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UK government looks set to u-turn on subsidies for nuclear

The British government is considering a reversal of its decision not to provide a subsidy to the nuclear power industry, in an effort to sign up energy companies to build nuclear power stations.

The Conservative – Liberal Democrats coalition had agreed in 2010 that nuclear power stations would only be built if no public subsidy was involved.
Nick Clegg and David Cameron
However the withdrawal of several utilities from the UK new nuclear build programme has forced ministers to think again.

The government is now in rigorous negotiations to incentivise energy companies to build new nuclear power stations by proposing to sign contracts guaranteeing subsidies for up to 40 years.

The Guardian newspaper has learned that ministers are intent on keeping the guaranteed wholesale cost of each unit of energy below the politically crucial figure of à‚£100 per megawatt hour.

The Department for Energy and Climate Change said in a statement: “No commitment has been made on commercial terms or a strike price. Ongoing discussions are focused on finding a fair, affordable deal, which represents value for money for consumers. Any agreement reached will be laid before parliament, and will include details of the strike price.”

According to the Guardian, Whitehall sources said they were confident that although the cost of the new reactor would be very high, that will start to fall with subsequent projects, and could fall as low as à‚£55-56 a unit later in the programme.

Long term the government hopes to build up to 16 GW of new nuclear power to help diversify the energy sources, also including renewable energy and new gas power, to keep prices down and make the UK more resilient to supply problems with one technology.

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