The report, Building New Nuclear: The Challenges Ahead, published by the House of Commons energy and climate change committee, says that building a new fleet of nuclear power stations is the most effective way for the UK to meet its climate change targets.
Ministers must stop ‘crossing their fingers’ and urgently develop a back-up energy strategy, it says.
The full report can be read here: http://www.publications.parliament.uk/pa/cm201213/cmselect/cmenergy/117/11702.htm
Committee chairman Tim Yeo said: “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 meet.
“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.”
Industry has outlined plans that would deliver 16GW new nuclear power stations by 2025, but new build projects in France and Finland have experienced serious delays and cost overruns. Although the government and industry have learned some lessons from this process, there remain obstacles that could delay new build projects in the UK.
The MPs support the government’s use of “contracts for difference” (CfDs) to help make new nuclear power stations easier to finance, but they are concerned at the lack of transparency around the price negotiations between the government and industry. The new contracts must provide value for money for consumers, they say, and should not be offered at a price that is higher than other low-carbon sources of energy, such as offshore wind, which is hoped to be around £100/MWh by 2020.
Mr Yeo added: “Unlike gas-fired power stations, nuclear power stations are expensive to build but cheap to operate. It is right that investors should be given confidence that they will recoup their money by providing them with long-term contracts.
“But at the same time Long-term price guarantees for new nuclear power stations need to deliver value for money to consumers. Locking consumers into paying prices for nuclear power that are unacceptably higher than prices paid to renewables or carbon capture and storage projects would be wrong.
“It is disappointing that there is still so little transparency about the on-going negotiations between the government and developers of new nuclear power stations.
“Government needs to provide more clarity about exactly what forms of support new nuclear projects will receive and whether consumers, taxpayers or project developers will have to cough up if construction costs end up being higher than anticipated.”
EDF Energy, which is planning to build two new reactors at Hinkley Point C, said that the start of construction all depended on reaching a deal with the government over CfDs, but denied any lack of transparency.
It said: “The government and EDF Energy are working together to agree a price for the electricity through a Contract for Difference at Hinkley Point C which will be fair and balanced for UK consumers and investors. Agreeing this contract is the key to attracting investors and to unlock funding for this project which will give the UK the secure, low carbon energy it needs for the future. The government can act now to deliver new nuclear in time to avoid the need for a back-up plan.
“When the contract agreeing a price for the electricity is published, it will show in a transparent way that new nuclear is competitive with all other forms of low carbon energy, and good value for consumers – satisfying a key recommendation made by this cross-party committee of MPs.”
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