Energy: Civil Nuclear Power

Lord Grantchester Excerpts

Thursday 9th December 2021 Lords Chamber

[Lord Grantchester (Lab)]

I am grateful to the noble Lord, Lord Howell, for returning with this subject for debate after its postponement last month. It is a very important area of energy policy that has perhaps been in the too-difficult box for some time, due to its long timescales and expensive price tags. All speakers in the debate, with the notable exception of the noble Lord, Lord Oates, have underlined that new nuclear has an important role to play in the energy mix of the future, alongside the decisive shift to renewables that is needed, both to deliver a response to the climate emergency and to ensure the UK’s energy security. Both present threats such that no part of the UK can afford to reject viable zero-carbon sources of power.

I thank everyone who has contributed to the debate for their insights into how best to utilise the technology more effectively. The noble Lord, Lord Wigley, spoke about how difficult it is to get the balance right in the public’s consideration of the issue. Nuclear jobs are high skilled, well paid and effectively unionised, but without new investment will inevitably slip away, overseas, from the Government’s dither and delay, leaving the UK so exposed and vulnerable to energy price spikes hitting families and businesses.

The problems that result from the Government’s lack of commitment to necessary timescales stem from the reluctance to fund adequately the range of nuclear technologies that are mostly untried, untested and underresearched. This has understandably arisen from nervousness following notable disasters and a lack of nuclear waste answers. However, my noble friend Lord West underlined the case for nuclear as crucial for low-carbon power.

Your Lordships’ House will shortly consider the Nuclear Energy (Financing) Bill, presently in the other place, introducing the regulated asset base financing model, with cost sharing—consumers paying through their bills—to reduce the cost of capital and build time. If everything is successful, with accurate estimates of build cost and development time, this may seem attractive. However, the experience of the United States with its version, called early cost recovery, has not resulted in any new US nuclear plants coming into service. Consumer risk could not easily be contained in the event of failure or abandonment. Has the Minister any firm estimates of the size of the long-term levy on customer bills that will result from powers to be granted under this Bill, should there be no prospect of retrieval of costs from production?

Much of the debate focused on the proposed RAB system for financing Sizewell C. This raises the issue of critical national infrastructure and possible overseas threats. The noble Lord, Lord Howell, mentioned this in his opening remarks. The agreement drawn up in 2016 between the UK Government, the Chinese Government and EDF allocated China General Nuclear a 33% stake in Hinkley Point C, 20% in Sizewell C and permission to build its own nuclear reactor in Bradwell, Essex. China’s involvement no longer has general support. Can the Minister update the House with any proposals to renegotiate this contract to ensure that there is no Chinese involvement in new nuclear in the UK, with a particular focus on ensuring that Sizewell C does not go ahead with the projected amount of Chinese involvement in its construction?

These problems stem from a lack of ownership control of the present major sites. The ownership of various sites may not coincide with the technology proposals that suit the Government’s preferences and investment focus. Can the Minister say whether the Government are giving any thought to this, especially when it is understood that one of the sites may be becoming available?

The Government can be congratulated on their funding to advance their nuclear goals. In July, they stated their preference to explore high-temperature gas reactors for their advanced modular reactor programme. This, effectively selecting a technology and identifying it as a proposed winner, would appear a radical departure from the Government’s previous position of being technology neutral. While high-temperature operation and heat supply has game-changing commercial importance in efficiency and a much broader industrial use case, this choice by the Government would ignore other fourth-generation systems being developed by the international industry and effectively close down UK participation in other AMR systems. This may have extensive national nuclear establishment backing in the UK, but it may not have the best economic potential to meet competitive commercial energy market needs.

Are the Government concerned that they will be putting their support into one basket that would entail a state design competing against other technology developers and crowd out other capital investors engaged in other AMR technologies? The noble Viscount, Lord Trenchard, mentioned others. Do the Government have potential collaborators and partnerships in mind for UK AMR deployment if they are not to maintain a more level playing field for non-incumbent players? Could Japan Atomic Research provide the sort of partnership that they would be comfortable with?

Speakers in the debate also considered the potential long-term size of and requirement for new nuclear power. The ultimate backcloth to this consideration revolves around the size of the capacity margin. This has caused anxiety in the past, as the capacity margin has been shrinking—down to 27% in 2016-17. However, more recently, the success of the CFD scheme has brought forward more renewable generation capacity, rising to 43% before falling back to 32% in 2020-21, due to the closure of many coal-fired plants.

Have the Government become more relaxed towards the margin projections, so that they have confidence through interconnectors and renewable developments to determine the baseload requirement for new nuclear? The Climate Change Committee, in its balanced pathway to meet electricity demand, estimated that a nuclear capacity of 10 gigawatts would be required. Alternatively, it presented four other scenarios, and the National Infrastructure Commission has been sceptical that any further developments beyond Hinkley Point C would be needed or cost-effective against renewables, which are likely to continue to fall in cost against a nuclear trend of ever-increasing costs and timescales.

Can the Minister confirm the Government’s agreement to the Climate Change Committee’s balanced pathway and that further new nuclear power generation beyond Hinkley Point C will indeed go ahead, and provide assurance that the 60,000 highly skilled nuclear industry jobs will remain, as the pipeline of activity must continue at pace? Under the Government’s watch, three large-scale nuclear projects have been abandoned due to the lack of certainty about the Government’s commitment. There are other ways, in addition to the RAB funding system, to de-risk the costs of capital. Can the Minister today provide further certainty on the many anxieties and questions raised about Sizewell C and the replacement for China’s stake? The National Security and Investment Act now enables the Government to consider this carefully.

What plans do the Government have for future development of the Wylfa site and how to use it following the failure to come to an agreement with Hitachi? Do they include either the Bechtel proposals, or the hybrid plans for SMRs and a wind farm from Shearwater Energy?

Labour is determined to do much more to help keep energy bills down, tackle the cost of living crisis and help the more vulnerable, calling for VAT on fuel to be cut to 0% and the reinstatement of the £1,000 a year universal credit uplift, and putting forward a plan for £28 billion extra investment every year to 2030 to implement a green industrial revolution, locally led, house by house, street by street. This commitment is matched by the determination for action in this decisive decade towards decarbonisation and net zero. The danger is of more dither and delay. We need reliable, secure and affordable energy that includes nuclear power.

Are the Government satisfied that they have the institutional arrangements to enable swift, decisive decision-making and implementation? They have grand plans, often without substance or coherent policy. They have many regulators and advisory bodies. There was a Nuclear Development Authority. Now, with the same initials but with its name changed, there is a Nuclear Decommissioning Authority. Have the Government turned their mind towards that important aspect?

Should now not be the opportune time to get on with it, as the noble Baroness, Lady Neville-Rolfe, concluded, to make progress and to consider delivery and implementation? Can the Minister say what plans the Government have in this respect? Civil servants are not generally known for their delivery prowess. Does nuclear now need a delivery agent to meet the challenge for implementation? Could its role be extended, with considerations to make SMR into a leading UK industry, for example, following investment in Rolls-Royce?

This debate has been fascinating, and there are many aspects I have not addressed. However, the Minister now has the opportunity to address and answer the many fundamental questions concerning new nuclear today. Can she inject some urgency and action into the Government’s proposals?