UK set to introduce nuclear subsidies

31. October 2012 | Industry & Suppliers | By:  Max Hall

With the U.K. government shortly set to present an Energy Bill before Parliament, which makes little mention of the contribution to be made by photovoltaics, a spokesman for coalition governing partners the Liberal Democrats denied the legislation contained subsidies for the nuclear industry.

The Wylfa nuclear power station on the isalnd of Anglesey, north Wales.

Wylfa nuclear power station in north Wales is among the nuclear plants expected to benefit from the U.K. government's forthcoming Energy Bill.

The spokesman told pv magazine, "We are confident that the Energy Bill does not contain any subsidy for the nuclear industry. That is the position for the Liberal Democrats, and our coalition government partners."

The party enshrined in its coalition agreement with the Conservatives that there would be no subsidies for the nuclear industry and the spokesman was commenting in the wake of an article by industry analyst Paul Gipe, which claimed the Contracts for Difference (CfD) regime outlined in the Energy Bill is a tariff by another name.

The forthcoming bill, expected to go before the U.K. parliament in November 2012, places heavy emphasis on the role a new generation of nuclear power plants – as well as power stations with Carbon Capture and Storage (CCS) technology – can play in the country’s future energy supply, with barely a mention of photovoltaics or other types of renewable energy.

Under the CfD regime, the government will set an agreed price – the strike price – for electricity generated over a fixed period of time. Although the draft bill states that the "CfD will be largely standardized across technologies" there are caveats relating to technologies which generate intermittently, including photovoltaics.

According to the draft bill, when the strike price is higher than the wholesale price of energy, utilities will have to pay the higher cost and when the strike price is lower, generators will lose out. Gipe speculates any shortfall for utilities may be made good by government support, possibly in the form of taxes, but this is not stated in the draft bill, meaning any adverse effect on utilities would have to be absorbed by them or passed on in the form of higher electricity bills.

"When is a subsidy not a subsidy?" said Andrew Pendleton, head of campaigns for Friends of the Earth, speaking to pv magazine. "It seems to me the CfD instrument will be a subsidy. The strike price that will be set for nuclear will come out significantly higher than that for renewables, because of the uncertainty and cost inflation of nuclear power generation. That strike price is supported by the government when it is above the wholesale price, so that is price support."

He continued, "We do not feel the CfD system is the right way to de-carbonise electricity generation in the U.K. A simpler feed-in tariff like that used in Germany would be better. The system has been formulated like this so that it doesn't fall foul of EU state aid rules. What I think they are doing is constructing a wholesale electricity unit price in the future that is high enough to support nuclear and get around Brussels state aid rules as well as allowing politicians to say they didn't break the coalition government pledge on subsidies for the nuclear industry."

A joint statement on the Energy Bill, issued by Friends of the Earth, Greenpeace, the World Wide Fund for Nature (WWF) and the Royal Society for the Protection of Birds (RSPB) said: "The secretary of state should stick to the coalition promises not to subsidise new nuclear power and refuse to sign contracts with new nuclear power providers which are above the market rate for power."

The U.K. Department for Energy and Climate Change (DECC) was unable to supply a comment at the time of going to press.

Expanding nuclear

The U.K. government this week welcomed the news that Japanese company Hitachi had bought Horizon Nuclear Power from German owners E.ON and RWE npower and will press ahead with plans for reactors at Wylfa on the island of Anglesey, north Wales; and at Oldbury in Gloucestershire, England.

The deal was described as a "multi-billion pound vote of confidence in the U.K." by Prime Minister, David Cameron, but Welsh nationalist party Plaid Cymru says the emphasis on nuclear over renewable energy sources is a step backwards.

"Plaid Cymru favors a non-nuclear energy plan for Wales and we remain opposed to new nuclear plants on new sites," Alun Ffred Jones AM, energy spokesperson for Plaid Cymru told pv magazine. "Our long term vision is for Wales' needs to be met through energy generated from the abundant renewable resources that are naturally available to us. We want to see the decision-making powers over these issues devolved to Wales. Successive Westminster governments have, unforgivably, failed to plan adequately for future energy which is clean, renewable, safe and abundant."

He added, "It's important effort is put in to creating jobs in the renewable energy sector, so that there is a diversity of jobs on the island. Ynys Mon (the Welsh name for Anglesey) has huge potential for renewable technologies, especially marine, as well as the same potential of communities everywhere to reduce the amount of energy people use. Efforts on the nuclear energy front should not prevent efforts to create other jobs. We can't afford to put all of our eggs in one basket."


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Emma Edward from Ridgefield

Saturday, 24.11.2012 06:52

The government must address the growing risk to the security of supply from the UK’s increasing dependence on imported gas. Currently, the UK has only 16 days of storage compared to 99 in Germany and 122 in France. As such government should introduce a supplier obligation or similar measure by 2012 which would provide an early incentive to invest in storage facilities.

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