Government to rethink Hinkley Point funding model for future projects 

The Government is likely to scrap the complex funding arrangements used to prop up the development of Hinkley Point C after an energy minister admitted the deal is unlikely to be used for future nuclear projects.
Richard Harrington, who joined the Business and Energy department as a junior minister earlier this year, said nuclear “absolutely” had a role to play in the future energy mix, but appeared to bow to Hinkley’s critics by admitting the financing model was “unlikely” to be used again.
Speaking on the fringes of the Conservative Party conference, he said he believed that a “third model” existed between the complex deal agreed with EDF Energy on Hinkley, and the suggestion that Government should be the main financier behind nuclear projects in order to drive costs lower.
“I can’t say more than that because there isn’t any more to say,” he said.
But the admission that Government is rethinking how it will support its ambitious new nuclear drive is likely to be welcomed by critics of the Hinkley.
The deal struck with EDF Energy to build Britain’s first new nuclear power project in a generation has been heavily criticised by experts and the National Audit Office because it guarantees the company a revenue of ?92.50 per megawatt-hour of power, well above current market prices.

Richard Harrington MP
The spending watchdog has publicly poured doubt on the project twice in the last two years, saying the Government did not do enough to increase the chances of a good deal for consumers.
Since then a House of Lords report piled further criticism on the ?18bn project. Lord Holick branded Hinkley a “good example of bad policy” and warned the Government that it was time to consider a plan B.
A source close to EDF Energy, also at the party conference, said the company had been clear that it is willing to engage with Government to create a new pricing model for its future projects at Sizewell and Bradwell.
The high cost of new nuclear is in part due to the heavy risk and ?20bn investment required upfront to build the plant, but critics say Government could reduce these costs by taking an active stake in the project.
Hinkley Point nuclear plant: the story so far
Earlier this year Tim Yeo, a former environment minister and energy committee chairman, wrote to Greg Clark, the Secretary of State, warning that the only way the Government can avert a crisis for the country’s nuclear programme is to take a direct financial stake in the projects.
He suggested that Government should offer loans to developers that can be paid back once the plant comes on stream, or take an equity stake in the project, which could be sold off to investors when construction is complete.
The UK is banking on the 3.2GW nuclear power plant to provide as much as 7pc of the country’s energy by the middle of next decade. However the Hinkley Point, Moorside and Sizewell B projects have all been dogged by delays and concerns over whether the multi-billion pound investments can be shouldered by the companies.
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