LONDON — Britain’s plans to build a fleet of nuclear power plants by 2025 are “ambitious” at best and “unrealistic” at worst, according to a report to be released Monday by a committee of the House of Commons.

“It is worrying that the government does not have any contingency plans in place for the event that little or no nuclear is forthcoming,” the Energy and Climate Change Committee wrote in its report.

Replacing the country’s aging network of nuclear power stations is a major component of the government’s strategy to lower 1990 levels of greenhouse gas emissions by 80 percent by 2050. While nuclear power has disadvantages, particularly the production of radioactive waste, it emits virtually no greenhouse gases.

The French utility EDF and the British government are negotiating the terms for developing new nuclear plants. EDF has proposed constructing two plants at Hinkley Point on the Severn Estuary in southwest England, where the company operates two nuclear stations built in the 1970s. The new plants would be the first for Britain since 1995.

But cost estimates for the project have soared. Analysts say that in order for the project to be viable, EDF needs the government to guarantee it will buy electricity from the plants at prices substantially higher than the current market rates.

Nuclear power now supplies about 20 percent of the electricity in Britain. The government is promoting conservation and the development of renewable sources of energy, but without new nuclear plants, Britain will struggle to meet demand for electricity and reduce carbon dioxide emissions.

Last year the German utilities RWE and E.On dropped out of contention for contracts to build the nuclear plants. A consortium led by Hitachi of Japan bought the Germans’ franchise, called Horizon, but it is years from being able to begin construction. That has left EDF as the government’s only realistic option for the foreseeable future.

For EDF, Britain provides an opportunity to demonstrate the viability of its next-generation European pressurized water reactors, known as EPRs. The first two EPR power plants, at Flamanville in France and Olkiluoto in Finland, have been plagued by huge cost overruns and technical problems. If EDF cannot make the next-generation reactors an attractive option for clients, it faces a gradual decline in its core businesses, said Harold Hutchinson, an analyst at Investec in London.

Britain wants to build around 10 new plants. Construction costs have soared to €8 billion, or $10.4 billion, for the EPR plant that EDF is building at Flamanville. The committee report estimates that the first British EPR will cost £7 billion, or $10.5 billion.

In a report last year, Citigroup estimated that if it cost EDF £7 billion to build a plant, in order to realize a 10 percent return, the utility would need to sell electricity at about £110 per megawatt hour range — roughly double today’s wholesale prices.

EDF Energy, the British arm of the company, will not disclose the electricity price it is seeking.

“When the contract agreeing a price for the electricity is published, it will show in a transparent way that new nuclear is competitive with all other forms of low-carbon energy, and good value for consumers,” it said in response to the committee report.

Providing EDF with substantial, long-term price guarantees would not only present a political challenge for the British government, it might also contravene European Union rules on state support for industry.

“I am not sure that if the U.K. had been told that this is what it would cost, it would not have gone down a different road,” said Antony Froggatt, a nuclear analyst at Chatham House, a study group based in London.

Last month the British utility Centrica, which has a 20 percent stake in EDF’s existing nuclear power plants in Britain, dropped out of EDF’s plans to build new nuclear stations and took a write-off of roughly £200 million.

Tim Yeo, the Conservative who is chairman of the House of Commons committee, said during an interview that he was concerned that EDF might walk away from the project within weeks. If that happens, development of new nuclear power plants “may not start in five years,” he said.

Article source: http://www.nytimes.com/2013/03/04/business/global/report-casts-doubt-on-britains-nuclear-electricity-strategy.html?partner=rss&emc=rss