Nuclear Energy (Financing) Bill (Second sitting)

Debate between Alan Whitehead and Matthew Pennycook

Committee stage
Tuesday 16th November 2021 Public Bill Committees

[Dr Whitehead]

Thank you.

[Matthew Pennycook (Greenwich and Woolwich) (Lab)]

Q Richard, you have spoken with great insight about the balance between the advantages of the RAB model and the risks that come with it for consumers, and also about how those consumers might be better protected. Will you give the Committee your take on what we have learned from those infrastructure projects that have benefited from a RAB funding model, such as Thames Tideway or Heathrow terminal 5? Was the peak of costs on consumers within the estimated range at the start of the project, leaving aside cost and time overruns? How accurately can you predict the peak cost for consumers and ensure that it comes within a set range, if—as may be the case—amendments to protect consumers are not ultimately adopted? How accurate is the forecasting of the total impact on consumer bills?

Richard Hall: On those two specific projects, Heathrow and Thames Tideway, I cannot give any insight. I am not particularly close to those individual cases. It is fair to note that in both cases the cost of capital brought forward by the model seems to have been low, in particular in the case of Thames Tideway. On nuclear, I simply go back to the point that there is a large base of literature looking at historical cost overruns and the extent to which things come in on budget. That tends to display fairly consistently that these types of projects are very likely to be subject to optimism bias at the time that they are procured—a belief that they will be cheaper than they actually will be.

In addition to the costs and dates I mentioned from the BEIS impact assessment suggesting the average levels of cost overruns, look at a couple of other examples from academia: Sovacool et al. looked at a global example of 180 new nuclear plants and found that 97% of them came in over budget and that the average cost overrun was 117%; and Flyvbjerg et al. found that in a sample of 194 nuclear plants, the median cost overrun was 68% and the median schedule or construction-time overrun was 40%. That is a fairly large sample set of projects, and the analysis tends to suggest considerable optimism bias for new nuclear—it tends to come in late and over budget.

Air Quality and Shore-to-Ship Charging

Debate between Alan Whitehead and Matthew Pennycook

Thursday 29th March 2018 Commons Chamber

[Dr Whitehead]

My hon. Friend has raised some important points, and I shall touch on some of them in a moment. There are currently no regulations that would mandate the introduction of shore-to-ship power, although it is possible that European Union directives could be used for the purpose.

To the credit of Southampton port, it is looking into whether it can install facilities in one cruise liner berth, but, as far as I know, it is alone in that. No other major port in the United Kingdom is following suit. The arguments that are presented for doing nothing about it are multiple and familiar. It is argued that not enough ships have the facilities to “plug in”, so it would be a waste of money, or that it is too expensive to take the plunge unilaterally, or that there are other ways in which emissions from ships might be reduced.

[Matthew Pennycook (Greenwich and Woolwich) (Lab)]

My hon. Friend is making a powerful case. As he will know, my hon. Friend the Member for Poplar and Limehouse (Jim Fitzpatrick) and I have concerns about the Enderby Wharf cruise liner terminal that is planned for East Greenwich. In that instance, the developer is saying that the cruise liner company with which it is working does not have the necessary technology. Is there not a role for the Government here? Could they not regulate to encourage cruise liner companies to upgrade and retrofit their fleets so that they can utilise this option when ports and terminals take it up?

[Dr Whitehead]

There is certainly a case for doing that. In California, regulations require a certain proportion of ships visiting ports to use shore-to-ship facilities. However, in California the facilities are already there.

The arguments for doing nothing have some limited grounds, but unless the facilities are there, ships will have no incentive to equip themselves to use them, and, as I have said, there is currently no mandate for their use. Equipping a berth for large vessels would cost about £3 million, and fully equipping all Britain’s major and medium-sized ports would probably come to about £100 million.

Energy BILL [ Lords ] (Fifth sitting)

Debate between Alan Whitehead and Matthew Pennycook

Tuesday 2nd February 2016 Public Bill Committees

[Matthew Pennycook]

I absolutely agree; my hon. Friend makes the case very powerfully. It is what I have heard on the Select Committee time and again, across a variety of renewable technologies. No one argues with the Minister’s point that as costs come down, subsidies should, in a stable and certain flight path, also reduce with them. What we take issue with is the early closure, as announced in June with very little consultation.

This could have been done in a much more effective way, in negotiation and consultation with the industry, where we move to different contracts for different regimes more stably. If the Minister is willing and happy to give the onshore wind industry the certainty that it is looking for around contracts for difference, I am sure we would be happy to hear that. What we have at the moment is a policy vacuum, when we had, before, not indefinite public subsidy but a certain flight path off it through the ending of the renewables obligation in 2017.

I return to my point about the EU renewables directive. When we look at the figures, we see that the situation is stark. We need 180 TW of new low-carbon generation by 2030. Every megawatt of generation that we do not get from onshore wind, in the sense of falling below our EU renewables target, will have to come from a more expensive form of renewable technology, be it offshore wind or nuclear.

Given how far behind we are on heat or transport—and I hope the Minister will agree with the Secretary of State that we do not have the right policies in place; we are behind on those targets and that part of renewables—the idea that this will bring down bills, which I understand is a large part of the rationale, at least according to Ministers, not the windy caucus, is unlikely. Even that 30p in the central scenario in the impact assessment is unlikely to happen, because we will be forced to turn to more expensive forms of renewables to meet our targets.

The worrying signal that this policy has sent, not just for investor confidence, is that the Government have abandoned their previous commitment to a technology-neutral approach at a time when the overriding priority must be decarbonisation at the lowest possible cost, regardless of what technology best aids that. So I support the Bill as it stands and I oppose the amendments.

[Dr Whitehead]

I do not rise to head up the debate, because my hon. Friend and fellow Front-Bench spokesman the Member for Norwich South has already done that admirably this afternoon. We are debating a number of amendments together in a process whereby something is potentially coming back into the Bill where it was not previously. Therefore, a principal series of amendments and consequential amendments to those amendments are being debated essentially at the same time, although I am sure we will have an opportunity to disentangle those two aspects of our debate; I am talking about the formal process of putting Government amendments 1, 2 and 3 to the Committee and considering whether we should divide on them, subsequently to which amendments to the amendments may then be considered formally. I understand that that is how we are going to do it.

Although Opposition Members are relatively confident that the strength of the argument made so far means that those original amendments will not pass, it is nevertheless possible that they might. We need to be clear in this debate about what the consequential amendments consist of. I will restrict my remarks solely to amendment (a) to new clause 1, which is in my name.

The hon. Member for Coatbridge, Chryston and Bellshill has done this Committee a service by setting out the range of issues relating to the grace periods, which are a consequence of the proposal to put back into legislation a clause bringing the renewables obligation to an early halt. I appreciate that we have in the Committee what one might call the “windy caucus”—the “ultras” is another way of describing them—who would have no grace periods and feel the process should have stopped immediately, the day after the general election. However, we have grace periods, and if one is to have them, it is important we get them right.

Grace periods should be reasonably equitable. Clearly, it is not equitable if instead of being a slamming shut of the door in its own right, a grace period slams another series of doors shut in the process of being exercised. There are a number of instances where that has apparently occurred.

One of the most egregious instances of a door being shut by a grace period when that grace period should be holding the door open is where applications have gone down exactly the path set out in the Conservative manifesto for wind farms—that is, local people have the final say on wind farm applications. They have specifically gone into the process of seeking approval. Without strings attached, without attempting to go for non-determination and without attempting to go straight to appeal groups, they have wholeheartedly gone into the process of properly consulting and seeking agreement at local level and have gone through all the procedures relating to local planning committees. Indeed, they have done exactly what would be envisaged for the process in the future, were the second part of that Conservative manifesto commitment to have been put into place.

Those particular schemes have not only gone through that process but received planning consent through it—that is, they have applied for consent and a planning committee has considered it and consented to the application, with all the issues concerning the consent having been resolved.

As hon. Members will know, in all planning arrangements—this is not only a question of wind farm applications—a number of sub-conditions may be discussed; for example, section 106 arrangements or, in some instances, a variation of a previous planning condition that needs to be discussed. Essentially, the degree or the qualification has been passed, but the degree ceremony has not been held and the certificate has not been given out, yet to all intents and purposes that application has been determined and the scheme is therefore in the pipeline. It is in the pipeline because it has been agreed by local determination.