nuclear-news

Who should take on the costs and risks of nuclear power?

There are, of course, other alternatives that may or may not turn out to be cheaper: gas (with or without carbon capture), renewables (assuming some form of affordable energy storage can be found) or letting the market itself decide how our electricity should be generated. If nuclear really is the future you might expect investors to be more interested in it without subsidies. And of course, you don’t get something for nowt: if consumers do end up paying less for Sizewell than they will for Hinkley it will be because they have taken on more risk.

Who should pay for nuclear? Spectator, Ross Clark, 29 Oct 21, ”………………  the funding of nuclear power stations that was unveiled yesterday in the form of the Nuclear Energy Finance Bill. The proposed legislation will impose levies on energy bills in order to subsidise the construction of new nuclear power stations. The new model of funding — called Regulated Asset Base — will replace the model by which Hinkley C is being constructed: the contracts for difference, or CfD, model which was used to entice EDF to undertake the project. The carrot is a guaranteed ‘strike’ price for electricity generated by the plant as soon as it starts generating electricity.

………… it will inevitably transfer risk to the consumer — should, say, the proposed new plant at Sizewell in Suffolk end up being abandoned before it begins generating power, taxpayers will already have paid towards the plant through their bills. 

With his characteristic optimism, Kwarteng claims that the new funding model will ‘save’ energy consumers £30 billion on each nuclear project. Can that really be true? It rather depends on your definition of saving money.

Kwarteng’s claim is based on the presumption that the only alternative to new nuclear power stations funded by the new model is for nuclear power stations to be funded like Hinkley by the CfD model. But Hinkley was itself horrendously expensive: EDF has been guaranteed a minimum price of £92.50 per MWh (at 2012 prices) over 35 years, the expected lifetime of the power station — around twice as high as wholesale electricity prices at the time the deal was signed.

………  it is somewhat dubious to replace a very expensive form of subsidy with one that promises to be merely expensive — and then claim that you have ‘saved’ money.

There are, of course, other alternatives that may or may not turn out to be cheaper: gas (with or without carbon capture), renewables (assuming some form of affordable energy storage can be found) or letting the market itself decide how our electricity should be generated. If nuclear really is the future you might expect investors to be more interested in it without subsidies. And of course, you don’t get something for nowt: if consumers do end up paying less for Sizewell than they will for Hinkley it will be because they have taken on more risk………….  https://www.spectator.com.au/2021/10/who-should-pay-for-nuclear/

October 30, 2021 - Posted by Christina Macpherson | business and costs, UK