The chief executive of SSE has warned UK consumers could end up footing an excessively high bill for nuclear power because of “opaque negotiations” between the UK Government and EDF Energy.
Writing in a daily newspaper about the draft Energy Bill, which is meant to encourage investment by offering a guaranteed price for low carbon electricity in pounds per megawatt hour (£ per MWh), he said: “The price levels will be set initially by negotiations between the Government and electricity generators.
“The nuclear industry, historically adept at negotiation, appears to be engaging in a classic piece of anchoring to get the highest price for new nuclear.”
Referring to Government-commissioned research which last year suggested a cost for new nuclear of £66-74/MWh, the SSE chief said figures being suggested for this “strike price” of more than £100 per MWh are “are completely at the wrong level”.
Mr Marchant wrote: “Less than four years ago, at the end of 2008, EDF said that the cost of a new reactor, specifically for the UK market would be around £45/MWh. If we allow a generous inflation figure that suggests £60/MWh to £65/MWh at today’s prices… So if £65/MWh was right only four years ago, why is the number now being mooted more than double that being promoted in 2008?”
He said the difference between paying £65/MWh for new nuclear, versus £140/MWh for new nuclear will amount to over £2bn every year if we build two reactors: “That is around £70 for every household on top of the current electricity bill.”
SSE is investing heavily in renewable energy, particularly offshore wind and last year jettisoned plans for developing nuclear power itself by selling its stake in the nuclear project NuGen for nearly £6billion.
Mr Marchant said the cost of nuclear should be compared to onshore wind, which costs around £90/MWh – rather than the more expensive, less mature offshore wind which developers hope will soon cost around £100/MWh.
ELN is waiting for a response from EDF Energy.