Hinkley Point C Reactor

Debate between James Heappey and Andrea Leadsom

Tuesday 8th March 2016 Commons Chamber

[Andrea Leadsom]

As I have explained, the strike price has been agreed, and we expect a final investment decision in the very near future.

The deal has already been through a number of rigorous approvals processes, both within the Government and within the European Union. In October 2013, the Department of Energy and Climate Change and EDF agreed the strike price for the electricity to be produced by Hinkley Point C. In October 2014, the European Commission approved the Hinkley Point C state aid case, following a lengthy and rigorous investigation by the Commission. Notwithstanding the ongoing opposition of a small minority of member states, we are confident that the decision is legally robust and will stand up to challenges.

In October 2015, EDF and its partner of 30 years, China General Nuclear, signed a strategic investment agreement in London. That commercial agreement set out the terms of EDF's partnership in the UK with CGN, starting with Hinkley Point C. EDF and CGN agreed to take a 66.5% stake and a 33.5% stake in Hinkley respectively. At that point, the final form of the contracts was agreed in substance. My right hon. Friend the Secretary of State made it clear at the time that she would make her final decision on Hinkley once EDF had reached its final investment decision.

The Government’s position has remained unchanged while the final details of the contracts have been ironed out. In November, we set out that we expected to conclude the deal in the coming months, and the Secretary of State made it clear that she was minded to proceed with the contract for difference support package for the deal, subject to any change in circumstances. We remain confident that all parties are firmly behind Hinkley Point C and are working hard towards a final investment decision. We have received assurances from EDF and the French Government—EDF’s largest shareholder—on this point. Hinkley is a large investment for EDF and CGN, so it is only right and proper that they take the necessary time now to ensure that everything is in order so that they can proceed smoothly once they have taken a positive final investment decision.

[James Heappey]

Does the Minister share our impatience, however, at the delay in the decision? Will she perhaps use this opportunity to encourage EDF to make all haste in arriving at that final investment decision?

[Andrea Leadsom]

I hear my hon. Friend, and I can tell him that we are ready and keen to proceed as soon as EDF announces its final investment decision. However, this is a commercial matter, and it is for EDF to finance Hinkley Point C and to deliver that final investment decision. We are aware of the financial issues it is dealing with, and we remain in regular contact with the corporate leadership of EDF and with the French Government. We have been assured by both that they are taking the necessary steps to reach a final investment decision as soon as possible. We are confident that this is a matter of when, not if. Specifically, we have been reassured that the resignation of the EDF finance director will have no impact on the timing of EDF’s final investment decision.

Hinkley C Connection Project

Debate between James Heappey and Andrea Leadsom

Thursday 14th January 2016 Commons Chamber

[The Minister of State, Department of Energy and Climate Change (Andrea Leadsom)]

I congratulate my hon. Friend the Member for Wells (James Heappey) on securing this debate on the Hinkley Point C connection project. He has spoken with enormous passion and I agree that he lives in a beautiful part of the country. He has made a powerful speech, and I know that this project is a matter of great interest to his constituency as well as to others along the proposed route of the electric line.

I know that my hon. Friend recognises that the delivery of new energy infrastructure is essential for ensuring that the lights are kept on and bills are kept low for UK businesses and domestic consumers. I am aware that energy infrastructure projects of all sorts can have real impacts on local communities. It is also the case, however, that such projects can bring real benefits, so finding the right balance between the impacts and the benefits is a key issue in decision making by the Secretary of State.

Hon. Members will be aware that consent for the proposed Hinkley Point C nuclear power station, which would have a generating capacity of 3.2 GW, 7% of the UK’s electricity demand, was granted by the Secretary of State in March 2013. EDF and CGN signed a strategic investment agreement in October 2015. EDF has confirmed that it will take a 66.5% stake in Hinkley, with CGN taking 33.5%, demonstrating a clear commitment from both parties.

Nuclear power offers clean, affordable, safe and reliable energy and is vital to the UK’s cost-effective transition to low carbon generation. Existing nuclear plants across Britain currently provide around 16% of the electricity generated in the UK, but most existing plants are due to close by 2024. The Government have therefore prepared the ground for new nuclear power stations through a package of reforms and regulatory measures that remove barriers to investment and give developers confidence. Alongside gas and renewables, new nuclear is therefore an important part of our energy mix, now and in the future.

As part of delivering new electricity generating capacity, new transmission infrastructure is also needed. Network companies, such as National Grid, submit proposals for need and funding for new network infrastructure to the industry regulator, Ofgem, and for planning consent to the relevant planning authorities. These proposals are based, through stakeholder engagement, on an assessment of requirements for existing and new generation and, of course, the costs and impacts of different connection options. Network companies seek to identify opportunities to provide savings for the consumer by giving consideration to future possible connections in an area to ensure that the most efficient overall design is delivered. In doing so, an assessment of the risk of future connections not materialising is required to avoid stranded or underutilised assets, the cost of which would ultimately be passed on to consumers.

This approach is reinforced by the Government’s national policy statements for energy, which set out the framework for factors to be considered when consenting to an infrastructure project of national significance. They make it clear that, for electricity networks, proper consideration should be given to other feasible means of connection, including underground and subsea cables. This includes costs, environmental impacts and network operability issues. The Government do not have a preference on the various network options. Instead, we expect network companies to use the most appropriate technologies available for the particular project, in line with planning and regulatory requirements.

New T-pylons have been proposed for some sections of the route. I have heard loud and clear my hon. Friend’s message that he is not a fan of T-pylons. They were developed following an international design competition held in 2011 by my Department, alongside National Grid and the Royal Institute of British Architects, to help identify a new pylon design that would meet transmission safety and reliability criteria and would also belong to the 21st century. The winning design was produced by Danish architects who have since worked with National Grid to develop and test prototypes that have informed the final design being proposed for parts of the connection.

The T-pylon is an interesting design. It is around 15 metres shorter than existing transmission lattice pylons and has the potential to reduce the impact on the landscape. I welcome this innovation as an alternative option that National Grid can use when designing overhead transmission lines in future. However, whether they are ultimately used as part of specific transmission projects, including Hinkley Point C, will be subject to both regulatory and planning approval.

The Planning Inspectorate completed its examination of the application for development consent for the Hinkley Point C electric line connection last July. The application is now with the Secretary of State for a decision. Hon. Members will understand that, as the decision is now under consideration in the Department, I cannot take part in any discussion of the pros and cons of this particular proposal.

In a previous debate in March 2012 on electricity transmission in north Somerset—before the Hinkley Point C connection application was submitted to the Planning Inspectorate—the then Energy Minister encouraged individuals and organisations with an interest in the proposal to engage with National Grid. I know that a number of hon. Members took note of that encouragement and were among the many people who made representations to the Planning Inspectorate during the examination of the Hinkley Point C connection application. Prior to examining the application, the Planning Inspectorate indicated that it would cover a broad range of topics that it considered to be of importance in assessing the potential impacts of the proposed connection. The topics on which views were to be sought included flood risk, landscape and visual effects, socioeconomic effects, traffic and transportation, and public rights of way. The inspectorate’s report was submitted to the Secretary of State on 19 October 2015, along with its recommendation on whether consent should be granted or refused. It will now be for the Secretary of State to consider her decision in the light of that report and all relevant information. She intends to announce her decision no later than 19 January 2016, which is the end of the three-month decision-making period set out in the Planning Act 2008.

Large energy infrastructure projects inevitably attract considerable interest from people who may be directly affected by the proposals, as well as people who have views on energy projects in a more generic way. In the case of Planning Act applications, it is for the Secretary of State, as decision maker, to consider all the arguments that are made for and against these projects and that are set out in the Planning Inspectorate’s report.

[James Heappey]

I sense that the Minister is moving away from a discussion of the T-pylon on to other things. Before she does, may I push her to clarify the technical issues that I raised about exactly how the T-pylon has been tested in a landscape similar to that in which it might be employed in Somerset, and the security concern I raised? Those are technical issues rather than planning issues, and one would hope that the Department already has the clarification at its disposal.

[Andrea Leadsom]

I am grateful to my hon. Friend for raising that again. As he is aware, the design has been tested and piloted, but it is absolutely the case that there will not be any compromise on any issues of safety and security—I can assure him of that. On the very specific technical points, I can write to him with further evidence. He should rest assured that whatever transmission method is used, it will be properly tested and robustly measured against all possible threats.

I assure all hon. Members that the Secretary of State’s consideration of the Hinkley Point C connection application will be rigorous and fair, taking into account all the many issues that have been raised by those who are for and against, and in the Planning Inspectorate’s report. I hope that hon. Members are reassured that concerns raised by interested parties about the Hinkley Point C electric line connection are being thoroughly considered throughout the planning process.

I thank my hon. Friend again for his constructive and thoughtful remarks. He has done the people of north Somerset proud by raising this issue in such an impassioned way. I can assure him that they and he do not have too much longer to wait for the decision.

Question put and agreed to.

Oral Answers to Questions

Debate between James Heappey and Andrea Leadsom

Thursday 7th January 2016 Commons Chamber

[James Heappey (Wells) (Con)]

24. EU minimum import prices on Chinese, Taiwanese and Malaysian photovoltaic cells inflate the cost of an average solar installation by £385. The Minister is working to extract the UK from that, but will she update the House on her progress and set a date by which she hopes to end these price controls?

[Andrea Leadsom]

I certainly agree with my hon. Friend that the MIP is an unwelcome drain on the UK solar industry. My right hon. Friend the Secretary of State made that point in her letter to the Trade Commissioner in November. I also agree that it would be fairer and simpler to remove the MIP while the current expiry review is under way. Unfortunately, however, the decision to launch an expiry review is one for the Commission, not for member states. Anti-dumping and anti-subsidy regulations require the Commission to maintain existing trade defence measures while the expiry review takes place, so it could be some months yet.

Energy Market Design

Debate between James Heappey and Andrea Leadsom

Monday 23rd November 2015 General Committees

[Andrea Leadsom]

Yes, I am entirely happy with that rate of progress. The hon. Gentleman is quite right to raise the issue of CfDs being made available to foreign generators. Of course, the key point for the British consumer is the evaluation of the contribution that offering a CfD to a non-British generator could make to our energy trilemma: decarbonisation; keeping the costs down: and keeping the lights on. We are considering two projects, but he is absolutely right that we will not be making decisions for the next year or two. The two projects are with the Isle of Man and Iceland. The Isle of Man has shallow waters and the appetite to build an offshore wind project, which it would then seek an export market for, and of course that could be very advantageous to the British consumer, because it could be very cheap energy to produce, so it could be good value for the consumer here. Likewise, a project with Iceland could offer us access to geothermal energy sources, which could be very advantageous for the UK. All those projects require quite a lot of evaluation, but I can assure the hon. Gentleman that we will look at them carefully, based on whether they offer best value to consumers.

[James Heappey (Wells) (Con)]

Last week, the Energy and Climate Change Committee went to the national grid headquarters in Wokingham, where the energy coming in from the continent is clearly displayed on its “flows” board. One became aware of the differences in the wholesale price between that in the UK and that elsewhere. As we build more interconnectors, I would be interested to know the Minister’s views on that: obviously, it will bring down the domestic wholesale price, but what will be the impact on existing CfDs and therefore on the Government’s financial exposure?

[Andrea Leadsom]

The advantage of interconnectors in the round is quite significant for UK consumers. They improve access to cheaper and, quite often, low-carbon sources of additional electricity, and indeed gas, as he will know. We have therefore encouraged more interconnection and we have a number of projects that are under way and under consideration, under our cap and floor regime, which does not leave the consumer completely at risk on the costs payable to the producer.

There is always a balance to be struck, of course. Because of the way that the price determines the flow—the interconnector will send gas or electricity this way, should it pay to do that—prices here will need to be higher for the power to flow this way. However, in aggregate, we anticipate that more interconnection would have a supressing impact on wholesale prices in the UK, but not to such a great extent that that would unbalance the system in the UK. My hon. Friend raises an important point, and we take very seriously the issue of balancing the system in the UK—having the right balance between energy security, keeping costs down and keeping the lights on—and we must keep that under constant review.