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Hinkley is a good example of bad policy - and needs an urgent plan B, says House of Lords
The House of Lords has slammed the Hinkley Point new nuclear project as a good example of bad Government policy which puts cutting carbon above reliable, low cost energy.
In a scathing report on the UK’s energy plans the Lords heaped criticism on the giant energy project, to be developed by EDF, saying it does not provide taxpayers with good value for money and may suffer delays.
The Government has been heavily criticised for handing EDF a contract to build the £18bn plant which will pay the French state-backed company a fixed price of £92.50 per megawatt-hour of electricity produced over 35 years. The total cost to consumers is estimated to be £30bn.
Hinkley has also proved highly divisive in France over concerns that EDF cannot afford the project, prompting the resignation of EDF’s former finance boss Thomas Piquemal last year.
The Government is banking on the 3.2GW nuclear power plant to provide as much as 7pc of the UK’s energy by the middle of next decade and, together with new projects at Moorside and Sizewell, are expected to help cut carbon emissions by 57pc from 1990 levels by 2030.
However, the economic affairs committee raised doubts over whether the projects can be delivered on time and called for an urgent ‘plan B’ for the trio of troubled high cost nuclear projects.
Similar EDF projects in France and Finland have been fraught with delay. Fears deepened over the UK’s nuclear future last week after Toshiba, the lead developer of the Moorside project, admitted it would have to take billions of pounds' worth of write downs in its nuclear business and will need to scale back its overseas ambitions.
“Now is the time for Government to look into this and decide how it is going to deliver a plan B,” Lord Holick told the Telegraph.
“Hinkley Point C is a good example of the way policy has become unbalanced and affordability neglected. It does not provide good value for money for consumers and there are substantial risks associated with the project,” he said.
The committee’s report blames the Government’s commitment to ‘decarbonising’ the UK’s electricity supply and the pressure to secure new power generating plants as coal plants continue to close for forcing bills higher.
“Poorly-designed government interventions, in pursuit of the decarbonisation, have put unnecessary pressure on the electricity supply and left consumers and industry paying too high a price,” Lord Hollick said.
The committee has called for an independent Energy Commission to advise Government on how to achieve an optimum balance of its three key objectives to keep the lights on at low cost while cutting carbon.
“It would not be entirely different to the role that the OBR plays with regards to the Treasury. What it would do is provide a degree of transparency, not only for the Government itself to make its decisions but for industry and observers and analysts so that there is a greater degree of accountability as opposed to confusion,” he said.
The claims are vehemently denied by green groups who criticised the findings as being out of touch. They argue that the cost of renewables is falling faster than predicted and are a vital source of new jobs.
The committee report found that the main reason for climbing energy tariffs is the rising global price of gas but said the cost impact of low carbon policies is beginning to inflate bills. The policies accounted for 2pc of the average consumer bill in 2004 but this swelled to 10pc by 2013. In order to meet the Government’s carbon targets the proportion of bills made up by climate targets will be 24pc by 2020 and 26pc by 2030.
A spokesman for EDF Energy, which is building Hinkley Point C, said it provided value for money and was competitive with other future energy choices.
"By providing reliable, low carbon electricity for 60 years, Hinkley Point C will play a vital role in helping the UK move away from fossil fuels," the spokesman said.
"It is already delivering significant benefits to the economy by creating jobs, boosting skills and strengthening the UK's industrial capacity."