The Nuclear Free Local Authorities (NFLA) publishes today its response to the UK Government consultation on the Revenue Asset Base (RAB) financial model being proposed to assist the funding of new nuclear reactors. NFLA see this new model as a real risk to the public purse, providing preferential treatment to new nuclear over renewable energy investment, is overly complicated to implement at a time when the ‘climate emergency’ calls for more straightforward and realisable schemes like energy efficiency and decentralised energy solutions instead.
The RAB model has been used to fund some large infrastructure projects like the Thames Tideway Tunnel, but it has been regularly criticised by audit watchdogs and select committees for moving the financial risk of the project onto the consumer. Despite this, the Government has now put it forward for funding new nuclear projects such as Sizewell C. (1)
This consultation arises from the failure of energy utilities to deliver investment to enable new nuclear reactors to be built. The ballooning costs of this technology is instructive – Hinkley Point C was originally going to cost £4 billion, but latest assessments put its cost at over £20 billion. Toshiba has abandoned development of the Moorside site in Cumbria after its core nuclear business nearly brought the entire company down, and Hitachi has pulled out of investing in the Wylfa B site over expanding cost concerns. Despite this, the UK Government is still determined to go ahead with supporting new nuclear power reactors and is now putting forward the RAB model to provide financial stability, and significant public resource, to resurrect these and other schemes just at a time when renewable energy has proven itself to be a value for money technology.
Our view on this consultation mirrors that recently given to ‘The Guardian’ by Dr Doug Parr, Chief Scientific Adviser for Greenpeace, who notes of it: “The nuclear industry has gone in just 10 years from saying they need no subsidies to asking bill payers to fork out for expensive power plants that don’t even exist yet and may never. This ‘nuclear tax’ won’t lower energy bills – it will simply shift the liability for something going wrong from nuclear firms to consumers.” (2)
In its response (3), NFLA note that the RAB approach exposes consumers to the cost of overruns, and in effect also requires them to provide financing to the nuclear industry at zero interest. There are plenty of ways to provide flexible power without resorting to so-called secure “baseload” supplies such as nuclear. In fact what will be required in future will be flexible supplies which can balance cheap renewables. Renewable energy is continuing to get cheaper, with, for example, a new study by Bloomberg New Energy Finance predicting that the cost of producing hydrogen gas with renewables is likely to plummet by 80% by 2030. (4)
In summary, NFLA believe the main problems of the RAB model are:
- Consumers may end up paying for nuclear projects which are not completed;
- Risk is shifted to consumers, including those who don’t use nuclear electricity – particularly Scottish and Northern Irish consumers where new nuclear reactors are not being planned for;
- It will be difficult to define a credible cost overrun threshold when already two EPR projects in Finland and France have tripled in cost;
- Private finance may still not be forthcoming despite all the effort being put into this funding model;
- There is limited experience of using the RAB model for anything as complex and risky as nuclear;
- The project developer will hold all the information, so the proposed Regulator will only be able to make token adjustments to projected costings;
- Setting up a new regulatory regime will mean the time it takes to provide any carbon savings will be far too long, at a time of real concern with responding urgently to the ‘climate emergency’;
- The Revenue Stream will include a variable strike price – consumers effectively forced to write a ‘blank cheque’ to the nuclear industry.
NFLA even note that in Copeland, where Sellafield is sited and strong support exists for nuclear power, the chairman of the council’s strategic nuclear and energy board, Steven Morgan, said the public under this new RAB scheme could end up paying “for plants that haven’t been built yet and may never be built.” Endorsing a “substantial increase in our electricity rates” to pay for new nuclear plants was “not something we should sleepwalk into“, he added. (5) NFLA would share such concerns.
NFLA Steering Committee Chair Councillor David Blackburn said:
“This detailed and thorough analysis of the RAB model by the NFLA makes it quite clear this proposed energy financing model will be overly expensive, overly complicated, is completely unnecessary as the answer to our future energy needs, and is a licence to support the nuclear industry with huge levels of financial support in variance with support for the renewable energy sector. It will fundamentally require the public, either as taxpayers or electricity bill payers, to foot the cost of overruns to new nuclear projects. This also arises at a time when the falling costs of a wide range of renewable energy technologies are rapid and the time it takes for renewable projects to be realised is much quicker than anything the nuclear industry can deliver. I believe RAB is not the answer to delivering and funding our future energy needs, far from it, and it should not be used for this purpose.”
Ends – for more information please contact Sean Morris, NFLA Secretary, on 00 44 (0)161 234 3244.
Notes for editors:
(1) UK Government consultation on the RAB financing model for new nuclear projects –
(2) The Guardian, 23rd July 2019
(3) NFLA New Nuclear Monitor 58, NFLA response on the RAB funding model is attached with this media release and is on the NFLA website.
(4) Bloomberg, 22nd August 2019
(5) BBC, 24th August 2019