The UK government is handing French and Chinese utilities tens of billions of pounds of taxpayers' money to build and operate the two Hinkley Point C reactors ‒ lifetime subsidies are guess-work but could amount to around £50 billion.1 In November 2017, the UK Parliament's Public Accounts Committee said Hinkley Point amounts to a "bad hand" and "the poorest consumers will be hit hardest"2 while the UK National Audit Office said Hinkley Point is "a risky and expensive project with uncertain strategic and economic benefits."3
Now the UK government is engineering an equally mind-boggling set of subsidies to persuade Japanese conglomerate Hitachi to proceed with two Advanced Boiling Water Reactors at Wylfa Newydd on the island of Anglesey in north Wales. It seems likely that the Japanese and UK government's will both provide direct financing for the reactors, with the two governments and Hitachi stumping up roughly one-third of the cost each.4 All sorts of other sweeteners are being offered to Hitachi by the UK government including loan guarantees and a guaranteed 'strike price' for electricity sold from Wylfa reactors (likely to be lower than the Hinkley strike price but still well above current wholesale rates, and significantly higher than the strike price for off-shore wind farms.4)
Thus governments are jumping in where private enterprise fears to tread. Hitachi hasn't found any private-sector partners, and Hitachi itself wants to dramatically reduce its stake in the Wylfa project. You'd think alarm bells would be ringing within the halls of government about the viability and economic logic of the project. Even with all the sweeteners being thrown in its direction, Hitachi has yet to commit to the project.5
Hannah Martin from Greenpeace UK said: "No bank, hedge fund or insurer will touch the UK's new nuclear programme with a bargepole. So Hitachi has no option but to ask the government for a taxpayer bailout to keep their collapsing reactor programme afloat. This would leave the British public to carry much of the cost and all of the risk. Any prudent investor would laugh at this request. After the Hinkley debacle, it's vital that the government stops trying to keep our energy policy a secret and presents any offer of a deal to Parliament before the Hitachi board meeting at the end of May. Otherwise it's difficult to know where their generosity to the nuclear industry might end."6
The 2010 Conservative Party election manifesto stated that: "we agree with the nuclear industry that taxpayer and consumer subsidies should not and will not be provided – in particular there must be no public underwriting of construction cost overruns".7 Now the Conservative government's position is that: "It remains the government's objective in the longer-term that new nuclear projects – like other energy infrastructure – should be financed by the private sector."8
Nick Butler noted in the Financial Times that a direct shareholding in the Wylfa project by the UK government will almost certainly be challenged in the courts on the grounds of competition policy and European state-aid rules. The UK is likely to be subject to EU rules at least until the end of the Brexit transition period.9
References:
1. Steve Thomas, Sept 2017, Time to Cancel Hinkley', http://www.no2nuclearpower.org.uk/wp/wp-content/uploads/2017/09/Time-to-...
2. World Nuclear Association, 23 Nov 2017, 'British MPs question value of Hinkley Point project', www.world-nuclear-news.org/NN-British-MPs-question-value-of-Hinkley-Poin...
3. Gerard Wynn, 29 Nov 2017, 'IEEFA Update: More Questions on U.K. Nuclear Project', http://ieefa.org/ieefa-update-questions-u-k-nuclear-project/
4. Adam Vaughan, 5 June 2018, 'UK takes £5bn stake in Welsh nuclear power station in policy U-turn', www.theguardian.com/environment/2018/jun/04/uk-takes-5bn-stake-in-welsh-...
5. NucNet, 29 May 2018, 'Hitachi Agrees To Continue Negotiations With UK Over New Nuclear At Wylfa', www.nucnet.org/all-the-news/2018/05/29/hitachi-agrees-to-continue-negoti...
6. nuClear news No.107, May 2018, 'Nuclear Subsidies – We Told You So', www.no2nuclearpower.org.uk/wp/wp-content/uploads/2018/05/NuClearNewsNo10...
7. Dave Toke, 4 June 2018, 'Wylfa: How the Tories are deliberately forgetting their nuclear lessons', http://realfeed-intariffs.blogspot.com/2018/06/wylfa-how-tories-are-deli...
8. Rachel Morison, 4 June 2018, 'U.K. Moves Toward Involvement on $27 Billion Nuclear Plant', www.bloomberg.com/news/articles/2018-06-04/u-k-weighs-taking-stake-with-...
9. Nick Butler, 4 June 2018, 'Stake in nuclear plant would be dramatic change of policy for UK', www.ft.com/content/7ba55ce6-63f3-11e8-90c2-9563a0613e56