Small Modular Reactors and Energy Security

Wednesday 19th January 2022 Westminster Hall

15:58

[Mr Peter Bone (in the Chair)]

Before we start, I remind hon. Members that they are expected to wear face coverings when not speaking in the debate. This is in line with Government guidance and that of the House of Commons Commission. I remind Members that they are asked by the House to take a covid lateral flow test before coming on to the estate. Please also give each other and members of staff space when seated and when entering and leaving the room. I will call Virginia Crosbie to move the motion and I will then call the Minister to respond. I have had notice that other Members will speak in the debate.

15:59

[Virginia Crosbie (Ynys Môn) (Con)]

I beg to move,

That this House has considered small modular reactors and energy security in the UK.

It is a pleasure to serve under your chairmanship, Mr Bone. I thank all Members who have attended this debate on what is a crucial topic for both the UK’s ongoing energy security and our ambitious goal to achieve net zero.

This is far from the first time that I have raised the issue of nuclear energy in a debate. I last raised the topic of the funding of nuclear power on 9 November last year in an Adjournment debate, and have also been active in raising the issue of nuclear through oral and written questions. I have recently established an all-party parliamentary group on small modular reactors.

[Sir William Cash (Stone) (Con)]

I congratulate my hon. Friend on the incredible work she does in this field, as well as not only her APPG work, but her work in relation to the Nuclear Industry Association. I pay tribute to Tim Stone, Lincoln Hill, and the other people who are doing amazing work, and I congratulate my hon. Friend very much on everything she has been doing.

[Virginia Crosbie]

That is incredibly kind of my hon. Friend, but I would like to highlight that it really is a team effort. I thank him for the support he has given me on my political journey: my nickname is “Atomic Kitten”, which is somewhat thanks to support from so many people.

Small modular reactors are an exciting new nuclear technology for three principal reasons. First, the modular construction helps to cure issues that have been experienced with past nuclear projects, such as financing, long construction timelines and cost. Secondly, they provide a much-needed route to energy security and low-carbon energy; and thirdly, SMRs could drive a new industrial revolution, levelling up across the UK with high-skilled jobs in the nuclear and engineering supply chain. That is something I am really hoping to hear from the Minister about.

[Alun Cairns (Vale of Glamorgan) (Con)]

I pay tribute to my hon. Friend for the work she is doing, not only in championing this issue in Parliament but prioritising Anglesey and Wylfa in the Minister’s mind as potential sites for nuclear investment. In the case of small modular reactors—[Interruption.]

[Mr Peter Bone (in the Chair)]

Order. I am not interrupting the right hon. Member because his intervention was too long; I am interrupting, I am afraid, because there is a Division.

16:01

Sitting suspended for a Division in the House.

16:16

On resuming—

[Alun Cairns]

It is a privilege to serve under your chairmanship, Mr Bone. In my intervention, I was supporting my hon. Friend’s contribution about the opportunities and benefits that small modular reactors will bring. Does she agree that the export potential is significant, and that an early intervention in the UK will yield significant benefits as that export opportunity becomes real?

[Virginia Crosbie]

I thank my right hon. Friend for his insightful intervention. He has been a vigorous champion of the nuclear sector, particularly in Wales, and he makes an important point. In the ’50s and ’60s we led the way with nuclear and nuclear export. This is an opportunity for us to get back to where we were, leading in a sector that is so vital for our energy security. That is very important for jobs, and it will create skilled jobs in my constituency and across Wales and the UK.

My third point is about co-locating and bringing together clean power with the industries that need it. That is an opportunity to bring high-skilled jobs from other industries. Such co-location is not new; the original Wylfa power station was established to provide power to Anglesey Aluminium.

Since we last debated nuclear financing, there have been major developments in the delivery of SMRs in the UK and in global energy security. The past months have seen an unprecedented rise in wholesale energy prices during winter, in part due to Russia’s aggressive behaviour towards its neighbour, Ukraine. That follows the issue in September with the Kent interconnector. I remind hon. Members that a fire at the Kent interconnector, which connects the UK with French power systems, led to soaring energy prices in the UK. We usually import 3 GW of power from France—enough to supply 3 million homes. That fire showed how fragile our energy security is when we rely on other countries for production.

[Jamie Stone (Caithness, Sutherland and Easter Ross) (LD)]

The hon. Member is making an excellent speech. Caithness is one of the most nuclear-sympathetic parts of the United Kingdom. Dounreay, Britain’s first nuclear reactor, was constructed there. Even today, some 1,500 jobs directly and 500 in the supply chain rest on the nuclear industry. When the wind is blowing hard and renewables are working, units of this nature can create hydrogen, which will help us to deal with the problem that the hon. Member describes.

[Virginia Crosbie]

I thank the hon. Member for his intervention. I am looking forward to an invitation to visit Caithness and see at first hand how important hydrogen is, how it can be linked with nuclear and how we can, I hope, come up with pink hydrogen. In my constituency of Anglesey, we are fortunate to be developing the Holyhead hydrogen hub, which the hon. Member might like to visit.

With much of the European gas supply transiting the continent through central and eastern Europe, the UK and other western European nations are at risk of Russian action to influence the price of wholesale gas and supply through Russian pipelines. Worse still, many of the other sources of gas for heating and industry also come from unstable parts of the globe. The UK is facing an existential crisis in energy supply that ultimately leaves the country exposed to soaring energy costs and potential electricity blackouts if we are unable to secure affordable, home-grown energy long term.

Addressing our energy needs is an urgent priority for the UK. We must build our way out of this overreliance on foreign energy by developing our indigenous supply in a way that is compatible with our COP26 and net zero commitments. To meet the requirements of the sixth carbon budget, we will need all new cars, vans and replacement boilers to be zero carbon in operation by the early 2030s. To move people towards the use of electricity while hitting net zero production by 2035, we must quickly move away from generating that electricity from fossil fuels. Britain currently has slim spare capacity in electrical power generation to feed those changes, leaving both our energy supply and our security under threat.

There is an obvious solution on the horizon. Nuclear power, which has been a neglected part of our energy mix, can bridge the gap. SMRs provide a once-in-a-generation opportunity for the UK to develop a new, global industry sector that will contribute to the country’s long-term energy security. A single SMR located on Anglesey in my constituency could produce enough energy for the whole of north Wales, which is primarily rural. A large plant in the same location could power the whole of Wales—with a little bit left over for England, if we are feeling generous.

Not only are SMRs easier to finance, but a factory build in controlled conditions means that they could be up and running as soon as 2028.

[Robin Millar (Aberconwy) (Con)]

My hon. Friend is making an excellent speech about how SMRs are of value not just to the UK, but beyond its shores. In Aberconwy I talk to farmers—they are the custodians of some three quarters of the constituency, and they produce some of the finest lamb and beef in the world—and I am hearing from them already that the impact of energy costs mean that bills are rising by up to £1,000 a month. Will she urge the Minister to meet with farmers and farmers’ representatives in Wales to make sure that is taken into consideration in looking at the energy supply?

[Virginia Crosbie]

My hon. Friend and neighbour from the beautiful constituency of Aberconwy makes a very important point. In his previous roles, the Minister has been keen to reach out to the farming community. He has already committed to coming to visit Anglesey and Wylfa Newydd, and I am sure he will reach out to the important rural and farming communities as part of that visit.

When it becomes law, the Nuclear Energy (Financing) Bill will give developers a guaranteed return on their investment and lower the cost of raising the capital required to build a power station; that accounts for much of the cost of nuclear projects. We have already seen the regulated asset base model used for infrastructure projects in London, such as the Thames Tideway tunnel, and using it in Wales to finance new nuclear will make a big difference in levelling up the UK.

There has been rapid progress in recent months. Rolls-Royce has received the green light to develop its SMR technology, with match funding from the UK Government. The Nuclear Energy (Financing) Bill will also make a big difference in allowing new sources of funding for nuclear projects. There are other exciting SMR technologies that can help the UK reduce its dependence on expensive foreign energy.

The generation IV molten salt reactors developed by Terrestrial Energy not only have the potential to provide clean energy to the grid, but could provide scalable clean hydrogen for industry. Boiling water reactors, such as that developed by GE Hitachi, deliver clean, flexible baseload energy, too. There is a real opportunity for the UK to take a lead in this field, supported by engineering firms such as Assystem and Bechtel, as well as the wider UK supply chain, which can support the development of all different types of SMR reactors.

This Government have made some impressive funding commitments so far, with the recent Budget allocating £1.7 billion of public funds to support new nuclear projects. The Government have committed to £385 million in the advanced nuclear fund, £215 million for small modular reactors, £170 million for research and development on advanced modular reactors and £120 million for the enabling fund announced in the net zero strategy. Finally, there is an additional £40 million for developing regulatory frameworks and supporting UK supply chains. That is very welcome, but given the scale of the potential energy crisis, there is scope for the Government to do more. The UK should be looking at contingency plans to get new SMRs into play as soon as possible to replace fossil fuel generation.

[Jill Mortimer (Hartlepool) (Con)]

I congratulate my hon. Friend on securing this debate. In Hartlepool, the nuclear reactor is on the brink of decommissioning, and my constituency is not the only one in that position. Does my hon. Friend agree that SMRs provide a unique opportunity for us to replace those decommissioned reactors as quickly as possible to preserve high-skilled jobs in places where people do not fear nuclear? They are used to it and they know the advantages it brings.

[Virginia Crosbie]

I thank my hon. Friend for her intervention. It is fantastic to have another atomic kitten here, and I welcome her warmly to this place. I will be talking about SMRs and how important it is that we have a plan in place so that we do not lose those high-skilled jobs, which are so valuable to our constituents across the UK.

To deploy SMRs as soon as possible and restore the UK’s leadership in nuclear technology, I call on the UK Government to take the following steps. I ask them to commit, in the upcoming nuclear road map from the Department for Business, Energy and Industrial Strategy, to deploying a fleet of at least 10 Rolls-Royce SMRs by 2035-36. That road map is critical if the UK Government are to get support from industry and investors, and it is the best way for UK taxpayers and consumers to benefit from the Government’s bold investment in the Rolls-Royce design. I ask the Government to allow the licensing and siting of the Rolls-Royce SMR technology to proceed in parallel, rather than one after another. As part of that, BEIS should instruct the Nuclear Decommissioning Authority and Magnox to begin detailed discussion on the sale of land on nuclear sites to Rolls-Royce as soon as possible.

I ask the Government to remain open to deploying other SMR technologies as they are proven around the world. Many of our trusted allies, including the US and Canada, are investing heavily in SMRs, and we should learn from their experience. The offer to conduct licensing and siting in parallel should be extended to all viable SMR developers with the financing to buy sites in the UK. As the Rolls-Royce design is proven, the Department for International Trade should back it with export financing to sell British technology across the world, as part of our global Britain initiative. In the ’50s and ’60s, the UK led the world in nuclear. I know that the Minister wrote one of his university projects on US-UK large-scale nuclear co-operation. How fantastic it would be to get us once more back to leading the way and exporting hundreds of SMRs. Think how that would galvanise the Welsh and UK steel sectors, and the high-skilled jobs it would create.

I ask the Government to bring forward a consultation within a month on classifying nuclear as a green investment in the UK taxonomy, and make nuclear investment eligible under the UK green financing framework. Especially as the Government are looking to invest directly in SMRs and in the next large-scale station, it makes sense to make those investments eligible for green bonds.

To be successful, manufacturers need certainty so that a strong UK supply chain can be established. I recently established the all-party parliamentary group on small modular reactors to look at some of those issues in more detail. We are already at the forefront of this technology, and we need to look at how we can position ourselves as a leading location for this SMR reactor technology.

In conclusion, I thank my fellow atomic kitten, the Under-Secretary of State for Transport, my hon. Friend the Member for Copeland (Trudy Harrison), because without her we would not have set up the nuclear delivery group; she has been a powerful force within the nuclear sector. In the UK we have a long and proud history of pioneering nuclear power. In 1956, we established the world’s first civil nuclear programme, opening our first nuclear power station, Calder Hall, at Windscale. At the peak, in 1997, 26% of the nation’s electricity was generated from nuclear power. Since then, several reactors have closed, and the share is now about 16%. Almost half of our current capacity is due to be retired by 2025, and other plants are rapidly reaching their use-by dates. SMRs could be the game-changing technology of the 21st century, not just in terms of providing British businesses and consumers with affordable, low-carbon energy, but as an export industry for technology and nuclear engineering skills across the globe.

I see the SMR programme and new nuclear as intrinsically linked to our levelling-up agenda. When we are importing gas from Russia and electricity from France, where are the jobs that generate that power located? Who is getting the value added from what we pay for that power? According to Rolls-Royce, a UK SMR programme could create 40,000 highly skilled, well-paid jobs. While constituencies such as mine in Ynys Môn suffer some of the lowest rates of gross value added across the UK—reflecting under-investment and a lack of quality, well-paid jobs—we are now paying our continental neighbours to provide us with energy.

For all these reasons, the UK needs to look closely and urgently at its energy strategy. Energy security is vital for our future as a nation, and for the sake of jobs and our economy. In SMRs, we have at our fingertips a technology that can transform the UK from an energy importer into an energy technology supporter. Diolch yn fawr.

[Mr Peter Bone (in the Chair)]

It might help right hon. and hon. Members to know that this debate will finish at 4.45 pm at the latest. I have been notified that two Members want to speak, but time is getting on and we must allow some time for the Minister to respond.

16:30

[Jill Mortimer (Hartlepool) (Con)]

It is a pleasure to serve under your chairmanship, Mr Bone. I congratulate the hon. Member for Ynys Môn (Virginia Crosbie) on securing this debate.

The UK is gripped by an energy crisis. Global gas prices have reached astronomical highs and pose fresh challenges for households already struggling to make ends meet. Gas prices, which are determined more by global events than by national government, have always been volatile, and household bills will soar again if we fail to rethink energy production in this country. New advances in nuclear technology could revolutionise the UK’s energy system, offering security, reliability, safety and cost-effectiveness to consumers. Small modular reactors stand at the forefront of those advances.

On security, switching to nuclear energy and SMRs would end Britain’s reliance on Russian fuel tycoons, who have been able to make global gas prices soar at a moment’s notice by reducing supply. SMRs would be built right here in Britain, and would be operated by British workers and designed according to British blueprints. Shifting our focus away from foreign gas moguls toward British tech would boost our economy and breathe new life into our post-industrial towns and cities like Hartlepool.

The Rolls-Royce-led SMR consortium, alongside Government support and matched funding, could contribute £52 billion to the UK economy, create 40,000 great jobs and unlock an export market worth an estimated £250 billion. Nevertheless, the glaring advantages of nuclear energy have often sadly been overshadowed by largely misguided concerns over safety, waste and cost.

On cost, although on the surface fossil fuels appear to be much cheaper than nuclear, more detailed analysis reveals that the opposite is in fact true. The cost of balancing the grid in times of uncertain gas prices, as we are currently experiencing, is alone greater than the construction costs of Hinkley Point C. To see this in action, compare Germany and France, and their energy bills in 2015. Although 54% of German energy came from fossil fuels that year, the average energy bill was double its French equivalent, where most energy was generated by nuclear.

On waste, contrary to popular belief, nuclear waste is the only kind of waste from electricity production that is safely stored. Waste from coal and gas, on the other hand, is not stored, and goes directly into the environment and our lungs.

Finally, on safety, those responsible for the clean-up operation following the Chernobyl disaster were exposed to 100 mSv of ionising radiation, but only experienced a 1% increase in their risk of mortality. To put that into perspective, the increased risk of mortality from living in a large city is 2.8% and that of passive smoking is 1.7%. With 7 million people dying from air pollution each year, nuclear energy would prolong lives rather than shorten them.

In Hartlepool, my constituents are used to nuclear and know the advantages it brings; they do not fear it. It is for all these reasons that we would welcome an SMR—or two—in Hartlepool to replace our soon-to-be decommissioned nuclear reactor.

16:34

[The Minister for Energy, Clean Growth and Climate Change (Greg Hands)]

I congratulate the hon. Member for Ynys Môn (Virginia Crosbie) on securing this important debate. She made a fantastic speech. It was a real tour de force around the whole sector. I thank her for her hard work in setting up the all-party parliamentary group on small modular reactors, which has already been an effective voice in Parliament. The hon. Member for Ynys Môn is one of the two original atomic kittens, along with my hon. Friend the Member for Copeland (Trudy Harrison). It is good to see other new members of the group, including my hon. Friend the Member for Hartlepool (Jill Mortimer), here today.

I was delighted to take on responsibility for the nuclear sector when I was appointed as Energy Minister in September, having been a champion for investment in nuclear energy during my time at the Department for International Trade, as I was before that. You and I, Mr Bone, during the 2005 to 2010 Parliament, were recorded as being part of a group called the atomic eight—a group who voted more strongly in favour of nuclear than the parliamentary Conservative party as a whole. I am looking forward to visiting my hon. Friend the Member for Ynys Môn’s constituency later this year—hopefully sooner—as the home of the former Wylfa nuclear power station and the site of the proposed Wylfa Newydd plant. Before getting into my hon. Friend’s excellently made points, I will address some other points mentioned.

My hon. Friend the Member for Copeland is not here in person but is very much here in spirit. My hon. Friend the Member for Stone (Sir William Cash) gave a very supportive intervention. The hon. Member for Caithness, Sutherland and Easter Ross (Jamie Stone) made very strong points on the importance of both nuclear and renewables in producing hydrogen; I ask him to have a word with his hon. Friends, who are still opposing the Nuclear Energy (Financing) Bill, which will cheapen the cost of nuclear, and ask the Liberal Democrats to reconsider and vote for it. We heard from my hon. Friend the Member for Aberconwy (Robin Millar) on the important role that nuclear could play in reducing bills. The Nuclear Energy (Financing) Bill will reduce the cost of a gigawatt nuclear power station by in excess of £30 billion overall. On a present-value basis, that is about £10 per bill payer—a very significant reduction.

Two months ago, the UK hosted the COP26 summit in Glasgow, which focused the world’s minds on the role of clean energy in tackling climate change. It was there that I had the privilege of opening a nuclear innovation event at the UK’s presidency pavilion, highlighting the largest ever nuclear presence at COP. It is great to be joined by the Exchequer Secretary to the Treasury, my hon. Friend the Member for Faversham and Mid Kent (Helen Whately), who I know has just come back from a visit to Hinkley Point C, and is also an enthusiast for the sector.

In April last year, the UK Government set into law the world’s most ambitious climate change target, through our carbon budget 6, in which we aim to achieve a 78% reduction in our emissions by 2035 compared to 1990 levels. In order to achieve this commitment, the UK will need to use a wide range of green technologies, of which nuclear is undoubtedly going to play a key role. The recently published net zero strategy sets out how the UK will deliver our commitment to reach net zero emissions by 2050, and it is clear that nuclear is an important part of our plans to achieve that.

I welcome the enthusiasm of my hon. Friend the Member for Ynys Môn for new nuclear. We will aim to bring at least one large-scale nuclear project to the point of final investment decision by the end of this Parliament, and we will take measures to inform investment decisions on further nuclear projects. SMRs will be important in delivering new nuclear for the UK. The smaller size of SMRs and their factory-based modular build potentially allows for more flexible deployment options—that is stating the obvious. My hon. Friend the Member for Hartlepool put in a bid for not just one, but two SMRs, and made the strong point that nuclear always goes down best in communities that are used to hosting nuclear. That has always been the case in our country, and Hartlepool is very much in that category.

[Damian Collins (Folkestone and Hythe) (Con)]

On that point, the Dungeness A power station in my constituency is in advanced decommissioning. The site is owned by the Nuclear Decommissioning Authority. I reinforce the point made by my hon. Friend the Member for Ynys Môn (Virginia Crosbie) that it would be helpful for the Department for Business, Energy and Industrial Strategy to give direction to the NDA that it can enter into negotiations with Rolls-Royce about the use of sites like Dungeness A, which may well be very suitable—indeed, ideal—for small modular reactors.

[Greg Hands]

I am always happy to meet the hon. Gentleman to discuss that. It is important at this stage that we are not too prescriptive about sites for SMRs; it would be too early for us to do that. I am very happy to meet him and discuss what might be done about the general position of Dungeness.

[Jamie Stone]

In the same spirit, I extend an invitation to the Minister: if he would care to come north to Caithness, he would receive a cordial welcome from the trade council and civic leaders.

[Greg Hands]

I welcome that intervention. I am very happy to offer the hon. Gentleman a deal: if he can persuade his party to become more pro-nuclear, he will ease the path of a visit to the very northernmost part of mainland Scotland. If the Liberal Democrats will vote for the Nuclear Energy (Financing) Bill when it returns to the House of Commons, I will come to Caithness and Sutherland in due course.

Good points about the exportability of this technology were also raised by the former Secretary of State for Wales, my right hon. Friend the Member for Vale of Glamorgan (Alun Cairns), and by my hon. Friend the Member for Ynys Môn—points that are very much true. As my hon. Friend said, in November last year, the Government announced £210 million for Rolls-Royce SMR Ltd to further develop the design for one of the world’s first small modular reactor designs. Funding for that project is matched by private investment, with the design potentially capable of deployment in the UK in the early 2030s. We recognise the significant export potential of the Rolls-Royce SMR technology, which has already generated considerable overseas interest.

My Department and my former Department, the Department for International Trade, are working closely with the company to support it into overseas markets, and UK Export Finance has indicated its willingness to provide cover to Rolls-Royce, subject to the normal lending criteria being met. As my hon. Friend the Member for Ynys Môn pointed out, this funding is part of the advanced nuclear fund—a significant Government investment of up to £385 million to develop a domestic SMR design and demonstrate innovative advanced modular reactors, also by the early 2030s.

In addition to investment in SMRs, the Government plan to invest in the advanced modular reactor research, development and demonstration programme, which aims to enable an AMR demonstration by the early 2030s. Based on our own analysis as well as other public reports, the focus of the programme is on high-temperature gas reactors, which I announced at the Nuclear Industry Association’s conference in November. In addition to low-carbon electricity generation, HTGRs have the potential to produce very high-temperature heat, which could be used for increasingly efficient production of low-carbon hydrogen—as has already been referred to by various Members—to help decarbonise industrial processed heat, or even for synthetic fuel production.

Furthermore, the Government have recently launched the £120 million future nuclear enabling fund, which has already been referred to, as virtually everything else has, by my hon. Friend the Member for Ynys Môn. She is so on top of nuclear—so well versed—that I sometimes worry about my own job: my hon. Friend knows as much about nuclear as I do. The FNEF aims to address barriers to future new nuclear and help companies to reduce project risks, so that they are better positioned for future investment decisions.

In answer to my hon. Friend’s question about allowing the licensing and siting of the Rolls-Royce SMR to proceed in parallel, while there are some steps that logically must be completed before others can begin in a nuclear deployment project, companies are not, of course, prevented by law or policy from—for example—applying for a nuclear site licence and development consent order in parallel. Those are commercial decisions, as companies are best placed to decide how and when to enter regulatory projects to best support their project.

I was pleased that Parliament voted to back the Nuclear Energy (Financing) Bill last week. As my hon. Friend has pointed out, classifying nuclear as green investment in the UK taxonomy would allow billions to flow into this essential technology. That is the basis behind the Nuclear Energy (Financing) Bill—to bring in private sector institutional financing. As the Prime Minister set out to the CBI, we intend to consult on including nuclear in the draft technical standards for our own UK green taxonomy. Further details will be released when the consultation is published.

To conclude, the Government fully support the development of small modular reactors and the exciting opportunities, both in terms of energy security and of reaching net zero, that new nuclear can offer the UK. We have demonstrated our serious interest in building nuclear capacity in the UK, and over the past year we have made decisions that boost investors’ and businesses’ confidence in investing in UK nuclear. From the energy White Paper to our landmark net zero strategy and funding for small modular reactors, we have shown our dedication to net zero and nuclear. I once again congratulate my hon. Friend the Member for Ynys Môn on an excellent debate.

Question put and agreed to.