Clark: UK may need 40GW of new baseload generation by 2050

Whether from nuclear plants or power stations equipped with carbon capture and storage (CCS), the UK will need up to 40GW of new low-carbon baseload generation to meet the net-zero emissions target, Greg Clark has warned.

Pictured: EDF's Hinkley Point C nuclear power station

Pictured: EDF's Hinkley Point C nuclear power station

Clark, who was replaced by Andrea Leadsom as business and energy secretary on Wednesday (24 July), reportedly made the comments in a meeting with industry on Monday as his department proposed to fund new nuclear projects under a regulatory asset base (RAB) model.

The minister was said in The Times to be citing government analysis which found that between 30GW and 40GW of dispatchable low-carbon generation would be needed by 2050 to meet the target of reducing greenhouse gas emissions to net-zero.

The entirety of the UK’s existing nuclear fleet – eight power stations with a combined capacity of 9GW – is scheduled to close by 2035. But so far only one new plant is being built – the 3.2GW Hinkley Point C project in Somerset.

Over the last year, the Japanese conglomerates Toshiba and Hitachi have shelved plans to build three nuclear plants at Moorside, Wylfa and Oldbury.

The Department for Business, Energy and Industrial Strategy released a raft of documents on Monday, including a consultation on the proposed RAB model, which EDF has been seeking for its Bradwell B and Sizewell C projects.

The dump is thought to be in lieu of the energy white paper, which the government promised to publish over the summer, but has yet to emerge.

Under the RAB model, developers would be allowed to recoup some of their investment before their project is up and running. The government said the model, which is already being used to fund the construction of the Thames Tideway super sewer, would lower financing costs and ultimately consumers’ bills.

However, this would also shift much of the construction risk onto bill payers, who could end up contributing large sums of money towards a project which is never completed.

Yorkshire Water launches sustainability bond

Yorkshire Water has launched its first sustainability bond in a bid to raise £350m from investors.

The bond will mature in 2041, with Yorkshire Water claiming it is the longest dated sustainability bond issued in GBP to date

The bond will mature in 2041, with Yorkshire Water claiming it is the longest dated sustainability bond issued in GBP to date

The bond will be admitted to the London Stock Exchange’s main market on Thursday (18 April) and is the first from Yorkshire Water’s recently published sustainability framework, which sets out how the supplier will spend money in ways that have an environmental or social benefit.

In August 2017, Anglian Water launched a £250 million green bond, but Yorkshire Water’s new offering is the first GBP denomination sustainability bond.

Yorkshire Water’s bond will mature in 22 years, in April 2041.

Speaking to Utility Week, BNP Paribas’ head of sustainable capital markets Agnes Gourc said the bond has been “strongly oversubscribed” and investors have placed more than £1.9 billion of bids.

“It does show there is a strong demand both for Yorkshire Water and for sustainability features in bonds.”

Gourc added that while the sustainability bonds market is relatively small, compared to mainstream investment bonds, it is growing and becoming increasingly popular with investors.

“Utility chief finance officers are more and more aware of investors’ expectations around environmental, social and governance issues,” she said.

“When a sustainability bond issue comes out, it is good for investors because it answers questions around those issues for them. They are not only bought by investors with a pure environmental strategy, but also those with broader strategies around sustainable, responsible investments.”

Yorkshire Water’s director of finance and regulation Liz Barber added: “Investors have responded very positively to our sustainable finance framework and the success of this issue confirms that we’ve taken the right approach.

“This is the first step in our plans to progressively move our debt portfolio into the framework and shows Yorkshire Water’s commitment to embed sustainability across all our operations.”

Tom Grimwood

This article first appeared on edie's sister title, Utility Week



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