Government to press ahead with energy reforms

Nick Clegg has signalled that the government intends to press ahead with reforms to the electricity market, in a bid to drive investment into low-carbon energy generation and save the fledgling UK nuclear building programme.

The deputy prime minister said last week the government would press on with electricity market reforms in the next parliamentary session, with legislation expected to be announced in next month’s Queen’s Speech. Among the expected measures will be a fixed price for low-carbon power in a move aimed at encouraging investment in low-carbon generation, including nuclear.

Last month German energy firms RWE Npower and E.ON declared they would sell their joint venture Horizon Nuclear Power, which has been developing plans for new nuclear power plants at two of the UK’s eight specified new nuclear sites.

The announcement was a major blow to the fledgling nuclear new build sector, which is worth tens of billions of pounds to the UK construction industry.

The move left EDF’s plans for nuclear power plants at Hinkley in Somerset and Sizewell in Suffolk as the only nuclear projects with an investor on board that are close to being started.

The government is not due to have its electricity market reform legislation on the statute book until spring 2013, but Alistair Smith, chair of the Institution of Mechanical Engineers Power Division, urged the government to act more quickly to make Horizon an attractive prospect for investment.

“It’s difficult for an investor to come on board for the project without there being a clear idea of what they will be able to charge for electricity coming out of the plant,” he said.

He said if a buyer for the Horizon project was not found soon, there was a risk the Horizon team would be disbanded, which would put the project back by up to two years because the licences would need to be awarded to new owners.

“You can’t have people sitting on the sidelines waiting forever. They need to come forward with something because uncertainty is damaging confidence,” he said.

The only potential operator of the scheme to have yet expressed an interest in public is Russian state-owned nuclear firm Rosatom, which operates 10 sites in Russia and built the Chernobyl reactor.

However, Sergey Novikov, director of communications at Rosatom, said that the firm would look to use its own reactor technology if it were to takeover the Horizon project, which would push back the timetable for construction.

“We realise that it will take about four years to get our project licence by the British nuclear authorities,” he said.

He added that Rosatom had not been in discussions with any of the other consortia already linked to the scheme.