Wednesday 20 March 2013

New nuclear build will lock consumers into higher energy bills

New nuclear build will lock consumers into higher energy bills

The Government’s plans for new nuclear power stations in the UK will lead to consumers facing higher energy bills for many more years to come.

That’s the view of environmental groups following the approval yesterday for EDF Energy to construct a new nuclear plant at Hinkley Point in Somerset. They are urging the Government to focus more on energy efficiency and renewable technologies to help decarbonise the UK economy instead of nuclear.

Keith Allott, Chief Advisor on Climate Change at WWF-UK said: “Backing nuclear means shifting a huge liability to British taxpayers for the cost of building, electricity and crucially, dealing with the waste. Unlike renewable energy, the costs of nuclear keep on rising – as witnessed by the fact that the only reactors currently being built in Europe are massively over-budget and far behind schedule.

“Focusing on renewables and energy efficiency, on the other hand, where the UK has huge potential to be an industrial leader, could deliver both huge cost reductions and a substantial boost to UK economic growth and manufacturing.”

WWF claims its report showed that if the renewables industry was allowed to grow at a steady rate over the next 20 years, it could provide more than 60% of the UK’s electricity by 2030.

Greenpeace Executive Director John Sauven said Hinkley C fails the economic, consumer, environmental and the legal tests.

He added: "It will lock a generation of consumers into higher energy bills, via a strike price that’s expected to be double the current price of electricity and it will distort energy policy by displacing newer, cleaner, cheaper technologies. With companies now saying the price of offshore wind will drop so much it will be on par with nuclear by 2020, there is no rationale for allowing Hinkley C to proceed. Giving it the green light when there is no credible plan for dealing with the waste could also be in breach of the law.”

Although consent has been given for the new nuclear plant, EDF Energy has yet to settle the so-called ‘strike price’ with the Government. It is part of the Contracts for Difference (CfD) scheme, which are long-term contracts expected to provide stable and predictable incentives for companies to invest in low-carbon generation.

Under the scheme, if the market price is lower than the agreed minimum ‘strike price’, electricity suppliers will have to pay the difference by making a surcharge on customer bills and if the market price rises higher, then the company would forfeit the difference.

However, the Institution of Mechanical Engineers (IMechE) welcomed the news but said the big challenge is in setting the strike price for power generated by the Hinkley Point C plant.

Dr Tim Fox, Head of Energy and Environment said: “It will need to be sufficiently attractive to investors from at home and outside of the UK for the plant to go ahead. Also, crucially, this price needs to be acceptable to the public when considered alongside strike prices agreed for electricity from renewables and other low carbon sources of power. We are transforming the energy system for the 21st century and effectively at a start-up for new nuclear, so getting this balance right for the first plant is key to helping ensure future success with follow on projects. Hopefully a deal will be reached between the Government and EDF soon so that we will be able to make a start on the big engineering challenges ahead.”

Written by

Bruna Pinhoni

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