My Lords, I begin by declaring a couple of interests. First, I should place on record that I live quite close to Sizewell. I say to the noble Lord, Lord Howell, that if only the current construction of Sizewell C were done in the way in which they built Sizewell B, with much of the material brought in from Sizewell A, some of the objections in the locality—not all of them—would certainly disappear. Secondly, and I say this particularly to the noble Baroness, Lady Worthington, for whom I have enormous respect as she knows a great deal about this, I know a little bit because I used to be a physics teacher, but I do not think that that holds much water these days—it was a long time ago.
My amendment is in a long grouping of amendments, but all seem to cover roughly the same theme, that of transparency and trying to ensure that we have as much information available to us as we can before fundamental decisions are made and this Bill goes through. There are many amendments covering issues to do with the designation procedures and so on. I note, for instance, that my noble friend Lord Oates in his Amendment 13 asks not only for more information on what impact the RAB will have on consumer bills but for that to be independently checked—something that Citizens Advice, for instance, has long been campaigning for.
My noble friend also raises a really interesting issue in Amendment 6. It is about getting some assurances that the station or generation system to be built will be able to deliver and will not have a number of outages, or perhaps will not even work at all. Of course, that is already being experienced by the Taishan EPR new build in China, which has been offline for the past eight months after only two and a half years in operation.
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Getting information is proving very difficult indeed. Today, letters were received by two people living near me in Suffolk. One of them had requested information about the expected timeframe in which the designation criteria referred to in Clause 3(1) would be provided. The reply that came today from BEIS’s new nuclear projects directorate said:
“The statement mentioned in Clause 3(1) is currently being developed, with a plan to be published in due course.”
So it has not even finalised the details of what Clause 3(1) in a Bill that we are expected to agree to will say.
The other letter discussed the issue raised in my Amendment 4. It specifically asked for information about whether the value-for-money estimates will be published. Answer came there none; no answer was given at all. Amendment 4 is fairly simple. It says that, in designating a nuclear company in relation to a project, the Secretary of State must be convinced that it
“will result in value for money, as evidenced by the publication of the Value for Money assessments conducted to date.”
It simply seeks further information, which will be vital before we go ahead with designating a project.
Of course, the problem is that whether nuclear can ever give us value for money is somewhat moot. Look at all the different technologies. The cost of nuclear has always stayed incredibly high. The annual levelized cost of energy analysis by the United States, which was updated by Lazard in October 2020, suggests that between 2015 and 2020 the average unsubsidised electricity generating cost declined for solar PV from $64 to $37 per megawatt hour and for onshore wind from $55 to $40 per megawatt hour. At the same time, nuclear power costs went up from $117 to $163 per megawatt hour. Over the past five years alone, nuclear energy costs have risen by 39%, while renewables have become the cheapest of any type of power generation.
No doubt the Minister will say in response that reducing the cost of finance, which this Bill proposes, is the key and will sort out all our problems. However, the truth is that those costs are so high because nuclear builds are inherently risky. The frequency of cost and time overruns of EPR builds in France, Finland, the UK and even China is, frankly, staggering. For instance, the cost and completion date of the Flamanville plant in France has now been updated seven times in 11 years. It is currently 12 years late and is expected to cost four times the original budget. The difficulties with all these builds are then explained as being because they are the first of their kind in their country, but of course that totally ignores the fact that EDF has been involved in every single one of them.
Even the Government’s impact assessment suggests that a new project such as Sizewell C is likely to take 13 to 17 years as opposed to EDF’s estimate of between nine and 12 years so, frankly, how can we have confidence that, for instance, Sizewell C can be built on schedule within the already eye-watering £20 billion? Incidentally, the £20 billion figure is two years out of date and, interestingly, EDF refuses to provide updated information to the planning inspectorate on the grounds that it is commercially sensitive. Therefore, I believe very strongly that we need to have more information about what the value-for-money estimates are and what they are based on.
One of the things which I got really concerned about was that when this was being debated in the other place we were told that, for instance, Sizewell C would be perfectly okay because huge lessons would be learned from Hinkley Point C. We are just going to move the thing on, but, of course, unless we have a value-for-money estimate that takes into account all the relevant factors, then I, for one, would be worried. What are the relevant factors? It seems to me that if you simply believe that you can replicate Sizewell C from what you have done at Hinkley Point C, you fail
to take into account the huge differences in the construction site itself: the different geology, for a start, the bridging work and working around sites of special scientific interest. There are huge issues around coastal defences, water desalination, new roads and so on, each of them bringing different challenges that have to be taken into account. Amendment 4 seeks not just to get more information but requires the publication of a value-for-money estimate so that we can have confidence in the project going forward.
I turn very briefly to Amendment 26, also in my name, which is a probing amendment. I looked very carefully at Clause 6(4)(e), where we are told that in exercising his or her powers the Secretary of State must have regard to
“the need to secure that the nuclear company has appropriate incentives in relation to the carrying out of its activities”
among many other factors. I hope that the Minister will be able to give us some information about what exactly that means because I suspect that it will refer, at least in part, to the agreed balance of risk sharing between the developer and the consumer—that is, who is going to pay for what over what period of time?
In reference to that I notice that the Minister in the other place said:
“Under an RAB model, the licence would determine a risk-sharing mechanism, whereby construction cost overruns up to the agreed financing cap are shared between investors and consumers. We expect that any RAB structure will ensure that financial incentives are in place to ensure the company’s investors manage project costs and schedules. The financing cap will be based on a robust risk analysis, including best-practice, reference-class modelling, and set at a level that is sufficiently remote that there is a very low chance that it would be reached”.—[Official Report, Commons, 18/11/21; col. 126.]
If I am right that part of the issue here is to do with cost-sharing, and if the cap is going to be set so far away and so high, presumably that means that the consumer will have to pay his or her share—we do not know what that percentage is—and that is just going to go on and on to a high level. I would be grateful for clarification on that, just so I know where I stand.
Also, I assume that what is intended here is that pressures will be put on the developer to ensure that there are not the cost overruns that, sadly, there have been on so many occasions. Since cost overruns have occurred on so many occasions, it would be helpful to know what the Government have in mind that will ensure that we are not going to have those in projects that will be covered under the RAB model.
I look forward to the Minister’s response and beg to move.