in future for the UK to build its capacity alongside international partners—and in the longer run, of course, there is fusion as well. Government research and innovation support targets a number of these opportunities, and we are investing in the capacity of our regulators to engage with their peers on the co-operation and harmonisation that will be essential to the deployment of any new technology on a global basis. As noble Lords have pointed out, this could never be a national strategy. Even SMRs, which are a cheaper alternative to conventional nuclear, would work efficiently or effectively only if there were an international market and not only a national market.
The Government have made good progress—I accept that it has been slow to date—in assessing the potential of small modular reactors. We will be closing the competition and publishing the detailed techno-economic assessment in the very near future. The techno-economic assessment used evidence gathered from 14 SMR vendors and the subsequent competition received eligible expressions of interest from more than 30 different companies across the nuclear industry, including 18 SMR vendors.
We recognise that the Government have a role to play in helping to establish the right market conditions to allow credible and investable modular reactor propositions to come forward. Only last week we announced £7 million investment to expand the capacity of the UK’s nuclear regulators to prepare them and the sector for the advanced technologies of tomorrow. The Government are now working with industry, through the industrial strategy nuclear sector deal, on a potential policy initiative to support the sector. That includes setting up a national college for nuclear to train 7,000 people by 2020, and Sellafield committing to achieve a workforce where 5% are apprentices, graduates or sponsored students within five years.
The nuclear industry, therefore, is in a position, from the point of view of technology, skills and regulation, to rebuild for the future the kind of leadership we had in the 1960s and 1970s. In response to the committee’s central question, the investments currently being made create the opportunity for the UK to be a,
“designer, manufacturer and operator of nuclear generation in the future”.
Nuclear power is a mature technology capable of providing secure, low-carbon affordable energy. The Government are committed to it playing a significant role in our future energy mix and being a key element in helping to meet our long-term climate change commitments. In terms of new nuclear, as all noble Lords know, the Government have signed a contract for Hinkley Point C, which is scheduled for completion in 2025. It will be the first new nuclear plant in the UK for more than 20 years. As existing plants come to the end of their lives over the coming decades, the Government believe that new nuclear will have a key role to play in meeting the demand.
Lord Grantchester
My Lords, perhaps I can press the Minister on one point. He was right to point in his analysis to the very expensive cost of this new technology coming on stream and the nuclear industry in general. A question that I hope he will be able to answer in his winding-up remarks is about the relative cost to the consumer of the new build. We have the example of Hinkley Point C in terms of one technology. If the noble Lord is looking to the future, it may be something which the UK could put an emphasis on. Is he able to say what the cost of the electricity is in his department’s analysis of power produced by small nuclear reactors?
Lord Prior of Brampton
As the noble Lord knows, the price for Hinkley is £92.50, which I think is indexed. The latest price in the auction for offshore wind was £57 and I think that the general figure I have heard for SMRs is around £60. Do not quote me on that, but it is a figure I have heard from people in the industry. Clearly, it depends on how much is produced and how economic it is in producing SMRs. The sum may come down below that. The fact is that the price of renewables is coming down. I know that the prices are variable and not baseload, but the industry does not stand still.
I am pleased to announce today that the Government intend to work with the secretariat and other members of the Generation IV International Forum in order to retake our place as an active and participating member of the forum in 2018. The GIF is the main grouping of countries interested in developing advanced nuclear technologies. Government can help to create the environment and frameworks to support nuclear development and deployment. We can also underpin the regulatory framework necessary to assess the safety, security and environmental aspects of new technologies. Ultimately, however, we must remember that the assessments and decisions on which technologies succeed rest not only with government but with the industry—and when I say the markets, I mean the price of the product.
We must remember that other industries are not standing still and waiting for nuclear to play catch-up. Renewables such as offshore wind and energy storage technologies are evolving at a pace. To maintain its place in the competitive low-carbon energy markets of the future, nuclear will need to provide additional value in terms of its flexibility, functionality or reduced costs to supplement its baseload availability. In a low-carbon green world, nuclear should have a big role to play, but it will have to be competitive with other low-carbon technologies.