Yahoo Finance Yeo: Treasury needs to pour billions into nuclear projects
The Treasury is facing calls to pour billions of pounds into a string of troubled new nuclear projects which threaten the UK’s energy supplies.
Tim Yeo, a former environment minister and energy committee chairman, is warning that the only way the Government can avert a crisis for the country’s nuclear programme is to take a direct financial stake in the projects.
Ministers should also actively encourage investment from nuclear companies in China, South Korea and Russia where the the industry is relatively insulated from the challenges faced by European companies thanks to strong state backing, he said.
Ministers are wary of involving the foreign powers in its energy security plans and have steadfastly resisted taking on the financial risk involved in nuclear construction.
In a letter to Business Secretary Greg Clark, the Tory grandee says there is a real danger that the pipeline of nuclear projects will fail to come on stream before 2030 unless Government agrees to intervene. Mr Yeo said the existing support regime, which guarantees a fixed price for each megawatt of power produced, does not go far enough to help investors who face billions in construction costs before the nuclear plant begins producing power.
In neither case would the Government’s support constitute a permanent subsidy.
Tim Yeo
The Government should offer loans to developers which can be paid back once the plant comes on stream, or take an equity stake in the project which could be sold off to investors when construction is complete.
“In neither case would the Government’s support constitute a permanent subsidy. It would directly cut the cost of electricity produced by the new plant because the Government’s borrowing costs will be lower than those of any private investor,” Mr Yeo writes.
The UK is banking on the 3.2GW nuclear power plant to provide as much as 7pc of the country’s energy by the middle of next decade. However, the Hinkley Point, Moorside and Sizewell B projects have all been dogged by delays and concerns over whether the multi-billion pound investments can be shouldered by the companies.
