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Nuclear Power

Part of the debate – in the House of Commons at 6:23 pm on 4th June 2018.

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Photo of Greg Clark Greg Clark The Secretary of State for Business, Energy and Industrial Strategy 6:23 pm, 4th June 2018

With permission, Mr Speaker, I would like to make a statement on the proposed Wylfa Newydd nuclear power plant.

Britain was the world’s first civil nuclear nation. Nuclear energy has powered homes and businesses in this country for over 60 years and currently provides about 20% of our electricity needs with low-carbon, secure and reliable base-load power. Nuclear has an important role to play in the UK’s energy future as we transition to the low-carbon economy. However, we have always been clear that no technology will be pursued at any price: new nuclear must provide value for money for consumers and taxpayers.

In 2016, we agreed to support the first new nuclear power station in a generation at Hinkley Point C in Somerset. Developers have set out proposals for a further five plants to come online over the next few decades. As I said at the time the contract for Hinkley Point C was agreed, the Government expect future nuclear projects to provide lower-cost electricity than Hinkley Point C.

The next project in this pipeline is the proposed Wylfa Newydd power station, based at Anglesey in north Wales. The project developers, Horizon Nuclear Power, which is owned by the Japanese company Hitachi, has developed proposals to build two reactors with a combined capacity of 2.9 GW. Hitachi’s reactor design has been deployed on time and on budget in Japan, and last December, having satisfied our strict safety standards, it completed the generic design assessment process run by the UK’s independent nuclear regulators. Horizon submitted its application for development consent to the Planning Inspectorate last Friday.

I am pleased to confirm today that Hitachi and the UK Government have decided to enter into negotiations in relation to the proposed Wylfa Newydd project. This is an important next step for the project, although no decision has yet been taken to proceed and the successful conclusion of these negotiations will of course be subject to full Government, regulatory and other approvals—including, but not limited to, value for money, due diligence and state aid requirements.

A key focus of discussions with Hitachi has been, and will continue to be, achieving lower-cost electricity for consumers. Both the National Audit Office and the Public Accounts Committee have recommended that the Government consider variations from the Hinkley Point C financing model in order to reduce costs to consumers. In line with the NAO and PAC’s clear findings and recommendations, for this project the Government will be considering direct investment alongside Hitachi, Japanese Government agencies and other parties. Our partnership on this project will serve as a further example of civil nuclear collaboration between the UK and Japan, building on the memorandum of co-operation that was signed with that country in 2016.

The UK is likely to need significant new nuclear capacity to meet our carbon reduction commitments at least cost, particularly as we electrify more of our transport and heating, so alongside entering negotiations in relation to Wylfa Newydd, the Government will continue to engage with the other developers in the UK new nuclear market on their proposals for further projects. This currently includes EDF over its plans for a follow-on EPR project at Sizewell C, CGN—China General Nuclear Power Corporation—over its proposals for an HPR1000 reactor at Bradwell, and Toshiba regarding the future of the NuGen project at Moorside, as well as Hitachi over potential further ABWR units at Wylfa and Oldbury.

It remains the Government’s objective in the longer term that new nuclear projects, like other energy infrastructure, should be financed by the private sector. Alongside our discussions with developers, we will be reviewing the viability of a regulated asset base model as a sustainable funding model, based on private finance for future projects beyond Wylfa, that could deliver the Government’s objectives of value for money, fiscal responsibility and decarbonisation.

Support for nuclear is reiterated in the nuclear sector deal that we will publish with the sector shortly. That deal, which the Government have developed in close partnership with the nuclear sector, will include ambitious proposals to drive down costs across the sector, including by reducing the cost of construction in new build and by investing in innovation in advanced nuclear technologies.

If the Wylfa project were to go forward following this period of negotiation, it would provide about 6% of our current electricity needs until nearly the end of the century, while supporting thousands of jobs, particularly in Wales, during its construction and operation. The actions this Government have taken will support a long-term pipeline for new nuclear projects in this country, and will provide the visibility needed to enable the industry to invest in the skills, including through the National College for Nuclear, and the UK supply chain capabilities across the country. I will continue to keep the House informed during the negotiations, and I commend this statement to the House.