UK ministers must develop ‘back-up energy plan’

The House of Commons Energy and Climate Change Committee (ECC) has called on the UK government to ‘urgently come up with a contingency plan’ for power as its plans to build a fleet of nuclear power plants by 2025 are ‘ambitious’ at best and ‘unrealistic’ at worst.

According to the ECC, nuclear power currently makes up 19 per cent of the UK’s energy mix, but this is set to fall as ‘all but one of our existing nuclear power stations are currently expected to close by 2023’.

There are now plans to develop up to 16 gigawatts (GW) of nuclear power in the UK to make up this shortfall, with developments such as Hitachi’s 6GW Horizon project, expected to be up and running by 2020.    

Though government has not set targets for specific electricity technologies, the ECC notes that the ‘DECC [Department for Energy and Climate Change] prefer a mixed energy portfolio including renewables, nuclear and fossil fuels with carbon capture and storage (CCS). Given the lack of progress that has been made to date in bringing forward CCS technology in the UK, the role for new nuclear in delivering on our decarbonisation goals seems likely to become even more significant’.

The ECC’s ‘Building New Nuclear: The Challenges Ahead’ report, released today (4 March), addresses concerns that there may be ‘barriers’ to industry’s plans of developing UK nuclear capacity, and warns that if these plans collapse, the energy market would be reliant on gas to close the gap, which could ‘bring indirect security concerns if the UK were to become more dependent on imported gas as a result’.

The report seeks to identify these barriers and ascertain how they might be overcome.

Key Suggestions

The report reads: ‘Despite the Department’s apparent confidence that the 16GW figure will be delivered, a number of witnesses suggested that the government was overly optimistic. The Civil Engineering Contractors Association told us that the government’s indicative timeline for new nuclear was “unrealistic”, while Greenpeace believed it was “increasingly unlikely that any nuclear reactors will be built before 2025”. The Institution of Mechanical Engineers said that the government was taking “a courageous approach to its policy” by relying entirely on the market to deliver new nuclear capacity to its preferred timescale’.

While the ECC said it supports the government’s use of Contracts for Difference to help make new nuclear power stations easier to finance, it reiterated the recommendation made in its pre-legislative scrutiny of the draft Energy Bill, that ‘the nuclear strike price should not be higher than that given to offshore wind, which is hoped to be around £100/MWh by 2020’.

It added that ‘nuclear will need to offer advantages’ compared to other low-carbon technologies if it is to deliver good value to customers.

The report goes on to suggest that the government should extend the UK Guarantees scheme to all nuclear new build projects, which may require ‘increasing the amount of available assistance to more that £50 billion’.

Additionally, it recommends that the DECC should monitor progress toward developing small nuclear reactors, so that the possibility of including these as part of the UK energy mix remains open.

Other recommendations listed in the Energy and Climate Change report included:

  • Identifying who is going to take the risk of construction costs being higher than anticipated;
  • Seeing the Office for Nuclear Regulation (OND) and Environment Agency plan their engagement activities so that regulators and developers can be present at the same public meetings;
  • Establishing an independent advice service for local communities living near individual ‘significant’ infrastructure projects;
  • Allowing local authorities hosting renewable energy projects to retain business rates to include all forms of low-carbon energy;
  • Providing additional forms of community benefit during construction periods;
  • Facilitating the OND in a ‘smoothing out’ of orders to supply chain companies to avoid ‘crunch points’ and resultant delays.

The report concludes that ‘while the cancellation or reduction of the UK’s new nuclear programme may cause challenges for energy security, it would have a much more significant impact on the UK’s ability to meet carbon reduction goals, making our legally-binding long term targets extremely challenging, if not impossible to meet’.

’The government is taking steps to facilitate and encourage new build nuclear in the UK but the final decisions to go ahead or not will be taken by boardroom executives rather than Ministers. Given that ultimately these decisions are beyond the government’s control, it is worrying that DECC does not have any contingency plans in place for the event that little or no new nuclear is forthcoming.’


Government needs to provide more clarity’

Speaking on the release of the report, Tim Yeo MP, Chair of the Energy and Climate Change Committee, said: "The government seems to be crossing its fingers that private companies will deliver a fleet of new nuclear power stations on time and on budget.

"Ministers need to urgently come up with a contingency plan in case the nuclear industry does not deliver the new power stations we need."

Voicing his disappointment about the lack of transparency over new nuclear power station negotiations, Yeo said: “Government needs to provide more clarity about exactly what forms of support new nuclear projects will receive and whether consumers, taxpayers or project developers will have to cough up if construction costs end up being higher than anticipated.”

Responding to the report John Hayes, Minister of State for Energy said: “The government is determined to see new nuclear play a role in our future energy mix, as it does today. We are working to make the UK one of the most attractive places in the world to invest in new nuclear. Already, companies have set out plans to develop new reactors at five sites across England.

“There will be transparency over the terms of any Investment Contracts, offered to developers of low carbon electricity generation, including new nuclear developers – and details will be laid before Parliament.”

Despite industry support for nuclear technology, public support for the radioactive energy is declining: in January, Cumbria County Council, the last UK council to volunteer as a potential site for an underground nuclear repository, voted against continuing the search for potentially hosting the £12 billion underground facility.

Read ‘New Nuclear: The Challenges Ahead' report or find out more about nuclear waste.