Britain to unveil minimum energy prices in June 2013

LONDON Tue Nov 20, 2012 7:09pm GMT

A windfarm is seen on Anglesey, north Wales May 2, 2011. REUTERS/Toby Melville

A windfarm is seen on Anglesey, north Wales May 2, 2011.

Credit: Reuters/Toby Melville

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LONDON (Reuters) - Britain will outline the minimum prices that utilities will get for generating electricity from nuclear and renewable sources in June next year, the government said on Tuesday, a move that prolongs uncertainty for investors.

Secretary of State for Energy and Climate Change Edward Davey told an influential parliamentary committee that the minimum price new nuclear power stations and windfarms can receive for selling into the grid would be published in June 2013 and would apply until 2017, when prices would be subject to revision.

Britain will introduce its long-awaited Electricity Market Reform bill early next week, Davey told the committee.

Around 330 billion pounds of investment will be needed in Britain's energy infrastructure by 2030, according to a report last month from the London School of Economics, and some investors had been hoping minimum prices for particular types of generation would be outlined this month.

Minimum prices for particular types of electricity generation "will be based on the evidence of the costs," Davey said.

Analysts say the cost of market entry for new nuclear power plants is around 140 pounds per megawatt-hour (MWh), which is comparable to offshore wind farms.

The current price for wholesale electricity is around 47 pounds per MWh.

Offshore wind benefits from generous government subsidies, but Britain has ruled out giving subsidies to investors in the nuclear industry.

Meanwhile, Davey said the parties in Britain's ruling coalition had not yet agreed whether a 2030 decarbonisation target would be included in next week's bill.

Another committee that advises the government on climate change earlier this year recommended that Britain adopt a target that would compel electricity to be produced at no more than 50g of CO2/kW by 2030.

British media last week reported that ministers in the coalition government were opposed to a threshold because it could mean no new fossil fuel power stations could be built unless they capture and bury carbon.

"My personal view is that there are attractions to decarbonisation by 2030. I am not going to prejudge outcome of discussions. But a lot of people in industry think this is a good idea," Davey said.

($1 = 0.6284 British pounds)

(Reporting by John McGarrity; editing by James Jukwey)

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