Nuclear Energy (Financing) Bill

Debate between Lord Oates and Lord West of Spithead

2nd reading
Monday 21st February 2022 Lords Chamber

[Lord Oates (LD)]

My Lords, I declare my interest as the chair of the advisory committee of Weber Shandwick UK. I am very pleased to follow the noble Lord, Lord West, and to take part in what has been a very interesting and informative debate. It follows on from a debate we had just before Christmas where I found myself the only person on one side of the argument. I see a little bit more support here today.

The Liberal Democrats are opposed to the provisions of this Bill on two principal grounds. The first is that we believe that new nuclear power generation is neither feasible nor a desirable means of reaching our net-zero targets. Secondly, we believe that, even if new nuclear projects were a feasible mechanism for reaching our decarbonisation requirements, this Bill, and the regulated asset base funding model for new nuclear that it establishes, are fundamentally flawed. The Bill imposes a double whammy on consumers, hitting them both with the upfront cost of construction and then with the huge, uncompetitive cost of nuclear generation. It takes no account of the ability of consumers to pay. Costs will fall equally on the richest and the poorest; those already struggling with the massive spike in the energy price cap will feel the charges most acutely.

The Bill is completely opaque in relation to the assumptions and models used to arrive at the estimated RAB charges. In the discussions that we had ahead of the Bill, the Minister’s own department described some of this as “a little bit arbitrary.” It gives the Secretary of State unacceptable powers to prevent publication of relevant material simply on the grounds that it might prejudice a commercial interest, regardless of the public interest in such disclosure. We hope that the Minister will recognise the need for far greater transparency in these matters than is currently proposed.

The Bill takes no account of willingness to pay. Some consumers have contracted explicitly with electricity suppliers that they do not receive nuclear-generated power, but they will be just as compelled to pay as anyone else. It proposes a funding model that has been used for new nuclear only in the United States, where, as we have heard from the noble Baroness, Lady Bennett, it was an unmitigated disaster. It cost consumers billions of dollars, with not a single new plant coming online as a result. The Minister tells us that the circumstances for the RAB are different because of different company structures and a different regulatory approach, but at the heart of both is the fact that risk is being transferred from an unwilling private sector to the consumers, who will not be given a choice. These are just some of the flaws in the Bill that we will attempt to correct in Committee.

Liberal Democrats, for a number of reasons, have a more in-principle objection to new nuclear projects. The noble Lord, Lord Wigley, quite rightly pointed out that we need to rapidly decarbonise our energy sector, but the new projects envisaged in the Bill cannot feasibly come online in time to meet the target to decarbonise our electricity supply by 2035, which the Government themselves say is necessary if we are to hit our 2050 net-zero target. The noble Lord, Lord Howell, underlined the huge difficulties that face these large-scale reactor projects. Even the notoriously optimistic EDF does not believe that Sizewell C could start generating before 2034 at the earliest. Given that it was wrong by a factor of 12 years for Finland’s Olkiluoto EPR, and that in January of this year EDF announced yet another delay to its Flamanville 3 EPR, which is already running a decade late and at quadruple the cost of its first estimate, I hope the Minister can agree with me—on this, if on nothing else—that EDF’s predictions are not ones on which to bank our net-zero plans.

Nuclear is not a feasible global strategy for meeting net-zero targets. We cannot possibly envisage nuclear power being the solution across the world. It is just not going to happen, so we need to find other ways. Nuclear is also, as we heard from my noble friend Lord Teverson, a particularly bad technology for complementing renewables. It is designed for baseload generation and, despite the ability of PWRs to load-follow, it is limited. As my noble friend said, the astronomical costs of construction mean that it does not make economic sense to run these plants at less than full capacity.

However, we also have to take into account the fact that delayed completion and outages can leave huge holes in supply. When Hinkley Point C finally comes online, should it suffer further delay or an outage once operational, we would lose 7% of all UK power, so we have to have an ability to backfill that. We should be aware that at this present moment, 10 of the French reactors are currently offline—nearly 20% of their fleet.

Thirdly, new nuclear is a costly distraction from the urgent need to radically rethink our energy system. As the noble Baroness, Lady Bennett, said, with the Bill we will be crowding out capital that is vitally needed for rethinking and reshaping that energy system through demand reduction, demand repositioning, and energy storage and release. The Bill is stuck in outmoded thinking.

As we heard from my noble friend Lord Teverson, the most cost-effective way to reduce CO₂ emissions—I think I saw the Minister nodding his head in agreement—is to reduce energy use. For the amount that Hinkley Point C will cost we could retrofit enough homes to save all the energy it will produce.

[Lord West of Spithead (Lab)]

I mentioned that with regard to this sort of work that is very easily said, but the complexity of doing it is immense when you are talking about people packed into tower blocks and all the different houses. It is not easy and straightforward. It is very important, but it will not resolve that problem, in exactly the same way that over the last weekend renewables did not provide us with that much energy. Luckily—I suppose—power lines went down so people were not demanding it that way, but my goodness me, renewables were not providing it.

[Lord Oates (LD)]

A huge amount of work could be done. Huge numbers of homes that are in very poor housing stock and in very poor condition could easily be brought up to speed. That is the urgent thing that needs to be done now instead of becoming obsessed with huge power plants which are immensely expensive, highly complex and cannot possibly come online in time to meet the targets that the Government have set themselves.