Energy bill will confirm push for new nuclear power stations

Posted on 22 May 2012

The Government will offer long term contracts and guarantees for investors in the new nuclear industry in its draft energy bill published later today, but critics warn the consumer will front the cost.

The draft energy bill will show that the government is making plans for a new generation of nuclear power stations.

The bill is expected to outline long term contracts for nuclear and renewable energy.

As government subsidy of nuclear power development is illegal under EU law, the bill is expected to offer guaranteed profits to companies and investors in nuclear power.

Consumer groups have said that such guarantees will be part-funded by higher bills to consumers, estimated to be up to £200 per household.

Energy Secretary Ed Davey told the BBC’s Today programme that nuclear would not be subsidized and it should not increase consumer bills. “By increasing the confidence of investors [by offering profit guarantees], you lower the cost of capital and encourage investment into alternative energy sources such as nuclear, and you will also lower the cost to the consumer.”

Critics say new nuclear build is expensive and the energy gap can be plugged by extending the life of existing power stations.

Volker Beckers, chief executive of utility RWE npower which in April pulled out of the UK’s nuclear industry, told the programme: “The energy bill should be seen a new milestone in the UK’s energy market which paves the way for full market reform. It’s too early to say definitely that it will affect consumer bills by X per cent. But this bill should give a renewed focus on renewables to be a major part of the long term UK energy mix.”

RenewableUK, the UK’s trade association for the renewable energy industry, welcomed the draft Energy Bill, but said the industry is concerned about the timetable for implementation. It said the Department for Energy and Climate Change (DECC) needs to provide reassurance in areas where detail is still missing.
“The timeline DECC has laid out looks very challenging to bring in wholesale change to the electricity market… [and] DECC needs continue to consult in order that an energy gap does not appear,” said director of policy at RenewableUK, Dr Gordon Edge.

“A gap means fewer options for the UK, which means we risk missing carbon reduction targets, continuing our dependence on imported fossil fuels and energy bills not being insulated from the rising costs of fuel.”

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