UK Energy Minister urged to ‘come clean’ on nuclear subsidies after reports French firm want cash guarantee

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  By Martin Kelly
 
UK Energy Secretary Ed Davey has been challenged to come clean on subsidies for nuclear power, following reports that French Giant EDF is demanding a price guarantee that would make nuclear energy the most expensive form of power in the UK.
 
The calls follow revelations that the energy giant has insisted on a guaranteed payment of £140 per MegaWatt hour before it commits to building a series of nuclear reactors for the UK Government.

The UK Government is moving towards replacing Renewable Obligation Certificates with a system of contracts for difference, which would see a long term energy price agreed with producers.  Any shortfall between that price and the market price would see producers paid the shortfall through a levy on customer bills.

The price demanded by the energy firm is almost three times the current electricity market rate and significantly more than the cost of nuclear power estimated by the UK Government.

It is also around two thirds more expensive than the cost of onshore wind.

Statistics from the Committee on Climate Change estimate that the production costs of onshore wind in 2011 were between £80 and £95 per MegaWatt hour, far less than the price that would be demanded for new nuclear power.

The UK coalition agreement rules out public subsidy for nuclear energy and Mr Davey stated in evidence before the Scottish Parliament’s Economy, Energy and Tourism Committee that there would be no public subsidies for nuclear power.

Commenting on the news, SNP MSP Chic Brodie, who sits on the Committee, said:

“As the anticipated costs of nuclear power rise and rise, the claims from Ed Davey that there will be no public subsidies for nuclear energy are sounding increasingly hollow.

“If customer bills rocket to pay for new nuclear power then it is simply semantics to claim that no subsidy is taking place.

“Work has not even begun on a new generation of nuclear power and the price is already spiralling out of control.

“New nuclear power stations are not the answer and our money should not be thrown into the black-hole they would become.

“Ed Davey should come clean on just how much new nuclear power would cost ordinary people and abandon his efforts to secure new nuclear which have disaster written all over them.”

Earlier this year speculation was high that the French giant would be forced to pull out of the UK’s nuclear power programme.  The claims followed the recent French elections and the instalment of Francois Hollande as the new French President after the defeat of Nicolas Sarkozy.

France currently relies on nuclear power for 75% of its electricity, a figure Hollande wants to reduce to 50% by 2025 with a greater focus on renewables.  There has also been talk of phasing out France’s nuclear power altogether within 20 or 30 years.

The industry has struggled to re-assert itself following the disaster at the Fukushima plant in Japan and rumours of a possible pull-out by EDF coincided with news that costs of building any new nuclear plants in the UK had increased by forty per cent.

New safety, construction and administrative costs led to estimates escalating as the cost of the first two reactors set for Hinkley Point in Somerset rose from £10 billion to £14 billion.

The news coincides with a report released last week by think-tank IPPR which disputed claims that wind-power is an inefficient and unreliable source of energy.
 
Results of studies carried out by the Institute for Public Policy Research showed that the controversial green energy source is both a reliable source of electricity and also that it contributes greatly towards carbon emission reductions.

Working with GL Garrad Hassan, a leading renewable energy consultancy, the report also found that recent rises in energy bills were largely due to wholesale gas costs, not renewable subsidies.  From 2004 – 2010 government support for renewables added £30 to the average energy bill, while wholesale gas costs added £290.