Long-term price contracts will make new nuclear reactors attractive to investors
(NucNet) Plans to secure 110 billion pounds (174 billion US dollars, 124 billion euro) of investment in electricity generation were unveiled in the UK July 12, including long-term price contracts with nuclear plants in order to attract investment in new build and make electricity prices more stable.
The Electricity Market Reform White Paper, or policy document, sets out key measures to attract investment, reduce the impact on consumer bills, and create a secure mix of electricity sources including gas, new nuclear, renewables and carbon capture and storage.
It says the UK needs “huge investment” in renewables and a new generation of nuclear plants.
Plan for price
Companies will be attracted to build new power plants, including nuclear, because with long-term price contracts they will be able to plan for the price they will receive, energy secretary Chris Huhne said.
The plans detailed in the White Paper would replace a quarter of the country’s power stations by 2030. The White Paper says more than GBP 110 billion in investment is needed to build the equivalent of 20 large power stations and upgrade the grid.
The proposed reforms have three central elements. Mr Huhne is proposing a government guarantee of a fixed price for electricity payable to generators designed to encourage new nuclear power plants and renewable energy.
He also wants a “capacity mechanism”, with the aim of ensuring that the UK has sufficient spare capacity on the national grid to cope with surges of demand and the intermittency of wind generation.
The White Paper proposes more stringent emissions performance standards on the UK’s fossil fuel power stations, ensuring that coal-fired plants become cleaner or shut down.
In an article written for ‘The Daily Telegraph’ newspaper, Mr Huhne said recent electricity and gas price rises in the UK are “symptomatic of fundamental ills in our energy system”.
He said: “Our fossil fuel habit leaves us hostage to global energy markets. The days of North Sea self-sufficiency are long gone. Today, we rely on imported fossil fuels to provide a third of our energy; in less than 15 years, it will be half.
“This would not matter so much if we had a balanced energy portfolio where nuclear and renewables smoothed out volatile gas prices. But we are 25th out of 27 European countries for renewables, and have not built a nuclear power station since 1987.”
In June the UK government published final proposals naming eight sites across the country as suitable for the construction of new nuclear plants by 2025.
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