Nuclear Energy

Lord Mott Excerpts

Thursday 7th September 2023 Lords Chamber

[Lord Mott (Con)]

My Lords, I thank my noble friend Lord Howell for securing this important and timely debate. I had the pleasure of sitting down with him yesterday morning to discuss nuclear policy in greater detail. I must say that his enthusiasm and expertise in this area are unmatched, and I thank him for his ongoing support for the civil nuclear industry in the UK. I thank also all noble Lords for participating in the debate and for their valuable contributions. I welcome the support for nuclear we heard from the noble Baroness, Lady Blake; this is an important signal for the industry. I would also like to reference at the outset my support for the Legislators for Nuclear initiative, as referenced by my noble friend Lady Bloomfield and the noble Lord, Lord Ravensdale. I understand that noble Lords met earlier this week with my ministerial colleague, Andrew Bowie MP, to discuss this further. I look forward to receiving an update on the progress of this work.

As the noble Viscount, Lord Hanworth, and the noble Lord, Lord Liddle, rightly pointed out, it is 70 years since construction began on the world’s first commercial nuclear power plant at Calder Hall in Cumbria. This incredible technology is undergoing a revival. Climate change, soaring global energy prices and improving nuclear technology have all prompted a rethink in our strategic priorities and, over the last 18 months, Vladimir Putin’s invasion of Ukraine has highlighted the enduring importance of energy security. This Government recognise the major role nuclear power has played, and will continue to play, in our own energy mix: not only delivering energy security but helping us to decarbonise.

That is why, last year, the Government set out in the British energy security strategy plans to generate up to a quarter of the country’s electricity from nuclear by 2050. To achieve this, we remain committed to the full spectrum of nuclear technologies, from traditional large-scale reactor projects through to exploring more innovative small, advanced and even microreactor designs. That is also why we have launched Great British Nuclear, to ensure we have the right structures in place to help deliver the nuclear programme.

The Government have committed to a new programmatic approach to the delivery of nuclear projects going forward, giving industry and investors the confidence to make the necessary investments that will help deliver projects at pace, while also reducing costs through learning and replication. To deliver this programme, we have launched Great British Nuclear—GBN—which will be an arm’s-length body responsible for helping to enable new nuclear projects, backed with the funding it needs.

GBN will apply a programmatic approach to both project deployment and technology selection. This has two key advantages: it will send the right signals to the sector, to provide long-term certainty and facilitate investment in the supply chain and skills; and it will offset the gradual retirement of existing capacity, strengthening UK energy independence while being central to delivering the decarbonisation needs set out by the noble Baroness, Lady Bennett.

GBN’s first priority is to identify the small modular reactor technologies best able to deliver a final investment decision by the end of 2029 and deliver projects in the mid-2030s, potentially releasing multi-billions of pounds of private and public investment to build SMR technologies on sites. To this end, following a market engagement exercise, GBN invited SMR technology vendors to register their interest in a technology selection process. The initial application window is now closed, with the ambition being to assess and decide on the leading technologies by the autumn.

In response to the question of the noble Lord, Lord Bilimoria, and as Minister Bowie said this morning at the World Nuclear Symposium, the UK’s technology selection process is three times quicker than that of any contemporary country and gives a unique rigour to the way that the UK selects SMR technology—something that we think will make the UK highly competitive globally.

In response my noble friend Lord Howell’s question about those reactors that have not yet sought government financing, I reiterate that, while GBN’s initial focus is the SMR down-selection process, the Government remain strongly committed to the full spectrum of nuclear technologies and continue to consider how all technologies could further contribute to UK energy security. For the companies referenced by my noble friend Lord Howell, the Government have committed to consult in the autumn on alternative routes to market for nuclear projects, in addition to that provided by the Great British Nuclear small ordmodular reactor technology selection process.

To respond to the question of the noble Lord, Lord Bilimoria, on the balance between GW and SMRs, the evidence received will help shape future policy and ensure that the UK’s nuclear programme is as comprehensive and inclusive as possible.

The Government are particularly keen to understand where Great British Nuclear and the Government could support the private sector to bring forward projects, and to understand the different technology designs—as referred to by the noble Viscount, Lord Hanworth, in his speech—particularly the safety, security and non-proliferation considerations that come with different technologies. As the noble Viscount pointed out when he described the range of different technologies being developed, the Government have recognised this.

To support different designs, the Government have launched the future nuclear enabling fund of up to £120 million, to provide targeted support for new nuclear development. The aim of the FNEF is to help industry reduce project costs, so that it is better positioned for future investment decisions. In July 2023, the Government shortlisted potential grants from the FNEF. This will release up to £77.1 million, to remove barriers to entry for nuclear projects.

In response to the comment of the noble Lord, Lord Ravensdale, on the supply chain, with the Government’s long-term plans for the deployment of civil nuclear to up to 24 gigawatts by 2050, strengthening domestic capabilities and capacity is a high priority. The development of further nuclear new build, regardless of technology, is likely to bring further supply chain companies to market.

There is good reason for GBN’s initial focus on SMRs. As my noble friend Lord Howell echoed, not only are they potentially less capital intensive to build than traditional nuclear power plants, because of their smaller size, but factory-based modular manufacturing is expected to make them more flexible to deploy, ultimately helping to secure our energy supply and bring down carbon emissions. Importantly, our support for SMRs dates back to 2020, when the Government announced the £385 million advanced nuclear fund to support pioneering SMR designs and to demonstrate an advanced modular reactor by the early 2030s. Of this funding, which a number of my noble friends recognised, up to £210 million was awarded to Rolls-Royce SMR Ltd to ensure that the SMR technology can continue to be developed and progressed according to the UK’s robust regulatory regime.

As my noble friend Lord Trenchard correctly pointed out, nuclear is not just about electricity generation; it is vital to decarbonising the wider heat and water industries. The Government recognise that advanced nuclear innovation creates opportunities for new uses of nuclear energy beyond electricity. That is at the heart of the partnership he referenced between the UK and Japan on high-temperature gas reactors. IT is also central to the Government’s commitment to demonstrate an AMR and the associated R&D fund being allocated in the advanced nuclear fund. Furthermore, we have committed to consult on additional routes to market for nuclear projects later in the autumn.

Delivery of the first reactor building at Hinkley Point C is now well under way. When finished, Hinkley will provide 7% of the country’s electricity, as well as an enormous boost to both the local and national economy, with up to 25,000 new employment opportunities. In response to my noble friend Lord Howell, EDF is aiming for reactor 1 to start commercial operations in June 2027, with reactor 2 forecast to start operating a year later. The cost has moved from between £22 billion and £23 billion to between £25 billion and £26 billion in 2015 monies. The drivers behind this cost and schedule increase are the Covid pandemic, with inefficiencies caused by working restrictions, and an overoptimistic initial cost and schedule estimate by EDF.

In response to the question about Chinese participation in Hinkley Point C from my noble friend Lord Howell, CGN is a minority partner in financing and building Hinkley Point C. It is not involved in major supply chain contracts at Hinkley Point C, nor is it involved in the instrumentation, control systems or any other critical function of the plant, including the intellectual property of the reactor.

Furthermore, the Hinkley project has already revealed a huge amount about how to plan and build large-scale schemes, which will be crucial in the development of the sister project at Sizewell C. That will allow lessons to be learned and costs to be controlled directly in response to delivery challenges, as the noble Baroness, Lady Bennett, highlighted in her speech.

Last November, the Government announced an historic £700 million investment in Sizewell C, the first direct investment in a large-scale nuclear project for more than three decades and directly responding to the delivery challenges highlighted by the noble Lord, Lord Liddle. As shareholders in this project, we have been pressing ahead with Sizewell C’s development. This summer, we invested and made available a further £511 million to mature the project further. Making that funding available now will mean that the project can start construction faster at the point of any final investment decision being made. From that, we would expect a result in cost savings and faster overall delivery. We are also continuing to develop plans with EDF and the project to raise private capital later this year, using our newly established regulated asset base model for nuclear. In response to my noble friend Lady Bloomfield, that will further develop the attractiveness of the industry as a place to invest.

In answer to my noble friend Lord Howell, Sizewell C is expected to be generating power by the mid-2030s, but the timescales for construction will depend on the outcome of our ongoing development of this project. I can assure the noble Baroness, Lady Blake, that the timing of a final investment decision is intended to be in this Parliament. As a near-exact replica of Hinkley Point C, Sizewell C will benefit from the lessons learned and the established supply chain of that project, providing high levels of maturity and de-risking the project relative to other options.

As I am sure the noble Baroness, Lady Sheehan, will appreciate, the capital costs for Sizewell C are commercially sensitive and subject to ongoing negotiations, which means that we cannot at this stage disclose them.

My noble friend Lord Howell asked about Taishan and the quality issue. Framatome has rectified the known issue with the redesign of the fuel assembly for Taishan and it is important to note that Hinkley Point C and Sizewell C use a different design.

To ensure that all this delivers energy security for the United Kingdom, we need to ensure a secure supply of nuclear fuel for future UK reactor fleets and those of our allies. As the noble Lord, Lord Ravensdale, noted, the UK is in the envious position of having deep fuel cycle capabilities. Preserving and growing this capability to benefit ourselves and our allies is at the heart of the Government’s ambition in the Atlantic declaration earlier in the year for the UK to have full front-end fuel cycle capabilities by the end of the decade, and we have been investing in the sector to deliver that commitment.

As my noble friend Lady Bloomfield correctly pointed out, at the start of the year the Government also launched a nuclear fuel fund of up to £50 million, which will be match-funded by industry, to strengthen our domestic fuel production capability. This is on top of the £13 million we awarded to Westinghouse Springfields Fuels Ltd last autumn to support a venture to convert freshly mined and recycled uranium. Again, this was match-funded to deliver £26 million in benefit to the UK.

To respond to the noble Baroness, Lady Sheehan, the fuel supply for Sizewell B is the responsibility of the operator, EDF, which sources it from the wider EDF supply chain. However, the investments into nuclear fuel facilities in the UK by the nuclear fuel fund are exactly designed to bring new capabilities to the UK and to those who source nuclear fuels, including operators such as EDF. These investments will strengthen UK fuel production capability, develop supply chains for advanced fuels and bolster efforts to diversify nuclear fuel production capacity away from Russia.

While the sourcing of civil fuel is a commercial decision for the reactor operator, I can assure the noble Lord, Lord Ravensdale, that the Government, in partnership with our allies, continue to look at how we strengthen and secure fuel supplies for our future reactors to ensure that they are not dependent on Russia. I note in particular the SMR technology selection criteria as an example of how we are doing this. I reassure the noble Lord, Lord Bilimoria, that the UK’s unique position here, unlike that of most of our global competitors, will increase the export potential for SMRs.

The noble Lord, Lord Ravensdale, asked about medical isotopes. The Government have launched a medical radionuclide innovation programme to identify where further government intervention is required to secure UK supplies, including an ongoing call for evidence from industry to inform this.

Of course, to achieve our ambitions, we must also demonstrate how to deal with our nuclear legacy safely and responsibly by providing the disposal route for the waste. This will also support the delivery of new nuclear projects that the Government are committed to bringing forward.

To answer the noble Lord, Lord West, we are making progress with plans to develop a geological disposal facility to dispose of our most hazardous radioactive waste and the waste that will arise from new nuclear projects. The siting process for the GDF is under way. It is a consent-based approach which requires a willing community to be a partner in the project’s development. Four areas have entered the siting process—some very close to the heart and home of the noble Lord, Lord Liddle, and the home of the UK’s world-beating decommissioning expertise. Three areas are in Cumberland—in Copeland and Allerdale—and one is in Theddlethorpe in Lincolnshire. Geological investigations in the shape of a marine geophysical survey were conducted last summer off the coast of Copeland, Cumberland.

On skills, which the noble Lord, Lord Bilimoria, and my noble friends Lady Bloomfield and Lord Trenchard correctly highlighted, we will of course need to address a key challenge in delivering our nuclear ambitions, ensuring that we have sufficient skills across our nuclear enterprise. The new Nuclear Skills Taskforce will ensure that the UK’s defence and civil nuclear sectors have the right people with the right skills to seize growth opportunities. It will build on existing work, cohering and turbocharging actions to address the skills challenges across the whole nuclear sector.

Finally, I will address the question on planning from the noble Lord, Lord Ravensdale, and the comments from the noble Baroness, Lady Blake. Although the process brought in by the Planning Act 2008 has been successful, we recognise that the current volumes and the complexity of applications have introduced greater challenges and resulted in longer timeframes for reviewing decisions over recent years. This is why we are pressing ahead with our action plan for reform. Furthermore, we are developing a new nuclear national policy statement, or NPS, which will cover the deployment of new nuclear power stations beyond 2025. This new NPS will take into account the changes in the nuclear landscape since the current NPS was published in 2011, including the realistic potential for deployment of advanced nuclear technologies such as SMRs.

To conclude, when construction began at Calder Hall seven decades ago, nuclear power was a bright and shining beacon that promised cheap, clean and reliable energy. Today we are witnessing the beginnings of a renaissance in nuclear power, only this time we have the proven, reliable and safe technology required to exploit its full potential and a Government determined to do everything we can to ensure that the UK remains a world leader in civil nuclear power. I thank noble Lords again for their varied yet equally important contributions to this debate.