Nuclear and the energy ‘market’
The UK government’s policy on low-carbon power generation has been criticised by the cross-party Energy and Climate Change Committee. They warned in a report that the government had “no plan B” if new nuclear plants are not built on time and on budget.
Committee Chair Tim Yeo MP warned:
“If new nuclear power stations are not built on time our legally binding climate change targets will be extremely challenging and much more expensive to build. The government seems to be crossing its fingers that private companies will deliver a fleet of new nuclear power stations on time and on budget. Ministers need to urgently come up with a contingency plan in case the nuclear industry does not deliver the new power stations we need.”
30% of the UK’s electricity comes from low-carbon sources, and 70% of that comes from nuclear. The UK government’s climate advisers say that the electricity sector needs to be largely decarbonised by 2030 if the UK is to meet targets to reduce carbon emissions by 80% on 1990 levels by 2050. However, all but one of the UK’s existing nuclear plants are set to close by 2023, and while there are plans for a new fleet to be online by 2025, the MPs said they had been told the proposals were “ambitious at best and unrealistic at worst”.
Even this ‘ambitious’ plan rests on one supplier EDF, who now own all the currently functioning commercial nuclear power reactors left in the UK. EDF understand the history of government bail outs of the nuclear industry, currently around £100m in decommissioning costs. And it is happening again.
Despite the ConDem coalition policy, the government has already agreed to subsidise new nuclear power plants by underwriting the potential costs of a nuclear accident and the costs for waste disposal. However, this still leaves EDF with the risk that the cost of building the plants will make the electricity too expensive for them to make major profits. So EDF have now persuaded the government to give nuclear power a guaranteed price for electricity, so if the market price falls below a certain level the difference will be made up from surcharges on customers’ bills. This subsidy was never intended for nuclear and effectively means that consumers are underwriting the risk that EDF don’t complete on time and to budget.
So EDF can’t really lose and as usual it’s the long suffering consumer who pays for the kid on electricity ‘market’.