Energy consumers and taxpayers could have to pay for cost overruns at new nuclear plants after the government backed a funding model proposed by EDF. The business department said last night it believed the “regulated asset base” model that the French energy giant wants for its proposed Sizewell plant in Suffolk could reduce consumer bills compared with the subsidy contract used to back the £20 billion Hinkley Point plant EDF is building in Somerset. A consultation document published last night confirms that consumers would, however, be asked to start paying for the plants on energy bills while they were still under construction and to share in the risks of cost overruns. In the case of an extreme overrun, the government – effectively the taxpayer – could either have to step in and pay the extra cost or scrap the project and pay compensation to investors. Under the regulated asset base model, the developer would receive a regulated price to give it a return on its investment expenditure, including during the construction period, and this would be levied on energy bills.
Times 23rd July 2019 read more »
New UK nuclear plants could be paid for upfront through energy bills. The UK government has thrown its backing behind proposals to finance new nuclear plants by having taxpayers pay upfront through their energy bills as it looks to reinvigorate a sector beset by cancellations and high costs. The proposal is likely to face criticism for loading risks on to consumers and the government at a time when renewable alternatives to nuclear like wind and solar are rapidly becoming cheaper. Boris Johnson, who is widely expected to become prime minister later this week, has in the past supported nuclear projects but also criticised their high costs. The Department for Business, Energy and Industrial Strategy, which is launching a three-month consultation on the proposals, said it believed the new financing model had the “potential to reduce the cost of raising private finance . . . thereby reducing consumer bills”. The Committee on Climate Change, which recommended earlier this year the government adopt a target of cutting emissions to net zero by 2050, said it expected “firm” low-carbon power to provide 38 per cent of future electricity supplies. Nuclear currently generates approximately 20 per cent of power in the UK. The government is expected to release its highly anticipated energy white paper in summer, which will indicate future electricity generation plans, with the UK’s 2013 energy strategy widely seen as defunct due to the faltering nuclear projects.
FT 23rd July 2019 read more »
In June 2018, the Secretary of State for Business, Energy and Industrial Strategy announced that the government would review the viability of a ‘Regulated Asset Base’ (RAB) model for new nuclear projects and committed in January 2019 to publishing an assessment of this model by the summer. Our assessment has concluded that, by providing regulated returns to investors, a RAB model has the potential to reduce the cost of raising private finance for new nuclear projects, thereby reducing consumer bills and maximising value for money for consumers and taxpayers. This consultation sets out the basis for our assessment and seeks views from interested parties on how a Nuclear RAB model could be implemented within the current energy system in a way that allows new nuclear to be built at low cost to consumers. It includes a set of suggested core principles that have resulted from our feasibility assessment, and considers important issues such as the possible approaches to risk-sharing under such a model.
BEIS 23rd July 2019 read more »
Government’s ‘nuclear tax’ will shift liability from firms to bill payers – Greenpeace. Commenting on the government consultation launched today about a new funding model for building future nuclear plants, Greenpeace UK’s chief scientist Dr Doug Parr said: “The nuclear industry has gone in just ten years from saying they need no subsidies to asking bill payers to fork out for expensive power plants that don’t even exist yet and may never. This ‘nuclear tax’ won’t lower energy bills – it will simply shift the liability for something going wrong from nuclear firms to consumers. Greg Clark himself has acknowledged that nuclear is being outcompeted by renewables. If ministers want affordable and clean energy, the fastest, safest and cheapest way to do that is to boost renewables like wind and solar.”
Greenpeace 22nd July 2019 read more »
Alongside a big expansion of renewables, reliable nuclear power is needed to help us switch from polluting fossil fuels and reach net zero emissions. Nuclear’s proven technology reduces the difficulties and cost of trying to decarbonise the electricity supply we all use and depend on. Lower costs for financing nuclear will benefit consumers through their bills and today’s consultation shows a way this can happen at Sizewell C in Suffolk. As a near replica of Hinkley Point C – Sizewell C will be cheaper to construct and finance. It will benefit from the experience of Hinkley Point C’s engineers, contractors and suppliers and lessons from other nuclear projects, including operational EPR plants. It can also repeat the huge boost for industry, jobs and skills already happening due to Hinkley Point C’s construction, which is on schedule.
EDF Energy 22nd July 2019 read more »