A delay or cancellation of the proposed Hinkley nuclear project in the UK could lead to an increase in energy bills and jeopardise the nation’s decarbonisation targets.
Energy Secretary Amber Rudd said while she is “fully confident” the project will go ahead, DECC has arrangements in place to ensure any delay does not pose a risk to security of supply.
The £18 billion project was announced in October 2013 but developer EDF has yet to make a final investment decision.
Mr Rudd added her department has also put in place “detailed monitoring and governance arrangements to ensure there is sufficient intelligence and foresight” on any issues that might delay construction further down the line so alternative capacity can be put in place.
That would be through the existing Capacity Market which will incentivise generators to provide power to cover any shortfall.
In a letter to Angus MacNeil MP, Chair of the Energy and Climate Change Committee, Ms Rudd said: “At this stage and at any point up to the Capacity Market four years before Hinkley commissions in 2025, we are confident the market would be able to respond to any anticipated shortfall and that alternative sources of supply would be unlikely to present a significant increase in cost to the consumer.
“I am also confident that alternative capacity could still be sourced if a risk of delay or cancellation emerged after this point but this may come at a higher cost. There is also a risk though that any such delay could put at risk our decarbonisation targets – once of the key reasons the government is supporting Hinkley Point C in the first place.”
However she added there are currently no liabilities the taxpayers would face if the project were to be cancelled at this stage, either by the UK or French Governments, as no contracts have yet been signed.
Ms Rudd went on: “Once the contracts are entered into, all risk is borne by EDF, except in the case of a narrow and extremely unlikely range of circumstances such as a political shut down or a change in law, which are almost entirely within the control of the UK Government.”
She said the government has been assured her French counterparts are taking the necessary steps to help reach a final investment decision as soon as possible.
EDF chief Vincent de Rivaz has also insisted the nuclear project will go ahead.