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Climate change and the Ukraine war have once again electrified interest in nuclear power. Global energy ministers met in Paris this week to discuss how to kick-start a new age of atomic power. Installed capacity must triple to 1,160 gigawatts by 2050, the Nuclear Energy Agency says.
In the west, many countries’ goals will hinge on attracting private capital to a sector with a tarnished record. Recent large projects in the US and Europe have run over budget and into delays.
New, small reactors that can be built in factories by companies such as NuScale and Rolls-Royce to reduce risks are an exciting prospect. For larger projects in particular, governments will have to offer incentives and guarantees that will not always sit comfortably with taxpayers.
Currently more than 400 nuclear reactors supply some 10 per cent of the world’s electricity. China is already building 24 new reactors, says the World Nuclear Association. Others such as France and the UK have ambitious targets.
The UK is a test case for investor appetite to fund new plants. It wants to secure funding for the 3.2GW Sizewell C project, using a regulated asset base financing model.
RAB is a sensible choice. Already used for infrastructure such as gas networks, it offers investors returns during construction. That avoids the accumulation of interest on debt that would normally be paid off when projects open. Households contribute to the financing via a surcharge on their energy bills.
For that reason, it is not popular with consumer groups. Opposition will grow especially as investors will want the risk of any budget blow-ups to be shared with bill-payers, at least 50-50. Governments have unpopular decisions to make to achieve their nuclear aims.
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