Energy market reform will pave the way for new nuclear

By 17 December 2010 Industry news

The companies planning to build new nuclear power stations in the UK have welcomed government proposals to reform the electricity market.

Consultation document on Carbon price floorThe proposals, which are open to consultation until February, include plans to introduce a carbon floor price to allow low-carbon generation to compete for long-term investment on a level basis with fossil fuels. Utilities have identified this as a necessary step to allow the construction of new nuclear plant and other low-carbon generators.

The news should give increased confidence to manufacturing companies preparing to supply the new generation of nuclear power stations.

Vincent de Rivaz, chief executive of EDF Energy, said: “This is a landmark day. The announcement reflects a broad consensus that a robust carbon price and other market reforms are in the interests of consumers and the environment. It creates a momentum that triggers the path to implementation in 2011.”

EDF Energy is planning to build four Areva EPR reactors with a total capacity of 6.4GWe at Hinkley Point and Sizewell.

“We are looking to drive about £20 billion worth of investment in new generation, working with our partner Centrica, to be on stream from 2018,” added de Rivaz. “Putting these reforms in place is an essential step to make this possible.”

NuGeneration, the joint venture between Iberdrola, GDF Suez and Scottish and Southern Energy which is planning up to 3.6GWe new capacity at Sellafield, also welcomed the news.

Ian Marchant, chief executive of Scottish and Southern Energy, commented: “In the next two decades, substantial investment is needed to decarbonise the power sector and maintain security of supply whilst ensuring electricity remains affordable.

“This requires an evolved market structure, which the electricity market reform process is appropriately timed to deliver, with a White Paper expected next summer and reforms set to be implemented by around 2013.”

Horizon Nuclear Power, the joint venture between E.ON UK and RWE npower which is planning up to 6GWe of new capacity at Wylfa and Oldbury, said it would be scrutinising the details of the proposals to make sure that they can deliver long-term confidence for investors.

“We welcome the Government’s commitment to reform the electricity market,” said Alan Raymant, chief operating officer at Horizon. “The country needs to replace closing power stations, and the focus must be on low carbon power generation. Nuclear is the most cost effective of the serious, large scale, low carbon electricity sources. It doesn’t need a subsidy, just a level playing field which isn’t currently provided by a market designed in another era.”

At the NIA’s annual Energy Choices conference in London earlier this month, all three groups called for energy market reform including a carbon floor price.

The new proposals include an array of measures to make low-carbon generation more economically attractive, and promote the construction of new generation capacity without the need for direct subsidies.

For nuclear power, the key reform is the introduction of a carbon floor price, which imposes a minimum price for electricity generated from fossil fuels and reflects the long-term costs of greenhouse gas emissions. The reform should benefit all low-carbon generation technologies.

The energy and climate change secretary, Chris Huhne MP, said: “These reforms lay the foundations for a sustainable economy, bringing billions in investment in the UK through greater certainty, safeguarding jobs up and down the supply chain, and giving the UK real competitive advantage in advanced energy technologies.

“Without investment in renewables, new nuclear and carbon capture and storage, emissions will remain too high, we will become dependent on energy imports, and increasingly vulnerable to fossil fuel price volatility. Low carbon technologies must be given the chance to become the dominant component in our electricity mix.”

Consultation documents for the carbon price support are available at:

Consultation documents on other proposals are at:

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