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UK will slug renewable energy providers for the costs of new nuclear

The question of state-sanctioned support for new nuclear power, paid ultimately by consumers, has become a fraught one for ministers.

Renewable energy providers to help bear cost of new UK nuclear reactors  Damian Carrington guardian.co.uk,   27 March 2013 Experts say decision to share cost of accommodating Hinkley Point reactors among providers amounts to subsidy for nuclear The row over subsidies for the UK’s new nuclear power stations has deepened after it emerged that the £160m-a-year cost of accommodating the giant reactors on the national electricity grid will be borne by all generators, including renewable energy providers.

The new reactors planned by EDF for Hinkley Point are significantly larger than any existing power stations, meaning the national grid has to pay for extra standby electricity to stop the grid crashing if one of the reactors unexpectedly goes offline. National Grid said its decision to charge all generators for the cost was because “increasing costs on larger users could delay the commissioning of large nuclear plants by a number of years”……

experts said the National Grid’s decision to spread the cost of extra standby capacity amounted to a subsidy for the new power stations. “There is no justification for nuclear being exempted from paying the additional costs to the system other than to make nuclear look cheaper than it is relative to other sources of electricity,” said Prof Catherine Mitchell, an energy policy expert at the University of Exeter. “It is clear to me that were there a genuine, transparent and comprehensive examination of the costs and benefits to society of nuclear versus renewables, the latter would be of far greater value both in the short and long term.”…..

an industry source with decades of senior experience in the sector said offshore windfarms would not be connected to the grid by a single cable and therefore not pose the same risk. “All renewable generators are paying the additional costs here, but not causing the need. The cost should lie where it falls,” he said. “National Grid obviously had its arm twisted at some point. Its justification is unconvincing.”…..

Currently, the grid’s back-up system plans for a major loss of up to 1,320MW a few times a year. But the two new reactors planned by EDF will have 1,600GW of capacity each, meaning the grid will have to increase its back-up to 1,800MW. Nuclear power stations can shut down at short notice owing to engineering problems or even a swarm of jellyfish blocking cooling water pipes, as happened in June 2011 at EDF’s reactor at Torness in Scotland.

“Nuclear reactors need back-up, which is expensive and which its advocates tend to forget,” said Doug Parr, policy director at Greenpeace. “The spreading of the cost is another implicit subsidy to get huge nuclear plants built that people will be paying for without even realising it.”….

The question of state-sanctioned support for new nuclear power, paid ultimately by consumers, has become a fraught one for ministers. In 2010, they promised there would be “no public subsidy”, but ministers have since modified that to say no “unfair” subsidies, meaning the subsidies are available to a range of technologies. But in February the energy secretary, Ed Davey, admitted to MPs the funding mechanism could differ between technologies and even individual projects. EDF is likely to receive tens of billions of pounds via the minimum price agreement.

The government also has to convince the European Union that its support for nuclear is not considered unfair under state aid rules. Doerte Fouquet, a lawyer specialising in EU law, said: “This scheme for nuclear generators [cannot] be declared compatible with European state aid rules.”

Mitchell said the nuclear industry was set to enjoy other benefits as well. “Renewables will be supported with 20-year contracts rather than nuclear’s expected 40 years and the unknown costs of nuclear waste and accidents will also be placed on customers via government.” http://www.guardian.co.uk/environment/2013/mar/27/renewable-energy-cost-nuclear-reactors

March 29, 2013 - Posted by Christina Macpherson | politics, UK