New nuclear cash plans ‘will freeze out China’
MINISTERS last night unveiled a new funding model to encourage more UK investment in nuclear power stations – squeezing out China but raising the prospect of higher bills.
The move by Business Secretary Kwasi Kwarteng to reduce reliance on overseas funding effectively means the Chinese could miss out on future projects
Investors in new stations will also see a return on their money before the plants are even built.
Ministers insist it will make projects easier to finance and cheaper in the long term – and help Britain meet its carbon reduction targets. The shake-up risks the wrath of Beijing but will delight Tory MPs who have been warning about growing Chinese influence.
The state-backed China General Nuclear has a 20 per cent stake in the consortium proposing the £20billion Sizewell C station in Suffolk. But the project has not yet been given the final go-ahead.
The new financing model will mean bill payers share the up-front costs instead of paying a premium when stations start producing power. The Government said it could help cut the cost of projects.
It is also hoped that removing China from the equation will unlock investment from British pension funds and others.
However, it will potentially add £1 per month to an average household electricity bill.
It will also mean that consumers take on the risk of delays and cost over-runs. Ministers have claimed that over the total lifetime of the project of about 60 years it would lead to lower bills and a total saving for consumers of more than £30billion.
The Nuclear Energy (Financing) Bill will use a model known as the Regulated Asset Base to fund future stations.
The same template has been used for Heathrow Terminal 5.
Britain’s seven nuclear plants provide about 16 per cent of the country’s electricity needs, but this is set to fall by almost half by 2024. Together, Hinkley Point and Sizewell C are expected to produce 14 per cent of the UK’s electricity needs, but they are not likely to be operational until the late 2030s.
Mr Kwarteng said: ‘In light of rising global gas prices, we need to ensure Britain’s electricity grid of the future is bolstered by reliable and affordable nuclear power that’s generated in this country.
‘The existing financing scheme led to too many overseas nuclear developers walking away from projects, setting Britain back years.’
The Nuclear Industry Association said it would add a small levy to bills of no more than a few pounds during the early phase of construction and less than £1 a month over the course of a project.
Greenpeace’s Dr Doug Parr said the model has already been used in the United States.
He warned: ‘The results were disastrous. It transfers huge financial risk from the builders to bill payers. In South Carolina, 18 per cent of residents’ energy bills went to pay for a half-built reactor which has been abandoned and will never produce electricity.’
‘Risks the wrath of Beijing’