The government’s new funding model at the heart of its plan for a nuclear renaissance is an improvement since it struck a deal three years ago to support Hinkley Point C in Somerset. This is the best that can be said for the new strategy, outlined by officials in a consultation last week. It is also very faint praise. EDF Energy’s deal to build Hinkley Point C, Britain’s first new nuclear power plant in a generation, has been dubbed the world’s most expensive power plant of all time, a “white elephant” in a changing energy landscape, and a risky and expensive gamble with taxpayers’ money. There was little chance that a deal so politically unpalatable could be repeated for EDF’s follow-on project at Sizewell B. Instead, officials returned to the drawing board to re-engineer a multibillion-pound funding framework that could help lower the eye-watering costs of constructing a nuclear reactor. The new funding model promises to cut the cost of building a new nuclear plant by a fifth – but this, too, comes at a cost. The government’s plans to make nuclear affordable means Britons will twice shoulder the risk of building new nuclear reactors. First, by paying upfront for the reactors through energy bills to help fund their construction. Second, by taking on the cost of any overruns or construction delays through a taxpayer guarantee. The public purse would also compensate nuclear investors if the project were scrapped. By shifting the risk from private investors to taxpayers, nuclear developers will be able to borrow money at cheaper rates, which will lead to lower bills for consumers. The National Infrastructure Commission has taken a dim view of the model. “This makes projects appear cheaper as consumers are effectively financing the projects at zero interest. At least some of the risk associated with construction costs also sit with consumers, a further hidden cost, since consumers are not paid to hold these risks in the way investors would be,” it said.”If ministers want affordable and clean energy, the fastest, safest and cheapest way to do that is to boost renewables like wind and solar,” said Doug Parr, chief scientist at Greenpeace.
Observer 27th July 2019 read more »