(Bloomberg) -- The U.K. government has proposed a bill to help boost investment in new nuclear power plants, a move that will help Britain cut its carbon emissions and that will be partly footed by consumers.
Britain will rely on a funding model previously used to pay for new airports and water projects, reducing its reliance on foreign capital, the government said in a statement. The so-called regulated asset base, or RAB, model is designed to encourage private-sector investment by diluting the construction risk shouldered by the taxpayer and developer.
Nuclear power is a key part of the U.K.'s strategy to reach net-zero carbon emissions by the middle of the century. The cleaner power source is meant to be a predictable complement to Britain's increasing amount of variable wind power. The bill would give a much needed boost to the nation's aging fleet, with five of the U.K.'s eight nuclear plants set to be permanently halted by 2024.
“In light of rising global gas prices, we need to ensure Britain's electricity grid of the future is bolstered by reliable and affordable nuclear power that's generated in this country,” said Business and Energy Secretary Kwasi Kwarteng. “We urgently need a new approach to attract British funds and other private investors to back new large-scale nuclear power stations in the U.K.”
Britain gets about 16% of its electricity from nuclear power stations and there's currently only one new large plant under construction, Electricite de France SA's Hinkley Point C, that's due to be finished in 2026. The French utility's 20 billion-pound ($27.6 billion) Sizewell C plant in southeast England could be the first to benefit from the new funding model. The government had been exploring ways to remove state-owned China General Nuclear Power Corp. from the project.
EDF Says Sizewell Nuclear Plant Can Be Built Without China
“This legislation is a big step forward and will allow us to fund Sizewell C so that it delivers reliable low-carbon nuclear power at a lower cost to consumers,” a spokesperson for EDF said in an emailed statement.
Higher Bills
Key to the proposal is adding costs for consumers during the construction phase of the project. Under the RAB model, a regulator determines how much customers will be charged, with the government expecting them to pay less than 1 pound per month on average through the building phase of a project that begins in 2023.
That's cheaper than using the same funding model for EDF's Hinkley plant, which left all the construction risk with the developer, according to government modeling.
The price for new nuclear power is far higher than for offshore wind, the U.K.'s primary source of new electricity generation. However, having nuclear plants on the grid reduces the risk that the U.K. will burn fossil fuels when the wind doesn't blow.
Still, construction of new nuclear power plants routinely run behind schedule, leaving consumers footing the bill even without the clean power.
“This government has not learned the lesson that new nuclear power can't deliver electricity on schedule or for an affordable price for consumers,” said Doug Parr, chief scientist for Greenpeace U.K.
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