Nuclear Power Funding

Debate between Virendra Sharma and Virginia Crosbie

Tuesday 9th November 2021 Westminster Hall

[Mr Virendra Sharma (in the Chair)]

Before we begin, I remind Members that they are expected to wear face coverings when they are not speaking in the debate. This is in line with current Government guidance and that of the House of Commons Commission. I remind Members that they are asked by the House to have a covid lateral flow test twice a week if they come on to the parliamentary estate. That can be done either at the testing centre in the House or at home. They should also give one another and members of staff space when seated and when entering and leaving the room. I call Virginia Crosbie to move the motion.

[Virginia Crosbie (Ynys Môn) (Con)]

I beg to move,

That this House has considered funding for nuclear power.

It is a pleasure to speak in this important debate on funding for nuclear power. The UK has a long and proud history of pioneering nuclear power. In the 1940s, British scientists were pre-eminent in the development of nuclear energy. In February 1955, the Government published a White Paper entitled “A Programme of Nuclear Power”, announcing the first purely commercial programme, building between 1,400 and 1,800 MW electrical Magnox capacity by 1965, and investigating the future use of fast breeder reactors. In 1956, we established the world’s first civil nuclear programme, opening our first nuclear power station, Calder Hall, at Windscale. At the peak of 1997, 26% of the nation’s electricity was generated from nuclear power. Since then, several reactors have closed, and the share is now about 16%. However, almost half of our current capacity is due to be retired by 2025, and other plants are rapidly reaching their use-by dates.

Our most recent plant, Sizewell B, began to generate electricity more than 25 years ago. Hinkley Point C, which has been under construction since 2014, is expected to begin generating energy by at least 2026, with a construction cost of about £23 billion. Therein lies the problem. Before we discuss it in more detail, I should like to put into context why nuclear power is important at the moment. First, I urge Members to consider our commitment to the planet. The Government have committed to achieving net zero by 2050, and as the Prime Minister has rightly said, our strategy sets the example for other countries to build back greener, as we lead the charge towards global net zero. He has stated that the world is at “one minute to midnight”, having run down the clock and waiting to combat climate change. It is time to move from “aspiration to action” if we are to slow global warming.

While our seven advanced gas-cooled nuclear reactors have been the most productive low-carbon assets in Britain’s history, all will be retired by 2030. Even before those retirements take effect, we have begun to see increased, not decreased, carbon emissions. This year, our emissions from energy generation are expected to be higher than they were last year—the first year-on-year increase since 2012. If we do not replace the current fleet, it is estimated that emissions will increase by 200 million tonnes by 2035.

Secondly, I urge Members to consider our commitment to the people of the UK. In the past few weeks, we have seen that both our energy security and our stability are at risk. In September, a fire at the Kent interconnector, which connects the UK and French power systems, led to soaring energy prices in the UK. Britain usually imports 3 GW of power from France—enough to supply 3 million homes—and the fire showed just how fragile our energy security is when we rely on other countries for production.

The fire coincided with cold weather, post-covid increased commercial demands for power, gas supply issues from Russia and Norway, and unusually cloudy but calm conditions, which created price increases and what the media dubbed “an energy crisis”. That combination of events illustrates how much our power systems are under pressure from the closing of conventional plants and our growing reliance on inconsistent renewable energy such as wind and solar.

Meeting the sixth carbon budget’s requirements will require all new cars, vans and replacement boilers to be zero carbon in operation by the early 2030s. Meeting the sixth carbon budget’s requirements will require all new cars, vans and replacement boilers to be zero carbon in operation by the early 2030s. However, to move people towards the use of electricity while hitting net zero production by 2035, we must quickly move away from generating that electricity from fossil fuels. Britain currently has slim spare capacity in electrical power generation to feed those changes, leaving both our energy supply and our security under threat.

We should also consider the wider role that nuclear energy can play in achieving net zero. As well as my passion for nuclear, I am a fan of hydrogen. I am delighted that the Government are supporting the Holyhead hydrogen hub in my constituency of Ynys Môn. Our nuclear industry stands ready to provide a significant kick-start to the UK’s hydrogen economy, which will enable us to pull ahead in the global hydrogen race. Others are moving fast to beat us. Emmanuel Macron wants France to be a world leader in green hydrogen by 2030, achieved by producing green hydrogen at scale from nuclear energy. We can outmanoeuvre France and other nations by taking steps such as expanding the renewable transport fuel obligation to cover nuclear, even if just for a time-limited period, to stimulate investment in hydrogen production and support a quicker roll-out of hydrogen, with buses, trains, lorries, ships and planes, all of which can be made in the UK.

Finally, I ask Members to consider jobs and our levelling-up agenda. When we are importing gas from Russia and electricity from France, where are the jobs generating that power located? Who is getting the value added from what we are paying for that power? British people are paying their electricity bills and they are not always funding jobs. At its peak, a large-scale nuclear plant employs around 10,000 people. At the moment, while constituencies such as mine of Ynys Môn suffer low gross value added, underinvestment and a lack of quality, well-paid local jobs, we are paying our continental neighbours to provide us with energy. For all those reasons, the UK needs to look closely and urgently at its energy strategy.

There is an answer. The road map to net zero published earlier this year by the all-party parliamentary group on nuclear power states:

“Nuclear is the most powerful and jobs-rich form of low-carbon energy.”

Nuclear has the ability to give the UK energy security and stability for decades to come, but we need to get to grips with nuclear sooner rather than later. For years, successive UK Governments have prevaricated, argued and changed position about what we are going to do with nuclear energy. I was delighted when the Government announced their Nuclear Energy (Financing Bill), which had its Second Reading last week. My hon. Friend the Member for Copeland (Trudy Harrison) and I have been pressing for that since setting up the nuclear delivery group last year.

The need for that Bill brings me back to the fundamental problem with nuclear. Yes, it has by far the lowest land footprint and thus the lowest knock-on environmental impact of any clean energy source. Yes, it would create an estimated 90,000 well-paid, quality UK jobs, along with huge supply chain opportunities. Yes, it would keep producing reliable energy regardless of whether it is sunny or windy. And yes, it would give the UK energy security and stability. But—and it is a big but—building a large nuclear plant takes time and money, and therein sits the big grey elephant in the room.

As I have already outlined, Hinkley Point C began construction in 2014 and it is not expected to begin energy production until at least 2026. It is not possible just to say, “I’m going to build a nuclear plant,” and then begin construction. It takes years to go through the planning and environmental concerns, submit a development consent order, and consult, debate and clarify before getting an agreement even to stick a spade in the ground. Fifteen years is a long time to expect an investor to wait to see any return on their capital, and that is why the financing of large nuclear plants has been such a big issue. It was cited as the main reason why Hitachi withdrew from Wylfa Newydd in my constituency of Ynys Môn, pulling the plug on nearly 20 years of hope for my constituents. Traditional sources of private and commercial funding for large-scale infrastructure developments include pension funds and investment vehicles, but they are generally less willing to come forward for projects that will take 10 to 15 years before there is any return on investment.

Financing for small modular reactors is potentially more straightforward, and I welcome the Government’s work on funding for SMRs. I also welcome the fantastic news today that Rolls-Royce has funding for its SMRs, thanks to a lot of hard work in both private and Government funding for this UK initiative. As modular builds, advanced modular reactors require less in up-front costs and time, but they are intended for local energy production and are still in the development stage. A single SMR on Anglesey could produce enough energy for north Wales, which is primarily a rural area, and a large plant in the same location would power the whole of Wales, with a little bit left over for England, if we were feeling generous.

That is why the Government are progressing the Nuclear Energy (Financing) Bill through Parliament, to de-risk new nuclear projects and attract private sector financing for large-scale and advanced nuclear power projects through the RAB—regulated asset-base—model. Under this model, an independent regulator sets a price which a developer is subsequently allowed to levy on consumer bills in return for the provision of certain power infrastructure, even before they begin generating power. This allows developers to have a guaranteed return on their investment and lower costs when raising the capital required for building a power station, which accounts for much of the costs of nuclear projects. RAB is already used in other UK infrastructures, such as the Thames Tideway tunnel.

After months of raising the issue, I am keen to see the Bill progress, and I hope that it will lead to large-scale new nuclear power development across the UK. I implore colleagues to support its passage through the House. Although the debate last week was poorly attended compared with other more thrilling rides, such as the Environment Bill, it could none the less be the most significant piece of legislation that we pass for the long- term benefit of our country.

We should seek to use the Bill to fund not just one but several large new nuclear builds. Building one plant takes time, as we see at Hinkley Point C, but if we act now, those specialist resources can be redeployed on our next plant, and the next and the next. With each plant, we develop more specialists, which means that build time is shorter, costs are relatively lower and efficiency is greater. Each time, we will develop local specialists, employ local apprentices and leave generations of local people with high-quality, specialist well-paid local employment.

The Bill is incredibly welcome, but we may need other financing tools initially in addition to the regulated asset base and contract for difference models. We must continue to explore other innovative ideas. We need to give our scientists and innovators the help and support that they need to overcome barriers beyond financing. The Advanced Research and Invention Agency Bill is a great example of how we can do that.

The recent Budget allocated £1.7 billion of public funds to support new nuclear projects, and we have seen the Government commit to £385 million in the advance nuclear fund; £215 million for small modular reactors; £170 million for research and development on advanced modular reactors; £120 million for the enabling fund announced in the net zero strategy; and an additional £40 million for developing regulatory frameworks and supporting UK supply chains.

By embracing nuclear we can secure not only our future energy security, but our future employment security, as the levelling-up agenda and the net zero agenda coincide. When Hitachi withdrew its development consent order for Wylfa Newydd at the beginning of the year, citing programme financing as the main factor, my constituency was devastated. Companies such as Bechtel, Westinghouse, Shearwater and Rolls-Royce are all keen to establish new nuclear on Anglesey and are looking at other sites in the UK.

The model proposed in the Nuclear Energy (Financing) Bill could be the starting point for regenerating areas of the country that desperately need levelling up. Alongside the Advanced Research and Invention Agency Bill and other initiatives and legislation, it offers hope for a new tomorrow. With that in mind, I appeal to colleagues across Westminster: now is the time for us to come together and embrace the opportunities before us. We cannot afford to stay in our partisan corners and we cannot afford to stay silent. We cannot afford to let this opportunity slip through our fingers. New nuclear has the potential to be a game changer locally, regionally and nationally.

To conclude, I welcome with open arms the finance and support structures that the Government have put in place for new nuclear. For the sake of our young people and future generations, I ask that we all put our political differences aside and work together to make them a reality. Diolch yn fawr.

[Several hon. Members rose—]