Bill payers could save about £30 billion for each new nuclear plant as part of new financing proposals, the Government has said, but critics fear the plans will transfer risk to households.
Business secretary Kwasi Kwarteng has laid out proposals which would allow the funders of a new nuclear plant to start getting money back before the project is completed.
It is designed to encourage investment to replace the fast-aging stock of nuclear power plants, which currently supply 16% of Britain’s electricity.
Current financing models have proven unattractive to investors, who have walked away from several proposed new plants in recent years.
“The existing financing scheme led to too many overseas nuclear developers walking away from projects, setting Britain back years,” Mr Kwarteng said.
“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.”
Proponents also say that the proposals to extend the regulated asset base model (RAB) will save money because investors will accept lower returns because they are taking smaller risks.
RAB has been used to fund the Thames Tideway sewer and Heathrow Terminal Five.
However, critics worry that the risk to investors is only lower because it is being shouldered by bill payers.
Before the nuclear plant is ready to start producing electricity, households will already start paying towards it through their electricity bills.
Ministers said that the cost would only reach £12 a year during construction, and claimed the model would then save households £10 per year over the life of the nuclear plant.
Greenpeace UK chief scientist, Dr Doug Parr, said that the model has already been used in the US.
“The results were disastrous. It transfers huge financial risk from the builders to bill payers. In South Carolina, 18% of residents’ energy bills went to pay for a half-built reactor which has been abandoned and will never produce electricity,” he said.
Nuclear power itself is also questioned by some experts, who point towards the rapidly falling price of wind-powered electricity.
Under the current model, energy giant EDF said it could deliver electricity for £89.50 per megawatt hour from its new Sizewell C nuclear site.
But some offshore wind projects that will come online in two years will charge as little as £39.65 per megawatt hour.
Nuclear proponents, however, say that the technology provides a zero-carbon source of electricity which is less volatile than wind or solar. When the wind is not blowing the turbines cannot produce anything, which requires something to take their place.
A spokesperson for Sizewell C said: “This legislation is a big step forward and will allow us to fund Sizewell C so that it delivers reliable, low carbon nuclear power at a lower cost to consumers.
“It is a once-in-a-generation opportunity to create thousands of jobs and training opportunities in East Suffolk.”