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Renewable energy providers to share cost of new nuclear reactors

Experts have said the decision to share cost of accommodating Hinkley Point reactors among providers amounts to subsidy for nuclear, The Guardian has reported.

The row over subsidies for the UK’s new nuclear power stations has deepened after it emerged that the £160m-a-year cost of accommodating the giant reactors on the national electricity grid will be borne by all generators, including renewable energy providers.

The new reactors planned by EDF for Hinkley Point are significantly larger than any existing power stations, meaning the national grid has to pay for extra standby electricity to stop the grid crashing if one of the reactors unexpectedly goes offline.

National Grid said its decision to charge all generators for the cost was because “increasing costs on larger users could delay the commissioning of large nuclear plants by a number of years”.

The government is sensitive to the charge that its energy policies are contributing to increases in consumer bills. On Wednesday it released an analysis which predicted that bills in 2020 would be £166 lower as a result of climate change policies than they would be if the government did nothing.

But experts said the National Grid’s decision to spread the cost of extra standby capacity amounted to a subsidy for the new power stations.

Currently, the grid’s back-up system plans for a major loss of up to 1,320 MW a few times a year. But the two new reactors planned by EDF will have 1,600 GW of capacity each, meaning the grid will have to increase its back-up to 1,800 MW.

Nuclear power stations can shut down at short notice owing to engineering problems or even a swarm of jellyfish blocking cooling water pipes, as happened in June 2011 at EDF’s reactor at Torness in Scotland.

The question of state-sanctioned support for new nuclear power, paid ultimately by consumers, has become a fraught one for ministers. In 2010, they promised there would be “no public subsidy”, but ministers have since modified that to say no “unfair” subsidies, meaning the subsidies are available to a range of technologies.

But in February the energy secretary, Ed Davey, admitted to MPs the funding mechanism could differ between technologies and even individual projects. EDF is likely to receive tens of billions of pounds via the minimum price agreement.

The government also has to convince the European Union that its support for nuclear is not considered unfair under state aid rules.

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