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UK’s “Contracts For Difference” a sneaky way for taxpayer to fund new nuclear reactors

overt Government support for nuclear power could fall foul of EU state aid rules…..

it [ the European Union] may take a dim view of subsidies for nuclear. 

“widespread perception that [Electricity Market Reform], and specifically CfDs, are a fig leaf over support for new nuclear”..

Energy reforms would herald a power vacuum Complex energy reform “is a fig leaf over support for new nuclear”, the Energy Select Committee finds – but ministers may still end up with no nuclear to show for it. The Telegraph, By Emily Gosden  23 Jul 2012  The Energy Select Committee pulls few punches in its assessment of the draft Energy Bill on Monday…..

The report dissects the fiendishly complicated legislation, highlighting a litany of design faults.
But it also offers a diagnosis as to why ministers have produced such complex and flawed policy: because they have designed it to accommodate the awkward demands of new nuclear.

The cornerstone of the reforms is the proposal to establish a “Feed-in Tariff with a Contract for Difference (CfD)” – a mouthful of a name that belies a simple concept. Ministers wants investors to stump up
billions of pounds to build low-carbon power generation, such as
nuclear reactors and offshore wind farms, but the economics and risks
of such projects may not stack up. So it will create long-term
contracts setting a price for the power they generate – guaranteeing
returns and so stimulating investment. …..
overt Government support for nuclear power could fall foul of EU state
aid rules……
The EU is unlikely to object to the simple system of subsidies
investors want when it comes to renewables – but it may take a dim
view of subsidies for nuclear. Nuclear bundled up with renewables, and
distanced from direct government backing, however, has a chance of
getting through…..
“State aid as well as political considerations have influenced the
design of the CfD package, and have caused policy and financial
support for nuclear to be rolled up with that for renewables,” the
committee concludes. In other words, the MPs appears to share what
they describe as “widespread perception that [Electricity Market Reform], and specifically CfDs, are a fig leaf over support for new nuclear”…..
what is clear is that they have already gone to great lengths to try
to facilitate new nuclear.
And, it appears, that is ringing alarm bells in the committee about
what a high price they may be willing to pay to achieve their nuclear
Even with CfD undecided, ministers are beginning negotiations with EDF
over the level of subsidy for its proposed nuclear plant at Hinkley
Point in Somerset. The committee says it is worried about the lack of
transparency, especially as EDF’s is the only nuclear proposal
anywhere near going ahead….
ministers should be preparing for the possibility they will end up
with a policy predicated on new nuclear – and still no nuclear to show
for it.


July 24, 2012 - Posted by | politics, UK

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