Ministers have no 'plan B’ if new nuclear plants are not built and are “crossing their fingers” that private companies deliver on time and on budget, a committee of MPs warned on Monday.
A series of obstacles could mean the Government’s target of 16 gigawatts of new nuclear power by 2025 is not met, according to a report from the commons Energy Select Committee.
It warns that if new plants do not materialise it could be “much more expensive” to meet Britain’s legally-binding climate change targets, and could leave the country more dependent on imported gas to keep the lights on.
Tim Yeo MP, the Committee’s chairman, said ministers must “urgently come up with a contingency plan in case the nuclear industry does not deliver the new power stations we need”.
But the committee also criticises the lack of transparency in Government talks with EDF Energy over subsidies to build Britain’s first new nuclear plant in a generation at Hinkley Point in Somerset, and warns that “new nuclear should not be delivered if the price is too high”.
With all but one of Britain’s existing nuclear reactors due to close by 2023, new plants are “crucial” if nuclear power is to remain part of the UK’s energy mix in future decades, the report says.
However the MPs heard evidence that the Government’s 16GW target - a plan that would see new reactors at five sites around the UK - was “'ambitious’ at best and 'unrealistic’ at worst”.
Energy giant Centrica announced last month it was pulling out of the EDF-led consortium for Hinkley Point and Sizewell in Suffolk due to spiralling costs and delays, and EDF is yet to find a replacement partner. EDF’s Flamanville reactor in France has been subject to massive cost overruns.
Plans by Japan’s Hitachi and by a consortium of Iberdrola and GDF Suez for reactors elsewhere in the UK are all at an early stage.
“Given the delays and problems that have dogged nuclear new build projects in neighbouring European countries it is worrying that the Government does not have any contingency plans in place for the event that little or no new nuclear is forthcoming,” the Committee says.
“Crossing one’s fingers is not an adequate or responsible approach when the UK’s legally binding climate change commitments and energy security are at stake.”
If the first tranche of new nuclear projects is not successful, it could be “difficult (or impossible) to finance any subsequent attempts at nuclear new build”, it warns.
Financing is one of the biggest challenges to new nuclear, because plants have high upfront construction costs - thought to be as much as £7bn a reactor for Hinkley Point - before they generate any returns.
The “cheapest source of funding” for the construction would be the UK government but “this approach is not compatible with the Coalition’s current policies”.
The Government instead wants private companies to fund the plants and will offer developers long-term contracts guaranteeing a price for the electricity they will generate. This so-called 'strike price’ will be subsidised through levies on consumer electricity bills.
The committee says it is “essential that any contract represents value for money for the consumer” and that “transparency about how the nuclear strike price will be set is still a major area of concern”.
John Hayes, Minister of State for Energy, said: “The Government is determined to see new nuclear play a role in our future energy mix, as it does today.”
EDF said the contract for electricity from Hinkley Point would be transparent and provide good value for consumers, adding that it was not asking consumers to bear construction risk.
telegraph.co.uk
A series of obstacles could mean the Government’s target of 16 gigawatts of new nuclear power by 2025 is not met, according to a report from the commons Energy Select Committee.
It warns that if new plants do not materialise it could be “much more expensive” to meet Britain’s legally-binding climate change targets, and could leave the country more dependent on imported gas to keep the lights on.
Tim Yeo MP, the Committee’s chairman, said ministers must “urgently come up with a contingency plan in case the nuclear industry does not deliver the new power stations we need”.
But the committee also criticises the lack of transparency in Government talks with EDF Energy over subsidies to build Britain’s first new nuclear plant in a generation at Hinkley Point in Somerset, and warns that “new nuclear should not be delivered if the price is too high”.
With all but one of Britain’s existing nuclear reactors due to close by 2023, new plants are “crucial” if nuclear power is to remain part of the UK’s energy mix in future decades, the report says.
However the MPs heard evidence that the Government’s 16GW target - a plan that would see new reactors at five sites around the UK - was “'ambitious’ at best and 'unrealistic’ at worst”.
Energy giant Centrica announced last month it was pulling out of the EDF-led consortium for Hinkley Point and Sizewell in Suffolk due to spiralling costs and delays, and EDF is yet to find a replacement partner. EDF’s Flamanville reactor in France has been subject to massive cost overruns.
Plans by Japan’s Hitachi and by a consortium of Iberdrola and GDF Suez for reactors elsewhere in the UK are all at an early stage.
“Given the delays and problems that have dogged nuclear new build projects in neighbouring European countries it is worrying that the Government does not have any contingency plans in place for the event that little or no new nuclear is forthcoming,” the Committee says.
“Crossing one’s fingers is not an adequate or responsible approach when the UK’s legally binding climate change commitments and energy security are at stake.”
If the first tranche of new nuclear projects is not successful, it could be “difficult (or impossible) to finance any subsequent attempts at nuclear new build”, it warns.
Financing is one of the biggest challenges to new nuclear, because plants have high upfront construction costs - thought to be as much as £7bn a reactor for Hinkley Point - before they generate any returns.
The “cheapest source of funding” for the construction would be the UK government but “this approach is not compatible with the Coalition’s current policies”.
The Government instead wants private companies to fund the plants and will offer developers long-term contracts guaranteeing a price for the electricity they will generate. This so-called 'strike price’ will be subsidised through levies on consumer electricity bills.
The committee says it is “essential that any contract represents value for money for the consumer” and that “transparency about how the nuclear strike price will be set is still a major area of concern”.
John Hayes, Minister of State for Energy, said: “The Government is determined to see new nuclear play a role in our future energy mix, as it does today.”
EDF said the contract for electricity from Hinkley Point would be transparent and provide good value for consumers, adding that it was not asking consumers to bear construction risk.
telegraph.co.uk
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