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My Lords, I am speaking in this debate because I wish to emphasise the importance of nuclear power in our national infrastructure strategy. If we are to meet our net zero greenhouse gas emission target by 2050, without the lights going out when the wind does not blow and the sun does not shine, we will have to increase the fraction of power that we deliver with nuclear power by at least 30% .
The total power we will need in 2050 is estimated to be 85 gigawatts, meaning that we will have to increase our nuclear capability to 26 gigawatts despite the nuclear closures that are planned. It is interesting to note that the Chinese have established a long-term plan to build their nuclear capacity to a remarkable 550 gigawatts. However, their population is about 20 times ours, making their commitment similar to ours in terms of power per person; it is an admirable target from their point of view.
The major problem with nuclear cited by critics is the Hinkley Point strike price of £92 per megawatt hour, which compares unfavourably with the more recent £40 per megawatt hour agreed for offshore wind. However, more than 50% of the cost of Hinkley Point is financial cost because the interest rate being charged by those providing the money is an incredible 9%. This high interest rate was justified by the high-risk assessment for the project. However, this risk assessment is now out of date. It was made when no one had been able to get an EPR reactor of the type being built at Hinkley Point working. The first EPR, at Flamanville in France, was over budget and years late, and the one in Finland was in a similar situation. In the meantime, CGN—China General Nuclear Power Group—which is working with EDF at Hinkley Point, has got two of these reactors working in Taishan and commercially feeding power into the Chinese grid at record levels for any power station. This removes the risk that there might have been a fundamental problem with the EPR design. It is predicted that future reactors can be financed at a rate close to 4.5%. This is estimated to reduce the strike price to below £60 per megawatt hour. In order for this cost reduction to be realised, the Government should ensure that investment grade companies are set up to build future plants, perhaps using regulated asset base techniques.
The second point is that comparisons between the costs of wind and nuclear made on the basis of strike price are not valid. The distributed nature of wind means that the cost of delivering this energy to the grid will be higher for the wind generators; 1,000 huge 5-megawatt wind turbines will be needed to deliver the same power as Hinkley Point, assuming optimistically that they will deliver, on average, 40% of their gross capacity. Estimates for this increased cost are £25 to £30 per megawatt hour, raising the real price of offshore wind to about £60 per megawatt hour, which is about the same as for nuclear power.
Further flexibility in the deployment of nuclear would be provided by small modular reactors, something recent Governments have been dilly-dallying with for years. We should get on with this and take up some of the proposals that have been made, for example by Rolls-Royce. The situation with nuclear would be improved even further if we arranged to use efficiently the 40% of energy it produces in the form of distributed heat—local heat. After all, heat is the largest fraction of our energy use. Overall, this opens up the possibility that it may be better to increase the percentage of nuclear to above 30%, especially as people are concerned by the vastly greater areas of land needed for onshore wind or, indeed, for solar PV generation.
If we persist in using fossil fuel power to underpin renewables, there are alternative solutions to meeting the carbon targets, the obvious ones being carbon capture and storage, pumped water or weight-lifting or battery storage, but at present, these alternatives will struggle to reach the tens of gigawatt-hour storage levels needed to be effective at national energy levels. Development of these approaches should none the less be pursued as, of course, should the further development of wind and solar power as well as tidal power, as mentioned in earlier speeches. This is especially true because we are yet to experience what will be involved in maintaining these systems as they approach their lifetime limits. For example, it will be more than 15 years before we know what will be involved in keeping wind turbines operating in the harsh environment of the North Sea.
Finally, I have a comment on nuclear waste. We need rapidly to establish a geological storage facility to cope with the vast legacy waste that has haunted us since the 1960s and to store the smaller and more easily handled waste from the new reactors.