Nuclear Energy (Financing) Bill (Second sitting)

Anthony Browne Excerpts

Committee stage
Tuesday 16th November 2021 Public Bill Committees

[The Chair]

Thank you. Anthony Browne or Virginia, did either of you have a follow-up question?

[Anthony Browne (South Cambridgeshire) (Con)]

Q Yes, thank you, Chair. I just want to clarify something. Mr Woods, did I hear you correctly when you said you could finance your smaller reactors from contracts for difference as well as a RAB model?

Alan Woods: We believe we can, yes. It is worth noting that our plant is an order of magnitude different to the larger ones in terms of the capital. It is also different in terms of the time it takes to build and in the fact that we have completely changed the risk profile. As I say, this is a factory-built product and it is something we are used to.

[Anthony Browne]

Q Do you not have the construction risk that others have?

Alan Woods: We have removed a lot of the construction risk. We have what is called our fourth factory, so we actually assemble our modules on site in a controlled factory environment. This allows us to remove and reduce that risk profile. It is a completely different ball game.

In that regard, we believe that we can attract private capital. We spent some time at COP26 last week and there is an appetite in the financial markets for investment in projects that can demonstrate an acceptable risk profile, which we believe we can. It is up to us to demonstrate that and to attract that private finance, but we think that is doable.

[Anthony Browne]

Q Is that irrespective of whether you have the CfD model or the RAB model?

Alan Woods: I am referring there to the CfD model. If we have the CfD, which is essentially providing some certainty of returns, then that certainty of returns, coupled with the fact that the risk profile of our product is completely different, represents an attractive financial investment.

[Anthony Browne]

Q From what you are saying, if you had the option between CfD and RAB, it sounds as if you would choose CfD?

Alan Woods: Well, look, if RAB is available then RAB is great. If you have got that high-risk profile, it will provide even better value to the consumer. From our perspective, the pace is also important and RAB is not legislated for yet. CfD is an available mechanism that is tried and tested, and we believe we can make it work. Therefore, to operate at pace, our preferred route at the moment would be to move forward with the CfD approach.

[Anthony Browne]

Q If you moved ahead with the CfD approach, would you be able to switch to the other approach when it is legislated for?

Alan Woods: Yes, sure. There is nothing stopping you.

[Anthony Browne]

Change horses.

Alan Woods: Yes, it is no secret that SMRs work by building a fleet. How you finance each SMR does not mean they all have to be financed the same way. We are also looking at models for the future, looking at the net zero challenge. The scale of energy or electricity generation that we will need to decarbonise things like heat and transport, or for synthetic aviation fuel, hydrogen and so on—it will take an enormous amount of electricity to make those new fuels. We see a world where you might need to do that on energy campuses that operate in an off-grid manner to maximise that value. In that kind of a regime in the future, we may be able to build these under a separate, more simplified PPA model.

[Anthony Browne]

Q I am interested in similar questions to the others. Chris, do you think the RAB model will be sufficient to encourage enough private capital to build a new generation of nuclear power stations, separate from the Rolls-Royce plant?

Chris Ball: Yes. I would take it back a step, actually, because we cannot let this conversation become either/or; it has to be both. I say that because, if you look at the future net zero world, the general view is that we should electrify as much as possible and then decarbonise the electricity supply industry. The electrification will probably double our demand on the grid and will probably lead to a tripling of our capacity on the grid, because a large amount of it is intermittent renewables.

There are various studies out there and everyone has a different view, but broadly speaking a quarter of the grid should be—will have to be—firm power, for a host of reasons, not least the storage costs escalating almost exponentially with increased of renewables penetration. We are talking around 50 GW of firm power, or 50 large plants; Hinkley is 3.2 GW. You have two main sources for that. The first is gas with carbon capture and sequestration. By the way, that energy sector has risks; there is no large-scale carbon capture and sequestration plant in the UK, but some of the modelling suggests that we would have to capture and sequester in the UK alone four times the current world capacity of carbon capture and sequestration. The other source is nuclear. This should not become an either/or conversation. This should be a conversation about how we make sure that the CCS market starts moving, the SMR market starts moving, and the large-scale nuclear market starts moving.

For context, we need to build something like 9 GW a year across all technologies—firm power and renewable power—between now and 2050. If you go back over the last 60 years, our peak output is of the order of the construction of 6 GW a year, averaging at 3 GW, so we have to treble the average output every year for the next 30 years, working to the 2050 timescale. This has to be a conversation about all. There is no doubt that, to push large-scale nuclear forward, the RAB model seems to the most appropriate method.

[Anthony Browne]

Q That is very interesting context. To come back to my question, will the RAB model be enough to attract sufficient capital, particularly from UK investors, to fund the building of the capacity you say is needed?

Chris Ball: This is not really my area of expertise; I suggest you are better off asking other people about that. The big piece for me is the risk allocation within that model—where risk sits. There is a balance there. From listening to some of the earlier evidence, clearly the more risk that is transferred to the developer, the more attractive that might become to some investors. The flipside of that is that you are starting to move to a scenario where risk is priced in through the delivery vehicle. That is a trade-off that I would be very careful of. I will limit my comments to that area.

[Anthony Browne]

Q Dawn, do you think the RAB model is sufficient to encourage the investment into the nuclear industry that we need to build the capacity to get to net zero?

Dawn James: I hope you can hear me okay now. I am not an expert in the field of investors, but building on what Chris said, it would certainly bring more developers into the UK. As I think you are all aware, a number of programmes have started then stopped, including at Wylfa and Moorside, and that is largely down to issues around financing. So yes, I believe that the RAB model will definitely attract more investors and developers, which, as you just said, is critical to our meeting our net zero target.

[Anthony Browne]

Q Cameron, the same question. Do you think the RAB model will be sufficient to attract enough capital to build the nuclear power stations we need?

Cameron Gilmour: Looking at some of the detail and how the Bill has been written, it seems to be designed to encourage that investment. Again, I am not a financial expert, but it is encouraging to see that nuclear is recognised as playing a key part in our journey towards net zero. From an investment perspective, it becomes something that the Government want to invest in and commit to, so you would say that has to be an encouraging sign for any potential investors.

[Anthony Browne]

Q Do you have any particular view about the role of Ofgem as set out in this Bill? Does Ofgem have the capability to regulate a RAB model in nuclear power? Obviously it is whole new area of interest and expertise for it.

Alan Woods: I notice I keep getting questions first, so I have less time to think of the answer, but—

[Anthony Browne]

I can ask Chris first if you want.

Chris Ball: No, that’s fine. [Laughter.]

Alan Woods: Look, clearly there needs to be a regulator, and a regulator is needed to regulate the way RAB is deployed and managed. From our perspective, Ofgem is as good a point to start as anywhere.

Chris Ball: Clearly this creates a new demand, and there is a need for additional capacity somewhere to oversee the management of the RAB model. I think the question is whether Ofgem is best placed to do that, and the answer is: possibly.

The other piece that I would look at is, ultimately, where our country’s energy system architect is now. Who is defining the way in which our energy system should look and operate in 2050? Is there benefit in establishing a new energy system architect who takes decisions on the future power mix, and actually putting into that system architect the capability to oversee investments in all sectors? I think that is one of the reflections that I would have about the controlling mind in how we reach that 2050 net zero energy system.

[Anthony Browne]

Q Would that not be the role of Government—of BEIS?

Chris Ball: It may well be within Government and BEIS, absolutely. But I think we do need that capability firmly established in one place. I am not suggesting it should necessarily sit outside of Government or BEIS, but we should have a clear collection of people under that title as the controlling mind.

[Anthony Browne]

Okay. That is all my questions, thank you.

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

Q This is a question just for Mr Woods—sorry—because of the small modular reactor interest. The benefits of RAB for the industry and for traditional build are quite obvious, but there are still risks. There is a risk in construction, and therefore costing that risk and building it into the RAB financing is a challenge. We were given evidence this morning by those who believe that a fleet will mean that things de-risk as we go along. There is, at least, a concept, and there is a proven record of design that works, but that is not necessarily the case with SMR. I am playing devil’s advocate. I can see that RAB would be extremely attractive to SMR going forward, but we are still at the concept stage, rather than having proof that it works in the way that we all hope it will.

Alan Woods: Let me break that down in terms of the proven part. Our design and our plant use proven technology. At the base of the reactor island, there is a pressurised water reactor. It is the same as what Rolls-Royce has designed, built and operated for the past 60 years in the submarine programme. We do not have the same set of requirements as the submarine programme, but it is the same core technology. Is it proven? Yes, it is absolutely proven. We know it works and that we can build it. We are building them today.

The rest of the turbine island plant is designed to use products that are already available in the market today. We are not designing a power plant that requires us to invent a specialist product here or a specialist product there and that has never been made before. It is designed to use products that exist in the market. Even though it is a steam turbine, it is a commodity product we can buy. All the constituent parts at our plant are proven technology. Our civil module approach has been proven by our partner, Laing O’Rourke, which is making modules of this nature today at Worksop. We will expand that facility to replicate and grow that module manufacturing capacity. The constituent parts are all proven. There is no technology innovation at the plant that is questionable as to whether it will reach the right technology-readiness level.

Then we come to our ability to manufacture and join the modules together. Again, this is not a technology challenge. It becomes more of a logistical challenge and there is plenty of evidence in other industries—in fact, inside Rolls-Royce—where we manage those logistics from the supply chain to the module facilities to the delivery to site and to the installation and commissioning of them.

I do not accept that we are not proven technology; we absolutely are. As I said, we have built into the design, intentionally from the outset, technologies and features that remove the risks associated with traditional construction. It is no longer a very large construction project; it is a factory of products. For example, when we build the power plant, we assembly the modules on site where an average of 500 people are assembling the parts. We do that to move those jobs into the module facilities and the supply chain and into the factory environment where we are manufacturing the same products over and over again in a production line environment.

--- Later in debate ---

[Virginia Crosbie]

Q In the 1950s and ’60s, the UK used to lead the nuclear sector on the global stage. When people across the world look at us they say that we have all the pieces of the jigsaw: we have the fuel; we have the large reactors; we have decommissioning; we have the supply chain. They are looking at us to put all those pieces of the jigsaw together to make that jigsaw puzzle. Is the RAB nuclear financing model the one piece of the puzzle that is missing so that we in the UK can once again compete on the global nuclear stage?

Chris Ball: I would observe that it is about making sure that companies come together as one, and that there is leadership in the industry. If a RAB model supports and encourages that, fantastic. Looking at nuclear nations around the world, those that have been successful in the decades since—the 2000s and ’90s onwards—we tend to find a clear industry lead. Sometimes that is the operator, and sometimes it is a reactor vendor, behind which everyone else is corralled. It is probably that leadership that we used to have in the UK in decades gone by, and behind which everyone corrals, that has aided a successful industry, particularly in overseas exports. That is the piece that is missing at the moment, but that does not mean that industry should not come together and do something about it itself. It probably should, and I include myself in that comment. If RAB encourages that, all the better, but that is an observation that I would make.

Alan Woods: I would say that for us to be seen as a global leader in nuclear again we need to own the technology as a nation. We need to own the intellectual property; we need to export it; we need to be the country that other countries come to when they are thinking about wanting to deploy and exploit nuclear solutions in their home markets. I think that we will get there. With SMR, we will definitely get there. I think that that is what differentiates us.

You only need to read the news—there is an awful lot of noise around SMRs. There are a lot of vendors out there, and there is a lot of confusion about what is near-term and what are future technologies. I can speak at first hand, as I was in the Czech Republic yesterday, and they said that there is one thing that differentiates us. They believe that we can and will do it—and that is not true for everyone they look at. Having our own technology, coupled with the heritage that we have as a nation, we can and will grow back our position of being seen as a global leader in nuclear technologies around the world, without a doubt.

Dawn James: I think your question, Virginia, is about the magic key to unlocking or getting back to that fabulous heritage that we have in the nuclear industry. At this moment in time, yes, it is, and we really welcome the legislation that is moving forward. I cannot begin to tell you how excited I am finally to see my industry moving forward at pace. I started in the nuclear industry when Sizewell B was commissioned—at the back end of the construction of the last power station in the UK—yet we still have a really thriving nuclear industry. This is the key to unlocking and creating an industry that will thrive for many years to come.

Cameron Gilmour: A couple of points. I think that it is probably a question for the developers about gigawatt plants—could they raise the capital required without RAB? Probably the answer is no. There is a bigger issue at stake, which is sustaining the advantages in the ’60s and ’70s that Virginia talked about, and being able to have a new build programme that is both gigawatt and SMRs—EMRs in due course. That helps us to sustain expertise and knowledge, and help people with the careers that Dawn and I have had, for apprentices and for graduates in modern history. Without that funding we do not have a programme, and without a programme we do not have an industry with a future.

[Anthony Browne]

Q Chris, I want to pick up on something that you said earlier. You talked about needing—my words, not yours—every tool in the tool box, or every weapon in the armoury, to get to net zero. You have mentioned carbon capture and storage a couple of times. That is not within the scope of the Bill, but I wondered whether you thought that the RAB model would be suitable for carbon capture and storage, and whether the Bill could possibly be widened so that it applied to things other than nuclear.

Chris Ball: Again, that is probably not my area of expertise. The way I have looked at this is to look at every technology, and where the challenge is around enabling mass deployment of that technology. With CCS at this point in time, the key issue is not necessarily about the financing but about how the market is going to be structured and the quality of demonstrator projects.

There are different models, of course, but if you believe some of the modelling out there, we would need to capture and sequester within the UK four times the current world capacity. That is not without its challenges. So in answer to your question, I would suspect that, of course, it can be applied to that, but I actually think there are other key focus areas that need some attention to start that market moving—not least the deployment of demonstrator projects in the near term hopefully as well.

[Virginia Crosbie]

Q There has rightly been a lot of talk today about the cost to consumers and the nuclear fleet mentality. Is the reality not that RAB will facilitate a fleet of nuclear, which will in turn be good news for the consumer?

Chris Ball: I think that is absolutely right, if you look at the RAB modelling. You have got to look at this from the concept of managing risk. How do we manage risk in the best possible way? You manage that risk through commonality and through ensuring that capability remains within the industry. We might deploy that commonality as pressurised water reactors. It might be a fleet of a couple of different designs, for instance, instead of one. From a risk perspective, it starts to consolidate down to a smaller number of different designs, with a level of commonality, where we can really drive risk and take the lessons from more projects to the next as well.

Alan Woods: A fleet clearly drives cost benefits. That is absolutely true of SMRs, despite the fact that they are factory produced anyway. We need that throughput in the factories. I would go back to the point I raised at the start. We welcome RAB. It is a mechanism that helps reduce cost of capital, but from our perspective we see there are alternative mechanisms, such as leaning on the CfD mechanism, and pace is important for us. We need to start thinking about delivering this fleet now, and that is what we are doing. Therefore, we have to look at mechanisms that are available for us now. We believe we can do this from a CfD to start with.

Dawn James: A fleet approach, without a shadow of doubt, drives down costs to the consumer by driving up our ability to replicate and driving in lessons learned from one station to the next. That security of work allows us to develop our workforce and to bring more people in. The more people you bring in at the bottom end, the more you drive down your costs, because you can spread the workforce across a number of different projects. It drives down costs in so many ways that, ultimately, that does get passed on to the consumer.

Cameron Gilmour: Yes, I agree with that. I will just bring a people angle to this as well. When I talk to some of the amazing, talented young apprentices and people in our business and we talk about this exciting future, there is no question that, without RAB, we will not have that opportunity to create that future for them, which would be a huge waste of talent. RAB is the enabler to getting that certainty and continuity for that next generation.

--- Later in debate ---

[Dr Whitehead]

Q Not a happy state of affairs, is it?

Tom Greatrex: Well, I hope that there will be clarity on that and other aspects of what has been announced by the Government in recent announcements as we proceed.

[Anthony Browne]

Q I have a simple, open question for all three of you. You all run trade associations, effectively, and you will have gone through the Bill in detail and looked at what you like and do not like. Are there any gaps in it? Are there any things you think should be in there that are not in there? We heard earlier, for example, about how, if there are overruns, you allocate the risk between consumers and investors and construction companies. That is obviously not covered in this Bill, but what gaps do you think there are?

Tom Greatrex: The Bill sets out a framework for a mechanism that we as the industry welcome. We think it is very important to be able to facilitate development of new projects. There are levels of detail that are not covered in the primary legislation, and I think you have touched on some of those in relation to exactly how aspects of risk sharing will be undertaken and the role of the regulator, which will be Ofgem—the expertise available to that body, and the fact that transitioning into being able to undertake what is effectively a new role is going to be significantly important. I am not sure those would necessarily be in the primary legislation, but there are aspects of this where there will need to be further information and development before a regulated desktop-based model can be used for nuclear development.

[Anthony Browne]

Q Tom Thackeray, are there any gaps or things you would want changed?

Tom Thackeray: From the CBI’s perspective, we do not have any significant concerns around what is included in the Bill, but as has been noted previously, there is a framework for the establishment of a regulated asset base model, and the details around designation and the risk-sharing profile are things that will be worked out on an individual project basis further down the line, which should be the case when legislating in this way.

[Anthony Browne]

Q You do not think it needs to be in primary legislation. It is better to be secondary legislation.

Tom Thackeray: Yes, from our members’ perspectives, they are comfortable with that way of operating.

[Anthony Browne]

Q Rebecca, does the Energy Industries Council have any particular concerns? Are there any gaps in the legislation? Are there any things that are not there that you would like to see included?

Rebecca Groundwater: I would echo what previous panellists have said. We have engaged with our members on this and, although the Bill is a framework and there will be more detail going forward, they are happy with how things are at the moment. There are no big gaps for them as the Bill currently stands.

[Anthony Browne]

Q That is reassuring to hear from the three trade associations. I have one other question. This is obviously about the nuclear industry, but there are other forms of energy out there. Wind power famously gets contracts for difference, but things like tidal power are also coming on. Carbon capture and storage is not a form of energy, but it is part of the battle to net zero that we were talking about earlier. Are you concerned that having this regime just for nuclear will favour one form of energy versus another and disadvantage other sectors, and that we will end up without the optimum different types of energy supply? Do you think that we might choose something different if we had a controlling mind of the energy supply, as it were? Are you concerned that this will end up distorting the sources of energy that we have? It is difficult for Tom Greatrex to answer that because he represents just one sector, but the others represent all the different sectors.

Tom Thackeray: I think that the Bill recognises the particularities of the nuclear sector and the state that we are in, in terms of having built the first of a kind at Hinkley and the next stage of that process, with the RAB being the apt model for this technology at this time. The RAB has potential in other parts of the energy mix. Carbon capture and storage is one of those areas where we might look to expand it, although we are probably not at that stage of development just at the moment. Across the energy mix, others have tried-and-tested routes to market through the contracts for difference regime. So this adds another piece to the puzzle in providing the diverse energy mix that businesses want to see. The Bill provides a useful framework that could be replicated if we wanted to use the RAB model in other forms of energy generation in the future.

Rebecca Groundwater: I think the funding model here works for nuclear because of the investment required. At the moment, the other energy sectors are working in their own areas and they have the strategies, the legislation and the sector deals that are working for them and helping them to get to the point where they need to be. The Bill is very sector-specific, and it works for nuclear. I agree with Tom that, if and when it gets to that stage, it can be rolled out further. If you look at this in terms of the nuclear energy system, it works, and it is okay to look at each one in silo while having a holistic view of how all energy systems work together to get us to net zero.

[Anthony Browne]

Q My last question is one that we touched on in a previous evidence session, which you probably did not hear. In the 1950s and 1960s the UK led the world on nuclear power. Then we hesitated, shall we say, and we have ended up with an industry in which most of our power stations are on their way out. The Government is now pro nuclear power, as I am, and I assume you all are. Do you think the RAB model is enough to get us back on the front foot with nuclear power and build the capacity and industry that we need, or is something else also needed?

Tom Greatrex: This is a really important part of it. We have had policy under successive Governments for a while now for new nuclear capacity. It should not be a surprise to anyone that our current fleet is coming towards the end of its generating life, even after life extensions. The barrier that has existed to a number of different projects that were cited in the Second Reading debate, for example, has been about the financing regime, given the long lead time to develop an asset that then lasts for a very long time. So this is the biggest single thing.

I think that what needs to go alongside it—to be fair to the Government, we have seen this in recent times—is a commitment in words of the need for nuclear to be part of that future mix. All those things help to give investors, potential investors and developers confidence that this decision will not be changed on a whim. That clarity of purpose is important. The financing framework has been the thing that has scuppered various projects, and I think it will be vital in getting our capacity levels back up again.

[Anthony Browne]

Q Rebecca, do you think this is enough to get the UK back on the front foot in nuclear power, or do you think other things are needed?

Rebecca Groundwater: This model provides certainty, and I know that the supply chain needs that certainty. We have been speaking to our members, and we engage with them. We know that they are diversifying out of energy. They are just not sure, despite what is needed, where the actual pipeline of projects coming down is from. They are not entirely sure what to go into. A lot of work has been done around the nuclear sector and with the supply chain. It is there and it is viable, and this commitment towards investment, and showcasing that it is seen as part of reaching net zero and part of that commitment to getting there, provides the stability for the industry to commit properly to it and to drive not just the local capability but the export capability, which UK businesses are very good at doing. I think this is a very welcome piece that we can move forward with.

[Anthony Browne]

Q Tom Thackeray, from the CBI’s point of view, is this what is needed to get the nuclear industry going again, or are there other parts of the jigsaw that we need to put in place?

Tom Thackeray: I think this is a really important step for the nuclear industry and could establish our credentials as world leaders once again. From the business customer side of this, obviously, the bulk of the CBI’s membership are people who are concerned about energy from an energy bill perspective, and they are all setting net zero targets for their own operations. That is not going to be achieved unless we decarbonise the energy supply, and that cannot be achieved unless we have the roll-out of nuclear over the years ahead, and in quick time. From the point of view of UK credibility towards net zero and business leading the way generally, outside and inside the nuclear industry, it is a really important step.

[Anthony Browne]

Those are all my questions. Thank you.

[The Chair]

Are there any other questions from Members?

--- Later in debate ---

[Dr Whitehead]

Q Stephen, do you have any views on that?

Professor Thomas: I think the problem is not the need for a special administrative regime to rescue things if it all goes badly wrong in the construction phase. I think the problem is the RAB mechanism that is putting consumers’ money at risk, and if we look at the impact assessment, we are looking at a plant that will not be completed until something like 2037 to 2041, so I will be paying into this plant for quite a long time and I probably will not live long enough to see any power from it. The special administrative regime is a way to try to solve a problem that is better solved by simply not using this RAB mechanism.

[Anthony Browne]

Q If we are in an existential crisis of climate change—if it is the biggest threat that we face as a species—should we not use every tool in the toolbox to combat it? Why would you rule one of them out? That is a question for Doug Parr first, and then Mycle Schneider.

Doug Parr: I do not think I have ever made any secret of the fact that there are attendant risks that come with nuclear that do not apply to other forms of zero-carbon and low-carbon generation. What I would ask, in the light of the climate crisis—it is not an insignificant challenge that you have put there—is why UK Governments of all colours have continued to emphasise nuclear policy over and above other ways of cutting emissions. For example, the last time I saw figures on Department for Business, Energy and Industrial Strategy civil servants and where they were working, there were more people working on nuclear than on renewables and clean building heat put together, so when it came to two of the big-ticket items that are going to be absolutely essential—lots of renewable power and lots of clean heat for buildings—there were fewer civil servants working on those than on nuclear.

Nuclear is a bit-part player in this. All sensible, cost-effective models show that nuclear will not be a big piece of the pie, in terms of delivering what we need to deliver, and there are considerable problems with delivering heat, as members of the Committee will know. There are some substantial issues with delivering the amount of renewable power that we need, yet what we have is a Bill for delivering nuclear, and more civil servants working on it than on other things. I emphasise that this is a distortion that has been in place over years, and it is becoming quite problematic, because every time people are working on nuclear and not working on these other things—not putting energy and money into other things—we lose our ability to deliver what we need to deliver.

[Anthony Browne]

Q The Government are obviously doing a lot of other things; most obviously, there is wind power, which has increased dramatically and now produces far more electricity than nuclear. Mycle, if we are in a climate crisis, why rule out one of the tools in the toolbox, which could be one of the most effective or most scalable?

Mycle Schneider: The question has to be: if I spend money today, what is the most climate-effective option that is available? There is absolutely no doubt, wherever it is, that it is impossible today to build a new nuclear plant as quickly as many other options, and at a cost that is competitive. Every dollar, euro or pound put into new nuclear is making the climate crisis worse. There is no doubt about that; it is very clear. It is straightforward. Existing nuclear power plants are a bit of another story, because they are there.

[Anthony Browne]

Q When wind power was in its early days—I used to be environment editor of The Observer, 20 years ago—obviously, the environment movement was very pro-wind power. It never worried about the cost of it, which was incredibly great then; it was an incredibly cost-ineffective form of energy, but because we invested in it, the prices came down. As Professor Thomas said, it has become a far more cost-effective form of power, so why are you so worried about the cost of nuclear now when people were not worried about the cost of wind power 20 years ago?

Mycle Schneider: That is their problem. We have a very precise view about what nuclear power has actually delivered. Nuclear power is not a new technology. It was 70 years ago that construction started on the first nuclear power reactor. We have long experience, but the strange thing is that the nuclear industry always claims a “first of its kind” situation. It is surprising because whether it is Olkiluoto—an EPR in Finland—Flamanville in France or Hinkley Point C, every time the industry claims it is the first of a kind. How many times can it do that? We see that each time, costs skyrocket and the nuclear industry does not deliver.

By the way, the nuclear industry is not delivering on existing reactors, either. It is not a coincidence that Standard and Poor’s downrated EDF Energy to junk last year. For me, as an outside observer, that is a strange situation. Basically, the business as it is run by EFD Energy is judged by the credit rating agencies as not investment grade. In fact, the EDF Group has been downgraded as well. It is still investment grade, but only because they get additional notches from extraordinary state support. The RAB scheme suggests bringing down financing costs—making borrowed money cheaper—but the way EDF runs its business is judged to be so bad by credit rating agencies that it is rated non-investment grade.

All of those things have to be taken into account, and the question for me—having listened to much of the industry’s presentations today—is about how incredibly confident it is about what it will deliver in the future, when what it has delivered in the past is way off its own targets.

[Anthony Browne]

You are based in Paris and 70% of France’s electricity comes from nuclear. France has consistently lower carbon dioxide emissions per capita than the UK. Presumably you agree that that is because of the size of its nuclear sector.

Mycle Schneider: Of course that is a substantial part of it, at this point. The problem is that in 2020 the production of nuclear power was the lowest it had been in 17 years, and the share of nuclear power in the French system was at its lowest since 1985. That does not sound like a very reliable source of electricity. Basically, the French reactors were down to zero production for 115 days in 2020. That means that for every two reactors you need one in reserve, because they do not generate power for a big part of the year.

Do not forget that France has created a very distorted energy system. The peak load in the winter is historically more than 100 GW, while the lowest load day is about 30 GW. To give you an idea, Germany is about 80 GW at the peak, but it has 20 million more people. France has distorted the system with electric space heating.

The nuclear sector provides just over 60 GW, and those 60 GW are never all available. So what happens in the winter is that France often imports power from Germany. As we know, quite a bit of that peak power from Germany is coal, so one has to look at the carbon footprint and not only the grand gigawatt-hour.