It is good news that the government is taking some decisons to ensure more electricity generation capacity is built in the UK. The past decade saw the Labour government agree to various EU proposals, and add proposals of their own, which shut down plants. They did not take the decisions to provide for their replacements, leaving us short of capacity from next winter.
Emission controls and above all CO2 controls are leading to the closure of older coal, oil and gas plants. Age is leading to the closure of many of our existing nuclear plants. We do need decisions followed by investment in the replacements. The pipeline was empty in 2010.
I have no objection in principle to civil nuclear power, and no objection in principle to foreign investment in our power production system. I do, however, want us to go for cheaper energy. I do want us to play to the strengths of the UK economy in our choices of new power stations, to maximise the economic benefits within the UK from the large investment programme we need.
Some worry about our nuclear know how. The truth is Labour sold our nuclear industry to overseas interests sometime ago. The absence of new nuclear stations in the UK from the mid 1990s onwards meant the industry fell into disuse here at home. If you place no orders for almost twenty years you do lose a lot of expertise and modern design. This new deal could be a way for the UK to rebuild parts of its nuclear industry, and to benefit from French technology in an area where France has moved onwards whilst the UK has headed for the exit.
Some worry about the price and the returns that The French and the Chinese will enjoy. Listening yesterday to the Secretary of State answering in the Commons, it sounds as if the draft contract does offer some benefits to UK consumers in the event of costs undershooting on the project. However, the guaranteed price at twice today’s wholesale market price, to come in in 2023 when they start generating power, is also indexed to general prices. The overseas investors will enjoy some protections from political and other risks, and should be able to generate a good return on the money they are putting up.
I would like to see UK investors and companies coming forward to supply our future power needs. I also want to see more cheaper power in the future mix, which will come from gas fired stations. I will look at the way this could happen in a later posting.