The cost of nuclear power could be slashed to “well below” £70 per MW/hr if the government provides more upfront support for projects, former energy and climate change committee chair Tim Yeo has claimed.
But without such backing both Moorside and Wylfa, the next plants due to be rolled out in the government’s nuclear programme, will not proceed “much further”, warns Yeo in a new blog.
He urges the government to demonstrate its commitment to Moorside and Wylfa, which are due to be developed by Korean utility Kepco and Hitachi respectively
“There’s a danger that any faltering of progress on either Wylfa or Moorside could cast doubt on the whole concept of a revival of the UK nuclear industry,” writes Yeo on the website of New Nuclear Watch Europe, which he chairs.
Amidst intensive lobbying by Hitachi and Kepco of the UK government to secure support, Yeo writes the government faces “urgent and critical” decisions about the nuclear power programme.
He proposes the Treasury could slash the cost of capital for the two plants by taking a direct minority equity stake.
In addition, the government could provide loans to the developers at the low interest rates it can access as a sovereign borrower, he writes.
“The right financial package could cut the price of nuclear electricity to well below £70 per MW/hr.
Yeo told Utility Week: “If you stick in a bit of equity at the construction stage and some loans at sovereign bond rate produces quite a dramatic impact on the final price of electricity because the cost of capital over 10 years is such a big component.”
Neither option would require a permanent investment, he adds.
And pointing to the latest McKinsey Energy Insight, he argues that a contribution from nuclear power will be required to displace fossil fuels to limit carbon emissions to a level that keeps the rise in global average temperatures below 2 C.