Theme 2 - Energy in the UK - Nuclear Power

BBC online / 21 October 2013: http://www.bbc.co.uk/news/business-24604218

UK nuclear power plant gets go-ahead

QUESTIONS:

1/ From Ed Davey's point of view, what is the right approach of the energy policiy?

2/ What is likely to happen to the energy bill in the 2020s and 2030s in the UK? 

3/ In the face of the uncertainties, what must the energy policy plan?

4/ Why are the British electricity reforms radical?

The government has given the go-ahead for the UK's first new nuclear station in a generation.

France's EDF Energy will lead a consortium, which includes Chinese investors, to build the Hinkley Point C plant in Somerset.

Ministers say the deal will help take the UK towards low-carbon power and lower generating costs in future.

Critics warn guaranteeing the group a price for electricity at twice the current level will raise bills.

"For the first time, a nuclear station in this country will not have been built with money from the British taxpayer," said Secretary of State for Energy Edward Davey.

The two reactors planned for Hinkley, which will provide power for about 60 years, are a key part of the coalition's drive to shift the UK away from fossil fuels towards low-carbon power.

Ministers and EDF have been in talks for more than a year about the minimum price the company will be paid for electricity produced at the site, which the government estimates will cost £16bn to build.

The two sides have now agreed the "strike price" of £92.50 for every megawatt hour of energy Hinkley C generates. This is almost twice the current wholesale cost of electricity.

This will fall to £89.50 for every megawatt hour of energy if EDF Group goes ahead with plans to develop a new nuclear power station at Sizewell in Suffolk. Doing both would allow EDF to share costs across both projects.

China invests

Chinese companies China National Nuclear Corporation and China General Nuclear Power Corporation will be minority shareholders in the project.

The move follows Chancellor George Osborne's announcement last week that Chinese firms would be allowed to invest in civil nuclear projects in the UK.

Prime Minister David Cameron said that the new Hinkley Point plant was "an excellent deal for Britain and British consumers".

"This underlines the confidence there is in Britain and makes clear that we are very much open for business," he added.
Labour leader Ed Miliband, who has pledged to freeze energy prices for 20 months if he wins the next election, said the party supported the development of new nuclear power stations, but would scrutinise the terms of the deal to ensure it delivered value for money for consumers.

"We've got the Prime Minister who says he can fix prices 35 years ahead for the energy companies but he can't freeze prices now for the consumer. No wonder we've got a cost of living crisis in this country," he added.

The existing plant at Hinkley currently produces about 1% of the UK's total energy, but this is expected to rise to 7% once the expansion is complete in 2023.

The announcement is not legally binding and it will be 2014 before EDF makes a final investment decision on the project. The plans will also require state aid clearance from the European Commission.

But it comes as concerns about domestic energy bills move up the agenda, with SSE, British Gas and Npower, three of the UK's "big six" gas and electricity suppliers, all having announced price increases.

The government estimates that with new nuclear power - including Hinkley - the average energy bill in 2030 will be £77 lower than it would have been without the new plants.

Energy UK, the trade body for the industry, said the agreement on Hinkley was "good news".

"Building new power stations is never quick or cheap, but in the case of Hinkley development, nothing goes on the bill until 2020," it said.

About 25,000 jobs are expected to be created during construction of the power plant, as well as 900 permanent jobs during its 60-year operation.