Without a word being said, British householders and businesses are about to be forced to pay for a French nuclear loser. The two German energy companies, RWE and E.ON, announced a month ago that they were withdrawing from building new nuclear power stations at Wylfa in Anglesey and Oldbury in Gloucestershire after the German government opted for early closure of its remaining reactors. The UK company Centrica, which has an option of 20% in any new build at Hinkley and Sizewell, has a weak balance sheet and is unlikely to proceed.
That leaves two French nuclear power companies, EDF and Areva, who the Tory government want to build two new reactors at Hinkly Point in Somerset and two at Sizewell in Suffolk. But they will only do so if they are guaranteed a high enough price for the electricity generated and if the risks in building the reactors are transferred to British households and businesses. And those risks are huge.
The two reactors being currently built by EDF and Areva at Olkiluoto in Finland and Flamanville in France are both massively over budget and running around 4 years late. The 4 previous reactors they built took an average 17 years from the start of construction to delivery of the first electricity. Since no new nuclear build can now begin in the UK before 2015, that might suggest that any new reactor will not be operating till around 2032. Yet the energy gap in the UK (‘the lights going out’) is predicted to happen about 2017.
So what does the Coalition do? So that the French can build reactors of the wrong kind (the European Pressurised Reactor), which we don’t need and can’t afford (a capital cost of €4,750/kW), and which will hugely distort UK energy policy for the next 40 years, The Coalition is about to rig the market through its so-called Electricity Market Reform programme which is aimed to favour nuclear at the expense of every other alternative. It will absorb huge amounts of direct and indirect subsidy even though the government has repeatedly and solemnly intoned that there will be no public subsidy at all for the building of new nuclear. In fact there will be a triple subsidy – a capacity payment, a carbon floor price, and a low carbon ‘contract for difference’.
There are still problems before this betrayal of the British consumer can happen. It has to clear EU State Aid rules which, since nuclear is a mature technology, is a likely stumbling block with the EU Commission. The government is trying to hide this by making the counterparty, not the government , but customers. The risk then to UK households and businesses is huge, yet is being deliberately hidden from public debate.