Green energy suppliers are protesting at the prospect of having to add a surcharge to household bills to pay for new nuclear plants in Britain when their customers purposely choose not to support the divisive technology.
UK ministers are aiming to introduce legislation in the autumn that would allow for a large nuclear power plant proposed for Sizewell on England’s east coast to be financed via a “regulated asset base” model. The scheme would see households help fund the construction of the £20bn plant via a surcharge on their energy bills, regardless of their supplier.
Households already pay for a number of policy costs via their energy bills, such as subsidies for wind and solar schemes, yet a nuclear surcharge would prove particularly difficult to stomach for companies that offer their customers “100 per cent renewable energy” deals, which do not include nuclear power.
Dale Vince, the founder of Ecotricity, the first company in Britain to have offered customers green electricity, told the Financial Times: “It’s bonkers we would all have to pay this subsidy for at least a decade of construction and not for power generated.”
“The government is reluctant to fund nuclear projects itself, so allowing Sizewell [C] to access the RAB [regulated asset base] system is simply dumping the cost on consumers — even those who have gone renewable, and that’s just unfair,” added Vince.
Kit Dixon, policy manager at Good Energy, the UK’s first supplier to offer customers 100 per cent renewable electricity, said that “we should be deeply concerned” by the nuclear industry potentially being offered such a deal to build expensive new plants “with little incentive to deliver on time or within budget”.
“We’ve got to stop seeing customers’ bills as a sort of cash machine for folly projects,” said another energy chief executive who asked not to be named.
EDF, the French state-backed utility that is developing the Sizewell C plant in Suffolk, argues a regulated asset base model would lead to lower financing costs and ultimately “significant savings for consumers”. It says the “steady” upfront returns offered by the mechanism, which would be regulated, would allow it to attract financing from pension and infrastructure funds that accept smaller returns in exchange for lower risks.
The model is used to build other infrastructure in the UK including energy networks and the Thames Tideway “super sewer” in London.
EDF Energy, the UK arm of the French energy group, said it had conducted its own analysis that suggested “new nuclear can save up to £5bn per year compared to a low-carbon energy system without it”.
It added: “Pitching nuclear and renewables against one another risks putting extra costs on consumers and does the planet a disservice. Wind, nuclear and solar are all needed for a reliable net-zero future.”
Critics of the regulated asset base model warn that it would expose households to cost-overruns, which have proved common in the nuclear industry.
Environment groups oppose nuclear on the grounds that it is more expensive than technologies such as offshore wind and leaves a legacy of highly toxic waste that takes more than 100,000 years to decay.
Bulb, Britain’s seventh biggest supplier by market share, also warned in a response to a consultation on the regulated asset base model that using the financing mechanism for nuclear plants “doesn’t protect customers who choose to be on a renewable tariff but adds costs to their bills for a technology they won’t directly benefit from”.
Companies that offer 100 per cent green energy deals either generate their own electricity from sources such as solar and wind or buy certificates issued by renewable electricity generators to match their supply, although the latter practice has been branded as “greenwashing” by some consumer groups.
The UK business department said the regulated asset base model remained a “credible option, with the potential to reduce the cost of new nuclear projects to consumers by helping to leverage vital private investment”.
Read More: Green energy suppliers oppose bills surcharge for new nuclear plants