Third Report - Nuclear energy in Wales

While we have heard dividing evidence on the role that nuclear energy should play in achieving the UK’s net zero targets and ensuring domestic energy security, there is a broad consensus between the UK and Welsh Governments, and the majority of our witnesses, in favour of new nuclear energy generation.

The storage technology required for an entire electricity system run on renewable energy is not there yet. Therefore, on balance, we consider that nuclear energy has a strong role to play, as part of a mix of low carbon sources, in achieving net zero and energy security.

The previous attempt to bring a new nuclear project to Wylfa by Hitachi has left scars on the local community. We are concerned that expectations are being raised again on Ynys Môn and question how long the uncertainty can continue about whether or not a new nuclear build will be delivered at Wylfa.

Given that the land at Wylfa Newydd is owned by Hitachi, it is unclear what the current state of play is at the site. If there is to be new nuclear at Wylfa, the issue of ownership of the land needs to be addressed. We reiterate a recommendation of our predecessor Committee and call on the UK Government to encourage Hitachi to sell the Wylfa Newydd site or take part in a consortium of developers to allow future development.

We have heard from a wide range of industry representatives that Wylfa is one of the best sites for nuclear development and it is difficult to see how the UK Government can deliver its nuclear ambitions without taking forward a project at Wylfa. We consider that Wylfa should be the location of the next gigawatt-scale nuclear generation plant after Sizewell C.

While successfully developing a Small Modular Reactor (SMR) would present a huge opportunity for the UK, the technology is still in development phase. If the UK Government is serious about nuclear energy now it needs to pursue new gigawatt- scale plants alongside its policy on SMRs.

The UK Government, and Great British Nuclear, should continue to engage with Cwmni Egino on its ambition for Trawsfynydd to become the first site to host Small Modular Reactors (SMRs) in the UK. We urge the Government to include the Trawsfynydd site in the new Nuclear National Policy Statement as a potential site for SMRs. (Paragraph 36) Financing new neclear

The introduction of the Regulated Asset Base (RAB) model is welcomed as a better alternative to the Contracts for Difference (CfD) scheme for nuclear developments. However, financing new nuclear projects is not straightforward and there will still be challenges under the RAB model. For a development to progress at Wylfa, important issues still remain regarding financial commitment. (Paragraph 47) Nuclear energy in Wales 27

We recognise the high cost of construction of nuclear energy plants and the large upfront investment needed to get a project to final investment decision. We hope that the Regulated Asset Base (RAB) model will help overcome these investment challenges. However, there are valid concerns about the risk to consumers, which needs to be closely monitored in order to be better understood as the RAB model is used for the first time for a nuclear project at Sizewell C. The Government should explain the mechanisms it will use to monitor and report to the House during the construction of Sizewell C.

We welcome the UK Government’s announcement that nuclear energy will be included in the green taxonomy, subject to consultation. We consider that this will unlock new avenues of private investment for nuclear development and send the signals needed to the financial sector that nuclear energy is an attractive investment. (Paragraph 53) Potential economic impact of new nuclear developments

New nuclear developments at Wylfa or Trawsfynydd could be a game-changer for the north Wales regional economy. Such projects would play an important role in the UK Government’s Levelling-Up agenda by bringing high-skilled, well-paid, long-term job opportunities to a rural area of the UK. It is vital that north Wales has the opportunity to benefit from the developments that arise from the UK-wide strategy to deliver net zero and achieve greater energy security.

If the UK Government is going to realise its ambitions for nuclear energy, investment in skills is essential and serious work needs to be done on how the required skills can be developed. We call on the UK and Welsh Governments to work closely together to support the skills sector to invest in training for nuclear jobs in Wales. We recommend that the UK Government collaborates with the sector, and Welsh Government, in the production of a nuclear skills strategy to provide certainty to the sector on the skills required, when and where to allow providers to plan investment in training programmes in Wales.

The contribution of businesses based in Wales to current nuclear developments at Hinkley Point C and Sizewell C demonstrates that, at least in part, the skills and supply chains for such projects are available in Wales. There should be investment in scaling up the Welsh nuclear supply chain to ensure that new nuclear projects in Wales employ the maximum local labour so that the local areas feel the benefits. If there is a new nuclear development in Wales, the UK Government should place a requirement on developers for a minimum level of local content during the project. (Paragraph 68) Commitment from the UK Government

While we welcome what feels like small steps in the right direction towards new nuclear at Wylfa, we do still question how much further down the path we are now to seeing a successful development than we were when Hitachi withdrew from the site. There will remain risks associated with both the UK and Welsh Governments’ political commitment to nuclear power and we believe the UK Government needs 28 Nuclear energy in Wales to make further commitments within this Parliament. Our overarching view is that new nuclear at Wylfa is not certain despite progress being made and more concrete commitment is required to deliver a project at Wylfa.

We welcome the UK Government’s announcement that it will deliver a programme of new nuclear projects. We recommend that the Government publishes a medium to long-term programme for nuclear energy generation. The programme must set out how it will achieve its ambitions of up to 24GW of nuclear energy by 2050 and must state which technologies (gigawatt-scale or Small Modular Reactor) the Government wants to be built, where and on what timescale. The programme should also include clear statements of the Government’s intentions for the Wylfa and Trawsfynydd sites.

We have heard strong representations from the nuclear sector for greater clarity and commitment from the UK Government on its ambitions. We put these representations to the UK Government ahead of the Spring Budget and welcome the launch of Great British Nuclear, as we called for. However, we are yet to see the detail of how this body will function. We recommend that GBN is given a mandate to plan and deliver a programme for nuclear generating sites in order to provide much needed clarity to the whole industry.

One of the significant missing parts of the future of nuclear development is the lack of a utility developer in the UK, other than EDF-related companies. We recommend that the UK Government explains its plans to resolve this problem and whether there is a role for Great British Nuclear to play. (Paragraph 80) Nuclear energy in Wales 29 Written evidence: Letter from Rt Hon Stephen Crabb MP, Chair, to the Prime Minister, 3 March 2023 Dear Prime Minister, I am writing ahead of the UK Budget announcement on 15 March 2023 to draw your attention to the representations made to us during my Committee’s inquiry into Nuclear energy in Wales. I would like to extend my thanks again to the Secretary of State for Wales and the Minister of State for the Department of Energy Security and Net Zero for giving their time to attend our Committee meeting on 22 February. The Committee launched this inquiry following the publication in April 2022 of the British Energy Security Strategy, which set out the Government’s ambitions for 24GW of nuclear energy by 2050 and the creation of Great British Nuclear. Simon Bowen, advisor to the Government on the establishment of Great British Nuclear, told my Committee that “it will be disastrous if we waited another two years” because the “whole of the industry will lose faith” and that “we’ve got to have the courage to take an inter-generational view […] for low carbon and net zero”. The Strategy named Wylfa, north Wales, as a potential site for a new nuclear project. Since then, we have heard of growing concerns of a loss of momentum in delivery of the Government’s Strategy and consequently, further uncertainty over the future of the Wylfa site. We have heard from a wide range of industry representatives that Wylfa is considered the best site in the UK for new nuclear development. Indeed, it is difficult to see how Government can deliver its nuclear ambitions without taking forward a project at Wylfa. There is a strong view within the Committee that