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Scotland ‘could fund England’s nuclear plants after independence’ under “regulated asset base” (RAB) model

the RAB model was favoured by the Tory government because “the fact is the market has fled nuclear”.

“The market has fled nuclear because of the risk and liability. The only way of getting nuclear through is with vast public subsidy, and this is a way of disguising that public subsidy.

the RAB model had been tried before in the US – under the name Early Cost Recovery – “and failed miserably”.

And that public money would come at the very start of construction. They would be paying right from the word go, so this is essentially free money. Even with that there really doesn’t seem to be much interest from the market.”

 https://www.thenational.scot/news/23083231.scotland-could-fund-englands-nuclear-plants-independence-rab-model/ 28 Oct 22

SCOTTISH bill payers could still be funding nuclear projects south of the Border through additional fees on their energy bills even after independence, one expert has said.

It comes as the UK Government looks to award the first contracts for new nuclear stations in England, which will be funded through the “regulated asset base” (RAB) model.

This RAB model will see electricity suppliers pay a levy to “relevant licensee nuclear companies”, with the costs passed on to consumers in the form of additional fees on top of their energy bills. Under conservative UK Government estimates, this could mean Scottish households’ energy bills rising by around £100 a year.

Dr Paul Dorfman, the chair of the non-profit Nuclear Consulting Group and associate fellow at the University of Sussex’s Science Policy Research Unit, told The National that the RAB model was favoured by the Tory government because “the fact is the market has fled nuclear”.

“RAB is absolutely, unequivocally all about trying to incentivise the market,” he said, “and it is doing it with public money.”

Dorfman went on: “And that public money would come at the very start of construction. They would be paying right from the word go, so this is essentially free money. Even with that there really doesn’t seem to be much interest from the market.”

The nuclear expert, who will give evidence on the topic to a Westminster committee next week, said the RAB model had been tried before in the US – under the name Early Cost Recovery – “and failed miserably”.

He said: “It can work for projects which you know will come in on time, but nuclear has huge liabilities and huge over-runs, and that’s precisely why it doesn’t work. RAB doesn’t work for projects with high liability and high risk.

“The market has fled nuclear because of the risk and liability. The only way of getting nuclear through is with vast public subsidy, and this is a way of disguising that public subsidy.

Dorfman warned that once the UK Government started sinking billions of pounds into efforts to begin construction of eight new nuclear stations by 2030, it would “become a fait accompli”.

He said that even after 17 years – the amount of time he estimates it will take from a contract being awarded to a nuclear plant being finished – “the UK public, and the Scots public, who may no longer be part of the UK, will still be liable for that”.

Dorfman said the first RAB nuclear contracts looked set to be awarded in 2023, estimating that would mean a completion date of the first nuclear plants around 2040.

“That’s too late for our climate,” he said. “It’s far too late for the current energy crisis. The point is of course, why do this when last year solar and wind made up three-quarters of all total new electricity generation capacity installed worldwide?”

The Nuclear Consulting Group chair further cautioned that no one knows for certain what the RAB funding arrangements will be.

Craig Dalzell, the head of policy and research at Common Weal, a think tank which has recently produced a report on the RAB funding model, said the “ongoing liability” for new nuclear projects in England should “not be outsourced to Scotland post-independence”.

Dalzell told The National: “The idea that Scottish energy users could be paying for the UK’s nuclear RAB schemes even after independence will surely be something that should be resisted. The Scottish Government should do everything it can to extract guarantees from the UK Government that this will not be the case and that the ongoing liability for these plants will not be outsourced to Scotland post-independence.

“At the very least, any payments for these plants should be taken into account when the time comes for independence negotiations and I would expect these charges to be offset against other debts or added to an equivalent payment from the remaining UK to Scotland to compensate for their mismanagement of energy policy.”

The UK Government’s Department for Business, Energy and Industrial Strategy declined to comment, saying only that its policy has not changed despite a new Secretary of State, Grant Shapps, taking control.

You can read Dr Dorfman’s written evidence on nuclear power to the House of Commons’ Science and Technology Committee here

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October 28, 2022 - Posted by | business and costs, UK

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