Energy Security and Net Zero Committee 

Oral evidence: Keeping the power on: our future energy technology mix, HC 116

Wednesday 15 November 2023

Ordered by the House of Commons to be published on 15 November 2023.

Watch the meeting 

Members present: Angus Brendan MacNeil (Chair); Vicky Ford; Barry Gardiner; Mark Garnier; Mark Pawsey; Lloyd Russell-Moyle.

Questions 107 – 199

Witnesses

I: Tom Greatrex, CEO, Nuclear Industry Association; Paul Spence, Director of Strategy and Corporate Affairs, EDF Energy; Dr Ciara Fox, Senior Metallurgist, MoltexFLEX; Alastair Evans, Director of Corporate and Government Affairs, Rolls-Royce SMR.

Written evidence from witnesses:

– Nuclear Industry Association

– MoltexFLEX

– Rolls-Royce SMR

Examination of witnesses

Witnesses: Tom Greatrex, Paul Spence, Dr Ciara Fox and Alastair Evans.

Chair: Good morning and welcome to the Energy Security and Net Zero Committee. This is our second session in our inquiry into keeping the power on. We have four witnesses talking about the nuclear industry. I will let the panel introduce themselves—name, rank and serial number, please.

Alastair Evans: Good morning. I am Alastair Evans, the director of corporate affairs for Rolls-Royce SMR.

Chair: Good morning and welcome.

Dr Fox: Good morning. I am Dr Ciara Fox, a senior metallurgist at MoltexFLEX.

Chair: Welcome as well. There is a familiar face in the parish.

Tom Greatrex: It is good to be back. I am Tom Greatrex, chief executive of the UK Nuclear Industry Association, which is the trade body for the civil nuclear sector.

Chair: And you were the former MP for Hamilton, was it?

Tom Greatrex: It was Rutherglen and Hamilton West.

Paul Spence: I am Paul Spence, director of strategy and corporate affairs for EDF’s UK operations. I am very pleased to be here representing the 8,000 people working for EDF on nuclear.

Chair: It is lovely to see you again; I think we met quite recently.

Paul Spence: We did, yes.

Q107       Chair: To kick off, I have a general question for the panel. Is the industry on course to hit the targets the Government have set?

Tom Greatrex: I take it that you are referring to the 24 GW by 2050 target in the energy security strategy. The answer to whether we are on target to hit it is that it depends on what now happens and how quickly it happens in relation to issues around siting, technology selection for SMR and decisions on future gigawatt-scale projects. If there is the right degree of urgency and focus in Government and related bodies’ decision-making, we can comfortably hit that target. If there is not—if we have years of dither, delay and waiting around—we will not.

Q108       Chair: I suppose the following question should be, given the obstacles you mentioned: are we heading to a position where you would have enough nuclear to offset intermittency, as the nuclear industry would see it, in winter, or too much nuclear that would require constraint payments and storage in the summer?

Tom Greatrex: You cannot have too much nuclear.

Chair: Therefore you will have many constraint payments.

Tom Greatrex: No.

Chair: You will not have any constraint payments.

Tom Greatrex: We will not have constraint payments arising from nuclear. There is a common misconception that nuclear cannot be used flexibly. It can. It can load follow. It does in other countries. It does not here because we do not have enough of it, frankly, to make that the sensible thing to do. You can load follow and that happens in other places. Any nuclear that is likely to be built in the future is all able to, and designed to be able to, load follow and be used flexibly.

When you are considering the scale of the decarbonisation challenge, not just in terms of the electricity grid but more widely, and the amount of electricity input you are going to need for other things, the amount of low-carbon capacity we need is significant. Developing that target of nuclear is not going to adversely impact on those issues.

Q109       Chair: To be clear, are you saying that nuclear cannot qualify for constraint payments or that nuclear will not need constraint payments? Which is it?

Tom Greatrex: You will not need them. If you are running a low-carbon system or a greater low-carbon system, you are going to need the firm power that nuclear power provides in the time that it provides it as a bedrock of your power mix anyway.

Q110       Chair: When you are saying that you do not need them, you still could be in the game where you get constraint payments. Or are you pulling yourselves out of the possibility of constraint payments altogether?

Tom Greatrex: I am saying that if you are running a greater low-carbon mixed electricity generation mix, you are not going to need to do that.

Q111       Chair: You could still get them, possibly. You are still in the running where you could get constraint payments. Or have you taken yourselves out of that completely and said, “We do not need constraint payments. We do not want to be even considered for constraint payments in the future”?

Tom Greatrex: The system operator would logically work in a way where you would maintain the firm power that you need as a bedrock of your system. That will come from nuclear in a low-carbon mix.

Q112       Chair: There will be no constraint payments being paid to nuclear at all; that is what you are telling us.

Tom Greatrex: No, I am telling you that in a greater low-carbon mix in the electricity generation system, you would use the nuclear part of that mix as your bedrock. It is firm power that is not, apart from at the very extremities, adversely impacted by the weather.

Q113       Chair: The point is that you could get constraint payments.

Tom Greatrex: With 24 GW, if you think about what 24 GW is, in that electricity generation mix, if you look at that in the context of increased demand for electricity, proportionately that is not much more than we had at the start of this decade. It is not going to have a different impact to what we currently have or what we have had even if you look back to 2020, at the start of this decade, before some of the current fleet started to cease generating.

Q114       Mark Garnier: Mr Greatrex, you may remember from back in 2010, I think it was, the great words from the Deputy Prime Minister that there is no point in cracking on with nuclear power because we will not have any nuclear power stations until 2022 at the very earliest. Do you think that the Government have improved since then on their opinion and attitude towards nuclear power?

Tom Greatrex: The energy security strategy and the things that will arise from that, which we hope to see coming relatively soon, have been a helpful way of being able to make people appreciate the reality of trying to deliver a low-carbon and energy secure mix. There is no credible analysis that shows that you can do that without nuclear being an integral part of it.

The combination of events we have had in the last couple of years—the impact on prices from the functioning of the gas market and some of the expected variance in some of the delivery from other low-carbon sources—has underlined the importance of nuclear as part of the mix. That is something the Government have not just recognised and acknowledged but are now putting into their policy framework. We need to see delivery from that if we are going to get there.

Going back to the quote you mentioned, if we had got on with it then, we would have been in a much better position now. You only need to look at Finland, which started building around about that time or just before that time. Earlier this year, Olkiluoto 3 came online and into the grid in Finland. As soon as it started generating power, it immediately significantly reduced consumer prices as well as increasing energy security, just at the time when energy security is a big issue for Finland and other countries.

Q115       Mark Garnier: It is one of those quotes that comes back to haunt, as we will obviously try to keep on reminding the Liberal Democrats.

Paul Spence, you are part of the supply side of all this. Do you, as a company, feel confident that the Government are giving you all the security you need to start investing in this and planning for the future? By the way, investment is not just building power stations; it is about committing funds to do all the planning.

Paul Spence: As you say, we are very heavily engaged in the delivery of the UK’s nuclear needs. If I can start with the existing stations, EDF is the owner of the existing fleet of nuclear gas-cooled reactors and the one pressurised-water reactor that is already running. When EDF bought that fleet in 2009, the expectation was that today all those gas-cooled reactors would have been closed. In fact, with investment, we still have four stations running, producing between them, from the gas-cooled reactors, about 25 TWh of power, which we think is a very helpful contribution. There is a further 10 TWh a year from Sizewell B, our pressurised-water reactor.

I should say that the Government have been helpful in enabling us to have the conditions and to treat nuclear equally with other technologies, to provide that security in things such as the capacity mechanism with a carbon price. The arrangements have been helpful to allow us to invest £7 billion already in that existing fleet, and to have the prospect of investing to keep it going further.

Clearly, the Government were very heavily involved in our first decision to restart new nuclear construction after 25 years when the UK had not done that. Seven years ago, we started that with Hinkley Point C. That project is progressing well and we are now seeing the next project, Sizewell C, looking well set for, we hope, a final investment decision within this Parliament. The foundations are there for nuclear.

Q116       Mark Garnier: Are you getting enough?

Paul Spence: In my ideal world, we would have been moving faster on some of the decisions. We would already have taken the decision on Sizewell C. Some of that is about the pace of decision making; some of that is about making sure that the regulators and the planning system are fully resourced to take decisions in a timely way.

Q117       Mark Garnier: I was going to come to that. Before I come to my next question on exactly that point, do you—either Ciara or Alastair—disagree with any of that?

Alastair Evans: No, I do not disagree. Very briefly, it is important to say that the Government are there to set out the strategy, and that is fine. It is all very well coming up with 24 GW by 2050; the challenge is how you get there. That is what we are expecting to see from a combination of Great British Nuclear and the Department. They will deliver the delivery model: how do we get there? What is the spatial planning? What goes where and when? That is the really important bit that we can take to investors.

Government can set the overarching strategy and then it is down to GBN and industry to work together on that delivery side. We are expecting a little more clarity. I think that the Government have talked about providing a nuclear road map by the end of this calendar year. That will send a very clear signal to investors that the UK has a plan and is going to deliver that plan.

Q118       Mark Garnier: That all sounds great from the Government point of view, as long as they deliver on their promise. What about devolved authorities—devolved Parliaments—or even local authority planning applications. Maybe, Paul, you can pick up on that one. Where it gets down to the nuts and bolts of actual local stuff, is that getting in your way or is that being helpful as well?

Paul Spence: We have had challenges. If I give the example of some of the Hinkley decision making, one thing that we were looking to do as part of that was some dredging in the Bristol channel that involved taking out that mud, and the intent was to discharge that non-nuclear mud elsewhere—actually, into Swansea bay. We saw a very protracted decision-making process.

Q119       Mark Garnier: How long is “protracted” these days?

Paul Spence: It probably cost us a year’s time.

Q120       Mark Garnier: This is a local planning authority that was basically mucking around. They work very hard—

Paul Spence: This was the Welsh Government, but we see the same at all levels. There are a lot of decisions involved in delivering critical national infrastructure. In some cases, we have found that those decisions have taken longer than they could have done. Some of that is about resourcing.

Q121       Mark Garnier: It was a year to decide where to dump some mud.

Paul Spence: It took longer than the year. It took a year longer than we thought it should have taken, and we had made a reasonable allowance.

Q122       Mark Garnier: To be absolutely clear on this, the Welsh Government decided that working out where to dump a bit of mud was worth holding up critical national infrastructure by at least 12 months, if not more, for whatever reasons.

Paul Spence: Yes, for their process of scrutiny of it. I am not arguing against scrutiny and local scrutiny of decisions that affect people, but it needs to be balanced with the urgency of delivering the infrastructure.

Mark Garnier: This is my final point: local planning issues are standing in the way of critical national infrastructure. They are standing in the way of energy security. They are standing in the way of lower energy bills, potentially, because you have greater supply. That is astonishing.

Q123       Chair: To pick up something that Tom Greatrex said, you mentioned that the reactor came on stream in Finland and gave cheaper prices. What was the megawatt-hour price coming out of that reactor?

Tom Greatrex: I do not know. I will have to write to the Committee.

Q124       Chair: The Hinkley CfD is £92.50 at 2012 prices. What does that equate to today?

Paul Spence: I will write to you with the precise number. It is somewhere in the range of £110 to £120 today.

Q125       Chair: That is the money that Hinkley, to be clear, will get paid for every megawatt. It is the minimum money EDF will be paid for every megawatt.

Paul Spence: It is the minimum and maximum. It is the amount of money—

Chair: That it will be paid for every megawatt it produces at Hinkley.

Q126       Barry Gardiner: Picking up where you left off, Chair, Olkiluoto was originally supposed to come onstream in 2009, was it not?

Tom Greatrex: I think so—it was around about that time, yes.

Q127       Barry Gardiner: Here we are, considerably later—14 years later—and the technical problems that it experienced were considerable. Hinkley was originally supposed to come onstream well before 2020. I think that originally 2018 had been mooted as the possible date. Here we are now, five years later. Has a lot been learned for Hinkley from resolving the problems at Olkiluoto? It was the same design, was it not?

Paul Spence: I will take that question in a number of parts.

Barry Gardiner: It is only a throwaway one before I get started.

Paul Spence: The first point is about whether we have learned lessons from Olkiluoto that we have applied for Hinkley. Yes, absolutely; we have learned lessons from Flamanville and the Taishan project in China as well. Those lessons are helping us to deliver Hinkley, helping us to do unit 2 better than unit 1, and then will help with Sizewell.

I will also take your point about the original intent on the timetable for Hinkley C. The hope of a date before 2020 was predicated on a decision in 2009 or 2010, so much earlier than it proved possible to take a final investment decision. That final investment decision was only taken in 2016. That was the point at which we could really start. We had started some construction work in advance, as you know very well.

Q128       Barry Gardiner: I remember it very well, as I am sure you do, Paul. You had to evict somebody from your board in France in order to get the decision through final investment decision. I remember that very well.

My point was more that when it was projected to be coming onstream in 2018 and then, subsequently, 2023, the rationale behind paying £92.50 at 2012 prices was said to be because in 2023 we would be coming off coal, there would be a bottleneck in the system and therefore it was worth paying a premium price to have that baseload energy come into the system at that time. Of course, actually, that bottleneck is considerably out of the way now. We do not have that bottleneck with coal coming off the system that the decision was predicated upon. It now looks like we are paying a premium price not to have it delivered at the time we wanted it. Now I gather that it is going to be delayed to the two different phases in 2026 and 2027, hopefully.

Paul Spence: I should start by saying that all the analysis that we have done and that I have seen DESNZ do says that a system with a component of nuclear is a cheaper system for consumers in total than a system without nuclear, using current technologies. That includes using wind and solar.

The case for bringing Hinkley forward was, as you say, based on the expected retirement of the coal stations and the end of life of the existing nuclear stations. We have seen 26 stations close since 2010. There is now one coal station left. As EDF, we have closed our 4 GW of coal capacity. We have also seen the closure of three of our gas-cooled reactor nuclear stations. We expected more of them to close by now and thankfully we have been able to keep those running longer.

Q129       Barry Gardiner: That is your internal business management of your revenue stream; that is not the country’s energy stream. You will naturally take commercial decisions about the mix that you have, but that should not affect the country’s view.

Paul Spence: No, but the country has had the benefit of a longer run of one of its low-carbon sources. We have seen the pick-up in the build of onshore wind a bit, offshore wind and solar, so we have seen new capacity come on to the system. The need case for Hinkley is still very much there and the 25 TWh that our existing gas-cooled reactor stations produce is what Hinkley will produce per year when both units are up and running. Even if we can extend the gas-cooled reactors a bit further, we expect that by the end of this decade they will be closed. The country needs low-carbon capacity.

Q130       Barry Gardiner: There is no question that the country needs low carbon; it is a question of what the source of it is and whether the investment in one form of low carbon damages the investment in another form. I totally take that point. Thank you for clarifying.

Can I pursue the whole issue of funding? Perhaps I can address Mr Evans and Dr Fox about the contract for difference model and the regulated asset base funding models. Are they suitable for SMRs and AMRs?

Alastair Evans: Yes. Both offer a set price, which provides an investable opportunity, but it is important to differentiate that Rolls-Royce SMR is a technology provider. We are not an integrated developer.

Barry Gardiner: For anybody who may be watching this, we should say what an SMR is and what an AMR is. I should have done that—sorry.

Alastair Evans: My apologies. An SMR is a small modular reactor. It is a new way of delivering nuclear technology. Our version of small is small as in footprint—as in two football pitches—modular as in modules are utilised to construct a superstructure at site, and a reactor. Rolls-Royce has been building nuclear submarine reactors for 60-plus years.

Dr Fox: I agree that the models are suitable. There are revolutionary technologies for AMR—advanced modular reactors—which are newer versions of technology but built modularly for nuclear reactors. They are also known as ANTs—advanced nuclear technologies—such as the MoltexFLEX reactor. These technologies are disruptive due to the fact of their modularity, their smaller size and their small footprints. It means that the investment for them can be privately funded.

What we need as development for nuclear is guidance on how policies that already exist are going to be applied, not just at gigawatt scale but to SMRs and ANTs together. We provide different opportunities for the market, not just for baseload energy but for flexibility. The road map including all three technologies separately, coming forward clearly at the end of the year, will open up investment for private funding without the need of revenue from the Government.

Q131       Barry Gardiner: That is very welcome news. In terms of contract for difference or regulated asset base, which funding model would you prefer to see?

Alastair Evans: We are in a selection process with Great British Nuclear, which will procure technologies to deploy. There is a benefit to the regulated asset base model, because risk can be transferred and it can reduce risk to the entity that is selling the technology and the developer entity. It can move that risk to ensure that you have as low a price for your levelised cost of electricity as possible.

Q132       Barry Gardiner: That is because you know exactly what you are going to get in return for your investment.

Alastair Evans: That’s right. Whether it is a contract for difference or a regulated asset base model, that is not a construct that Rolls-Royce SMR would be negotiating. We bring the technology and deploy that technology at a site. The off-take—the RAB or the CfD—is a construct that will be agreed and negotiated by the developer entity, which Great British Nuclear will set up.

Q133       Barry Gardiner: What do you expect the eventual levelised cost of electricity from SMRs and AMRs to be?

Alastair Evans: It varies. I can only speak to the Rolls-Royce SMR technology. We have talked in the public domain previously about an estimate of between £50 and £75 in 2021 prices. It is difficult to get drawn into too much detail.

Q134       Barry Gardiner: That would be approximately half of the £92.50 at 2021 prices that we were talking about earlier coming out of Hinkley; is that right?

Alastair Evans: Around £50 to £75 is the public domain number that we have talked about as being achievable in 2019 figures.

Q135       Barry Gardiner: To be clear again, so that the public understand, because we are using technical language here, that levelised cost means all the costs of construction and operation and getting the electricity into people’s homes. That is what the consumer will, through the Government, be paying.

Alastair Evans: Yes, plus the decommissioning at the end of the life. It is put into a pension fund, so it is the whole-lifecycle cost.

Dr Fox: This is one opportunity where ANTs have something very unique to offer that will revolutionise nuclear energy for the industry. Technologies like the FLEX reactor have estimated costs of £28 per megawatt-hour electric and estimated costs for hydrogen production of £8 per MW of heat generation. It really is a very new ballpark to be playing in when utilising ANT technologies. It is one of the reasons why it is very important to make sure that they have a route to market too, to ensure that consumers benefit from the cost improvements.

Q136       Barry Gardiner: Given that the Government promised £1.7 billon to the industry to get things to final investment decision, and that £1.2 billion of that, I think, has gone to the Sizewell C project, would you like to see more coming into the modular systems that you are proponents of? Would that even up the playing field, enable you to get there faster and enable us to get that 50% reduction in the costs that the others are proposing to charge us?

Alastair Evans: You need to do it all. It is eminently sensible to progress Sizewell. I will use Paul’s own lines. Units 1 and 2 are at Hinkley. Units 3 and 4 are at Sizewell. It makes sense to do a fleet. The same concept holds with SMRs. You have to see that clarity of route to market for a fleet.

We have received £210 million of Government grant funding. That enabled us to raise nearly £300 million in new equity from external investors, so the Government are supporting our programme, which is welcome. It is really important to say that Great British Nuclear has set out that up to £20 billion has been earmarked for the development of SMR technology. The Government are making good strides. They are making it clear that they have a long-term plan to deliver SMR, so that is very welcome.

Dr Fox: I completely agree. The Government need to continue to invest in gigawatt scale. The energy sector needs it. They need to invest in SMRs and ANTs in particular, but not necessarily giving the development companies the money. We need the development to come in the development of the road map, the upskilling of regulators and more regulatory access and capacity.

The investment in Government funding in their side of the road map to make sure that we can come to market will give private investors the encouragement and security to know that we have a place here at the table, for nuclear in the UK. That will unlock the private investment for technologies such as the Rolls-Royce SMR and the MoltexFLEX ANT to come to market through private investment, based on the merit of their technology alone. How we get to market is where we would like to see more investment and clarity.

Q137       Barry Gardiner: Picking up on what you said about the UK, are there lessons that we could be learning from the way in which other countries have managed the public costs associated with the deployment of nuclear?

Dr Fox: Let me ponder on that for a moment. There has been a lot of good development globally in nuclear in recent years. There have been a lot of modern technologies that have started to come to market, particularly for ANTs, whether it is molten-salt reactor learnings or other technologies. The UK is very well placed, because we have quite a good nuclear pedigree in our history and in how we have developed reactors.

Our regulatory processes are key in the delivery of ANTs, in that they are assessments based on the criteria we bring forward. They do not have policies that are only utilisable for previous nuclear technologies, such as AGRs and LWRs. There is a good place that we have going forward that is quite unique in the nuclear industry across the world. There is one reason that ANTs such as MoltexFLEX are really keen to deploy here first: it is because we have that history and pedigree. We hope that the rest of the world can learn from the way that we do it.

Q138       Mark Pawsey: I wanted to ask Tom, as a spokesman for the industry more broadly, the following. We have just heard from Alastair and Ciara that contract for difference and regulated asset base models work for the UK. We also heard from Paul that it takes a long time to get an investment decision. What is holding everything up?

Tom Greatrex: In relation to an investment decision, it is very firmly in the court of the Government to get to a conclusion on that, in terms of those discussions. Paul can talk to that in more detail, but they are ongoing and we hope that gets to a conclusion soon. The Government previously said that that would happen before the end of this Parliament—the end of this calendar year, I think. That is pretty key to getting the project to go ahead, because you cannot start meaningful construction until there is a final investment decision, and as yet there has not been one on Sizewell.

Q139       Mark Pawsey: How does what we are doing right now differ from what we did in the last century, when we managed to get a fleet of nuclear plants under way effectively?

Tom Greatrex: The most important thing you can have is a programme, so that you know what your programme is. That enables industry to invest, it enables activity to happen, it enables a supply chain to be upskilled and it sets clarity for investors as well. If you look historically at where nuclear has been developed at pace, it has been when there has been a fleet.

If you look at France from the 1970s, for example, it built a lot of nuclear over a relatively short period of time. It went from almost nothing to significant amounts in 10 or 15 years. If you look at South Korea, it is similar. Those are the ways in which you are able to deliver it most efficiently and effectively.

What you do not do is build one, stop, wait 20 years and then think about whether you are going to build another one. There are all the costs of it, in reinvigorating the supply chain, getting skills up, regulators and so on. You do all that, build something, it all falls away or dissipates elsewhere and then you have to start again. That is where we are at the moment. We have the opportunity not to be there.

Q140       Mark Pawsey: In terms of the obstacles to getting things under way, are those challenges greater than the requirement that we have from Government to make a decision right now? Where does it sit in relation to other planning, skills and challenges in rebuilding a nuclear fleet?

Tom Greatrex: I am sure you will hear from other parts of the energy sector about the issues around planning. They are significant. We know that that is something that is recognised by the Government and there is work ongoing on that. Paul gave an example, but there are plenty of other examples you could think of where process that takes a very long time needs to be looked at.

There are also issues around some of those things in relation to the grid infrastructure, for example, which is important for whatever technology you are trying to deploy and has a significant impact. There are other areas. For example, the Treasury had said, I think 18 months or so ago, that it would shortly be consulting on the UK taxonomy; that consultation still has not happened. That would enable nuclear to be treated in the same way as other low-carbon technologies. That would aid the process and pace of investment. There are a whole range of different things that, if you looked at it and worked at pace on it, would increase the speed of delivery.

Q141       Mark Pawsey: Paul, as an existing operator and developer, how would you rank the challenges you face in getting new nuclear delivered?

Paul Spence: Ultimately, delivery comes down to the fact that all the things need to be coming together. It is a bit like asking which child you love most and saying, “Which is the most important?” Tom’s list of planning, grid, other consents, the availability of people, skills, supply chain, manufacturers to do the work, which involves their confidence that there is going to be work for them to do so they invest in the factories, skills building and labour productivity are all factors.

To be very transparent, we started out recognising that it was going to be a challenge to restart the UK’s nuclear industry after 25 years of not building new stations. It has proved harder than we expected to do that and taken longer than we had hoped, some of that due to covid. Overall, if we are going to do what the country needs and the Government wants, which is to accelerate towards the 24 GW of nuclear from large‑scale, small modular and advanced technologies, a programme with decisions and with the resource to line up behind delivering that programme—decisions from Government but also the industry and Government working together to get the industrial delivery and the people and skills ready—is going to take all that if we are going to do it fast.

Q142       Chair: I have been looking at the prices of the reactor that just opened in Finland. It is similar, I believe, to Hinkley. A price of £52.27, roughly, has been quoted. You are going to make a fortune at Hinkley, are you not? It is twice the price. The same reactors are producing electricity for approximately £52.27 a megawatt-hour and you will be charging £110 to consumers in the UK.

Paul Spence: Finland has a structure called Mankala, which involves the investors in the project being the people who take the power from the project. They take that power at cost, so there is not a cost of financing built into it in quite the same way that there is into the contract for difference structure or even into a RAB structure. It has chosen an industrial structure that means that as a shareholder, you get power, and you get that power at a low cost. It could do that because local authorities, steel manufacturers and pulp and paper manufacturers are the people who are the ones who set up and invested in the station and then benefit from the lower-cost power.

With Hinkley Point, we have it under the contract for difference structure, which involved ourselves and our Chinese partners taking the risk on the time and cost of delivery of that first project. That protected British consumers from the potential of overruns and some of the challenges that I have talked about in terms of the cost of restarting. When we took the investment decision on Hinkley Point, we said that we expected a 9% project return rate. That has reduced because the costs have gone up and the delivery time has gone down. EDF is not going to make a massive fortune; it is going to make a fair return for the effort that it has put into the first project.

Q143       Chair: For the same reactor in Finland and England, the French and the Chinese are doing quite well out of it, but is the bill payer in England not getting absolutely clobbered in comparison to the bill payer in Finland?

Mark Garnier: That is how a capitalist economy works.

Chair: That is how the capitalist economy works.

Mark Garnier: It has been proved to work for years.

Chair: The profits are better for the developer in England, presumably, than in Finland.

Paul Spence: We took some risks that were not borne by the builders in Finland and we get a return for taking those risks. The National Audit Office recommended—it is what the Government have done—that the Government should then look at whether there are other ways of financing future nuclear projects. The RAB is one of the approaches. For a second project that is a copy and therefore, potentially, less at risk of cost overrun or schedule overrun, it makes a lot of sense to look at a different financing structure that has a lower reward.

Q144       Chair: I do not want to spend too long on this, but we at least agree on the figures and the underlying thing. We agree on the figures on the price in England and in Finland.

Paul Spence: We would have to go away and look at the numbers for Olkiluoto.

Chair: You have given me the figure of about £110.

Paul Spence: I do not know the equivalent for Olkiluoto.

Chair: I have found from Reuters €60, which I have converted into about £52, so I think that we will agree the figures. You say that there are different reasons behind it; I would rather be building my nuclear stations in high-paying England than in low-paying Finland if I was in that ballpark.

Q145       Vicky Ford: Could you comment on global events and global geopolitical trends that concern you when it comes to energy security in the nuclear sector?

Paul Spence: The first observation I would make, if I can, is a broader energy sector one rather than a narrowly nuclear sector one. We have had a reminder that energy self-sufficiency is a very wise thing for countries to have. We saw, with Russia’s invasion of Ukraine, a huge increase in the cost of gas and concerns about the reliability and security of some of our energy supplies. One thing that nuclear offers is that it produces power from stations in the UK. That is reliable and secure and you can store the fuel that you need for nuclear stations in the UK for many years, so it is a very reliable and secure source. That is the first lesson.

Russia has been a part of the nuclear fuel chain in the past. That dynamic changes now, and rightly has changed with the invasion of Ukraine. Today, we are not reliant on Russia for future fuel. That piece is secure.

I guess that the other part of your question is about the role of the Chinese in UK nuclear. What role is appropriate is clearly a decision for the UK Government. I know that we have a very robust regulator that looks very carefully at security and scrutinises the security of our nuclear industry. In Hinkley Point C, we have had a Chinese co-investor that so far has borne a third of the cost of the financing for Hinkley Point C and has brought some valuable industrial lessons from its construction projects in Taishan, which have been helpful as we have built the station.

The design of the reactor in Hinkley and the proposed design for Sizewell is a European pressurised-water reactor with UK requirements added into that. It is not reliant on Chinese design or components. The vast majority of the supply chain for the EPR comes from the UK and Europe.

Q146       Vicky Ford: With due respect, you do not just have any old Chinese investor: you have a Chinese investor that is explicitly linked to the Chinese state. Perhaps I should point out that Bradwell is very close to my Chelmsford constituency, geographically, as you will be aware—although it takes a hell of a long time to get down the Dengie—and people have stopped talking about Bradwell.

Since 2016, when the decision was made that China General Nuclear Power would join with EDF on these three power stations—it is the junior partner in Hinkley and Sizewell, but would have been the main partner, as I understand it, on Bradwell—our relationship with China has changed considerably. China—how do I pick my words diplomatically?—clearly takes a more aggressive stance on areas of global policy than others.

First, our sister Committee that looks at security issues has said very clearly that it is unacceptable for the Government to be considering Chinese involvement in the UK’s critical nuclear strategy. Secondly, given the deal in respect of Bradwell, and the fact that Bradwell could be a site for a nuclear power station that was not under such control, what are your thoughts on what has been said about China by our sister Committee, the Intelligence and Security Committee? Can you give us an update on what the hell is going on with Bradwell?

Paul Spence: I will take that in three bits. The first piece on Hinkley is that, as I say, the role of the Chinese is very contained and, as I say, subject to scrutiny from the regulator. It is responsible for security as well.

Vicky Ford: I understand that. Would you feel happy if the roles were reversed—if it was the senior partner and you were the junior partner?

Paul Spence: That is not the situation for Hinkley. I should also clarify that the Chinese are no longer involved in the project at Sizewell. The Government have taken over the stake that the Chinese had in the development phase of that project. They have a contained role in Hinkley Point C. They have no role in Sizewell C.

How Bradwell could or should be taken forward as a potential site for nuclear really is a question for the Government. Given the advice, as you say, I would be surprised if that involved any role for CGN in the delivery of anything in terms of a nuclear station at Bradwell. Bradwell remains a good potential site for hosting maybe smaller, maybe advanced nuclear technologies as well.

Q147       Vicky Ford: Would any of the others like to talk about overseas investment? You have talked about private sector investments; are we seeing other state investments from other parts of the world?

Alastair Evans: If I could talk about the export piece more specifically—

Vicky Ford: No, no—are we seeing other overseas investors linked to overseas states considering investment in small nuclear reactors, for example, in the UK?

Alastair Evans: Mr Greatrex can talk about it in greater detail. There are a range of overseas developers, from the Koreans to the Americans, who could come to the UK to deploy.

Dr Fox: We are looking at private investing in the UK to fund our reactors. There has been interest from foreign Governments in using the reactor, but as it is exported—investing not in our first technology but in uptake of a later design. We would welcome the export opportunity and being able to partner with foreign nationals, but we would rely on Government for guidance on where we should be looking and which Governments are appropriate for us to utilise.

It is a multi-billion-pound industry that we can access if we are early to market with SMRs and ANTs globally. We think that is a very important factor to remember to consider, but we are looking at home investment first to bring things to market, and utilising our regulators.

Q148       Vicky Ford: Given the strategic importance and incredibly long lifetime of this infrastructure, should we be looking to exclude competitor nations from our domestic construction and the running of future nuclear sites in this country?

Alastair Evans: That is a decision for the Government. Most countries have a national programme that is led by their national utilities—you have a nationally run and delivered programme, whether that is in Korea or France. They are good examples of where you have had programmes. Again, Great British Nuclear is bringing to market a programme that will secure the procurement of reactors, but there are a range of investors. You do not want to close off from the private sector investment community entirely. It brings a diverse range of skills, expertise and knowledge that we have talked about earlier.

Vicky Ford: Bringing in the skills is interesting.

Dr Fox: UK investment and such is very important, but reaching net zero and a green future in the UK is vitally important. Utilising all the technologies at our disposal should be done to make sure we reach that target. If you utilise nuclear well, the 24 GW target can actually be surpassed and beaten and we can provide more energy.

Paul Spence: I am conscious that I am sitting here as the representative of a French Government-owned organisation. EDF is about to celebrate its 25th anniversary here in the UK. I would like to argue that that is a case where there has been a very positive working relationship with a foreign Government-owned organisation, working in nuclear to the benefit of the UK’s energy security and to the mutual benefit of the UK and France.

Vicky Ford: Let me say that I do not put France and China in the same pot.

Paul Spence: No, I know.

Q149       Mark Garnier: Of course, when we started we were all happily members of the same European Union, but there we go. I will not reopen that thorny can of worms, if you can have a thorny can of worms.

Ciara and Alastair, I wanted to talk about SMRs and AMRs and how you can use them, in terms of their ability from being part of the baseload supply to a flexible, deliverable supply. You can speed them up and slow them down as you need. Dispatchable power is what I am trying to get to. Are they as good as dispatchable generators as they are as baseload generators?

Dr Fox: Yes, most definitely. ANTs like the FLEX reactor can ramp up and ramp down electricity production rapidly. However, the high‑temperature outputs utilised by a lot of ANTs, such as the molten-salt FLEX reactor, means that you can also store energy in molten salts, which can retain heat for days. You can draw that down when you need to meet peak loads and fill in for intermittent energy shortages. Despite all nuclear being very utilised for baseload, it is actually a very flexible technology.

A way that you can also use it flexibly is the high‑temperature output for the FLEX reactor. It is 700°C. That can decarbonise industry directly, utilising the heat for food production, some steel manufacturing processes and aluminium. You have a much broader range of decarbonisation. For hydrogen production as well, you can do it chemically rather than by electrolysis, and you therefore have a more efficient production of hydrogen, which can decarbonise the transport industry as well.

Mark Garnier: It sounds like it is the fantastic solution to all our problems.

Dr Fox: I would like to hope so, yes. I fully believe in the technology.

Q150       Mark Garnier: I am going to ask a slightly technical question in a second, but Alastair, is it the same sort of answer on SMRs?

Alastair Evans: Yes. Our SMR is 470 MW. That is power for about a million homes, so it is at the large end of the small spectrum.

Mark Garnier: That is bigger than you were talking about, because it was 240 MW.

Alastair Evans: It is 470 MW.

Mark Garnier: Okay; it has always been 470 MW.

Alastair Evans: It has consistently been around 470 MW. Grid application and power to the grid is our base case. Exactly as Paul talked about earlier, that Mankala model, where you bring together energy‑intensive users, is an eminently sensible approach. With some of the data centres being built in the UK or the US and hitting 300 MW or 400 MW, there is huge demand. If you could deliver that through private wire contracts, you are not putting strain on the grid. You are not having to build new grid infrastructure. You are minimising your whole impact. That is an eminently sensible way of trying to deliver microgrids to regions where it is desirable.

Q151       Mark Garnier: That is fantastic. Ciara, can I ask you one completely random question, given the fact that you are a metallurgist? Last week I went down and had a look at the UK Atomic Energy Authority fusion stuff. As a metallurgist, can you say whether they are ever going to resolve the neutron embrittlement problem that is holding up building that they are talking about?

Chair: He said it was a random question.

Dr Fox: That is far more leftfield than I was expecting it to be. The developments in materials science that are being made mean that we will get there. I do not know exactly what that is going to look like, but materials science is developing daily and new technologies and materials are coming forward that are less susceptible to neutron embrittlement. Neutron embrittlement is not a new phenomenon—it is something we have looked at in the nuclear industry for decades—and there is a lot of experience of how they are developing them.

Mark Garnier: You are optimistic.

Dr Fox: I am very optimistic, yes.

Q152       Lloyd Russell-Moyle: You have touched on it already, but to what extent can the nuclear industry, or nuclear energy, assist with the decarbonisation of heat particularly?

Dr Fox: All nuclear reactors operate at relatively high temperatures, but with ANTs like the FLEX reactor having an output of 700°C, that means we can utilise that heat for far more industries to help them to rapidly decarbonise. The small footprint of a FLEX reactor—the actual core being about the size of a three-bedroomed house on average—means that they can be deployed at relatively small industrial sites. Our output for power is around 24 MW electric, so it is quite flexible. You could have a fleet for a large industry-scale site, or an individual to provide less energy for all these industrial processes, to decarbonise them. It is a very effective solution.

Q153       Lloyd Russell-Moyle: The National Grid has said that it is not yet clear that nuclear into hydrogen will be cost-competitive. You have mentioned your chemical process that could follow; what are the costs associated with that versus the cost of using renewable energy to produce it via traditional electrolysis?

Dr Fox: The high-temperature output that allows us to use a chemical process means that it is a far more efficient method. The FLEX reactor is predicted to produce heat at £8 per megawatt-hour of heat. Not only would we be competitive with renewables, but we are actually likely, when we come to market in the mid-2030s, to be able to be at a lower cost. That is what we predict: to be lower cost than oil and gas, or at least competitive, and competitive with all renewable technologies on the market.

Q154       Lloyd Russell-Moyle: It is lower cost than oil and gas, so this is blue hydrogen, but only competitive with green hydrogen.

Dr Fox: I must admit that I do not know exactly what the costs are for renewables and oil and gas for producing hydrogen. I have heard internally when we discuss it that we are going to be competitive with or lower than. When we come to market in the mid-2030s, a lot will depend on what the price points of other industries are. We are very confident in our cost estimates of an LCOE of £28 per megawatt-hour electric and £8 per megawatt-hour for hydrogen production. We are confident in those. There is contingency in them. They have been checked and are very thorough. It will depend on what the market around us looks like at the time.

Q155       Lloyd Russell-Moyle: You said that your expected date is the mid‑2030s. That is expected for the bringing on of the reactor. Is that also for all the hydrogen production to go alongside?

Dr Fox: Mid-2030s is for a roll-out of a fleet of FLEX reactors being ready by that time. We would like our first FLEX reactor to be built by 2031 as a demonstrator plant, so that we can prove the technology in the UK, go to the regulator and make sure that we have demonstrated to the UK and the world that the technology works and does everything we are promising it will. The fleet will follow in the 2030s that can have hydrogen production, electricity production, utilise the high‑temperature outputs, store energy and enable the full penetration of renewables on to the grid.

Q156       Lloyd Russell-Moyle: At the moment, the lead-in time from 2031 to a wider roll-out would be what timescale?

Dr Fox: I predict that it will be around half a decade—four or five years—to have a full-scale roll-out, but I would need to check that and write back to you to be sure.

Q157       Lloyd Russell-Moyle: To all of you—I have written down Tom’s name, but it can be to anyone really—what are the challenges and opportunities for using small nuclear plants for industrial decarbonisation?

Tom Greatrex: If you are going to decarbonise beyond the grid, whichever way you do it you need a lot of electricity input. That is the most fundamental point in this. On your question about decarbonising heat, whether you do that through heat being electrified, hydrogen or a combination of the two, you are going to need a lot of electricity. The role that nuclear plays in that is providing a lot of electricity from a very small footprint for a very long time with consistency of delivery.

Q158       Lloyd Russell-Moyle: You are saying that it is large electricity production that goes into the grid—that is the main role.

Tom Greatrex: We need a lot of electricity production. It does not make very much sense to use high-carbon electricity production to then try to decarbonise other things. You need low-carbon electricity. That comes from a number of sources, of which nuclear is one. The advantages that nuclear gives you as part of that mix include the fact that it is not, other than at the very extremities, impacted by the weather particularly. You can get a lot of power for a very long time from a very small amount of land use. Those factors are part of a consideration about how you decarbonise heat overall.

To your questions about hydrogen and green hydrogen, what makes green hydrogen green is that the input—the electricity that then, through electrolysis, produces the hydrogen—does not have any carbon emissions. There is not a distinction in that sense between that electricity coming from wind or solar or nuclear. They are all low-carbon and so all provide that same value into that input.

Q159       Lloyd Russell-Moyle: I am trying to work out the costs of using renewables and using nuclear. Yes, they will all be green in the end, but we need to make sure that it is financially competitive.

Paul Spence: To add to Tom’s point, with Sizewell C we are looking at using hydrogen transport and talking with Felixstowe port about helping it to use hydrogen more extensively, using the potential of low-carbon electricity from Sizewell B in the short term. In the medium to longer term, when Sizewell C is operating we can take some of the steam—not as high-temperature as Ciara is talking about—from Sizewell C to increase the temperature of the water, which provides about a 10% improvement in the efficiency of electrolysis. You can have a more efficient electrolyser to produce more hydrogen from water and, again, be confident, as Tom says, that that is green hydrogen. There is a real industrial project to do that that we are looking at in Suffolk.

Q160       Chair: You said that the higher the temperature, the more efficient it is.

Paul Spence: To a point, yes. This is at about 300° temperature. You get a more efficient electrolysis.

Chair: From wind power, that is just room temperature.

Paul Spence: Wind would be using room temperature, unless they use other energy to heat up that water.

Chair: Which is less efficient for the energy conversion.

Paul Spence: That is right, yes, and then we are also, in Heysham over on the north-west coast, looking at the possibility of using some of the low-carbon electricity to produce hydrogen, which will then help to decarbonise asphalt production. What we want to do there is to build a demonstrator—a small project—to show that the technology can work as part of helping the industrial upscaling of something that has not yet been done in that sector before.

When you talk about renewable hydrogen, we would talk about low-carbon hydrogen, and we as EDF are also involved in projects using wind and solar to produce hydrogen as part of decarbonising the industry.

Q161       Lloyd Russell-Moyle: So in your projects, you are talking about using a by-product of the nuclear power to warm up the water, and then you would still actually use the renewables when there are peaks of them and their energy is not needed—

Paul Spence: And/or nuclear, yes.

Lloyd Russell-Moyle: Or in the fallow moments where the demand is low. So you use it in a dynamic partnership.

Paul Spence: That’s right. The final piece of the jigsaw that we have been examining is that we have a nuclear site at Hartlepool, in the middle of a very large industrial area, and we have been looking, with DESNZ through some of its innovation funding, at what the heat needs are in that region, and therefore what sort of nuclear technologies might be able to meet the heat and hydrogen needs there.

Q162       Lloyd Russell-Moyle: What needs to happen to get that on board and on target by 2040?

Paul Spence: There need to be demonstrator projects in the short term to show that the ideas can be made to work, and then there needs to be a scale-up plan.

Q163       Lloyd Russell-Moyle: Do you have a timeline that would meet that?

Paul Spence: This is work that is being done, a large part of it between my research and development team and the early-scale business development teams. The timeline is achievable for the 2040s to be doing that, and that is what we are working on.

Dr Fox: For 2040s timelines to be met, from a technology provider’s point of view, the technology can be ready for then, but we are only going to be ready if we have a clear road map for all nuclear technology, gigawatt scales, SMRs and ANTs to get to market to make sure that we can provide that energy to decarbonise industry, the grid, and also transport, together in the future in the 2040s. Without a clear road map of how we access the market, how we access sites and how we access the regulators, we will not meet those targets. We need to be met halfway by Government to be able to get there.

Lloyd Russell-Moyle: These sites can be, in your two cases, relatively small sites.

Q164       Chair: You mentioned that hydrogen is a by-product of the high temperatures. We were talking about district heating in other countries, and a point was raised about high-temperature water. Are any nuclear reactors anywhere using high temperatures as a by-product for district heating? Is that getting done anywhere? It seems an obvious question to me, hence I am asking, but I know nothing about it.

Paul Spence: I know it is done in China, and I believe that some of the lower-temperature heat is used in other countries, not necessarily for domestic heating but for other industrial direct heat uses, so yes, it is used elsewhere in that way.

Q165       Vicky Ford: We do not tend to build our nuclear power stations very close to residential areas for domestic heating.

Ciara, I think you are awesome. I want to bottle you up and take you around to every woman who might be thinking about going into STEM, especially in terms of your answer to the very leftfield question and the details on materials science. You said that you hope to build your first AMR in 2031 and then roll that out through the 2030s into a fleet; are there any other AMR technologies that might be doing that faster?

Dr Fox: I must admit that I do not know any, especially in the UK, that are necessarily going to do it faster.

Q166       Vicky Ford: Let us go with that schedule for the UK. How soon might this fleet be having a significant role in not only providing baseload but providing flexibility?

Dr Fox: Flexibility is in the core design of a FLEX reactor. It is our very name. You will not build a FLEX reactor without that capability.

Q167       Vicky Ford: How do you think the UK should be plugging the gap between now and then?

Dr Fox: That is a really great question, if you can just let me think about it for a moment.

Q168       Vicky Ford: While you think about that, I am going to ask Alastair the same questions. How soon will we see the SMRs deployed, in terms of the first one and then fleet?

Alastair Evans: The first one will be early 2030s. My business has control of how long it takes from first nuclear concrete to power. It will be four or five years for the first of kind. The aim here is to be credible in timeline, so we are giving five years for that first unit, and it will come down in time. I do not have control of everything we talked about earlier around planning, licensing and those processes. In the UK, they can take a protracted period of time.

Q169       Vicky Ford: From when you get permission to first putting a spade in the ground, you think it will be five years.

Alastair Evans: That is correct.

Vicky Ford: And it will be slightly longer for the first one and then faster as you get through.

Alastair Evans: That is absolutely right. The aim here is fleets, so we will build factories in the same way that Rolls-Royce plc delivers jet engines in a throughput manufacturing process. You will have your first SMR; a year later you will have your second; six months later you will have your third; six months later you will have your fourth. It is really about trying to keep up with that domestic—

Q170       Vicky Ford: How soon into that process do you see a significant role in flexibility, not just in baseload?

Alastair Evans: The important point that Mr Russell-Moyle covered was that it is not about flex by switching down the nuclear power; it is about diverting the use or diverting the steam. It is diverting the power to the production of hydrogen or synthetic aviation fuel within an energy-intensive process. Again, that will be built into our design. It will go through the regulator with that as the basis of the design.

Q171       Vicky Ford: Or indeed you could put the power beside the data centre so that it is all localised. Going back to AMRs, how should we be plugging the gap in the meantime?

Dr Fox: AMRs, ANTs and all nuclear are not here to replace renewables. The gap needs to be filled. We need to prioritise, in this country, utilising renewable energy—solar, wind, offshore wind—and ramping up our ability to produce energy with those technologies. Nuclear is here as a technology to complement them, to provide consistent baseload energy, and to help to meet peak load demands when required. Ramping up both as quickly as possible will keep lights on and keep us with a stable energy production.

Q172       Vicky Ford: Alastair, would you agree with that?

Alastair Evans: Yes, entirely. The challenge here is not getting to net zero; it is staying there. We have to completely revolutionise what is on the grid today and rebuild that, and we are going to have to double the installed capacity. We are going to have to go through a really tremendous growth period of deployment of at-scale nuclear and all the associated renewables that go alongside it, so the answer is all of the above.

Q173       Mark Pawsey: I want to follow up on a point that Paul make earlier. You were talking about how we had not built a nuclear power station for 25 years, we had lost the skills, and we have to go into partnership with others in order to use their expertise and knowledge. Clearly, Hinkley is the first of a kind, and the benefits of adopting that technology will only be realised if we move on to subsequent sites. By how much will site number 2 reduce compared to Hinkley, and how many would you need to build in order to get real economies of scale in the production process?

Paul Spence: The best evidence I can give you about the opportunity that is available is if I look between the first unit at Hinkley C and the second unit at Hinkley C, where we are seeing somewhere between 25% and 30% improvements. Whether it is the time to fabricate the ring at the bottom of the reactor or the time to put the steel in, it is consistent that we are seeing a 25% to 30% performance improvement for that second unit compared to the first unit. I would expect the next unit at Sizewell will be as good, maybe a little better, than that second unit at Hinkley Point C.

We are seeing the same thing when it comes to some of the equipment contracts on Sizewell. Again, what we are seeing is the same order of magnitude of improvement because the design has been done the first time for the equipment for Hinkley Point C, and that does not need to be redone for Sizewell and the qualification does not need to be done again. You can see a 20%, 25% or 30% cost improvement from that going to units 3 and 4.

If I look internationally, six seems to be a fleet that makes the most benefit or takes the most advantage of the scale benefits. We see that France is looking at a fleet of six, with possibly eight further reactors for their next EPR programme. We see the same for Poland in what it is talking about. You see the same in lots of other countries that are starting to look at their nuclear ambition. A fleet with a repeat design, repeating that design somewhere around six times, looks a very sensible thing to do.

Q174       Mark Pawsey: For Sizewell, it is 10% less cost to deliver; you spoke about 30% in some of your numbers in terms of improvements in processes.

Paul Spence: It is 30% from the first unit at Hinkley Point C to the second unit at Hinkley Point C, so, on average, we are already coming down that curve with the second unit at Hinkley Point C. The next unit at Sizewell will be as good as that unit at Hinkley Point C, so you have two units on aggregate, and then the next ones will be as good as—

Q175       Mark Pawsey: What about the development of a domestic supply chain for the components that go in?

Paul Spence: In terms of the domestic supply chain, for Hinkley we set an ambition of somewhere around 64%, I think, at the start, for content from the UK. For Sizewell C, we have said that we believe that could increase to 70%. We have worked really hard to increase UK content, and UK content in manufacturing. If we go ahead with the next units, we will see the benefit of that in terms of work for Bilfinger at its factory.

Q176       Mark Pawsey: Right now, does the UK supply chain see a sufficient programme to justify investment in their businesses?

Paul Spence: At the moment, they are seeing what the reality is, which is they have orders for Hinkley Point C and they are hopeful of orders for Sizewell, but until we reach a final investment decision, that is a hope for orders for Sizewell. Beyond Sizewell, they see the ambition of 24 GW, but they do not see firm orders from us for further units or from the other developers. We have a real opportunity to do something about that, but it needs the firm decision.

Q177       Mark Pawsey: Alastair, if you were to get the go-ahead, are you able to use the supply chain that is being developed by EDF in its project, or would your suppliers be a different group of manufacturers?

Alastair Evans: As Paul said, we would seek to use as much UK content as possible—60% to 70%, if not more—but the challenge comes when, exactly as other panellists have said, there is no clear demand signal. We will need hundreds of pipes and valves in our system. If you produce those in the UK now, you may have the capability but you might not have the capacity, and you might not have the capacity to do multiple orders. If you knew that those orders were going to be coming in three years’ time, you would scale up and prepare, but the supply chain cannot do that yet.

We have some fantastic initiatives in the UK such as the NAMRC—the Nuclear Advanced Manufacturing Research Centre—and the catapults that can support businesses, but until they see that clear contractual demand signal, it is very difficult for them to put money into the requirements.

Q178       Barry Gardiner: Putting it bluntly and briefly, you are not going to be able to do all of this, are you? We know that you need 50,000 people in the workplace to be replaced simply to stay as we are. If you achieve the 24 GW that the Government is projecting, we would need between 75,000 and 150,000 extra personnel, and the skills base is simply not there. What now needs to be done? What are the cost implications of it? What is the risk to the project, in terms of not only cost but delay, which will then feed through into cost? How are you tackling this, and how should Government be tackling this?

Tom Greatrex: It sounds a bit like a single transferable answer, but the programme is what is important, because the programme gives the clarity to enable investment to happen. You do not determine your energy requirements or energy security requirements by the amount of workforce that is available. You determine your workforce and your capacity by the programme that you need to deliver, and we have not got that, and we have not had that in this country for a long time. That is what we need to get to. That is something that will not only increase the amount of jobs, growth and economic activity in the supply chain across the whole of the country, but also means that the delivery of the infrastructure is more efficient and more effective.

Q179       Barry Gardiner: Turn that now into a recommendation that this Committee should incorporate into its report.

Tom Greatrex: The Government should set out their programme, including where, when and what, because when you have that clarity, the supply chain, the sector that I represent and all of our supply chain companies will deliver. They can see the opportunities and are excited about the opportunities but, as Paul said, because we have been here before with projects that have not got to conclusion, they are not going to be in a position to make that significant investment in capacity and capability until they can see that there is going to be a programme. At the moment, we have a high-level ambition but not a programme.

Q180       Barry Gardiner: You are saying that the industry and investors need to have trust in Government that there is a clear programme here and that the Government are going to stick with it and not move the goalposts.

Tom Greatrex: That is what has happened internationally in other markets, which proves that that is the way to deliver it effectively and efficiently.

Paul Spence: To add to Tom’s point, in that programme there needs to be a deliberate plan to build skills and to build them in a co-ordinated fashion. We have 10,500 people today in Somerset working on Hinkley Point C, on the civil work and on the mechanical and electrical installation. In order to have 10,500 people able to work to nuclear standards, we have worked really hard, particularly with Bridgewater College but with a number colleges in the south-west and across the country.

Barry Gardiner: And with the GMB Union—Tom’s old union.

Paul Spence: Yes, and with the unions.

Barry Gardiner: Do not leave Gary Smith out of this or you’ll be in real trouble.

Paul Spence: We have established four centres of excellence in the region: welding, construction, mechanical and electrical. Some 34,000 people have been through those training centres so far, and a lot more need to go through them. We set an ambition at the start of the project for about 1,000 apprentices; we are already at 1,300 apprentices who have been part of the programme. We need to scale all that up and we need to be taking advantage of the opportunity that Hinkley offers, to have more people come through Hinkley so they can then go and work on the follow‑on projects. That is what a deliberate plan would involve: something that says that we are going to ramp up that training activity.

Q181       Barry Gardiner: I totally agree with you. This is a problem not just for your sector but for so many sectors. On a range of Select Committees, I am finding exactly the same questions coming up, but we are not talking about 1,300, we are talking about 150,000, and you are competing against those other industries for those trained professionals.

Paul Spence: Our experience is that yes, we are competing to attract people to come and work in the nuclear sector, but we are telling the story to potential recruits from schools, as well as from other sectors that need to make a transition from high carbon to low carbon, that we are doing something that is about national security and also about addressing the challenge of climate change. People want to come and work in this sector. They like the jobs that are on offer and the skills that they can build, so we can do it.

Q182       Barry Gardiner: Give me the recommendation to Government. What should they be doing? How much should they be investing in this? How should they be setting out a strategic plan for the training centres, for the colleges? How detailed do Government need to go to meet that 150,000 target?

Paul Spence: It is through that level of detail—identifying the training centres, saying how much money they are putting into it. I would add to that list identifying where the trainers who are going to deliver the training for that 150,000 people are going to come from. Industry needs to participate in that.

Barry Gardiner: Yes—who trains the trainers?

Paul Spence: Yes, absolutely.

Alastair Evans: There is also a space for innovation. It is really important that we do not just look at the big headline numbers. I have been incredibly impressed by the electron-beam welding that is being developed and delivered at the Nuclear Advanced Manufacturing Research Centre. A weld that would have taken 100 days is being done in one. What can we do? What are the innovations that mean we can ensure that we do not need 150,000 and that it is a significantly smaller number? Innovation has to be part of that story as well.

Tom Greatrex: There is no point in doing any of that without having clarity of programme.

Q183       Chair: Having recently started doing some welding myself, it is great to hear all this chat about welding; it is a fascinating thing to do. On scales, it might have been Tom or Paul who talked about the effort being there and it being about the when and the what—I think Tom Greatrex said it. What is the shortest lead-in time the industry would need between a plan and the delivery of the workforce when there is certainty? I know it is a difficult question.

Tom Greatrex: The workforce is multi-faceted. A lot of it is construction skills. We talked about welding.

Q184       Chair: If the Government says, “This is the plan,” when can you get the workforce in place to start delivering that plan, in terms of training times?

Paul Spence: We started some of the training programmes at Hinkley Point C three, four or five years ago, or even longer ago. They are bearing fruit now, but they started to bear fruit two or three years ago.

Chair: You are talking about a couple of years, anyway.

Paul Spence: Yes, practically, in order to start making a really material difference.

Chair: I am assuming a none pre-existing skill base, so I am talking about skilling them up. I probably should have made that clear in the question.

Paul Spence: In the meantime, what we have done is we have found ways to make sure that we are tapping into some of the retraining opportunities, where people who have welding skills but have been working in a different sector might come and work in nuclear. People who know how to do equipment installation in other sectors can come and work, so we can accelerate some parts of that if we need to, but it is about ramping up the big programme—it is a programme.

Dr Fox: I was going to echo a few of others’ points and add to them. Of course, if you deliver a plan today, the nuclear industry will immediately respond in trying to upskill. It will not be an overnight change, but it will be within a year, or maybe even months, that we start getting people into the industry. These transferable skills exist in the industry. A lot of people who work for MoltexFLEX do not come from a nuclear background. They have come from other industries with knowledge of engineering, with knowledge of physics and chemistry, and can contribute to designs immediately.

There will obviously be a much bigger ramp-up from utilising a multi-year college design and going into that fine detail, but it does not have to be slow. There can be really fast turnarounds in some of these industries. Also, the innovation point is hugely important, not just for welding but also utilising a range of reactor designs. We have a lot of experience with gigawatt scale in the UK. ANTs and SMRs are smaller, easier to deliver, more simplistic and have less components, so they will be faster to come to market. By utilising this high number of workforces and some of these simpler technologies, we will need fewer people to bring in each technology.

We need to make sure that the plan is appropriate for gigawatt scale, which we have a lot of experience in, but also that the plan going forward includes SMRs and ANTs at the forefront, so that we can get there as quickly as possible.

Q185       Chair: To pick up some loose ends, Paul Spence, you mentioned that fuel is no longer coming from Russia. Where is it coming from now?

Paul Spence: For the raw uranium, the largest sources are Canada, Australia and some of the former “Stans”.

Q186       Chair: Is Canada the main supplier at the moment?

Paul Spence: It is a mix of all of those, and then it is blended and enriched. The process of turning raw uranium into fuel is quite a complex process that involves a number of different steps.

Q187       Chair: Can you write to us later? We are interested in the detail.

Paul Spence: Yes, absolutely.

Q188       Chair: Earlier, Barry Gardiner asked Alastair Evans about the CfD and the regulated asset base models. You gave an immediate yes, which made my alarm bells ring, thinking, “What does this mean for the bill payer?” Ultimately, if you are sounding that enthusiastic, who is losing?

Alastair Evans: The question was whether those were applicable structures for SMR deployment, to which the answer is yes.

Chair: Yes—because the money is good.

Alastair Evans: No, not because the money is good. Paul has already spoken about where risk sits, and risk has a cost to it. If you have a contract for difference, the risk sits entirely with the developer and you get a higher cost. Under a regulated asset base, the risk is spread and it is identified where it can be best placed, which is one of the elements that reduces the overall cost. Again, whether it is CfD or RAB is a question for the Government to work through and the GBN entity to work through.

Q189       Chair: Around that time, Dr Fox, you said something about prices—about £20 per megawatt-hour or something like that. It was very brief and I am not sure I caught that correctly, so correct me if I am wrong.

Dr Fox: The levelised cost of electricity for the FLEX reactor is predicted to be £28 per megawatt-hour electric.

Chair: When?

Dr Fox: That will be for the fleet rollout in the mid-2030s. We can be ready at low cost, to provide low-cost energy that is green, by the mid-2030s, to help us to hit our 2050 targets.

Q190       Chair: That makes me ask the next question. Why are we doing £110 electricity from Hinkley?

Dr Fox: Hinkley Point C will provide a large amount of baseload energy from a single source. Hinkley Point C is the first of its kind. It is going to be slightly more expensive to do and, as we have said, the cost of those is going to come down with each subsequent reactor that is built. The FLEX reactor is a much smaller unit. It is much more simplistic. We can go forward with that. Hinkley Point C is a technology that was ready today, or several years ago, to come to market. Molten-salt technology has had a lot of really good development in recent years. It has taken a little more time to get here, but the simpler design means that it will be ready very close to the rest of the reactors going forward.

Q191       Chair: Why not build simpler designs rather than complex and expensive ones?

Dr Fox: Going forward, we will have a place to play in decarbonising our future. Gigawatt scale is very appropriate for use at existing nuclear sites that have decommissioned reactors, whereas the FLEX can be built in fleets to provide baseload electricity to the market, but it also has that flexibility and lower cost. It is not about which technology is best or cheapest; it is about utilising all of them in the correct areas going forward.

Q192       Chair: Tom Greatrex, how does the new Great British Nuclear differ from the previous role of British Nuclear Fuels Ltd—BNFL?

Tom Greatrex: GBN is entirely different. GBN has been established to determine what we talked about before—which sites, the programme—and to run the selection process for which SMR technology will be at the forefront. It has done the first part of that. There is a shortlist of six and it is engaging with the SMR technology vendors to down-select from that six. That is very different from what BNFL used to do. There may be a confusion because, technically, the shell company of what was BNFL is being used as the vehicle for GBN, but in terms of their function, they are very different.

Q193       Chair: Where do waste costs fall?

Tom Greatrex: Do you mean the cost of processing the waste?

Chair: I mean decommissioning waste and the drums that are sitting at the moment in Sellafield or wherever.

Tom Greatrex: The cost of waste and decommissioning is factored into the current operating fleet and any future fleets. It is accounted for within the cost. That is an important part of the overall cost: it includes decommissioning and waste management. The legacy stuff, which is a cost to the public purse, is significantly from military programmes and other early programmes. That is borne by the public purse through the DESNZ budget.

Q194       Barry Gardiner: You say the decommissioning costs of all this are borne by the company now, not by the public purse.

Tom Greatrex: They are factored into the costs. It is effectively set aside in a fund to be used for the decommissioning and waste management when you get to that stage.

Q195       Barry Gardiner: Who holds that fund?

Paul Spence: Essentially, it is an independent trust, but it is set up to manage the investment, overseen by Treasury.

Q196       Barry Gardiner: It is an escrow-style account.

Paul Spence: It is the equivalent of a pension fund set up to—

Barry Gardiner: We have had quite a bit of experience with pension funds that we are not too happy with.

Paul Spence: It has been set up with the lessons of those pensions funds. We pay as we start loading fuel and then as we start producing electricity. We pay into that fund. That fund is then invested for the operating life of the stations. At the end of the life of the station, it will be there, and it is reviewed along its path and that money will be there to bear the cost.

Q197       Barry Gardiner: It is separate trustees.

Paul Spence: Yes.

Q198       Barry Gardiner: For clarity, will each company have its own pension fund, or is it an industry-wide pension fund so that, if one has not quite made the contributions that it perhaps ought to have done or fails in some other way, the rest of the industry will pick it up?

Paul Spence: I will need to go and check the precise arrangements and write to you, if I may.

Q199       Mark Pawsey: There are lots of areas, not least in construction costs, where the reality has ended up being something different from what was predicted. What happens if there is a difference between the actual cost and that which has been predicted for the handling of waste?

Paul Spence: For the decommissioning of waste, what I do know is that the estimates of the costs that were then built into the strike price are as conservative as required by the Treasury Green Book, and then with added conservatism. There is a lot of contingency built into the allowances for those costs.

Mark Pawsey: The reverse could apply and it could end up costing less. There is a flexibility.

Paul Spence: It could. Going back to Tom’s point, a lot of the waste that we are talking about from new stations is a physically very small addition to the amount of waste that the UK already has generated and needs to deal with. It is not being allowed for at a marginal cost: it is being allowed as a full contribution. We are making an extra contribution to something that the UK already needs to deal with.

Dr Fox: These costs are not just decided by us—by the developers. We are working as an industry with the NDA and NWS to make sure that the costs are realistic and that all new reactors coming to market have a robust plan to deal with their waste, whether that is gigawatt scale, SMR or ANTs going forward. We not only have robust solutions but understand what the requirements are from the Government side and our side, to make sure that we work together so that the plan, when we reach market, is not overestimated nor underestimated but is very realistic, so that everyone is on the same page going forward.

Early engagement is key and something that we are really proactive in doing. We would like to be more proactive with Government bodies to make sure that we reach market in that sensible way.

Tom Greatrex: It is important to register that all of that is part of the process that any reactor design has to go through by the independent regulator to assess whether it is suitable to be built in this country. All of that is part of that assessment.

Chair: That is a nice point to end on, with a former member of the parish, Mr Greatrex; it is good to see you again. This has been the representatives of the nuclear industry in our second session on keeping the power on. For those watching, there will be contrary voices, because we know that there are different views—shall we say—around waste and costs in the nuclear industry. Doubtless we will hear from those going forward.

In the meantime, can I thank the four of you for being here this morning, for helping and for putting over your points of view? Finally, to Dr Fox, I think you are quite safe from being bottled—I mean that in the nicest way, not bottled badly. Vicky Ford has left, but clearly you made a very good impression on her, and she is correct in what she said about role models for women in STEM. As a father of three daughters, I am very much aware of that. Thank you all very much.