NIA Response to Strategy and Policy Statement for Energy Policy in Great Britain Consultation

The NIA is the trade association and representative body for the civil nuclear industry in the UK. We represent around 250 companies operating across all aspects of the nuclear fuel cycle, including the current and prospective operators of nuclear power stations, international designers, and vendors of nuclear power stations, and those engaged in decommissioning, waste management and nuclear liabilities management. Members also include nuclear equipment suppliers, engineering and construction firms, nuclear research organisations, and legal, financial and consultancy companies.

Due to the diversity of our membership, our views in this submission will cover high-level, industry-wide matters. Our members may choose to make their own detailed submissions.

Questions

Does the strategy and policy statement identify the most important strategic priorities and policy outcomes for government in formulating policy for the energy sector in Great Britain? If not, please provide details of the priorities that you think should be included.

Recognition of the important long-term role that civil nuclear will play in achieving net zero ambitions through the provision of reliable dispatchable baseload power and low carbon heat.

• The NIA would welcome clear recognition of the vital role nuclear will play in achieving the strategic priorities set out in the Strategic Policy Statement. Nuclear development will enable greater clean energy production, driving the transition to net zero, ensuring energy security and driving economic growth.
• Given the long lifetime of these projects, recognition of the importance of nuclear to the energy sector and positive statements of policy support for new nuclear projects are needed to strengthen investor confidence.
• Nuclear is essential for meeting the Government’s decarbonisation targets and increasing the UK’s energy security by providing firm, domestic, clean power.
• Nuclear currently supplies around 15% of our electricity from just over half a square mile of land, and according to United Nations’ analysis, nuclear has the lowest lifecycle carbon, lowest land use, and lowest impact on ecosystems of any electricity source.

Designation of planning as a strategic priority to enable the development of low carbon energy projects.

• The NIA believe that establishing a robust planning system should be designated a strategic priority as planning has become a critical source of uncertainty for low carbon energy projects. This increases the costs of, undermines the investment case for, these projects, just when we need to meet the challenge of climate change and deliver Net Zero the most.
• When the NSIP regime was conceived, it was intended to be a streamlined system that would wrap-in the various consents required into one application to be determined by the Secretary of State. However, in practice this has not been achieved.
• The approval of new nuclear developments is slow and burdensome, and getting slower and more burdensome. Hinkley Point C, the first nuclear power plant to start construction in the UK since the 1980s, took 17 months to receive a Development Consent Order, between October 2011 and March 2013. In comparison to this, Sizewell C, a replica of Hinkley Point C technology, took 26 months, from May 2020 to July 2022, to receive its Development Consent Order. EDF submitted 1,001 documents as part of its Development Consent Order application for Hinkley Point C and 4,378 documents for Sizewell C.
• The planning process must be streamlined, and regulators must be adequately resourced to enable new nuclear development and other NSIPs. The overlap between the Development Consent Order and the environmental consents, permits, and licences adds costs and wastes resources.
• The provision of less burdensome compliance, clear timeframes, adequate resources for regulators to approve permits, consents, and licenses would also be welcomed to facilitate investor confidence in NSIPs.
• Enabling the development of new low carbon energy projects, by designating the improvement of the planning system a strategic priority, will help mitigate similar events such as the recent energy crisis, ensuring energy security by making the UK less reliant on imported energy from foreign sources.

Does the strategy and policy statement effectively set out the role of Ofgem in supporting government to deliver its priorities? If not, please identify where these expectations could be made clearer.

The NIA supports the use of the Regulated Asset Base (RAB) model to finance new nuclear projects, however, we would welcome further clarity on the role of Ofgem as the economic regulator of the RAB model for nuclear generation assets.

We would like to see the Strategic Policy Statement emphasise the importance of regulatory certainty in how Ofgem operates. Regulatory certainty is critical to investor confidence, particularly in new regulatory regimes.  We believe that there should be an obligation on Ofgem to act in a way that encourages investment in new nuclear projects. Ofgem has an integral role to play in establishing a regulatory environment within which investors feel confident to take investment decisions. To achieve this, the NIA would welcome a statement that Ofgem will only seek changes to the RAB regime in exceptional circumstances.

We would also welcome clarification on how Ofgem will be resourced. It is vital that Ofgem has the resources it needs to support the Government in delivering its priorities. Recruitment and retention of regulatory resources are already under pressure from a range of factors, including industry demand and uncompetitive salaries. This must be addressed to ensure that Ofgem can meet the demands of Government.

Given the Future System Operator does not exist yet but will need to have regard to the strategy and policy statement once it does, do you consider that we have effectively reflected the Future System Operator’s role in this document? If not, please identify where these expectations could be made clearer.

In principle, we support the role and responsibilities of the Future System Operator (FSO) as described in the document. We welcome the Net Zero duty being placed on the FSO, along with Ofgem, to ensure decisions proportionate to the urgent need for more low carbon energy to mitigate climate change. We would welcome further information about these roles and responsibilities to understand the FSO’s role in enabling net zero infrastructure, ensuring energy security, and ensuring the system is fit for the future, as the information given is high level. Adequate resourcing and skilling of the FSO will be essential to ensure that decisions are taken with necessary certainty and speed. This is crucial to carry through well-intended reforms into practice at a project level.

Further Information

The NIA is happy to provide more context or any clarifications desired on the content of our response and to ask our members where appropriate for additional information that may be useful.

Please contact Lauren Rowe, Policy Analyst for the NIA, at [email protected] to do this.