Queen’s Speech
Lord Broers Excerpts(4 years, 6 months ago)
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Lord Broers (CB)
My Lords, I am speaking in this debate because I wish to emphasise the importance of nuclear power in our national infrastructure strategy. If we are to meet our net zero greenhouse gas emission target by 2050, without the lights going out when the wind does not blow and the sun does not shine, we will have to increase the fraction of power that we deliver with nuclear power by at least 30% .
The total power we will need in 2050 is estimated to be 85 gigawatts, meaning that we will have to increase our nuclear capability to 26 gigawatts despite the nuclear closures that are planned. It is interesting to note that the Chinese have established a long-term plan to build their nuclear capacity to a remarkable 550 gigawatts. However, their population is about 20 times ours, making their commitment similar to ours in terms of power per person; it is an admirable target from their point of view.
The major problem with nuclear cited by critics is the Hinkley Point strike price of £92 per megawatt hour, which compares unfavourably with the more recent £40 per megawatt hour agreed for offshore wind. However, more than 50% of the cost of Hinkley Point is financial cost because the interest rate being charged by those providing the money is an incredible 9%. This high interest rate was justified by the high-risk assessment for the project. However, this risk assessment is now out of date. It was made when no one had been able to get an EPR reactor of the type being built at Hinkley Point working. The first EPR, at Flamanville in France, was over budget and years late, and the one in Finland was in a similar situation. In the meantime, CGN—China General Nuclear Power Group—which is working with EDF at Hinkley Point, has got two of these reactors working in Taishan and commercially feeding power into the Chinese grid at record levels for any power station. This removes the risk that there might have been a fundamental problem with the EPR design. It is predicted that future reactors can be financed at a rate close to 4.5%. This is estimated to reduce the strike price to below £60 per megawatt hour. In order for this cost reduction to be realised, the Government should ensure that investment grade companies are set up to build future plants, perhaps using regulated asset base techniques.
The second point is that comparisons between the costs of wind and nuclear made on the basis of strike price are not valid. The distributed nature of wind means that the cost of delivering this energy to the grid will be higher for the wind generators; 1,000 huge 5-megawatt wind turbines will be needed to deliver the same power as Hinkley Point, assuming optimistically that they will deliver, on average, 40% of their gross capacity. Estimates for this increased cost are £25 to £30 per megawatt hour, raising the real price of offshore wind to about £60 per megawatt hour, which is about the same as for nuclear power.
Further flexibility in the deployment of nuclear would be provided by small modular reactors, something recent Governments have been dilly-dallying with for years. We should get on with this and take up some of the proposals that have been made, for example by Rolls-Royce. The situation with nuclear would be improved even further if we arranged to use efficiently the 40% of energy it produces in the form of distributed heat—local heat. After all, heat is the largest fraction of our energy use. Overall, this opens up the possibility that it may be better to increase the percentage of nuclear to above 30%, especially as people are concerned by the vastly greater areas of land needed for onshore wind or, indeed, for solar PV generation.
If we persist in using fossil fuel power to underpin renewables, there are alternative solutions to meeting the carbon targets, the obvious ones being carbon capture and storage, pumped water or weight-lifting or battery storage, but at present, these alternatives will struggle to reach the tens of gigawatt-hour storage levels needed to be effective at national energy levels. Development of these approaches should none the less be pursued as, of course, should the further development of wind and solar power as well as tidal power, as mentioned in earlier speeches. This is especially true because we are yet to experience what will be involved in maintaining these systems as they approach their lifetime limits. For example, it will be more than 15 years before we know what will be involved in keeping wind turbines operating in the harsh environment of the North Sea.
Finally, I have a comment on nuclear waste. We need rapidly to establish a geological storage facility to cope with the vast legacy waste that has haunted us since the 1960s and to store the smaller and more easily handled waste from the new reactors.
Higher Education (Basic Amount) (England) Regulations 2010
Lord Broers Excerpts(13 years, 4 months ago)
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Queen's Speech
Lord Broers Excerpts(13 years, 11 months ago)
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Lord Broers
My Lords, I, too, take great pleasure in congratulating the noble Baroness, Lady Wilcox, and the noble Lord, Lord Henley, on their new appointments.
I shall speak to the first priority of the Government as set out in the second paragraph of the gracious Speech: the reduction of the deficit and the restoration of economic growth. As an engineer, I certainly do not have overall solutions to these immense problems, but I feel strongly that there are actions that we must take if there is to be any chance that we are to resolve them, and there are things that we should not do.
I shall start with one of the latter. We must not go on being afraid to face the magnitude of the problem, perhaps on the assumption that we will frighten people or be thought to be talking down the UK economy. The public and our partners and competitors overseas are not innumerate; the numbers are starkly clear for all to see. No matter how one tries to define “structural debt” as opposed to “cyclical debt”—the economists differ on this—our structural debt is several hundred billion pounds higher than would normally be accepted for a healthy economy. Before we can start to reduce the structural debt, the economy will have to recover so that the cyclical debt is contained and annual deficit eliminated. Even if we allow ourselves 10 years to recover, the annual sums of money needed to close the gap far exceed £100 billion, and may approach £200 billion. We have to get on with it—after all, the £6 billion that has caused so much anguish offsets only 14 days of borrowing.
Faced with these apparently insurmountable debts, what do we do? It is unlikely that we can find the sum needed in savings, no matter how savage the spending round, and only a limited amount can be raised by increasing taxes if the nation is not to revolt. We are going to have to get the economy growing again. I agree with the Prime Minister that there is no other course but to place much more emphasis on manufacturing. The question is: how do we do this? We could risk generating runaway inflation and further devalue the pound. After all, in 2008, on the previous Government’s watch, the pound was devalued by a staggering 25 per cent, much to the relief of industry, even if it demonstrated the weakness of our economy compared to others. Further devaluation might increase the competitiveness of industry and improve the balance of trade, but naturally it would make funding our deficit prohibitively expensive. Short of providing an unrealistically weak pound, we will have to find incentives that encourage investment in new ideas, and lower cost and more efficient funding for industry than is being provided by our banks. After all, banks that hugely reward their employees and at the same time aim to make large profits have to make all that money out of someone, and of course it is generally their customers.
To improve our industrial performance we must first develop a rational and competitively priced energy strategy, as mentioned by the noble Lords, Lord Lawson, Lord Oxburgh and Lord Jenkin. We must also make better use of our educational system and our science and engineering research base. Mike Lynch, one of our most successful entrepreneurs, recently said in the Times:
“If you look at the calibre of our students and the competitive advantage they bring, we should have a raft of internationally successful technology companies. Instead, there are only two software companies … in the FTSE 100—Autonomy”,
which is Mike’s company,
“and Sage. Our ambition should be to have … ten. Without technology companies the UK economy will be in massive trouble”.
A proposal that should help create high-technology companies has been made by Dr Hermann Hauser in his recent report to the former Secretary of State at the Department for Business, Innovation and Skills, The Current and Future Role of Technology and Innovation Centres in the UK. Dr Hauser proposes that the UK develops a translational infrastructure similar to that used in other countries that greatly benefits their economies by building bridges between universities and industry. At the moment our expertise in many subjects is scattered across the country in many small centres, few of which, if any, attain international levels of competitiveness in technology transfer. Hauser recommends that we concentrate our expertise in general areas such as stem cells and regenerative medicine, future internet technologies, plastic electronics, software, technologies addressing renewable energy and climate change, satellite communications, fuel cells, advanced manufacturing and composite materials. These should be concentrated into a handful of centres that are internationally competitive and attract the serious involvement of industry.
We have to do all that we can to encourage and support our manufacturing industry. After all, despite neglect, it still adds more than £l50 billion a year to the UK economy, accounts for half of exports and represents 13 per cent of gross domestic product. However, as Dick Olver, chairman of BAE Systems, has pointed out recently in the Financial Times, these statistics mask disturbing trends. Since 1970 the UK has suffered the sharpest decline in manufacturing as a proportion of employment of any advanced industrial economy. Olver goes on to say:
“Without action, that trend is likely to continue and, in a global environment, big companies will have fewer reasons to favour the UK when deciding where to invest”.
Other data produced by the ERA Foundation show that over the past decade our trade balance in finished manufactured goods has declined, at an average rate of 20 per cent a year, from a position of rough balance to a deficit of £55 billion. We need to reverse these trends if we are to recover our economy.