By Susanna Twidale and Kate Holton
LONDON – Britain plans to adopt a new model to fund its nuclear energy expansion under which households pay a small amount each month for new plants while they are still being constructed, the government said on Tuesday.
Britain aims to reach net zero emissions by 2050, which will require a huge increase in low-carbon power generation such as wind, solar and nuclear. [L8N23Y23F]
The country is hoping to build a fleet of new nuclear plants to help replace aging coal and nuclear facilities and cut greenhouse gas emissions, but developers have struggled to finance new projects.
The government said it would propose the new Nuclear Energy (financing) Bill, which would use the regulated-asset-based (RAB) model through which companies building new plants would be paid during the construction phase, cutting down their development risk and allowing them to secure cheaper financing for the projects.
Proponents say the model, previously used in the UK to finance monopoly infrastructure assets such as water, gas and electricity networks, would ultimately lower the cost of new projects for consumers.
Critics of RAB say it will leave taxpayers liable for any cost over-runs and delays during construction.
France’s EDF is building Britain’s first new nuclear plant in more than two decades, Hinkley Point C, with backing from China’s CGN.
EDF initially promised power from the plant would cooking Britons’ Christmas dinners in 2017, but it is unlikely to be completed until 2026 at the earliest and its budget has swelled to 22 billion-23 billion pounds..
EDF said the new legislation will pave the way for it to go forward with another new plant, Sizewell C.
“This legislation is a big step forward and will allow us to fund Sizewell C,” an EDF spokesperson said via email.
With the right consents in place it could start construction on the new plant this parliament, the spokesperson said.
The government said the RAB model would likely add a few pounds to typical household bills during the early stages of construction and on average less than 1 pound a month during the full construction phase.
It also estimated that the model could save more than 30 billion pounds ($41 billion) over the lifetime of a new nuclear project and attract funding from British financial institutions.
“The existing financing scheme led to too many overseas nuclear developers walking away … We urgently need a new approach to attract British funds and other private investors,” Business and Energy Secretary Kwasi Kwarteng said in a statement.
($1 = 0.7272 pounds)