Government Ministers Are Pressed To Explain Cost Overruns for Nuclear Energy
By Leigh Teixeira
Critics have urged the UK government to explain who will foot the bill should there be any cost overruns in the delays of new nuclear power plants. This comes after MPís suggested that this would come out of the pockets of the consumer.
Last week it was said that a letter was sent to the energy select committee. In this letter, government MPís admitted any cost overruns or delays with the development of EDFís nuclear power plant at Hinkley Point could seriously curb the possibility of any other new nuclear developments within the UK.
The letter stated that in most situations the developers were able to manage construction risks best but in some situations there had to be variations to allow for a selection of low emission technologies to come to the forefront at a reasonable price and in a way that shows distinct variances in risk profile.
Head of the energy select committee, Tim Yeo wrote to Michael Fallon the energy minister. He asked whether or not the £14 billion power plant at Hinkley Point would be such a case.
Itís a sensitive matter at the moment because of EDFís nuclear power plant in France has faced massive overruns in costs and delays. Although they backed out of the project at Hinkley Point earlier in the year, Centrica stated that the costs involved had gone up beyond expectations and the time frame given in which it would be built had just about doubled.
The letter from the MPís said that the construction of the first nuclear power plant will be watched closely by possible developers and investors. How this project progresses would decide whether or something similar would be considered in future. It stands to reason that if the project cannot be completed on time or the budget is exceeded, the less likely it would be for investors to show interest in the nuclear program.
EDF has insisted that consumers will not bear the burden of any cost overruns at the power plant at Hinkley Point, should there be any delay.
The project will go ahead as planned if MPís can come to agreement with EDF on the amount the latter will receive in subsidies for any power that is produced by the plant. This wonít happen if it isnít consistent with Europeís state aid rules, as well as affordable, fair and value for money and takes into consideration the Governmentís policy that there wonít be any public subsidies for new nuclear power plants.
The energy select committee accused the MPís of not having an alternative plan should there be no new nuclear power plants. The letter to the committee insists that the nuclear program is based on having more than one power plant up and running and that the development of these power plants wasnít bound to just one developer. The letter also states that it would be difficult for the UK to meet the targets for carbon emissions if there wasnít any new nuclear power plants built.
The Department of Energy and Climate Change released a statement saying that if there are any overruns in costs this burden will be borne by the developer and not the consumer. They intend to protect consumers from bearing this cost as best as possible.
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