Britain’s struggling nuclear program must be relaunched with a new funding model that allows costs to be taken off consumers’ bills, as ministers seek to attract new investors and exclude Chinese companies to replace its aging nuclear facilities.
Business secretary Kwasi Kwarteng on Tuesday introduced a bill to reorganize the way nuclear facilities are funded following the cancellation of recent projects, and hopes to attract investors from the UK, the US and moreover before the country’s existing reactors retire by 2035.
Although Kwarteng only talks about wanting to reduce “the UK’s dependence on foreign developers,” Conservative MPs believe the move will help him oust China’s CGN from future energy projects.
The Nuclear Energy Finance Bill will use a funding model known as the Regulated Asset Base (RAB), which has been used for other infrastructure projects, including Terminal 5 of Heathrow and the Thames Tideway tunnel. Under the plan, consumers will contribute upfront to the cost of new nuclear power projects during their construction phase.
Currently, operators only receive income when the plant starts producing electricity. This model, known as “contracts for difference”, has failed to create the nuclear renaissance Boris Johnson believes is vital in helping Britain meet its net zero commitments. The recent cancellation of nuclear power projects at Wylfa in Wales and Moorside in Cumbria – by Hitachi and Toshiba respectively is seen as proof that the current model is broken.
“The existing funding program has led too many foreign nuclear developers to pull out of projects, setting Britain back for years,” Kwarteng said.
Chinese state-owned CGN has a 20 percent stake in the Sizewell C power plant project in Suffolk – EDF owns the remaining 80 percent – and had hoped to build a nuclear power plant in Bradwell, Essex. But conservative MPs hope that if new investors enter the sector, EDF would be able to find new investment partners before Kwarteng signs the Sizewell project with a “final investment decision”.
The plan would also help Kwarteng avoid using the new national security and investment legislation, which comes into effect in January, to forcibly block Chinese participation – a move that would escalate tensions with Beijing.
Ministers sought to withdraw CGN from infrastructure projects in the UK. Last year, the government banned Chinese telecommunications equipment maker Huawei from its 5G mobile phone network. “Finding alternative investors to the Chinese for this urgent and necessary development of new nuclear energy is vital,” said Damian Green, former conservative deputy prime minister.
Energy Minister Greg Hands this week wrote on Twitter that he had discussed with US officials “how the US could help with new civilian nuclear power in the UK”, but ministers also want more UK investors, such as pension funds and other institutional investors.
Ministers say lower financing costs could save consumers more than Â£ 30bn over the lifespan of a large nuclear project, although in the short term a typical household energy bill would increase of “a few pounds per year” during the first phase of construction of a project.
Currently 16 percent of the UK’s electricity generation comes from nuclear power, but Hinkley Point C in Somerset, another EDF project also supported by CGN, is the only new plant under construction.
Opponents of the RAB model say consumers could be affected by the construction cost overruns, as happened with the Thames Tideway project in London. Thames Water customers are currently paying the cost of the Â£ 4.1bn tunnel through an additional Â£ 18 on their water bills, but could face additional charges due to delays in the project.
Tom Burke, co-founder of E3G, a climate think tank, said he feared the model would be “a very bad deal for consumers,” arguing that nuclear power would be a lot. more expensive than that created by renewable energies at the time. any new factory started the following decade.
âConsumers will have to pay twice as much for their electricity,â he warned. âOnce, during construction, through a levy on their bills, and then after they actually build the thing, everyone will have to be forced to buy their electricity at several times the cost. ”
He also asked why British households were being asked to provide a subsidy to EDF, which lobbied for the RAB model, and said the plan risked undermining the growth of a home-based renewable energy industry.
âThere aren’t a lot of ways that makes sense, unless you’re EDF, the GMB union. . . or a government chasing after COP26, âhe said.