The Spring Budget & Nuclear 2017
A regular staple of parliament has been the Spring Budget, where the Chancellor of the Exchequer reveals changes in tax and spending for the first part of the year, followed by the Autumn budget later in the year.
With mounting pressure on the government for a range of financial support to Civil Nuclear, the recent front-page news of Hinkley Point C is an immediate example, did the Spring Budget 2017 have anything to say?
Alongside the uncertain future of new build projects such as Horizon in Wylfa Newydd and at Moorside following Toshiba’s financial struggles, government intervention may be a welcome step in ensuring these projects progress smoothly.
Oil & Gas
Perhaps the largest revelation from the budget regarding power and climate is the tax relief for the North Sea oil and gas sector. This is welcome news for those businesses and organisations currently utilising the UK reserves of fossil fuels and non-renewables.
This provides some financial support following the drop in oil and gas prices from the past years and also prepares for the UK’s oil and gas production to decline.
What does this mean for the state of the nuclear industry? Well, it may come as no surprise that it would appear not a great deal.
With Hammond mentioning in his statement a goal to ‘maximise exploitation of remaining reserves [of the North Sea]’ it’s clear that there are no short-term plans to reduce dependency on Oil and Gas.
Levy Control Framework
This part of the budget, whilst not part of Hammond’s speech, shows a greater insight into the government’s plans regarding the nuclear industry.
With much discussion earlier in the year over the cost of energy when Hinkley Point C is operational, it will come as no surprise to some that the Levy Control Framework is to be scrapped.
The LCF was created to budget low-carbon subsidies through costs of electricity bills. The system was intended to control consumer costs and provide a level of certainty for investors to these energy sources.
This framework has undergone a deal of criticism, and so news of its scrappage and an implementation of new controls later in the year is not necessarily shocking.
As for how this effects the nuclear industry, it indicates a likely response to the inevitable cost rises associated with Hinkley Point C, and potentially other new builds over the next few years.
With an increased financial cost for companies involved in nuclear, it follows that without significant subsidies from the UK government, British customers will end up paying higher energy costs.
Industrial Strategy Challenge Fund
Perhaps the most explicitly beneficial to nuclear aspect of the budget is the £270 million used to launch the Industrial Strategy Challenge fund. Whilst this will not directly benefit the nuclear industry, it will support tools and technologies that will help innovate the operation and management of a range of facilities and goals.
The funding will support research from universities and businesses. Whilst there is a criticism of the low amount of funding, this support will help develop a number of technologies used in the nuclear industry.
Perhaps the most notable point, as mentioned on the government’s website, is the research into artificial intelligence and robotics for extreme environments. Recent explorations of the Fukushima plant by robotics showed the conditions these new robotics will need to be prepared for. As we move towards decommissioning a large number of our existing nuclear power plant fleet, these will play a larger part in the process.
The Nuclear Power industry in the Spring Budget 2017
With the announcement from Philip Hammond that not only is this his first Spring Budget, but also the last, it would seem that we may need to wait for the autumn budget for more details on many of the aspects affecting nuclear.
One thing is clear is that it does not at least seem like the government will be changing their stance on funding nuclear new builds in the immediate future. With the announcements of LCF scrappage, and a commitment to innovative technologies to the industry, it is yet to be seen what developments may happen later in the year.
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