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House of Commons Energy and Climate Change Committee Building New Nuclear: the challenges ahead Sixth Report of Session 2012–13 Volume I Volume I: Report, together with formal minutes, oral and written evidence Additional written evidence is contained in Volume II, available on the Committee website at www.parliament.uk/ecc Ordered by the House of Commons to be printed Tuesday 26 February 2013 HC 117 Published on 4 March 2013 by authority of the House of Commons London: The Stationery Office Limited £20.00 The Energy and Climate Change Committee The Energy and Climate Change Committee is appointed by the House of Commons to examine the expenditure, administration, and policy of the Department of Energy and Climate Change and associated public bodies. Current membership Mr Tim Yeo MP (Conservative, South Suffolk) (Chair) Dan Byles MP (Conservative, North Warwickshire) Barry Gardiner MP (Labour, Brent North) Ian Lavery MP (Labour, Wansbeck) Dr Phillip Lee MP (Conservative, Bracknell) Rt Hon Peter Lilley MP (Conservative, Hitchin & Harpenden) Albert Owen MP (Labour, Ynys Môn) Christopher Pincher MP (Conservative, Tamworth) John Robertson MP (Labour, Glasgow North West) Sir Robert Smith MP (Liberal Democrat, West Aberdeenshire and Kincardine) Dr Alan Whitehead MP (Labour, Southampton Test) The following members were also members of the committee during the parliament: Gemma Doyle MP (Labour/Co-operative, West Dunbartonshire) Tom Greatrex MP (Labour, Rutherglen and Hamilton West) Laura Sandys MP (Conservative, South Thanet) Powers The Committee is one of the departmental select committees, the powers of which are set out in House of Commons Standing Orders, principally in SO No 152. These are available on the Internet via www.parliament.uk. Publication The Reports and evidence of the Committee are published by The Stationery Office by Order of the House. All publications of the Committee (including press notices) are on the internet at www.parliament.uk/ecc. A list of Reports of the Committee in the present Parliament is at the back of this volume. The Report of the Committee, the formal minutes relating to that report, oral evidence taken and some or all written evidence are available in a printed volume. Additional written evidence may be published on the internet only. Committee staff The current staff of the Committee are Sarah Hartwell-Naguib (Clerk), Liz Bolton (Second Clerk), Jenny Bird (Senior Committee Specialist), Tom Leveridge (Committee Specialist), Luanne Middleton (Inquiry Manager), Shane Pathmanathan (Senior Committee Assistant), Jonathan Olivier Wright (Committee Assistant), Joe Strawson (Committee Support Assistant), and Nick Davies (Media Officer). Contacts All correspondence should be addressed to the Clerk of the Energy and Climate Change Committee, House of Commons, 7 Millbank, London SW1P 3JA. The telephone number for general enquiries is 020 7219 2569; the Committee’s email address is [email protected] Building New Nuclear: the challenges ahead 1 Contents Report Page Summary 3 1 Introduction 5 Context of the inquiry 5 Our inquiry 6 2 Nuclear new build in the UK 7 Plans for nuclear new build in the UK 7 Consequence of failing to deliver new build 7 Will the new nuclear programme be delivered? 9 Lessons from other countries 9 Is a Plan B needed? 11 3 Financing new nuclear 13 Where will the money come from? 13 Barriers to raising finance 14 The Government’s solutions 15 Contracts for Difference 15 Generic Design Assessment 16 UK Guarantees Scheme 16 Alternative approaches 17 4 Public attitudes 19 Public opinion at the national level 19 Fukushima 19 Foreign ownership of nuclear power stations 20 Local level opinion 20 Building public support 21 Government leadership 21 Trust, understanding of risk, and risk governance 22 Community benefit 24 5 Supply chain and skills 26 Potential for bottlenecks and delays 26 Opportunities for UK businesses 27 Skills 28 6 New technologies 30 Thorium 30 Pebble bed reactors 30 Fast reactors 31 7 Conclusion 32 8 Recommendations 33 2 Building New Nuclear: the challenges ahead 9 Annex 1: Summary of private session with Hitachi 37 10 Annex 2: Visit to Bridgwater and Hinkley Point C 40 Formal Minutes 41 Witnesses 43 List of printed written evidence 44 List of additional written evidence 44 List of Reports from the Committee during the current Parliament 45 Building New Nuclear: the challenges ahead 3 Summary As a low-carbon technology, nuclear power could play an important role in helping the UK to meet climate change and energy security goals. However, all but one of the existing power stations are due to close by 2023. New build is therefore crucial if nuclear power is to remain part of the UK’s energy mix in future decades. If the projects currently under development are all delivered as planned, 16GW of new nuclear capacity will be added to GB’s electricity system by 2025. Without these power stations, it will be extremely difficult to meet our low-carbon obligations, and potentially more expensive too. A failure to deliver new nuclear would have a lesser impact on energy security, but could result in an increased use of gas to make up the shortfall. This could bring indirect security concerns if the UK were to become more dependent on imported gas as a result. Finally, if this tranche of new nuclear projects is not successful, it could undermine investor confidence in the sector, making it difficult (or impossible) to finance any subsequent attempts at nuclear new build. Many stakeholders consider the plans to build 16GW by 2025 as “ambitious” at best and “unrealistic” at worst. Given the delays and problems that have dogged nuclear new build projects in neighbouring European countries it is worrying that the Government does not have any contingency plans in place for the event that little or no new nuclear is forthcoming. These should be developed as a matter of urgency. Raising finance remains one of the biggest potential barriers to nuclear new build. We hope that the introduction of Contracts for Difference will help to reduce the policy and revenue risk associated with nuclear new build projects and thereby lower the cost of capital. Construction risk remains a problem for the nuclear industry and it was not clear to us exactly who will bear this risk in the UK; consumers, taxpayers or project developers. We seek to gain clarity on this aspect. Public opposition to new build projects could also present a barrier. While there is overall support for new nuclear at the national level, attitudes at the local level can be more polarised. During our visit to Bridgwater, we discovered that local concerns focused much more on the disruption that would be caused by the construction process than on the risk of a nuclear accident. There is scope to improve engagement with members of the public on issues regarding risk. The Office for Nuclear Regulation conducts some public engagement work, but this is separate from the planning process, although that is the process through which most members of the public will tend to engage with any new development. In addition, it is “one-way” in nature, rather than a two-way dialogue, which is a more effective method of risk communication. We would like to see better coordination between the ONR, Environment Agency and developers in their public engagement. We also believe there might be merit in establishing an independent advice service for communities living near to nationally significant infrastructure projects, since permission for these projects is granted by the Secretary of State, rather than local planning authorities. This service could support local communities in interpreting complex planning documents and improving 4 Building New Nuclear: the challenges ahead understanding of the process for obtaining planning permission. The UK’s nuclear supply chain industry and skills base has withered significantly since Sizewell B was completed in 1995. A nuclear new build programme presents an opportunity to rebuild this industry and to create new job opportunities in the UK. However, potential suppliers to nuclear new build projects need to have a proper understanding of the safety and quality requirements associated with nuclear projects in order to take advantage of these opportunities. Stronger leadership from Government will help to build confidence and to attract workers into this sector of the economy. Building New Nuclear: the challenges ahead 5 1 Introduction 1. Around 19% of the UK’s electricity generation is from nuclear power.1 However, all but one of our existing nuclear power stations are currently expected to close by 2023. As a low-carbon source of electricity, nuclear power could contribute towards the UK’s long- term climate change and energy security goals, but a new generation of nuclear plant will be required to deliver this. 2. Although the Government does not set deployment targets for particular types of electricity generation, The Department of Energy and Climate Change (DECC) has always supported the idea of a “balanced mix” consisting of renewables, nuclear and fossil fuel with carbon capture and storage (CCS) as the route to delivering its energy and climate change policy aims.2 3. A number of steps to help facilitate nuclear new build in the UK have already been taken. These include the introduction of the Generic Design Assessment process (see chapter 2) and changes to the planning system for nationally significant infrastructure projects (including nuclear power stations). Most notably, the Energy Bill—before Parliament at the time of writing—will introduce a new system of long-term contracts for low-carbon electricity generators, which are intended to bring forward new investment in these projects. 4. The industry has set out plans to develop up to 16GW of nuclear power in the UK by 2025. Our inquiry was prompted by concerns that there may be barriers to delivering such a programme in the UK.
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