Hinkley Point C

Lord Howell of Guildford Excerpts

Thursday 15th September 2016 Lords Chamber

[Baroness Neville-Rolfe]

I will certainly look at what we can do about transparency relating to small nuclear reactors. It is something that, as a new energy team, we are in the process of looking at, as I have already said. The noble Lord, as always, makes a good point about the need for testing this idea.

I did not answer the point from the noble Lord, Lord Teverson, on tidal lagoons. We will take a decision on the future role of tidal lagoons in the UK’s energy mix following the conclusions of an independent review being undertaken by Mr Hendry, the former MP.

[Lord Howell of Guildford (Con)]

Would my noble friend accept that this was an incredibly difficult decision and that there were huge risks whichever way the decision might have gone? Would she agree that the main risks of going ahead—although, as I said, there were huge risks in not going ahead—are not so much the Chinese security issue, which has received a lot of press, as the rocky financial state of EDF, which the noble Lord, Lord Teverson, rightly raised, and of its supplier, Areva; the untried design, which still has not been proven and still is not working; the possibility of further cost inflation in the construction; and the enormous delay? Having visited Flamanville, I have seen how extensive that is: it is six years behind time and three times over budget.

Of course, as the noble Lord, Lord Teverson, again said, there are the new technology possibilities coming along by the time this produces electric current, as well as the possibility of falling renewable costs and the present possibility of very low oil and gas prices for years ahead. When I launched a programme in 1979 of nine new reactors—only one, Sizewell B, was ever built —it was the weak oil price that completely undermined the economics of the situation. That is the problem we face again today. Would my noble friend accept that it might have been wiser, faced with this Hobson’s choice, to at least have gone at it more sequentially and built just one reactor the same size as Flamanville to start with, and then see how matters developed from there, working with the Chinese and the French, not involving huge compensation and delay? One at a time might just have been a wiser course.

Finally, can we have a careful examination of how this decision ever came about and how my noble friends in the Government were confronted with it, so we are not caught out a second time?

[Baroness Neville-Rolfe]

I very much agree with my noble friend that we should learn from our experiences. That is something I always try to ensure we do in any area I am involved with. That obviously includes this. The honest truth is that this has been a difficult decision. That is one of the reasons why it was delayed, although we ended up with a decision in September, which was the most recent scheduled date.

My noble friend asks why there will be two reactors instead of one. There are two answers there. There are economies of scale. We have the skills and capability. The second point is that the consortium, led by EDF, came forward with a proposal for two reactors allowing for all of that and bringing many benefits that were weighed against the difficulties. We have made some changes, particularly relating to security protections, but we believe this project represents value for money for 7% of supplies of electricity over 60 years, of a sort that is a secure and reliable baseload, as they call it in the industry.