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It is “too early to say” whether Hinkley Point C gives value for money, politicians concluded in a cross-party report published on Tuesday.
While calling for political consensus on nuclear, a review of the sector by think-tank Carbon Connect questioned the price tag of the UK’s flagship project.
Equity investors in EDF Energy’s planned new nuclear power station could achieve returns of around 20 per cent, according to the report. That would be “substantially higher” than the 12 to 15 per cent typical of private finance initiatives.
It is “difficult to judge the effectiveness” of government’s negotiations with EDF Energy over the support package, the report went on, as the process was “neither competitive nor transparent”.
The remarks come as the European Commission investigates the Hinkley Point deal to determine whether it passes state aid rules. The Commission has expressed doubts the support, including a guaranteed power price of £92.50/MWh for 35 years, is justified.
Changing the support package “would not be an impossible task if made necessary and politicians should work together to maintain consensus,” the report said. That consensus would make nuclear cheaper, by reducing the risk for investors, it argued.
The Carbon Connect report is the result of an independent inquiry jointly chaired by Conservative former energy minister Charles Hendry and shadow energy minister Baroness Bryony Worthington. It follows reports on the future role of fossil fuels and renewables in the electricity generation mix.
Worthington said: “At this stage it is impossible to tell which will be the cheapest [source of electricity] in the future so we need an ‘all of the above’ energy policy, including nuclear power.”
Other recommendations included more urgency in reusing the UK’s plutonium stockpile, exploring other technologies and fuels, revisiting nuclear waste storage plans.
Hendry said: “The report concludes that nuclear can play a very significant role in delivering secure, low carbon electricity, but there is much work still to be done to secure the nuclear renaissance that many of us want to see.”
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