Energy: Civil Nuclear Power
Debate between Lord West of Spithead and Baroness Bloomfield of Hinton Waldrist(2 years, 11 months ago)
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Baroness Bloomfield of Hinton Waldrist (Con)
My Lords, I am most grateful to my noble friend for securing this incredibly important and timely debate, and for his thoughtful and thought-provoking speech drawing on his wealth of experience in this sector, gained over so many years. I am also grateful to all noble Lords for adding to the excellence of this debate. We are fortunate indeed to have so much experience in this House; polymaths indeed. I say to the two noble Lords who were wrongfooted by the timings of today’s business that I will be happy to respond to their speeches if they will forward them to me in due course.
My noble friend Lord Howell and other noble Lords raised the important question of the role of nuclear power in this country’s energy system, at a most important time for energy policy—a time when people and businesses up and down the country are worrying about the cost of their energy and the health of the companies that they rely on to provide it. The debate is also timely for another reason that gives a crucial context for our deliberations. We recently published our Net Zero Strategy, a milestone document that sets out the UK’s path to net-zero greenhouse gas emissions by 2050. The UK was the first major economy to make net zero a target, enshrining it in legislation in 2019. There is no doubt that climate change is one of the greatest global challenges that we face, and that action and leadership are urgently needed in the UK and across the world. In committing to net zero, and now in publishing our plan of action to help us get there, the UK is showing global leadership in a battle that we simply must win.
Everybody acknowledges that net zero is an enormous challenge. To ensure that we are on track to meet that target, we have set the UK’s sixth carbon budget in line with recommendations from the Committee on Climate Change. We must reduce our emissions of harmful greenhouse gases by 78% against 1990 levels by 2035. This will require all areas of our economy to play their part.
The power sector’s effort share in this mission amounts to an 80% reduction in emissions by 2035, the mid-point of the carbon budget 6 period. This will require a range of low-carbon technologies to be deployed in large capacities, and quickly, not least because we estimate that our electricity system will need to double in size by 2050 to meet the increased demand as sectors such as heat and transport use electricity to achieve their own decarbonisation.
The Government have been clear that a significant proportion of the UK’s future electricity needs should come from renewables such as wind and solar, and flexible technologies, including energy storage and demand-side response. However, we have also been clear that the UK needs stable, firm, low-carbon power for when the wind does not blow and the sun does not shine.
It is in this context that we consider the value of nuclear power. We are already a nuclear nation. We built the world’s first commercial power station, at Calder Hall in Cumbria, in 1957. Since the mid-1990s, around 20% of the UK’s electricity supply has come from nuclear. After 1995, when we built Sizewell B in Suffolk, there was a hiatus on new nuclear build, but we broke that hiatus in 2016 when we gave the go-ahead to Hinkley Point C in Somerset. In 2020, nuclear provided around 16% of the country’s electricity supply and 27% of our overall low-carbon supply. Hinkley Point C will provide 3.2 gigawatts, meeting around 7% of GB’s current electricity requirements. However, over the next decade, as many noble Lords have pointed out, many of our existing plants will be coming to the end of their life. Therefore, we need more nuclear power, including large-scale gigawatt and advanced nuclear technologies, and the Net Zero Strategy, which highlights nuclear’s role in reaching net zero.
We have announced a £120 million future nuclear enabling fund, the details of which are being worked up following the spending review, and I look forward to updating noble Lords on how that money can help to support further nuclear research in the UK. Alongside more information on the fund, we will publish a road map for new nuclear in 2022. It will focus on what is needed to support all future new nuclear in the UK.
We continue to make progress on key issues such as nuclear financing. The Nuclear Energy (Financing) Bill will establish a new model for nuclear projects that will cut the cost of financing and, importantly, reduce costs to consumers. The Bill will also help us reduce our reliance on overseas developers for finance, and open opportunities for British companies in the nuclear industry and our closest partners to develop projects across the UK without compromising on our nuclear ambitions.
We have also invested £210 million, matched by Rolls-Royce, to develop its design for one of the world’s first small modular reactors. Each small reactor is potentially capable of powering a million homes. As well as providing energy for the UK, the project will also create high-quality jobs, helping us to level up as we drive emissions down.
Moving to AMRs, the Government have recently announced that we will focus on high-temperature gas reactors as the technology of choice for the AMR research, development and demonstration programme, with the ambition for this to lead to a HTGR demonstration by the early 2030s. That does not preclude the Government looking at other forms of advanced modular reactors, which I know the noble Lord, Lord Grantchester, was concerned about. However, we have to put our backs behind one technology in order to make it happen in the timescale available.
Alongside our efforts on nuclear fission, the UK is widely recognised as a world-leader in the most promising fusion energy technologies, with the Government committing £220 million towards the first five-year phase of the Spherical Tokamak for Energy Production programme—STEP. Fusion is no longer decades away, and recently I know that the programme managed to produce more output than input into the project, which highlights the fact that it may not take another 30 years. We might be talking more like 15 years.
The value of nuclear is not seen only in terms of energy generation but in the socioeconomic benefits that these projects will bring to the UK. Hinkley Point C is providing an enormous boost to both the local and national economy, providing 25,000 new jobs, with £3.5 billion spent with companies in the south-west to-date—figures that we hope to be replicated at Sizewell C in Suffolk. Hinkley has also trained more than 800 apprentices. I also know that the Culham fusion project also has an apprenticeship programme that takes in 120 graduate apprentices a year who learn all about nuclear fusion.
We are committed to levelling up. For example, there is the National College for Nuclear, with two hub campuses in Cumbria and the south-west delivering training on its behalf. We also recognise the potential to develop clusters of nuclear expertise in other nuclear communities such as those in the North West Nuclear Arc. The noble Lord, Lord Wigley, will know of my particular interest in developing this arc further into north-west Wales, using Trawsfynydd, Wylfa and Bangor University’s excellent nuclear department as part of that building-up exercise.
Energy security is also an absolute priority for this Government. We have highly diverse sources of gas and electricity that ensure that households, businesses and heavy industry get the energy they need. The Government are working closely with Ofgem, National Grid and industry to monitor supply and demand, and the gas and electricity system operators have the tools they need to manage operability requirements in all scenarios. We remain confident that Britain’s energy security will be maintained.
However, we recognise the pressures that businesses are facing due to the significant increases in global gas prices. We are continuing to engage constructively with industry to further understand and help mitigate the impacts of global gas prices. Our priority is to ensure that costs are managed and supplies of energy are maintained. We will work with industry to put it on a more stable footing in the longer-term. That includes continuing to build a robust domestic renewable energy sector so that we are not as exposed to global trends in natural gas supply and demand.
In just this past year, we have seen incredible progress in our ambition to deliver new nuclear, including a comprehensive net-zero strategy that sets a clear direction and unprecedented representation of nuclear on the world stage at COP 26. It is that momentum that we must now build on, as we look to secure our future energy needs, with nuclear playing a key role.
My noble friend Lord Howell of Guildford asked me two questions. First, who pays for Hinkley Point C? I can confirm that EDF and all investors are committed to the project. On his second question of whether we are committed to large plants or waiting for SMRs, we believe that a diverse mix of low-carbon generating technologies in the UK is the right answer. We will need to progress all forms of low-carbon generation if we are to meet our decarbonisation targets, including large-scale gigawatt and advanced nuclear technologies such as SMRs and AMRs.
In response to the noble Viscount, Lord Hanworth, and a number of other noble Lords who talked about nuclear financing, as previously mentioned we have recently introduced into Parliament the Nuclear Energy (Financing) Bill, which has passed its Second Reading and Committee in the House of Commons. I can reassure noble Lords that we will be holding a number of Peer engagement exercises before the Bill arrives in this House—I suspect before the end of January. We had hoped that that would happen in December, but I suspect that it will now be early in the new year. However, I encourage everyone who has spoken in this debate to get involved in this interesting Bill.
I know the noble Viscount, Lord Hanworth, was concerned about the intergenerational gap of financing for large nuclear projects. I direct him to Dieter Helm’s excellent work on this subject. The whole point of the RAB model is that it separates the risk of the construction phase from the rewards of the operational phase. We need to compensate the investor for the cost of capital at a rate in the construction phase that is derived through a market pricing discovery process, and it will then be set as part of the RAB licence. But when it comes to the operational phase, the regulator will set the cost of capital, balancing his financing duty with the duty to the consumer to help keep costs down. In this, it will mirror any other large-scale infrastructure projects, which use market mechanisms to set costs. In this way, investors will be incentivised to keep costs down. Therefore, it does not just de-risk the whole project but, because it reduces the amount of rolled-up interest that grows over many years in the construction, can reduce the cost of a Hinkley Point by up to £30 billion, as other noble Lords will have read in other briefing notes.
So the Nuclear Energy (Financing) Bill enables the use of the regulated asset base model for new nuclear projects, including both current technologies and potential advanced nuclear technologies and small modular reactors. This Bill will help to reduce the capital cost of nuclear projects, which is likely to be the key driver of the overall costs of a nuclear project, and it does this by sharing risk. Experience has shown that financing these sorts of projects through private capital can instil greater discipline than if they are done through government funds alone. This can help to ensure that the project is delivered on time and on budget, meaning that consumer costs are kept to a minimum.
Within the RAB model, we are creating incentives to encourage developers to deliver new projects in an effective way. To help protect consumers, we are creating a regulatory regime under which Ofgem will have full oversight and audit rights to the project activities throughout its construction.
I thank the noble Lord, Lord Broers, for his considered comments. I agree with him on the safety record of nuclear and the longevity of its operation compared to other technologies. I have already covered cost but, on his points on waste, the UK has in place an effective and robust regulatory regime to ensure that radioactive waste is managed safely, securely and in ways that minimise the impact to human health and the environment. That is why we believe that a geological disposal facility will allow the NDA to complete the decommissioning and clean-up of the nuclear estate. I should mention that I have read that some of the advanced nuclear technologies being worked on by some of the AMR designs may, over time, find the holy grail and be able to reuse some of the embedded energy in all that stored waste at Sellafield, which would mitigate the scale of the geological disposal facility that we might otherwise need.
I take issue with one of the noble Lord’s comments: we need to invest in all these technologies, because some of them will have a very long-term benefit for what we do with nuclear waste. I also remind him that the large-scale nuclear reactors have lasted so much longer than they were originally intended to that we have actually been gaining from the production of energy from them long after we financed them in the 1970s and 1980s.
As my noble friend Lady Neville-Rolfe mentioned when responding to the noble Lord, Lord Howell of Guildford, CGN currently has a 20% stake in Sizewell C up to the point of final investment decision. The final configuration of investors for constructing the plant is subject to negotiations. Our aim is to bring at least one large-scale nuclear plant to the point of FID by the end of this Parliament, subject to value for money and all relevant approvals. We announced up to £1.7 billion in the spending review to help deliver this objective. In the Net Zero Strategy, we announced up to £120 million for a new future nuclear enabling fund to provide targeted support to address barriers to entry, and will look to accelerate nuclear projects.
The noble Lord, Lord West of Spithead, mentioned CGN and Taishan. These issues are under investigation, and we do not want to prejudice the outcome of that. But the Bradwell B project is at such an early stage of development that the Government are not making any decision at the present time. He also mentioned Wylfa, as, of course, did the noble Lord, Lord Wigley. I agree that this remains an excellent site, if not the perfect site, for new nuclear. We regularly discuss a range of proposals with all interested and credible investors— of which there are a number—and discussions are progressing.
The noble Lord, Lord Goodlad, referenced the speed of decision-making. I hope I have given some reassurance. We are currently in negotiations with the developers of Sizewell C with the aim of reaching a financial investment decision in this Parliament.
Lord West of Spithead (Lab)
There was another question to do with Chinese involvement with these power stations, what discussions we have had with them and what threat we see in that.
Electricity Supplies from Europe
Debate between Lord West of Spithead and Baroness Bloomfield of Hinton Waldrist
Lord West of Spithead
To ask Her Majesty’s Government what proportion of electricity supply to the United Kingdom is provided from continental Europe.
Baroness Bloomfield of Hinton Waldrist (Con)
From provisional data, net imports from continental Europe—the Netherlands, Belgium and France—provided 5.6% of UK electricity supply in 2020. Final data for 2020 will be published at the end of July.
Lord West of Spithead (Lab)
My Lords, I thank the Minister for her Answer. Threats to provision of power to Jersey have highlighted the issue of UK reliance on overseas power supplies. Currently, I think we have four interconnectors and the number is going up by about 10 or even 12. Does the Minister agree that it is highly dangerous for our nation to be reliant on power sources beyond our shores, and contrary to government policy on resilience and sovereignty? Rapid completion of major new nuclear reactors, plus advanced modular reactors, would seem to be the answer to ensuring sufficient UK provision of zero-carbon electrical power.
Baroness Bloomfield of Hinton Waldrist (Con)
Interconnectors form an important part of our energy mix, but most of the power consumed in this country is still domestically produced. The noble Lord will know that the White Paper mentioned an ambition to have 18 gigawatts of power through interconnection. In The Ten Point Plan for a Green Industrial Revolution, reiterated in the energy White Paper, the Government confirmed their commitment to developing large, small and advanced nuclear projects, and an advanced nuclear fund of up to £385 million was proposed to invest in the next generation of nuclear.
Ynys Môn: Economy
Debate between Lord West of Spithead and Baroness Bloomfield of Hinton Waldrist
Baroness Bloomfield of Hinton Waldrist (Con)
The noble Baroness is right to focus on the energy sector for Ynys Môn. The announcement overnight of the £5 million investment in the Holyhead hydrogen hub, adding to the Welsh Government’s investment, £253,000 from the £120 million north Wales growth deal for the Morlais tidal flow schemes and the commitment to invest in the production of one gigawatt of offshore floating wind, in which Wales has a technological head start, all show that we are delivering on our promises for Wales and working with the Welsh Government.
Lord West of Spithead (Lab)
My Lords, the Minister believes passionately in the need for nuclear power and, judging by her excitement over the result of the match on Sunday, also about Wales. When I asked on 11 January about how many large nuclear power stations were planned as part of our future energy mix, she replied that the country would need “significant, large nuclear capacity”. First, is she able to specify a number? Unless we act now, we will run out of options and, indeed, power stations. Secondly, if we cannot get a major nuclear power station at Wylfa, possibly the best site for one in the whole of the United Kingdom, is there scope for development of advanced small modular reactors, with the benefit of the production of hydrogen as well as power?
Baroness Bloomfield of Hinton Waldrist (Con)
We have been ambitious in our plans for new nuclear. We committed to at least one more gigawatt power plant in the energy White Paper published before Christmas and we are in discussions with a number of operators. There will be two operational power stations in 2030 and, by 2032, the first SMR should be operational too. We will look at all reasonable proposals for the development of the Wylfa site, which is, in fact, the best nuclear site in the world, not just the UK.
Electricity Supply
Debate between Lord West of Spithead and Baroness Bloomfield of Hinton Waldrist(3 years, 9 months ago)
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Lord West of Spithead
To ask Her Majesty’s Government, further to the announcement by EDF of a delay in electricity generation from Unit 1 at Hinkley Point C, what assessment they have made of the impact of any such delay on energy supply in the United Kingdom.
Baroness Bloomfield of Hinton Waldrist (Con)
My Lords, the capacity market is the market mechanism we use to ensure that the volume of power generation we have available is always sufficient to meet national demand. If Hinkley Point C looks likely to be delayed, we will procure more alternative capacity in the meantime. Taxpayers and consumers will not be affected by the changes that EDF recently announced. The investors are entirely responsible for the project cost and schedule.
Lord West of Spithead (Lab)
My Lords, I thank the Minister for her Answer. Considering the pressures of Covid, EDF is to be congratulated on what has been achieved on site. If you go to see what has been done, you will know that it is quite amazing.
Nuclear will have to provide about 30 gigawatts of electrical power by 2050 if we are to meet net zero. Large reactors are required for electrical generation but, of course, AMRs must be developed for co-generating heat and hydrogen production. Building Sizewell C is now a matter of urgency. The Government’s energy White Paper and national infrastructure strategy rightly put nuclear at the heart of our net-zero future.
The National Security and Investment Bill which is going through the House is likely to scupper Bradwell B. There is grave concern about the withdrawal of Horizon Nuclear Power’s development consent order application for the construction of Wylfa Newydd. Are the Government concerned? This new nuclear reactor is needed now more than ever. There are less than two months in which to find a solution.
Baroness Bloomfield of Hinton Waldrist (Con)
My Lords, in a nutshell, Wylfa Newydd is probably the best nuclear site currently available globally. The Government are very keen to find a developer for it. While we are naturally disappointed that Horizon is not going ahead, any other developer will need to make a fresh development consent order relevant to its own technology. We are keen to discuss new-build projects with the investors of any other companies willing to develop these sites.
National Grid: Capacity
Debate between Lord West of Spithead and Baroness Bloomfield of Hinton Waldrist
Baroness Bloomfield of Hinton Waldrist (Con)
There was a number of questions there; I will do my best. Having consulted, we still believe that the regulated asset base model is the best way of financing large-scale nuclear projects. As we said in the energy White Paper, we are absolutely committed to producing at least one new plan for a large nuclear project. On SMRs, the £385 million allocated to advanced nuclear technologies in the energy White Paper is a significant amount; we are committed to it and we support the Rolls-Royce consortium wholeheartedly.
Lord West of Spithead (Lab)
My Lords, I am a strong supporter of the need to develop and deploy small modular nuclear reactors, which should be designed and built in the United Kingdom. However, we also need some large nuclear power stations. Hinkley Point B and Hunterston B will both close in 2022, and time is running out. Nuclear is crucial for the provision of round-the-clock, weather-independent, low-carbon electricity as the demand for electricity soars. The building and commissioning of Sizewell C is now a matter of urgency; we need to proceed, but with minimal and reducing Chinese involvement. How many large nuclear power stations does the current energy policy plan for the UK? Bearing in mind the risks of Chinese involvement, can the Minister confirm that we will not proceed with Bradwell B—the Chinese reactor—but instead revive Japanese options such as Wylfa in Anglesey?
Baroness Bloomfield of Hinton Waldrist (Con)
The noble Lord, Lord West of Spithead, is always a great proponent of large nuclear, and I agree that we are likely to need significant, large nuclear capacity in order to meet our carbon reduction commitments at the least cost. We will continue to engage with all viable companies and investors on their proposals for future projects, including all of the Sizewell C and other projects. The UK welcomes foreign investment in our infrastructure. However, all investment involving critical infrastructure, which includes nuclear, is subject to thorough scrutiny and needs to satisfy our robust legal, regulatory and, indeed, national security requirements.
Nuclear Power Stations
Debate between Lord West of Spithead and Baroness Bloomfield of Hinton Waldrist
Lord West of Spithead
To ask Her Majesty’s Government which United Kingdom nuclear power stations will be providing power to the National Grid in (1) 2030, (2) 2032, and (3) 2035.
Baroness Bloomfield of Hinton Waldrist (Con)
My Lords, based on current plans, in 2030 there will be four nuclear power stations providing power to the UK electricity system. Two of these stations are scheduled to close in 2030. In 2032 and in 2035 there will be two stations providing power to the UK electricity system. However, some developers have plans for new power stations.
Lord West of Spithead (Lab)
I thank the Minister for her Answer but the Government appear somewhat complacent about tackling what will be a crisis for our future energy supply, particularly the supply of electricity as demand for that rises. There is no doubt that the current civil nuclear programme is in complete disarray. We know that, alongside renewables, new nuclear power stations are necessary if we are to decarbonise our economy. I understand that the real problem is funding of nuclear power. Is the regulated asset-based model, used for example on the Tideway scheme, a possible way to fund new reactor projects? I believe we really must start funding nuclear power.
Baroness Bloomfield of Hinton Waldrist
I take issue with the noble Lord’s assertion that we do not take nuclear power seriously. We launched the nuclear sector deal in 2018—the fifth in a series of deals as part of the industrial strategy—and through this deal the sector has been committed to deliver a 30% reduction in the cost of new-build projects by 2030. The Government are committed to looking at alternative funding models that could improve value for money and reduce the capital cost of new nuclear projects. He is right that we have consulted on a regulated-asset base. The consultation closed on 14 October 2019 and we are currently considering responses to inform the best approach to the financing of future nuclear projects, which include the regulated-asset base and other models.