NUC0019
Written evidence submitted by Virginia Crosbie MP
What role can, or should, nuclear power play in achieving net zero and UK energy security?
Nuclear power can and should provide a key role in achieving net zero and UK energy security. Nuclear power, including in Wales, has provided energy security and clean power since the 1960s. Nuclear power is the only large-scale, high-capacity factor generating technology currently available that can be deployed to meet our net zero targets. In concert with wind and other renewable technologies, rapid expansion of nuclear energy will help the UK to meet our climate goals. Unlike offshore wind which has a capacity factor of approximately 40 % (IEA and others), nuclear power can consistently achieve capacity factors above 90 % (ANS and others)[1]. The whole system cost of all generating technologies should be considered on a level playing field when comparing technologies. For technologies with a low-capacity factor, the whole system cost should take account of the cost of supplying backup power to these technologies when they are not generating or generating at a lower capacity. Failure to do so could lead to a repeat of the current energy situation where electricity prices are rising largely due to the increasing market price of natural gas which is predominantly used to backup intermittent generation such as renewables when the wind doesn’t blow or the sun doesn’t shine.
Nuclear power has recently been classified as green by the EU and studies show that it has the lowest land take (footprint), lowest carbon dioxide lifecycle emissions, lowest lifecycle impacts and lowest material requirements (UNECE and others).
It is not simply a question of nuclear power versus renewables or another technology but rather how much of each low carbon technology can and should we deploy to meet our net zero goals and attain energy security. The amount of generation required to replace existing generation, meet new electricity demand and meet the demand for decarbonisation of other sectors is huge. This cannot be met with any one technology alone. Countries with a large number of renewable generators on the Grid such as Germany are reliant on other sources of generation to back up the intermittent nature of these technologies. In Germany under Energiewende (energy transition), renewables are largely backed up with natural gas. This has seen a large increase in German power prices, scarcity of natural gas to support the electrical grid and a switch to indigenous German lignite or brown coal to backup renewables, leading to increased emissions. Whilst the use of indigenous German lignite may assist Germany with their energy security; the use of fossil fuels to backup renewables is somewhat contradictory.
The use of biomass for electrical generation is somewhat limited. Producing carbon dioxide on burning, the Committee on Climate Change acknowledge that the amount of biomass available within the UK is limited and planting biomass for power generation when there are other suitable alternatives raises ethical questions when the land can be used for agriculture or housing.
Carbon capture and storage has not yet been adequately proven at scale to be efficient or economic. Current installations are thought to achieve around 90 % carbon capture efficiency and the Committee on Climate Change acknowledges that higher capture efficiencies are necessary to ensure the country can reach net zero.
With all but one of our currently operational nuclear power plants scheduled to be removed from service by 2035, the decarbonisation of our electricity generating sector by 2035 and the electrification of other sectors such as industry and transport, immediate action is required. Nuclear power plants can be deployed now to help achieve our energy security and net zero targets.
What are the main challenges to delivering the UK Government’s commitment to bring at least one large-scale nuclear project to final investment decision by the end of this Parliament?
The publication of the Energy White Paper, 10 Point Plan and Energy Security strategy and the creation of Great British Nuclear (GBN) have been key in helping to signal the UK’s goal for nuclear energy.
There are a number of remaining challenges in this regard, and most are symptomatic of previous inaction and inability to send clear and unambiguous signals to the market and developers:
How important is the finance model to ensuring a successful nuclear project, and is the regulated asset base (RAB) model the best one to deliver this?
The financing model is key to deployment of new nuclear power stations. In our drive to ensure cheap, clean and reliable energy, we must look to ensure that the most efficient and cheapest form of deployment is possible. The cost of capital secured on the open market allied with the perceived risk of building the first new nuclear power stations in a generation are likely to result in a cost of capital which is higher than it need be.
The introduction of a RAB and other financing models should ensure that the costs of capital are reduced so far as is reasonable. The use of Government financing/lending/loan guarantees could also be considered. The RAB model has already been consulted on and so this response does not propose to address this. The model and/or variations of it has been proven in other countries and applications (including nuclear).
The answer is more one of addressing as to where the balance of risk should lie for financing of new plants, given that taxpayers are also consumers of energy that new plants provide. If the goal is the most rapid deployment at the lowest cost, then the route to achieving this should be pursued. This is unlikely to be the raising of capital from commercial markets with risk apportioned to developers as this, if it results in a viable project, will be transferred onto the bill payer. This may result in higher costs overall than need have been the case. Focussing on the lowest overall cost approach may mean risk is apportioned to the taxpayer in order to facilitate the reduction in the cost of capital in the short term.
Due to previous ineffective action to deploy new nuclear plants, the UK and it’s supply chain is re-learning aspects of nuclear construction with the construction of HPC that it has forgotten since the early days of being a nuclear pioneer in the 1960s and 1970s where new large scale nuclear plants were connected at the rate of approximately one large plant per year. Restarting a sustained nuclear programme will lead to a lower perceived risk as lessons are re-learnt and the supply chain skills up to achieve efficient deployment of new plant. Emerging evidence from Hinkley Point C is already showing an acceleration of construction times from unit to unit (EDF Energy). When replicated across plants, these will come down still further. Indeed, this is reflected in the strike price for Hinkley Point C which is currently set at £92.50/MWh. Once Sizewell C is constructed, the Hinkley Point strike price will reduce to £89.50/MWh and the strike price for Sizewell C is expected to be less, reflecting the fleet effect of reducing costs as more, follow on units are built. Using RAB or an alternate financing model for Sizewell C will further reduce the cost of capital and bring down the Sizewell C costs still further.
What practical steps can the UK Government take to support the nuclear industry in developing a range of nuclear technologies, including small modular reactors?
Support to R&D is key and it is pleasing to see the funding provided to both SMR and AMRs in the most recent funding awards from BEIS. It is key to continue this cycle of investment to maintain the UK’s status as a leading nuclear nation and to advance on the products and technologies for tomorrow. This lack of nuclear R&D funding led to a dip in skilled persons and capabilities from the late 1980s in the UK through to the present day. This trend has started to be reversed with the launch of the Nuclear Innovation Programme in the previous Parliament and successive funding, but more is needed.
Clear, unambiguous policy and legislation from UK Government. It is pleasing to see the publication of the Energy White Paper, the 10 Point Plan for a Green Industrial Revolution and the Energy Security Strategy along with clear targets for new nuclear generation. These targets should be seen as the lower limit however and continued building as much as the UK can manage, should be encouraged.
Ensuring policy and legislation related to the financing, siting and permissioning of reactors are streamlined in pursuit of our net zero and national security goals. Policy considerations and permissioning decisions should consider, in balance with local factors, the importance of such projects to achieving net zero and obtaining energy security.
It is also pleasing to see the launch of the Future Nuclear Enabling Fund and Great British Nuclear. Clarity should be provided around both of these as soon as is possible to help advance the deployment of nuclear technologies.
Whilst there are a number of new nuclear sites currently available, these will be swiftly exhausted as new nuclear deployment progresses and the Government should look to the next generation of sites and siting processes to ensure timely and smooth deployment of new plants.
Government should consider the characterisation and infrastructure improvements of existing sites to allow for a faster deployment of plants and not leave this to as yet unconfirmed developers for these sites. Work on characterisation would ensure a faster deployment and improvements to infrastructure would benefit the local population in addition to attracting developers to sites. Where developers are required to improve infrastructure, this can be done but may result in a higher cost if it is financed using private funding and must be done later in the schedule than could otherwise have been achieved; if the developer is attracted to the site in the first instance.
Financial support to the first of a kind / first of a fleet reactor may be required to help overcome the inherent risks and increased costs of first of a kind items. This is not unique to nuclear but similar to all new deployments and has been exacerbated in the UK by ineffective action over the past few decades.
Clear and unambiguous commitment to nuclear by the UK Government, from all departments is necessary to send clear and confident signals to the marketplace to invest in the UK nuclear industry. Given the recent political changes and previous Government nuclear policy, clear signals are required to provide confidence to manufacturers wishing to construct new factories and supply chains and hire new workers into the industry.
Defining the role of GBN and progressing the development of new nuclear projects is critical to early deployment. Maintaining a clear commitment to a continuous and sustained deployment of nuclear plants over the ensuing decades will also be crucial to market confidence.
What would the likely cost be to the taxpayer of the UK Government supporting the development of a new nuclear power station at Wylfa?
The answer to this question depends entirely upon factors raised in answers to the previous questions. It depends upon:
Whatever the answer to the above questions; the returns for the taxpayer should also be considered and are likely to provide for any outlay or risk exposure in the initial project.
What is the potential economic impact for Wales of a new nuclear power station at Wylfa?
As evidenced by the previous nuclear power station at Wylfa, new nuclear power stations are critical to the economy and infrastructure of not just their local area, to Wales but also to the wider UK. The impact of jobs and skills in the direct and indirect supply chains is enormous and provides wealth, prosperity and high-quality jobs. These jobs last for many generations with a ten-year design and build programme, followed by a 60 year operating life and 10 – 20 year decommissioning programme (for new plants). Nuclear plants provide high value employment and benefits.
The UK nuclear industry currently supports over 60,000 jobs in the UK today (NIA). At the time of writing 22,000 people are working on the Hinkley Point C project in Somerset, including over 922 apprentices trained to date (EDF Energy). When Horizon Nuclear Power ceased development of ABWRs at Wylfa, amongst the hundreds of people to lose their jobs were 33 apprentices. All drawn from the local area, these apprentices were found new jobs, some in the nuclear industry and some outside. Approximately 2/3rds were employed at Hinkley Point C. Whilst I am delighted that they have found good, stable employment, this loss of skills from the Welsh economy meant that young people have had to move home to find work and they take the Welsh language with them, contributing to a drop in numbers of Welsh speakers at home. The reinvigoration of the UK nuclear programme in Wales will enable more young people to stay at home and speak their language; helping to sustain it.
In my constituency where the major employers are local government, agriculture and tourism, a new nuclear plant can create long lasting and high-quality opportunities. Nuclear plants create significant numbers of jobs (WNA & NIA) and contribute significantly to the local economy. In the US, the total economic impact of the Indian Point Energy Center to the local counties in New York State was calculated as $763.3m in 2002 (NEI) and a similar study conducted by the NEI for Xcel Energy’s 2 plants in Minnesota calculated that the plants contributed $600m to the State’s gross product annually (NEI). Rolls-Royce SMR claim that their new SMR programme can create 40,000 regional jobs and £52bn in economic benefits to the UK by 2050 (Rolls-Royce SMR). It is clear that new nuclear facilities can bring long term prosperity and stable employment for future generations.
Given nuclear power’s green record and proven track record for creating and sustaining thousands of high paying jobs, we are seeing a large number of environmental activists voicing their support for nuclear. Indeed, in the latest YouGov poll, a majority of people support nuclear energy as a means of achieving net zero (YouGov May 2022). We must rapidly continue our deployment of nuclear power plants to help reach our goal of 24 GW of nuclear by 2050 and to help the UK meet its net zero and energy security targets by starting right here at Wylfa on Ynys Môn.
August 2022
[1] Capacity factor: The ratio of the electrical energy produced by a generating unit for the period of time considered; to the electrical energy that could have been produced at continuous full power operation during the same period. For example, a unit rated at 1 GW for 100 days would have a theoretical maximum capacity of 100 GWdays (100 % capacity factor). With a capacity factor of 40 %, a unit of 1 GW would generate 40 GWdays over 100 days.