MPs call for Plan B on nuclear

The government is negotiating with three groups aiming to build Britain’s new generation of nuclear plants but needs to stop “crossing its fingers’”and develop a back-up strategy in case these plans are derailed, according to a House of Commons select committee.

The huge upfront costs of building power stations, public opposition and potential problems in the supply chain still present significant barriers to the UK’s plans to build 16GW worth of nuclear generation capability, the MPs said in a report.

The government seems to be crossing its fingers that private companies will deliver

“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,” said Tim Yeo, chair of the Energy and Climate Change Committee, in a statement.

“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.”

The new build programme has already undergone turmoil, with UK energy company Centrica recently pulling out of a deal with French firm EDF to build four reactors, citing increasing costs and delays.

This follows the move last year by Japan’s Hitachi to take over the Horizon nuclear programme for up to six new reactors after German utilities E.On and RWE pulled out.

Two alternative approaches suggested by the Committee include setting out who would be responsible for the risk of construction overrunning projected costs, and examining the possibility of smaller reactors closer in size to modern gas-fired plants that would be cheaper to develop.

“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,” said Yeo.

“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.”

Dithering on this issue just plays into the hands of the developers

The report also suggested bringing forward the timetable for supply chain involvement in the project and looking at ways to open a dialogue between the different developers to try to smooth out the order process and avoid bottlenecks.

Recommended measures to help increase public support include providing an independent advice service to help local communities better understand projects set to be built in their area and increasing their tax benefit from the schemes.

Responses to the report from government and industry focused on the current negotiations to agree a “strike price” for energy that developers will be guaranteed to receive in return for committing to build the plants.

Energy minister John Hayes said: ‘We’re focused on bringing forward this investment, but also getting the best deal for the consumer.

“There will be transparency over the terms of any Investment Contracts, offered to developers of low carbon electricity generation, including new nuclear developers – and details will be laid before Parliament.”

Alistair Smith, chairman of the Institution of Mechanical Engineers’ Power Industries Division, called on the government to agree the strike price quickly.

“Dithering on this issue just plays into the hands of the developers who will be in an even stronger position if the capacity margins reduce and there becomes a real threat of the lights going out.”