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UK Consumers face financial burden of future nuclear projects even before they are built

New UK nuclear plants could be paid for upfront through energy bills, Consumers face financial burden of future projects even before they are built Ft.com, David Sheppard and Harry Dempsey, 22 July 19, 

 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 consultation on the new financing model, which aims to lower overall costs by having consumers fund future nuclear projects before they are built, comes as the government targets cutting carbon emissions to net zero by 2050.

Half of all new nuclear projects planned in the UK have collapsed in the past year after failing to secure the necessary private financing, including Hitachi’s decision to suspend the £20bn Wylfa plant in north Wales and Toshiba’s cancellation of its development in Moorside, Cumbria. Seven of the UK’s eight existing nuclear plants are set to close by 2030.

But 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”.

France’s state-backed EDF Energy has been a vocal champion for the proposed model, known as Regulated Asset Base or RAB, after the cost of its Hinkley Point project in Somerset was heavily criticised for its cost to consumers.

BEIS said using an RAB model for future projects was suitable as companies such as EDF would look to replicate the Hinkley Point design in future plants. EDF said on Monday that its proposed Sizewell C plant would be a “near replica” and therefore “cheaper to construct and finance”. …..

Greenpeace UK’s chief scientist Doug Parr criticised the proposal saying it would shift liabilities from private investors to taxpayers. “The nuclear industry has gone in just 10 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,” Mr Parr said.

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. https://www.ft.com/content/e2cf07ae-acaa-11e9-8030-530adfa879c2

July 23, 2019 - Posted by Christina Macpherson | business and costs, politics, UK