National Grid has criticised plans by gas and electricity watchdog Ofgem to connect the Hinkley Point C power station to the electricity network, saying that this approach fails to reflect financing costs and its estimate of £100 million in savings was excessive.
Shares in Ofgem dropped by two per cent after the plans were announced, detailing how the power network would be overhauled to send electricity from the new plant to the rest of the country, the Guardian reports. The project will feature underground cables, new substations and the new T-pylon design, which are expected to have less impact on the local landscape.
Ofgem said it had plans in place to impose a competition proxy on National Grid to simulate the effect of the Hinkley Seabank project being put out to tender. This would be achieved by setting a lower rate of return than would typically be faced by the regulated monopoly. The aim is to simulate cost savings that the watchdog has achieved in the offshore wind sector – when grid connections are put out to tender.
In a statement, National Grid said: “These parameters do not, in our view, offer the level of returns that would allow sustainable investment in the UK energy sector needed to deliver good outcomes for both customers and investors.”
This comes as EDF Energy claims that it could build a second nuclear power station here in the UK that would actually be 20 per cent cheaper than Hinkley Point C – which is costing the taxpayer £20 billion.
According to the Guardian, the company believes that it would be cheaper to construct a plant at Sizewell in Suffolk because of existing grid connections, replication of construction techniques and exploration of new finance models.
New chief executive Simone Rossi said he also thinks he could deliver Hinkley on time with power ready to be generated come the year 2025. EDF has already issued warnings that the Somerset project could be 18 months late, with other similar projects in Finland and France running years over schedule.
Hinkley Point C itself will sit alongside an operating nuclear power station, and one that’s being decommissioned. It’s thought it will make huge contributions to the UK’s move to reduce its carbon emissions, with electricity generated avoiding nine million tonnes of CO2 emissions each year – or 600 million over its lifespan of 60 years.
There are other benefits to the project, however, including 25,000 employment opportunities, up to 1,000 apprenticeships and 64 per cent of its construction value predicted to go to companies here in the UK.
Not only that but a £20 million Community Fund has been set up to spend on improvements for local communities that have been most affected by the development of the nuclear reactor.
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