UK aims to set nuclear CfD strike prices by end 2013
London, 27 September (Argus) — The UK government will in November set out draft details of a planned contract-for-difference (CfD) subsidy regime for nuclear and renewable power, with a view to setting CfD strike prices by the end of 2013, a senior official at the Department of Energy and Climate Change (Decc) said today.
Decc expects the strike price to be set over the course of the next year, with draft prices published in 2013 and final prices published by the end of the same year for the 2014-2017 period, Decc's director of energy markets and networks, Jonathan Brearley, said at National Grid's Future Energy Scenarios 2012 event. The feed-in tariff with CfD, designed to give nuclear and renewables a guaranteed wholesale power price, is the key element of the government's electricity market reforms.
“It is very hard today to ask investors to invest against the carbon tax alone,” Brearley said, noting that projects in development now will come on line in the next decade and beyond, several government administrations from now, in the unstable area of tax policy.
But the proposed schedule still leaves uncertainty for projects that require an earlier investment decision, such as the planned new nuclear plant at Hinkley Point C. French state-controlled utility EdF and UK generator Centrica have said that they would like the bill underpinning the reforms to become legislation by spring 2013 to facilitate a final investment decision. Any project that needs an early decision should approach Decc, Brearley said, adding that this would not equate to a blank cheque for nuclear power. The government is not prepared to support nuclear “at any price”, he said.
The government had been working on the basis of introducing a multi-party contract model for the CfD regime, but based on industry concerns it is now considering a single counterparty model, Brearley said, which will mean setting up a separate counterparty body for administering contracts with generators. It will have revenue-raising powers to collect payments from suppliers to fund payments to generators and vice versa. The government previously said that it will not act as the counterparty, and National Grid said it will not take on the role so that it can keep its balance sheet focused on network management.
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