nuclear-news

Uncertainty on costs of UK’s new nuclear power project

UK nuclear power plant contract: £80bn deal or no deal? Fiona Harvey and Patrick WintourThe Guardian, Monday 21 October 2013  Political parties and industry groups welcome low-carbon project as academics and campaigners question cost and waste. The British energy secretary, Ed Davey, has signed the first new nuclear contract with French state-backed utility firm EDF, admitting only a clairvoyant could know the true cost to the taxpayer of the 35-year contract because of the uncertainty of future energy prices.

Energy academics said on Monday that the deal was a gamble, but estimated the cost would be at least £80bn over the life of the two new reactors to be built in Somerset, or roughly £3.5m a day for each reactor at current rates. The cost will depend on how energy prices move over the next 30 years.

Ministers made it clear that future governments would be locked into the contract, set to run until 2058, or face large penalties to compensate EDF. The Treasury has also been forced to offer loan guarantees to underwrite the finance for the investment, which is being undertaken by a consortium of French and Chinese investors.

The contract – which was signed as npower became the third major energy supplier to announce inflation-busting price rises – attracted strong criticism from some environmental groups, who said the price was excessive and the issue of waste unresolved….

The coaliton agreement signed in 2010 opposed providing nuclear industry with any public subsidy, a position reaffirmed by the Liberal Democrats at their conference this autumn. The conference also ended the party’s opposition in principle to nuclear power……

David Boyle, a Lib Dem adviser to Nick Clegg, said: “Everyone knows that nuclear energy would be impossible without some kind of guarantee, and I seriously doubt whether EDF will ever make money even on that one. But that was not what we promised ourselves, let alone anyone else. The party’s embarrassing new policy repeats the same glib non-position – no nuclear subsidies – when that is precisely what is now being agreed.”…..

Antony Froggatt, from the Chatham House thinktank, said EDF’s costs projection had already increased markedly. “In 2006, its submission to the government’s energy review stated [the type of reactor to be used, a European pressurised water reactor] would cost £28.80 per megawatt-hour in 2013 values,” he said. “This more than threefold increase [to £92.50], over eight years, puts the cost of nuclear electricity at about double the current market rate – higher than that produced by both gas and coal-fired power stations, and more costly than many renewable energy options.”

Projects to build new reactors in France, Finland and elsewhere have run into delays and cost increases………. http://www.theguardian.com/environment/2013/oct/21/uk-nuclear-power-plant-contract-deal-no-deal

October 26, 2013 - Posted by Christina Macpherson | business and costs, UK