The Brit-Govt is to invest upwards of £5 billion in a new nuclear power station in Wales, in a “striking reversal” of a decades-long policy of avoiding direct investment in nuclear power.
Greg Clark, the UK’s business secretary announced the initial agreement with the Japanese firm Hitachi.
The Wylfa plant is expected to generate enough low carbon power for 6% of the UK’s energy, or around five miliion homes.
In contrast to the £92.50 MW/hr price agreed for electricity generated by the new Hinkley Point C reactor, the government stake has reduced the guaranteed price of power from the Wylfa plant to around £75-£77 per megawatt hour.
Dieter Helm, professor of Energy Policy at the University of Oxford, said: “The sheer cost of building new nuclear power stations means it makes sense for the government to help finance projects like this.
“Governments can borrow much more cheaply that private companies and that lower cost of borrowing can drastically reduce the ultimate cost.
“Hinkley Point C would have been roughly half the cost if the government had been borrowing the money to build it at 2%, rather than EDF’s cost of capital, which was 9%.”
Justin Bowden, GMB National Secretary for Energy said: “We may be witnessing an outbreak of energy policy common sense that should set a new precedent for our vital energy infrastructure projects.
“The go ahead on a new, publicly funded power station at Wylfa, and the accompanying creation of thousands of new jobs and apprenticeships, means a huge boost to the economy and reliable electricity to millions of homes.
“By Government taking a stake in the new power station, the price to consumers will be greatly reduced.
“This makes good sense all round, not just the obvious benefits to bill payers but because Government is ‘the lender of last resort’ when it comes to guaranteeing the country’s energy supply and so direct public funding of the construction does away with the nonsensical pretence that this is some other country or company’s responsibility.
“GMB has long maintained it is the facts, not the hype, which should determine the UK’s energy policy decisions.
Tom Greatrex, Chief Executive of the Nuclear Industry Association, stated: “Nuclear power has made a massive contribution to the UK, providing reliable, secure and always available low carbon energy for sixty years. It remains the single largest source of low carbon electricity – providing more than 20% of the power the country generates for homes, businesses and public services.
“It has an integral role to play in a future low carbon mix as our energy infrastructure is upgraded, and ageing power plants replaced. “
However, the move has infuriated renewable energy supporters.
Chris Hewett, chief executive of the Solar Trade Association, commented: “Tthe development of the Wylfa Newydd nuclear power station marks a significant shift in energy policy towards explicit state investment in energy projects.
“The investment will further tilt the playing field in the energy market which is already highly distorted by Government interventions.
“The announcement comes at a time when the utility solar industry has been waiting more than three years for access to competitive UK clean power auctions, where it can offer power at close to wholesale price.
“Simultaneously, rooftop solar on warehouses and factories, an application which no longer requires Government subsidy, has been stalled by crippling business rate hikes.“
The cost of UK utility-scale solar PV generation has fallen by approximately 20% per year since 2014 and is currently estimated at £50-55/MWh.
6 Jun 2018