Wylfa becomes more likely as UK Gov brings forward plan for consumers to pay for plants before they’re built
A second Wylfa nuclear plant on Anglesey is believed to have become more likely as the UK Government has introduced a new finance model that will see consumers pay for nuclear plants before they’re built.
The UK Government wants to bring the power station projects such as Wylfa B on Anglesey and Trawsfynydd in Gwynedd back from the dead as part of plans to attain net zero carbon emissions by 2035.
The Net Zero Strategy announced last week confirmed that £120 million was being made available to support the development of nuclear projects through the Future Nuclear Enabling Fund.
US nuclear company Westinghouse is planning to revive plans for a nuclear power plant at Wylfa that was abandoned by Japan’s Hitachi in 2019, and the UK Government has indicated that it is keen to see the plan come to fruition.
Ministers are also expected to back smaller modular reactors which are being developed by a consortium led by Rolls-Royce. One of these is planned for installation in the Trawsfynydd nuclear plant which is no longer producing energy.
Business Secretary Kwasi Kwarteng has set out the details of the new model in the Nuclear Energy (Financing) Bill which the government says will reduce reliance on overseas developers for financing new nuclear projects by substantially increasing the pool of private investors to include British pension funds, insurers and other institutional investors.
Under the existing mechanism to support new nuclear projects developers have to finance the construction of a nuclear project from scratch and only begin receiving revenue when the station starts generating electricity.
This led to the cancellation of recent potential projects, such as Hitachi’s project at Wylfa Newydd and Toshiba’s planned plant at Moorside in Cumbria.
Under the new proposals, consumers will contribute to the cost of new nuclear power projects during the construction phase – but it’s claimed overall consumers are expected to save more than £30 billion over the project’s lifetime compared with existing funding mechanisms.
The government hopes that Initial contributions will encourage private investors by offering them greater certainty through a lower and more reliable rate of return in the early stages of a project, lowering the cost of financing it, and ultimately helping reduce consumer electricity bills.
“In light of rising global gas prices, we need to ensure Britain’s electricity grid of the future is bolstered by reliable and affordable nuclear power that’s generated in this country,” UK Business and Energy Secretary Kwasi Kwarteng, said.
“The existing financing scheme led to too many overseas nuclear developers walking away from projects, setting Britain back years. We urgently need a new approach to attract British funds and other private investors to back new large-scale nuclear power stations in the UK.”
“Our new model is a win-win for nuclear in our country. Not only will we be able to encourage a greater diversity of private investment, but this will ultimately lower the cost of financing new nuclear power and reduce the costs to consumers and businesses.”
Ministers claim large-scale project funded under this scheme will add at most a few pounds a year to typical household energy bills during the early stages of construction and on average less than £1 per month during the full construction phase of the project.
Overall, the lower cost of financing the project is expected to lead to savings for consumers of at least £30 billion on each project. This translates to a saving of more than £10 per year for an average domestic dual fuel bill throughout the life of the nuclear power station – which can operate for 60 years.