Callum McCaig
Main Page: Callum McCaig (Scottish National Party - Aberdeen South)Hinkley Point C Reactor
Callum McCaig Excerpts
The Minister of State, Department of Energy and Climate Change (Andrea Leadsom)
In the same tone as the hon. Gentleman, I would like to draw attention on International Women’s Day to the fact that Dame Sue Ion was on “Desert Island Discs” as the first woman to be awarded the very prestigious president’s medal by the Royal Academy of Engineering and she is herself a nuclear expert. I am sure that all hon. Members will be delighted to hear that today of all days.
I thank the hon. Member for East Lothian (George Kerevan) for securing this debate, which gives me the opportunity to put forward the Government’s vision for Hinkley Point C. HPC is a matter of national importance for our energy system, and it is only right that it should be discussed in this House. However, let me point out that we do not put all our eggs in one basket. Far from being the only game in town, as the hon. Gentleman suggested, it is part of a balanced mix of energy sources that includes renewables and fossil fuels. It is absolutely vital that we stick to our plan for energy security and decarbonising at the lowest price to consumers.
Returning to HPC, there are numerous approvals processes for a project like it, many of which have already been completed. These include state aid; the approval of a funded decommissioning programme to cover the costs of managing waste from HPC, which is included in the contract for difference; planning approval; and grid connection. Some other processes will continue up to signature of the documents. Looking ahead, HPC will need to comply with the UK’s robust nuclear regulations—among the most stringent and safest in the world.
However, the key to this project is the funding package that has been negotiated with the developer. It is this, I think, that the hon. Gentleman had in mind when calling for this debate, and I intend to focus my remarks on it. The short answer to the question he raised is that the timing of Government’s final approval of the deal is dependent on EDF being in a position to make a final investment decision. As he is aware, this is ultimately a commercial matter for EDF. In the UK, it is for developers to fund, build and operate new nuclear power stations. I would like to take this opportunity to explain what this Government are doing to expedite the successful conclusion of this landmark deal.
Andrea Leadsom
I shall not give way for a while; I am slightly short of time and I have important points to make. I will give way later if there is time.
Let me first remind the House of the reasons why the Government have supported the development of Hinkley Point C, and how we have ensured that this is a good deal for Britain. New nuclear is needed, alongside renewables and fossil fuels, because nuclear is the only non-renewable low-carbon technology that is currently proven and can be deployed on a large scale to provide continuous supply. Most existing nuclear plants, which currently meet about 16% of our energy needs, are due to close by the late 2020s. Without new nuclear build, the share of nuclear generation could dip to 3% in 2030. Britain is a world leader in civil nuclear, through our skills base, our infrastructure and our regulatory regime. Hinkley Point C will keep Britain at the forefront of nuclear development.
Government policy has determined that the new plant should be financed and built by the private sector. The Government have worked closely with new-build vendors and industry to develop a number of initiatives to maximise both the capability and the economic benefits to the UK. That goes far wider than Hinkley Point C—industry has set out proposals to develop 18 GW of new nuclear power in the UK—but the first step in this long-term plan is Hinkley, which will be the first new nuclear power plant to be built in the UK for 20 years, and which will blaze a trail for further nuclear development.
Once it is up and running in 2025, Hinkley will provide 3.2 GW of secure, base-load and low carbon electricity for at least 60 years, meeting 7% of the UK's energy needs. That is enough to power 6 million homes, twice as many as there are in the whole of London. Hinkley will give an enormous boost to both the local and the national economy, providing 25,000 jobs during construction, as well as 1,000 apprenticeships. The plant will provide employment for 900 permanent staff once it is up and running, contributing £40 million a year to the local economy.
Having visited Bridgwater recently, I can tell the House that there is a real sense of excitement about the project. EDF has not been complacent; it is digging away. It has back runs, and the whole site has been levelled. There is big investment in the local community, and local people are very supportive of the project.
EDF believes that at least 60% of the £18 billion value of construction work on Hinkley will go to UK-based businesses. Through our negotiations, we have ensured that consumers will not pay anything for the electricity until the plant is generating, so the risks of construction will be transferred to the developer. At the same time, we have ensured that mechanisms are in place to enable any construction underspends or profits above a certain level to be shared with consumers. If the project comes in under budget, savings will be shared with consumers, but if there are overspends, the developer will bear all the additional costs.
As I have said, we need new nuclear, and Hinkley Point C will pave the way for a new generation of nuclear plants in the UK in a cost-competitive way, thanks to the unique deal that we have negotiated.
Callum McCaig
In the context of that “unique deal”, may I ask the Minister, as the final decision approaches, for a cast-iron guarantee from the Government that the strike price of £92.50 will not be increased?
Andrea Leadsom
As I have explained, the strike price has been agreed, and we expect a final investment decision in the very near future.
The deal has already been through a number of rigorous approvals processes, both within the Government and within the European Union. In October 2013, the Department of Energy and Climate Change and EDF agreed the strike price for the electricity to be produced by Hinkley Point C. In October 2014, the European Commission approved the Hinkley Point C state aid case, following a lengthy and rigorous investigation by the Commission. Notwithstanding the ongoing opposition of a small minority of member states, we are confident that the decision is legally robust and will stand up to challenges.
In October 2015, EDF and its partner of 30 years, China General Nuclear, signed a strategic investment agreement in London. That commercial agreement set out the terms of EDF's partnership in the UK with CGN, starting with Hinkley Point C. EDF and CGN agreed to take a 66.5% stake and a 33.5% stake in Hinkley respectively. At that point, the final form of the contracts was agreed in substance. My right hon. Friend the Secretary of State made it clear at the time that she would make her final decision on Hinkley once EDF had reached its final investment decision.
The Government’s position has remained unchanged while the final details of the contracts have been ironed out. In November, we set out that we expected to conclude the deal in the coming months, and the Secretary of State made it clear that she was minded to proceed with the contract for difference support package for the deal, subject to any change in circumstances. We remain confident that all parties are firmly behind Hinkley Point C and are working hard towards a final investment decision. We have received assurances from EDF and the French Government—EDF’s largest shareholder—on this point. Hinkley is a large investment for EDF and CGN, so it is only right and proper that they take the necessary time now to ensure that everything is in order so that they can proceed smoothly once they have taken a positive final investment decision.