4 Mar (NucNet): The politician heading a UK committee that has been researching new nuclear build has called on the government to “pay a reasonable price” for new reactors and warned that negotiations over market incentives could fail.
Tim Yeo, a Conservative member of parliament and chairman of the influential House of Commons energy and climate change select committee, said in an interview with the BBC today that there is a danger negotiations between the government and EDF Energy over a contract-for-difference (CfD) subsidy regime could founder.
Asked if electricity companies want “a promise of subsidy” to build new nuclear reactors, Mr Yeo said it is not surprising that if they are going to invest 10-12 billion pounds they want some sort of guarantee. A CfD regime would offer that opportunity, he said.
The government says CfDs wold stabilise returns for generators at a fixed level known as a “strike price” and insulate consumers by clawing back money from generators if the market price is higher than the strike price.
Mr Yeo said the committee’s view is that to get the first two [EDF Energy] reactors built [at Hinkley Point] the government should be prepared to pay a fair price and after that “the costs will come down”.
He said, however, that the Treasury (finance department) has come into the negotiations and has taken “a rigid line” with EDF Energy.
Mr Yeo was being interviewed following publication of a report that said the government needs a “plan B” on nuclear power because of the danger that new reactors will not be built in time to avoid energy shortages and possible blackouts.
A series of obstacles could mean the government’s target of 16 gigawatts of new nuclear power by 2025 is not met, according to the report from the energy and climate change select committee report.
The report criticises the lack of transparency in government talks with EDF Energy over possible subsidies to build the UK’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 the UK’s 16 commercially operational 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.
EDF Energy chief executive officer Vincent de Rivaz said in December 2012 that a final investment decision on whether or not to build new nuclear reactors at Hinkley Point will be taken in 2013.
He said the introduction of CfDs is essential for EDF Energy to be able to make a long-term commitment to building two European Pressurised Water Reactors at Hinkley Point.
The energy and climate change select committee report is online:
www.parliament.uk/business/committees/committees-a-z/commons-select/energy-and-climate-change-committee/news/building-new-nuclear-the-challenges-ahead
Follow NucNet on Twitter @nucnetupdates
