Like autumn follows summer
Some things are inevitable and always easy to predict: eg autumn always follows summer or new nuclear power always require extra money.
What is astonishing this time around is that the UK Government chose to believe that EDF Energy’s nuclear plant did not need extra support to build its planned new nuclear programme.
Getting your turn of phrase right is the key to smoothing public relations. But not everyone is fooled by careful words.
Greenpeace and Friends of the Earth have skeptical eyes when it comes to Government energy policies. Greenpeace has previously described the government’s support for the plant as “the heist of the century”. “There is absolutely no legal, moral or environmental justification in turning taxes into guaranteed profits for a nuclear power company whose only legacy will be a pile of radioactive waste. This is a bad plan for everyone except EDF,” said Greenpeace EU Legal Adviser Andrea Carta.
Green campaigners are concerned that EDF has not agreed on any payment towards the disposal and decommissioning of the radioactive waste the project will generate, and also that it has been given UK government insurance against any future alterations to the country’s energy or environmental laws which could lead to an increase in costs.
Academics too have voiced their concern. As Tony Roulstone of the Cambridge Nuclear Energy Centre said earlier this year that the Government’s position has been modified to promise ‘no special subsidy’ for nuclear – which is the basis of EMR.
That is strictly true but the weasel words of the Government means that there will be no special nuclear subsidy. Instead it has promised it will pay EDF £92.50/MWh for 35 years – well more than twice the level of current market prices.
However 60% of any profit EDF turns above 13.5% for the expected 60-year lifespan of the Hinkley nuclear project, will be returned to the government. The EC has previously questioned the move which equates to total support worth £17.6 billion or so. But this month the European Commission it ruled that the £10 billion in government credit guarantees do not constitute illegal state aid. Phew! If they say so it must be true.
And who will pay that higher price? The UK Government itself? Of course not. It is inevitable that the public will do so in their energy bills for some time to come.
Dominic Maclaine is an EPG Associate and used to be the editor of New Power before he sold the business. He conducted PhD research into electricity supply competition in the UK and Norway at SPRU. He was previously the editor of the monthly newsletter Power UK published by Platts (and previously the Financial Times). He is currently writing a book about recent developments in the UK electricity market, to be published by Routledge.