New Nuclear Power

David Morris Excerpts

Thursday 7th February 2013 Commons Chamber

[Martin Horwood]

The signatories to the motion have included the Public Accounts Committee in it, but the hon. Lady makes a good case for perhaps extending that level of scrutiny to her own Committee. Of course because there is commercial sensitivity about some of these negotiations, it would be possible for those Committees to meet in private, as other Committees of this House do when dealing with sensitive subjects.

As I was saying, like RWE and E.ON before it, Centrica has decided that it is not going to touch these new nuclear plans with a bargepole—and it is not hard to see why. I do not know of a nuclear power station anywhere in the world that has been completed on time, on budget and without public subsidy. The new third-generation pressurised water reactors planned for the UK—sometimes called European pressurised reactors or EPRs—are already in deep trouble elsewhere. The Olkiluoto plant in Finland was begun in 2005 and should have gone on line in 2009. The latest estimate is that it will not be generating power before 2015, at least six years late. The first cost estimate was €3.7 billion, but now that has risen to €8 billion. Construction in Flamanville in France began in 2007. The Flamanville facility is now four years late and counting, while the costs have escalated even further and faster than those in Finland, from an original guess of €3.3 billion, according to Le Monde, to the €8.5 billion announced just in December. One French commentator said that this latest announcement undermined the credibility of EPRs as a technology export, and Centrica was obviously listening.

Will anyone take Centrica’s place? EDF is apparently talking to partners it has worked with in China, but I would just warn the Secretary of State that, according to the recent Nuclear Materials Security Index report, China ranks 29th among the group of 32 nuclear nations on nuclear security and materials transparency. Given wider security—

[David Morris (Morecambe and Lunesdale) (Con)]

rose—

[Martin Horwood]

I am sorry but I cannot give way because of the time limit.

Given wider security and international relations concerns, it would seem to be worth thinking twice, just as the Americans have recently done, about allowing Chinese companies to take a major stake in any strategically important British energy supply projects.

Hitachi stepped in to replace E.ON and RWE on the other projected new nuclear plants, but Hitachi has only taken an option on UK new build. Its proposed advanced boiling water reactor design is still perhaps some four years from regulatory approval and Hitachi, too, is waiting on the strike price negotiations.

More and more research is questioning the cost-effectiveness of nuclear. The Energy Fair group of energy consultants and academics has stripped out all subsidies and says that the real cost of nuclear power is at least £200 per MWh, which is much more than the cost of offshore wind power at £140 per MWh or that of onshore wind power at less than £90 MWh. If EDF has done similar sums—there have been rumours in the industry of asks as high as £165 per MWh for the strike price—that raises the extraordinary possibility that nuclear power, a mature and not very competitive industry started in 1956, might be asking for a strike price comparable with or even higher than that of the newly emerging wind industry. Frustratingly, even Parliament does not know whether that is the case.

Finally, I come to the rather obvious point that nuclear is a fossil-fuel technology. If the worldwide investment in nuclear continues in China and elsewhere, despite all these risks, the price of uranium also will inevitably rise, making nuclear here even more uneconomic. Nuclear sceptics may have a very unlikely ally in this debate. The Treasury’s levy control framework, which caps the costs that can be added to consumers’ bills, currently specifies a figure of £2.6 billion a year. Tom Burke, writing in The Guardian, cites estimates that the cap would have to rise to £12.5 billion or more to provide 16 GW of nuclear power by 2025. As he says:

“Anyone who thinks that the Treasury will agree to a levy cap this large is dreaming.”

The risk, of course, is that support for nuclear will therefore squeeze out possible support for renewables.

Let me remind hon. Members on both sides of the House that the coalition agreement in May 2010 promised

“the replacement of existing nuclear power stations provided... that they receive no public subsidy.”

Agreed coalition policy was restated by the former Secretary of State in the annual energy statement a few months later:

“new nuclear can go ahead so long as there is no public subsidy.”—[Official Report, 27 July 2010; Vol. 514, c. 868.]

He did not say, “no unfair subsidy” or, “no unjustified subsidy”; he said, “no subsidy whatsoever”.

Liberal Democrats and Greens have long opposed nuclear power. But Conservative Members, with their strong commitment to sound finance and their horror of unjustified subsidies, should be alarmed too, even if they reject Électricité de France’s accusation of jingoism against the hon. Member for Bracknell (Dr Lee), who dared to question the cost-efficiency of adding our own subsidy to that of the French taxpayer. And Labour MPs should remember the mantra that their Government maintained throughout many long hours of debate on their last Energy Bill, which I remember because I was a shadow environment spokesperson; again, the line was, “No public subsidy”.

The request in this motion is modest. It seeks not the instant abandonment—

--- Later in debate ---

[Paul Flynn]

My hon. Friend says that it is expensive, but it is very cheap. He should take a trip to La Rance in Brittany, where for more than 30 years there has been a tidal power station producing the cheapest electricity in France.

Thanks to the Public Accounts Committee, we now have a clear picture of the future. Let us look at the enormity of the sums involved. Professor Tom Burke, who was an adviser to a previous Government, has said:

“The scale of the proposed investment is very large. The contract will last for a very long time at a strike price of £100/MW and a 30 year contract like this would require a subsidy of £1 billion/year above today’s wholesale price for electricity. This would lead to a transfer of £30 billion to EDF”—

Électricité de France, a French company—from the pockets of British taxpayers. He continued:

“Should the whole of the 16GW of new nuclear anticipated by the Energy Minister be financed on similar terms it would cost householders and businesses £150 billion by 2050.”

Back in 2008, I tabled an early-day motion forecasting that any profits that might be made from nuclear power would be enjoyed by foreign companies. We have seen the stampede that is now going on with E.ON, RWE and Centrica, and that is all for business reasons. Any profits would be enjoyed in France, but the enormous cost would be paid by British taxpayers.

There are huge liabilities involved. We hear about £67.5 billion—an astonishing figure—for dealing with nuclear waste. The Flowers committee report said in 1976 that it was irresponsible to go on generating electricity from nuclear power without a solution to the waste problem.

[David Morris]

Will the hon. Gentleman give way?

[Paul Flynn]

I cannot give way any more.

The waste problem is continuing at a cost of £1.5 billion a year. We still do not have the solution and we are in the same position with the £67.5 billion. The answer used to be to dig a hole and bury it. Now, thanks to Cumbria council’s decision, quite rightly, not to build—

--- Later in debate ---

[David Morris (Morecambe and Lunesdale) (Con)]

Our future energy needs and how we meet them are critical to this nation. I congratulate my hon. Friend the Member for Cheltenham (Martin Horwood) on securing this debate, and I also pay tribute to the hon. Member for Hartlepool (Mr Wright), who is a friend outside this Chamber.

My constituency is one of the biggest energy producers in the country and my area contains gas, onshore and offshore wind, and—biggest of all—two nuclear power stations. I am incredibly supportive of the nuclear industry and have established Conservative Friends of Nuclear Energy to help advocate it. The nuclear industry is worth protecting and developing. Indeed, I would go so far as referring to it as the ultimate low-carbon industry.

People in my constituency are sick of onshore wind blighting the countryside. My mailbag is always full of letters from various conglomerates that want subsidies to develop onshore wind. Our nuclear power station is a huge employer and incredibly popular among those who live closest to it. In fact, my constituency has been designated for a third nuclear reactor, and we have a good chance of getting it built. For all the good news, however, there are many misconceptions about the industry.

[Zac Goldsmith]

On that point, is my hon. Friend saying that subsidies are acceptable for nuclear power but unacceptable for onshore wind? That seems to be where his speech is going.

[David Morris]

No, I think that wind has an important part to play in the mix, but I am unequivocal when I say that we should have subsidies in the nuclear power industry as well.

There are many misconceptions about the nuclear industry, not least the energy market reforms that are hugely generous to companies such as EDF. The reality is rather different. All three new-build companies—Horizon, EDF and NuGen—are building plants at their own expense. Contracts for difference guarantee a price for the electricity produced, but that is done for one simple reason: it is impossible to raise £7 billion to build a nuclear power station unless the banks have some idea of what the turnover will be. That is why we need contracts for difference to bring predictability to the price.

A recent report by the Department of Energy and Climate Change suggested that contracts for difference could lead to a fall in bills of between 6% and 8%—welcome news during these difficult economic times—but to characterise that as a subsidy is wrong. In fact, DECC has made it clear time and again that it will not subsidise new nuclear energy. I have not always supported that position, but it would be remiss of me not to point out that the Department is firm in its view.

Every study I have seen shows nuclear energy as one of the cheapest large-scale low-carbon technologies. It is also a huge employer and will soon account for 0.4% of British GDP, equating to 32,500 jobs. I believe that nuclear is the future of low-carbon technology. It is clean, cheap and provides employment opportunities in areas that really need them. I support nuclear energy and the energy market reforms. They are the way forward and will keep the lights on for decades to come.