Caroline Lucas calls on the government to halt the nuclear contracting process in a Backbench Business debate on nuclear subsidy.
Despite the pledge in the 2010 Coalition Agreement and in numerous ministerial statements since that there would be “no public subsidy” for new nuclear, it has become increasingly clear that the government’s introduction of a carbon price floor and other measures in its forthcoming Electricity Market Reform (EMR) will result in huge windfall handouts for nuclear generators. It’s time to ditch the doublespeak and state the obvious: this is a subsidy by another name.
In the Backbench Business debate today, MPs will raise concerns about negotiations currently taking place between the Department of Energy and Climate Change and new nuclear suppliers to fix a ‘strike price’ in advance of the EMR legislation. Not only do these talks pre-empt the legislative process in a way which suggests that commercial interests are taking priority, there is also a worrying secrecy around exactly how much money taxpayers will need to cough up to pay for this increasingly expensive technology.
The truth is that the primary beneficiary of these policies will be the French state-owned nuclear company Edf, which will be gifted billions of pounds to cover the cost of the new power station at Hinkley Point in Somerset – particularly if secretive proposals to underwrite construction costs are successful.
The scale of the proposed investment at Hinkley is vast and the duration of the contract is long. At a strike price of £100/MW and a 30 year contract under EMR, this would require a subsidy of £1 billion a year above today’s wholesale electricity price – meaning £30 billion going straight from British households and businesses to Edf. If the 16GW of new nuclear anticipated by the Energy Minister Ed Davey were to be financed on similar terms, it would cost householders and businesses £150 billion by 2050.
As well as being required to show how this can possibly represent good value for money, DECC also needs to explain how its parallel objective of bringing down the wholesale price of electricity is supposed to be compatible with the proposed Edf contract – since it would seem that the amount of subsidy would have to increase as a result of those lower prices. By signing up to a fixed price, this contract would surely then eliminate any benefit to consumers that might result from lowering the price of electricity.
The positive PR campaign orchestrated by nuclear companies in the weeks following the Fukushima disaster gave us a glimpse of the power that the nuclear lobby wields in Whitehall. With the benefits of investing in renewables, energy efficiency and demand reduction becoming ever clearer, we need to see far more transparency around the decisions about where our electricity will come from in the decades ahead.
The government should therefore halt the nuclear contracting process and allow the Public Accounts Committee to examine whether the public subsidy being offered for new nuclear power through EMR is really the right solution to deliver an affordable, sustainable and secure energy future.