Government in a corner over new nuclear

With so many billions of pounds, euros and yen at stake - negotiations around the programme to build a new generation of nuclear plants in the UK were always going to be difficult.

An estimated 16GW of nuclear capacity is needed to bridge the energy gap being created by the closure of many coal-fired and ageing nuclear plants. However, this has to be delivered at a cost that is affordable by taxpayers and energy consumers.

The Government, however, seems in a weaker position than the power companies in these negotiations.

EDF, for example, has signalled that the support currently on offer would not justify the long-term investment required for its proposed Hinkley C project.

It could, therefore, follow the example of UK energy company Centrica, which recently pulled out of a deal with French group to build four reactors.

This could then impact on negotiations with Japan’s Hitachi, which last year took over a programme to build up to six new reactors after German utilities E.On and RWE pulled out.

One problem for the Government is that it does not have a contingency plan to fall back on - as the House of Commons select committee has pointed out (see report).

As Tim Yeo, chair of the energy and climate change committee, said: “The government seems to be crossing its fingers … Ministers need to urgently come up with a contingency plan in case the nuclear industry does not deliver the new power stations we need.”

With or without such a plan B, though, ministers will soon have to work out how the UK can affordably keep the lights on.