Plans to usher in a new era of nuclear energy by building the country’s first reactor for 20 years in Somerset have been cast into doubt amid concerns over the Government’s energy policy.
Centrica – formerly British Gas – has threatened to pull out of a joint agreement with French company EDF Energy to construct the Hinkley Point C twin reactor.
Executives at Centrica, which holds a 20 per cent stake in the project, have warned Whitehall officials that the plan hangs by a thread and could be scrapped without assurances on the future price of nuclear-generated electricity.
The threat comes after plans for new reactors at Oldbury in Gloucestershire and Wylfa on Anglesey, in Wales, were shelved by Horizon, a partnership of two German companies, last month.
Ken Maddock, Conservative leader of Somerset County Council and chairman of the New Nuclear Local Authorities Group (NNLAG), said all eyes were now on Hinkley, which would form “a template” for the entire programme.
Mr Maddock said he would like to see energy from the ‘new nuclear’ attract subsidies similar to those enjoyed by technologies such as wind and solar.
But he also claimed that there was an ongoing battle to extract “community benefits” which would adequately compensate residents for the “inconvenience, stigma and fear” of living near the Somerset reactors. said: “There is a massive enthusiasm for new nuclear among local authorities – but there has been a bit of a pause and was great disappointment that Horizon’s backers pulled out,” he added.
“I would like to see new nuclear trade on a par with other low carbon renewables but the Government approach is largely governed by the coalition agreement which is to provide nuclear without public funding.”
Centrica joins a growing number of energy companies that are cooling on nuclear power, a process that accelerated after last year’s Fukushima disaster, triggered by the tsunami in Japan.
The Government has tried to help investors by proposing sweeping reforms of Britain’s electricity market, designed to attract investment in low-carbon electricity generation.
As part of that, new nuclear plants will receive a guaranteed price for electricity but the actual level of support has yet to be determined.
The Coalition supports the new nuclear facilities but a concession secured from the Conservatives by the anti-nuclear Liberal Democrats means this must be done without any Government help.
A recent Government submission to the European Commission shows that subsidies will help all “low-carbon technology”, effectively allowing the nuclear industry to claim the same sort of public help as wind and solar.
Greenpeace says the Government is not being honest about giving the nuclear industry a subsidy and argues that only renewables that need help to develop and did not have the same waste disposal problems as nuclear should be given extra help.
Hinkley Point C is the most advanced of the ten proposed reactors, winning planning permission to carry out site preparation works last July.
Protestors have made the site the focus of the UK’s anti-nuclear campaign, occupying trees and a disused farmhouse earlier this year.
A planning application was submitted to the Infrastructure Planning Commission (IPC) last October and a decision is expected later this year.
The Prime Minister claimed that the project would blaze a trail for a new Anglo-French industrial pact. But sources at Centrica have told the Financial Times that ministers must set out details of what the long-term contracts for low-carbon energy prices would be “within months”.
“Nuclear power stations cost £6 billion each and we must know what the return is going to be on that kind of investment,” a person close to the company is quoted as saying.
“If we don’t get the right answers, we won’t proceed.”
Conservative MP Tim Yeo, chairman of the influential energy select committee, has described Centrica’s potential withdrawal as a “hammer blow to the future of nuclear”.
“If they are considering pulling out I would regard it as very alarming indeed.”
EDF did not comment last night.