Gov’t Nuclear Deal to Raise Energy Prices for 35 Years

April 3, 2014 | Market Watch: Industry News

A new report by energy giant SSE has revealed that the government’s recent deal with EDF’s Hinkley Point nuclear power station will result in an increase in energy bills for decades to come. The current construction of the Somerset-based nuclear project is anticipated to add “considerable cost” to household bills for the next 35 years, with the strike price of electricity generated through the power station contracted at roughly double the current price of power.

According to the report, leading analyst, Peter Atherton, described it as “the most expensive conventional power station in the world” and a “clear case of socialising risk and privatising profits”.

Despite earlier promises that nuclear plans would only go ahead “without subsidy”, the government has agreed to pay EDF a fixed price of £92.50 per megawatt hour generated at the plant for a period of 35 years, a figure that will rise with inflation. Under the planned system of Contracts for Difference, when the wholesale price of energy is below this amount, the difference will be made up through surcharges on consumer bills.

Scottish National Party member, Chic Brodie, who sits on the Economy, Energy and Tourism Committee, described the move as a “colossal waste of resources”.

He commented: “This is a complete betrayal of the Westminster Government’s promise of no subsidies for nuclear energy. The price that has been agreed is a hefty bill that will leave people paying the price for Westminster’s obsession with grossly overpriced nuclear energy.”

 

 

Is Nuclear Energy the Answer to the UK’s Energy Needs?

Hinkley Point is due to begin operating in 2023 and when running at full capacity, the two reactors are expected to cater for as much as 7% of the country’s energy needs. Plans for the new power station, which is crucial to the coalition’s nuclear program, have been derailed several times in the past few years, with British Gas parent company Centrica pulling out the deal in 2013 because of rising project costs.

On announcing the strike price in October, after over a year of negotiations, Prime Minister David Cameron said: “As part of our plan to help Britain succeed, after months of negotiation, we have a deal for the first nuclear power station in a generation to be built in Britain.

“This deal means £16 billion of investment coming into the country and the creation of 25,000 jobs, which is brilliant news for the South West and for the country as a whole.

“As we compete in the tough global race, this underlines the confidence there is in Britain and makes clear that we are very much open for business.

“This also marks the next generation of nuclear power in Britain, which has an important part to play in contributing to our future energy needs and our longer term security of supply”.

However, though nuclear projects could offer a much-needed long-term solution to the country’s energy needs, with over 4.5 million households already living in fuel poverty, it may come at a steep price.

 

 

For more information on the Hinkley Point development and SSE’s report:

SSE’s Powering Britain report: http://sse.com/media/204699/SSE-RESPONSE-TO-LABOUR-PARTY-GREEN-PAPER-MARCH-2014.pdf

For further information on the government’s announcement of the strike price agreement: http://www.thecourier.co.uk/news/uk/uk-government-hails-brilliant-nuclear-power-station-deal-1.143791

The SNP comments on the expected rise in prices: http://www.snp.org/media-centre/news/2013/oct/35-year-nuclear-subsidy-waste-resources

 

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