Nuclear Energy Financing Bill
This week the Nuclear Energy (Financing) Bill returned for its second reading and passed 255 to 80. There were few MPs in the Commons for the debate and over 250 votes were not recorded.
Consumers shoulder the cost and risk. Private sector have guaranteed profits.
The current financing system has stopped projects from going ahead. Private investors do not want to invest in building new nuclear power plants because it is so costly and high-risk, they have to invest up front and don’t get profits until the project is completed. This bill will allow companies to pass the costs of research, development and construction onto the consumers – the British public – who will shoulder costs through paying an additional fee ON TOP OF the cost of their domestic energy consumption. This means ordinary people, will be paying three times for nuclear power energy. First through their taxes – the government are ‘investing’ £1.2bn – second through an additional cost to their bills, and third for the cost of their domestic energy use. Whilst shareholders will receive profits even before the reactors are constructed, consumers will see none of these profits, instead exposed risk of spiralling cost, potential over-runs and accidents.
Government position on nuclear power and its financing.
The government incorrectly believes ‘Large-scale nuclear power plants are the only proven technology available today that is deployed at scale to provide continuous, reliable and low-carbon electricity. Our electricity system needs nuclear power.’
The Bill allows the Secretary of State ‘to designate a company to benefit from a Regulated Asset Base (RAB) model.
The RAB model allows a company to charge consumers to construct and operate new infrastructure projects. It allows the company’s investors to share … the project’s construction and operating risks with consumers…’
The government could use this model to get new projects off the ground ‘ … including, potentially, the Sizewell C project in Suffolk, which is the subject of ongoing negotiations between EDF and the Government, as well as potential further projects, such as on the Wylfa site in Wales.’ Greg Hands, Minister of State Department for Business, Energy & Industrial strategy
Public funding for nuclear power
‘The Chancellor’s spending review backs this commitment by providing £1.7 billion to enable the investment decision, alongside a new £120 million future nuclear enabling fund to tackle barriers to deploying new nuclear technology.’ GH
‘The funding model will require consumers to pay a small amount on their bills during the construction of a nuclear project. These payments from the start of construction will avoid the build-up of interest on loans that would otherwise lead to higher costs to consumers in the future.’ GH
Challenging the government’s position
Alan Brown (Kilmarnock and Loudon) (SNP) ‘On proven technology working alongside renewables, he will be well aware that pumped storage hydro can provide that. Why will the Government not give the go-ahead for Coire Glas in the highlands, which has been progressed by SSE?’
Deidre Brock (SNP) ‘Does he support the tidal energy efforts being made in Scotland? Would he support far more investment in that?
The Government's Nuclear Energy (Financing) Bill would push the costs of untried nuclear reactors onto households already struggling with rising energy bills.
We should be investing in tried & tested renewables, not gambling on unreliable, expensive & dangerous nuclear sources.
— Bell Ribeiro-Addy MP (@BellRibeiroAddy) November 3, 2021
Prohibitive costs of nuclear power (Hinkley Point C):
Alan Brown, (SNP) ‘it is £4.5 billion over the initial estimates, which is 25% over budget…’
The government have ‘… tried to tell us that the eye-watering strike rate of £92.20 per megawatt hour for a 35-year contract, while the cost of offshore wind dropped to £40 per megawatt hour for just a 15-year concession, meant that the nuclear deal was a good deal.’
‘…[minister argues that] the new funding model could potentially save the taxpayer £30 billion to £80 billion. How much money do the Government estimate has been wasted on Hinkley? How many billions of pounds are the Government willing to commit bill payers to if they say they can save up to £80 billion? Logic says that hundreds of billions of pounds would have to be spent to be able to argue that there could be a saving of £80 billion.’
‘If Sizewell C saves 25% compared with Hinkley, that is still a capital cost outlay of £18 billion. Surely there are better ways to spend £18 billion. We heard from the right hon. Member for Kingswood (Chris Skidmore) about the number of jobs being created. If I was given £18 billion to £20 billion, I am sure that I could create 30,000 jobs —by the way, that is £730,000-odd a job in capital costs alone. ‘
‘On costs, we are told that a new deal signed under the proposed new funding model in the Bill will cost consumers only £1 a month during construction, but if we look at a 10-year construction period for Sizewell C, we see that that means that bill payers in 28 million households will pay £3.4 billion before it is operational. That is a further £3.4 billion in expenditure when that money could be better invested elsewhere.’
Delays of construction (Hinkley Point C):
Alan Brown, SNP ‘On progress, the commissioning date for unit one has now been put back to June 2026, instead of the anticipated 2025, but they also admit there is a programme risk of up to 15 months on top of that. That means that it could be September 2027 before unit 1 of Hinkley is operational and unit 2 will then follow a further year behind. So it is realistic to say that Hinkley Point C will not be fully operational until 2027-28, which is 10 years after we were initially told that Hinkley Point C was required to stop the lights going out. Given that the lights have not gone out, that undermines the original case for Hinkley.’
Whilst the Labour Party’s official position is to support the Bill, Alan Whitehead, shadow energy minister points out RAB risks:
‘There are also substantial risks with RAB that need to be managed. It places the cost and risk of financing the project on the shoulders of customers, in this instance electricity bill payers, which adds to bill costs through a levy on their bills before anything has materialised. In the event of the plant not being completed, it lumbers them with bill costs without the benefit of the plant for which they have paid producing relatively cheaper electricity.
RAB also adds to the burden of bills unpredictably if the project overruns on cost or time—both of which, as we know, nuclear plant development is rather prone to. The extension of the construction period for a project, when the highest effect is felt on bills, lengthens that higher take period. An increase in cost may also cause revisions to be made to allowable costs ceilings, and hence cause heavier costs on bills.’
‘Nuclear power stations elsewhere in the world have been funded along RAB lines, but have simply not been completed, which has left consumers with a huge bill and no benefit.’
Nuclear waste ‘legacy’ and decommissioning costs
Deidre Brock, SNP
‘… we know that the permanent safe disposal of radioactive waste from nuclear power plants has not yet been achieved by any country. A 2018 study from the department of geology at the University of Kansas recently suggested that nuclear waste disposal would be two and a half to four times more expensive than has been estimated. Those costs will be passed on to those who come after us. Is my hon. Friend satisfied that these possibilities have been fully taken into account in the financing model?’
Alan Brown, SNP ‘It will cost £132 billion to deal with the existing nuclear waste legacy. Why do we want to create another waste legacy for future generations to deal with?
Sarah Olney, Lib Dem ‘I urge the Government not to ignore, in their enthusiasm for nuclear, the considerable downsides of nuclear waste. As a member of the Public Accounts Committee, I visited Sellafield last year, and I hope that every Government Member who promotes this Bill will also take the opportunity to do so. I found it so eye-opening in respect of the consequences of dealing with nuclear waste and the considerable time, effort and money that is still now being spent to dispose of nuclear waste that was generated in the 1970s, before I was born. It was just extraordinary and really brought home to me the literally toxic legacy that we leave for future generations when we create nuclear waste. I am not confident in some of the proposed solutions to deal with it, which could have grave environmental consequences. We cannot be confident that in 50 years’ time people will take nuclear waste seriously and that the right procedures will be in place.
The Government had to be dragged kicking and screaming into stopping water companies from piping raw sewage into our rivers, lakes and the sea 💩
And we're now supposed to trust them to ensure nuclear waste is properly disposed of?
— Bell Ribeiro-Addy MP (@BellRibeiroAddy) November 3, 2021
Disparity of investment of nuclear vs tidal
Alan Brown, SNP: ‘What else could we do with that amount of money? We could upgrade all homes to energy performance certificate band C. We could have wave and tidal generation. The UK Government are willing to introduce the Bill and commit hundreds of millions of pounds to nuclear—the Budget has £1.7 billion just for developing nuclear to a negotiation stage—but they will not even ringfence £24 million for wave and tidal in pot 2 of the forthcoming contracts for difference auction. The disparity is clear.’
‘Pumped storage hydro is the perfect foil for intermittent renewables, rather than big, inflexible nuclear power stations that invariably pump energy to the grid when it is not required. An Imperial College report suggests that there could be system savings of £700 million a year from using pumped storage hydro technology instead of nuclear.’
‘In the 2019 World Nuclear Industry Status Report, Mycle Schneider, who was the lead author of the report, said that nuclear power “meets no technical or operational need that low-carbon competitors cannot meet better, cheaper and faster.”
A recent study by Good Energy and the Energy System Catapult demonstrated that carbon emissions from the power sector could be eliminated as early as 2030 without the need to develop new nuclear power. Sarah Darby, associate professor of the energy programme at Oxford University’s Environmental Change Institute, has said: “Nuclear stations are particularly unsuited to meeting peak demand: they are so expensive to build that it makes no sense to use them only for short periods of time. Even if it were easy to adjust their output flexibly—which it isn’t—there doesn’t appear to be any business case for nuclear, whether large, small, ‘advanced’ or otherwise.”
Lib Dems position: support RAB (private sector offloading costs onto consumers). They support construction of Hinkley C but not any further new nuclear power stations
Sarah Olney: ‘I also want to make it clear that it is not our position that we should be closing down nuclear power stations; we support the ones that are currently operational and where contracts have been signed to open new ones. As I want to go on to make clear, our position is very much that there should not be new nuclear power stations.
‘I strongly back the Government in what they are trying to achieve here, but not for nuclear. I wish to reiterate the Liberal Democrat position: there is currently no economic or environmental case for the construction of any further nuclear stations in the UK. The hon. Member for Kilmarnock and Loudoun (Alan Brown) set out, in his extensive and detailed speech, very much what we believe: there really is not a case for such construction.