NIA Response to the ‘Review of Electricity Market Arrangements – Second Consultation’

The NIA is the trade association and representative body for the civil nuclear industry in the UK. We represent around 280 companies operating across all aspects of the nuclear fuel cycle, including the current and prospective operators of nuclear power stations, international designers, and vendors of nuclear power stations, and those engaged in decommissioning, waste management and nuclear liabilities management. Members also include nuclear equipment suppliers, engineering and construction firms, nuclear research organisations, and legal, financial and consultancy companies.

Due to the diversity of our membership, our views in this submission will cover high-level, industrywide matters. Our members may choose to make their own detailed submissions.

Comments

Nuclear currently supplies around 15% of our electricity from just over half a square mile of land, and according to United Nations’ analysis, nuclear has the lowest lifecycle carbon, lowest land use, and lowest impact on ecosystems of any electricity source. Nuclear reactors are also capable of ramping their output up and down to match changes in demand or renewable output.

There is therefore an overwhelming public interest in bringing new nuclear power plants into operation and with this in mind, we would encourage Government to be mindful of the potential impacts of any changes to the current electricity market on new nuclear development and to factor these changes into the design of support mechanisms for new nuclear.

Significant work has already gone into developing the CfD model for Hinkley Point C and the nuclear RAB model for Sizewell C and we would hope that due consideration is given as part of proposed market reform changes to ensure the intent of the nuclear CfD and RAB mechanisms are not detrimentally impacted by the proposed changes.

Mechanisms must deliver sufficient revenue certainty and investor confidence to make investment in nuclear attractive. Any deviation from existing government policy on nuclear deployment and market signals could diminish private sector interest. Without investment, new nuclear projects cannot be built, and the UK will not meet its energy security goals.

Clarity from Government on how zonal pricing will operate and be delivered in practice is also essential as the proposed move to a zonal market could be difficult to implement and may result in market uncertainty which would have a negative impact on investor confidence.

Further Information

The NIA is happy to provide more context, or any clarifications desired on the content of our response and to ask our members where appropriate for additional information that may be useful.

Please contact Lauren Rowe, Policy Analyst for the Nuclear Industry Association, at [email protected] to do this.