“They’ll be able to dream up some bogus price” – UK nuclear proponents want financing system

UK needs new finance model for nuclear – experts, Montel News , KELLY PAUL, London

18 Jan 2021

The UK must adopt a regulated asset base model (RAB) to kickstart investment in nuclear development, or risk the country missing its target to be net zero by 2050, proponents of the financing mechanism say.

A RAB model for financing could attract pension funds, insurance firms, sovereign wealth funds and infrastructure asset managers to shore up French utility EDF’s funds and carry a new nuclear project through to completion, industry experts told Montel.

The UK’s plans to build new nuclear infrastructure in the country have stalled against a backdrop of political reticence to commit, spiralling costs associated with Hinkley Point C, which EDF is building, and the steady retreat of potential investors. ……

Under RAB, an economic regulator would grant a licence to a company to charge a regulated price to users in exchange for the provision of infrastructure, in this case a nuclear reactor. …….

The UK government recently confirmed it has entered into negotiations with EDF on the Sizewell C reactor in Suffolk and has pledged to reach an investment decision on at least one nuclear power station by the end of the current parliament.

High cost
But the high cost of constructing a nuclear reactor – in the region of GBP 20bn – and EDF’s own financial and political strife mean the government must find additional investors for nuclear development in the UK.

EDF itself signalled that the cost for the Hinkley C reactor would be between GBP 21.5 billion and GBP 22.5 billion, a rise of between GBP 1.9 billion and GBP 2.9 billion as compared with previous estimates.

In France, meanwhile, the operator’s Flamanville reactor is running 11 years behind schedule and EDF’s estimated cost of completion has spiralled to EUR 12.4bn, up from its original estimate of EUR 3.3bn.

Blank cheque

Detractors of the RAB model have dismissed the mechanism as a “blank cheque” for UK consumers to sign, while others called into question the price competitiveness of new nuclear given the falling cost of renewables.

Critics maintain that by guaranteeing a significant source of capital ahead of the expensive construction phase, as RAB does, consumers are essentially being asked to pay for a reactor when they have no way of assessing how costly it will be, or if any of the delays that have marred Hinkley could occur again.

At the government’s recent consultation on the RAB model, specific figures relating to financing were not discussed.

“They’ll be able to dream up some bogus price,” said Stephen Thomas, emeritus professor of energy policy at the University of Greenwich. https://www.montelnews.com/en/story/uk-needs-new-finance-model-for-nuclear-experts/1187367

January 19, 2021 - Posted by Christina Macpherson | business and costs, politics, UK

No comments yet.

nuclear-news

The News That Matters about the Nuclear Industry Fukushima Chernobyl Mayak Three Mile Island Atomic Testing Radiation Isotope