The government seemed to be “crossing its fingers” that private companies would deliver reactors on time and on budget, despite delays and cost overruns in other countries, the energy and climate change committee’s chairman, Tim Yeo, said.
A report by the committee raises concerns there is no “Plan B” for the energy sector if the planned series of reactors are not delivered on time, and the government needs to develop one urgently.
But Mr Yeo also warns that any such contingency plan, which would rely on a step change in energy efficiency measures or an even greater reliance on renewables, is extremely difficult to deliver – making nuclear crucial.
The committee’s report says that a failure to get new nuclear reactors built on time could leave the UK relying on more gas for electricity, risking the security of energy supplies as the country could be more dependent on imports.
If the new projects are not successful it will undermine investor confidence in the nuclear sector and make it difficult, or impossible, to get any further reactors built, the report warns.
The latest data from the Department of Energy and Climate Change showed that almost 30 per cent of the UK’s electricity now comes from low-carbon sources, and the lion’s share of that – at over 70 per cent of the clean energy total – comes from nuclear. The government’s climate advisers have said that the electricity sector needs to be largely decarbonised by 2030 if the UK is to be on track to meet legally binding targets to reduce carbon emissions by 80 per cent on 1990 levels by 2050.
However, all but one of the UK’s existing nuclear plants are set to close by 2023, and while there are plans for a new fleet to be online by 2025, the MPs said they had been told the proposals were “ambitious at best and unrealistic at worst”.
One of the key concerns is the guaranteed price suppliers will be paid for low-carbon electricity from nuclear plants under long-term contracts which aim to give investors the certainty to pay the high capital costs of nuclear power.
Mr Yeo admitted that EDF, the only major player currently working on building the next generation of reactors, had the government “over a barrel” in terms of negotiating the price for the first contracts. But he said he hoped the first negotiations, for two units at Hinkley Point, would conclude soon and would be a “sensible” deal, and said that it was possible the cost for further nuclear plants could come down after that.
“If new nuclear power stations are not built on time our legally binding climate change targets will be extremely challenging and much more expensive to build,” he warned.
“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.”