MPs seek plan B in case of new nuclear plant delays

LONDON Mon Mar 4, 2013 12:03am GMT

An employee walks through the charge hall inside EDF Energy's Hinkley Point B nuclear power station in Bridgwater, southwest England December 13, 2012. REUTERS/Suzanne Plunkett

An employee walks through the charge hall inside EDF Energy's Hinkley Point B nuclear power station in Bridgwater, southwest England December 13, 2012.

Credit: Reuters/Suzanne Plunkett

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LONDON (Reuters) - Britain needs an alternative plan for low-carbon energy supply in the event that new nuclear plants are not built on time, a group of MPs said in a report on Monday.

Developers have come forward with plans to build 16 gigawatts (GW) of new nuclear capacity by 2025 to replace old plants, but cost overruns and delays following the Fukushima crisis in Japan have already resulted in a number of companies pulling out of the programme.

"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," said Tim Yeo, chair of the parliament's committee on energy and climate change.

"Ministers need to urgently come up with a contingency plan in case the nuclear industry does not deliver the new power stations we need," Yeo added in a statement published alongside the committee's report on the planned nuclear plants.

Industry experts interviewed in several sessions by the committee suggested a plan B could consist of reducing and better managing energy demand, expanding renewable energy capacity more quickly, short to medium-term investment in gas plants or more funding for new nuclear technologies research.

Britain currently produces around 19 percent of its electricity from nuclear plants and all but one station are scheduled to close by 2023.

The government is counting on new nuclear power plants as part of its electricity market reform which aims to promote investment in forms of energy that emit little or zero carbon.

Reform proposals include a guaranteed minimum price for electricity generated by such projects and the government is currently negotiating with new nuclear investor EDF where such a price could be set.

The committee recommended in its report the price should not exceed 100 pounds per megawatt-hour (MWh), which is the cost expected for offshore wind projects by 2020.

"Some witnesses believed that the Government was not in a strong negotiating position and that there was a perverse incentive for EDF to inflate costs in order to receive a higher strike price," the committee said, adding that EDF's UK chief executive refuted this in his evidence session.

The MPs urged the government to be transparent about the price discussions and that it should clarify who out of energy consumers, taxpayers and project developers carried the risk of construction cost overruns.

The government is expected to respond to the committee's report and its price discussions with EDF are due to conclude by the end of the month.

(Reporting by Karolin Schaps; editing by James Jukwey)

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