Nuclear Energy (Financing) Bill (Second sitting)

Mark Jenkinson Excerpts

Committee stage
Tuesday 16th November 2021 Public Bill Committees

[The Chair]

Can I ask if there are any declarations of interest?

[Mark Jenkinson (Workington) (Con)]

Chair, I would like to bring to the Committee’s attention my entry in the Register of Members’ Financial Interests. It is a matter of public record that I worked in the nuclear industry prior to my election.

[The Chair]

Thank you.

Examination of witness

Richard Hall gave evidence.

--- Later in debate ---

[Alan Brown]

Q We also heard this morning that disposal of radioactive waste is built into the up-front cost and becomes part of the 60-year payback. Is there any way of ensuring that the risk stays with the developer? Might the risk transfer to the consumer? If a company became insolvent, who would be responsible for decommissioning and disposal of the waste?

Richard Hall: That is a good question. If the special administration regime were to be used, I understand that effectively it would mean that the special administrator would be taking on that risk. That may mean that it became a public liability. I do not know how a special administrator would sell on that risk to others.

In terms of where it would be borne if the special administration regime were never used, I think that would come down to the terms of the contract agreed between the Government and the developer. In its current form, the Bill basically enables the Government to enter into negotiations with a developer to agree a contract based around the RAB model, but the details of that contract are not contained in the Bill. Earlier, I said that I thought it very important that an independent third-party impact assessment be laid before Parliament after a deal is struck but before it becomes contractually binding. That would provide the opportunity to understand where the liabilities would sit in that type of situation.

[Mark Jenkinson]

Q Obviously, I have heard what you just said about nuclear. Since Hinkley, we have taken an annualised payment from operators to deal with waste and decommissioning. It is not something that we have to deal with later in the special administration regime. I gather you have an anti-nuclear stance. Does the CAB have a preferred route to providing consumers with electricity? You have spoken a lot about renewables and the cost of renewables, but when we factor in constraint payments and various other issues, such as back-up, it becomes a very expensive way of delivering energy to the most vulnerable in society. Does the CAB have a view on a preferred electricity generation route, and if we are to build nuclear, do you have an alternative preferred model to RAB?

Richard Hall: We do not have an anti-nuclear stance; we are technology neutral. In terms of the options between bringing forward new nuclear or leaving catastrophic climate change unchecked, there is no question that nuclear is an option that can help us to reduce our emissions and tackle the climate change crisis. We do not have concerns on the technology itself, and whether it can be done safely and so on. Our concerns are simply around cost. It looks like a costly option compared with others.

On whether we have a preferred approach, because we are technology neutral we do not have a preference for any particular technology over others. I would simply highlight such things as the analysis of the Committee on Climate Change, which showed a range of possible pathways to 2050 that it considered to be affordable. Some of them involved nuclear and some of them did not. It appears that there is a choice to be made.

[The Chair]

I think this will be the last question to the witness.

--- Later in debate ---

[The Chair]

Order. We are drifting a little from the scope of the Bill. Can we get back to questions that relate to the Bill, please?

[Mark Jenkinson]

Q This question is particularly for Stephen. I want to go back to comments on baseload. The Climate Change Committee says that we need 37% firm power—we can call that what we like; we can change its name from baseload to firm power—which most of our renewables do not provide. You talked about CfDs being better for consumers than RAB. At the time, I thought we were mad to strike at £92.50 at Hinkley, which is probably 800% of construction costs, because of the cost of capital being all back-loaded, which RAB will obviously do away with. What is an acceptable level to force on the poorest in our society for energy per megawatt-hour? We have heard today that we can probably produce energy at £60 per megawatt-hour, possibly a bit less. The update in levelised cost of energy for 2020 for one of the UK’s biggest wind farms, which continues to be extended in Walney, was £136 per megawatt-hour. That is before we take into account constraint payments and all the other inefficiencies in wind power. You talked about tidal and how it is not on the radar, but is far off in the future, and of course into three figures per megawatt-hour. What is acceptable? What is the answer for that 37% firm power?

Professor Thomas: As I said, I do not think there is a case for the need for firm baseload power. If the National Grid Company does not think there is a need for it, who are we to tell it that it does not know how to operate a system reliably?

[Mark Jenkinson]

Q That is the Climate Change Committee’s sixth carbon budget. Are we saying that the Climate Change Committee is wrong?

Professor Thomas: I would trust the National Grid Company over the Climate Change Committee on matters of reliability of the grid.

[Mark Jenkinson]

Q That was not the question. Are we saying that the Climate Change Committee is wrong to say that we need 37% firm power?

Professor Thomas: Yes, I am saying that it is wrong. If the National Grid Company does not say that there is a need for firm baseload power, I will trust it. If that means that the Climate Change Committee is wrong, so be it.

[Mark Jenkinson]

Q Reliability not being baseload, but—Doug wants to come in. Go on, Doug.

Doug Parr: There is a difference between firm and baseload. We absolutely need firm power because there will be spells when we do not have much wind and solar. That is where there is a need for firm power, and I do not believe that anybody who thinks about it for a moment would dispute that. The question is what forms that. As I hinted earlier, on the question about where nuclear fits in the overall system to deliver a cost-effective and secure system, it is now a race between cost-effective storage of renewable power on the one hand and something like nuclear on the other. We can see that the existing deployment of green hydrogen and the money that is flowing into it will bring that cost down sharply. The Climate Change Committee has already assumed that there will be cost reductions. How fast they will go is still not certain, but we know that those costs will come down pretty quickly.

[Mark Jenkinson]

Q Back to the definition of firm power, we have energy requirements of up to 50-something gigawatt-hours. Thirty of that is a constant. The figure does not drop much below 30 or the late 20s. We can dress it up however we like, but that is a firm requirement that is likely only to increase. The Climate Change Committee defined firm power very specifically as nuclear or gas with carbon capture and storage. Are we saying that we should ignore its proposals in favour of intermittent renewables?

Doug Parr: No, we are not. We are saying that there needs to be a storable medium for energy, and that is the gas that I would be talking about. There needs to be a firm dispatchable form of power, and that is what it is, because there will be times when there will be an excess of renewable power, which will be convertible. In the first instance, it will be exportable. Then it becomes importable, and usable in the form of stored energy. I take the point about what the committee says is necessary for system security, but as Steve said, the National Grid does not see that as being baseload; it is about something that can be flexible to accommodate the other aspects of the system, and it needs to be looked at as a system.

[Mark Jenkinson]

It is semantics—baseload or firm power.

[The Chair]

Order. I am going to move on. Two more people want to ask questions.

[Mark Jenkinson]

I just want to pick up on hydrogen specifically, because we heard that it is incredibly inefficient.

[The Chair]

Order. Mark, I am going to move on. There are two more people, and you have had a long time. I call Kirsty Blackman.