Ministers forced to throw taxpayers’ cash at nuclear plants – and in the meantime the wind blows, the sun shines and the tides turn.
“Ministers are poised to admit that taxpayer cash will be used to fund a new fleet of nuclear power stations — reversing years of government opposition to direct public subsidy.
With Britain’s ageing coal plants due to shut by 2025, the government is banking on new nuclear reactors going up at sites including Wylfa in Anglesey, north Wales, and Moorside in Cumbria.
Successive energy ministers have insisted that no public cash will be used to fund this new generation. Yet industry sources claim the business and energy secretary, Greg Clark, accepts that this hands-off approach cannot persist if the plants are to be built. They say Whitehall is preparing to launch a consultation, possibly this summer, on the government taking minority equity stakes in new nuclear projects to kick-start their construction.
“The penny has finally dropped,” said a senior source in the nuclear sector. “It is the government’s duty to keep the lights on. The government now gets this.”
The refusal to award subsidies has been a constant in the nuclear debate. In 2010, when the coalition government sanctioned the creation of new stations, the then energy secretary Chris Huhne said: “There will be no public subsidy.”
Instead, ministers have demanded companies rather than British taxpayers bear the construction risks of the multibillion-pound projects.
It has not quite worked out that way. EDF and CGN — arms of the French and Chinese governments respectively — last year committed to spend £18bn on the Hinkley Point power station in Somerset, after being guaranteed a price for the plant’s electricity.
The future of the NuGen consortium building the Cumbrian plant will be thrown into doubt this week when the financially troubled Japanese industrial giant Toshiba confirms its retreat from the industry.
To ensure the plant is built, British taxpayer cash will probably be matched with funds from the Japanese government, possibly via the Japan Bank for International Cooperation and Nippon Export and Investment Insurance.
Japan’s Hitachi, which is behind the Wylfa project, is locked in talks with the British and Japanese governments over how to fund the 2.7-gigawatt station. The consultation on state equity is likely to be launched alongside an outline deal on funding Wylfa. Sources said the deal and the consultation are not certain and could yet collapse.
New support for nuclear will form a key pillar of Theresa May’s industrial strategy. But the Treasury remains desperate to keep the power stations, each of which will cost more than £10bn, off the government’s stretched balance sheet.
That will limit Britain to minority equity stakes, possibly up to 25% to 30%, in the new projects.”
Source: Times Newspapers Limited (paywall)