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Another sort of “feed-in tariff” – UK’s sly subsidy for nuclear power

The “feed-in tariffs” referred to in the leaked submission are not the same as the feed-in tariffs by which households can gain extra income by installing solar panels. 

Ministers planning ‘hidden subsidies’ for nuclear power Lib Dem worries over leaked document revealing plans to subsidise nuclear through electricity bills Fiona Harvey and Terry Macalister guardian.co.uk,  20 April 2012 “……The leaked document, a submission to the European commission, which the government has confirmed as genuine, says: “Our reforms will put in place a regulatory framework based on feed-in tariffs for all low-carbon technologies, which will allow younger technologies to mature so that in the near- to mid-term future they will be able to compete in the open market … in time, we expect that this regulatory framework will enable different low-carbon technologies to compete against each other on a level playing field for their appropriate role in the energy mix.”

This is the clearest evidence yet of government plans to subsidise nuclear power through the back door, by classifying it with renewables as “low-carbon power”, despite repeated assurances that there would be no public subsidy. In the coalition agreement subsidies to nuclear are explicitly ruled out. It said: “Liberal Democrats have long opposed any new nuclear construction. Conservatives, by contrast, are committed to allowing the replacement of existing nuclear power stations provided that they are subject to the normal planning process for major projects (under a new National Planning Statement), and also provided that they receive no public subsidy.”…..

Within the energy industry the plans are also controversial. The Scottish & Southern Energy presentation firmly labels the government’s nuclear plans as “subsidy”. In the presentation MPs were told the government was bringing the changes in as it needed to “hide the subsidy” to avoid a furore.

SSE noted the plans would have to “clear state aid [rules], yet subsidy for a mature technology like nuclear is a likely stumbling block with the commission” and accused the government of trying to hide this. SSE said: “We are concerned because if a nuclear subsidy messes up renewable support [there will be] massive uncertainty in our core market.”

A spokesman for SSE said: “It is unclear what subsidy is required to make investment in new nuclear work. What the UK needs is an honest debate about the level of subsidy required, the mechanism for providing it, and why consumers should pay for it. If we decide that nuclear does need a subsidy it must be transparent how this is being provided and not be done in a way that damages investment in essential new renewable generation.”…..

The “feed-in tariffs” referred to in the leaked submission are not the same as the feed-in tariffs by which households can gain extra income by installing solar panels. Domestic feed-in tariffs, which were slashed last year in a manner that was ruled illegal in key respects by the courts, require energy utilities to pay those who generate solar power a fixed price, in excess of the normal electricity price.

But for nuclear power, the feed-in tariffs would take the form instead of a complex system known as “contracts for difference”. Under this arrangement, the government allows energy companies to sign long-term contracts, which would prioritise the purchasing of low-carbon power, though would not necessarily offer much of a premium compared with the standard electricity price. The attraction is that the long-term certainty these contracts provide makes it easier for investors to plan.

These contracts – details of which will be set out later this year, to come into force from 2014 – have not been used in the UK before, and some energy experts are concerned that their complexity will make them difficult to work in practice, or that they may distort the market unfairly and result in higher bills….. http://www.guardian.co.uk/environment/2012/apr/20/coalition-u-turn-nuclear-energy-subsidies?newsfeed=true

April 21, 2012 - Posted by Christina Macpherson | politics, Reference, secrets,lies and civil liberties, UK