5 Dec 12

EDF Energy Response to the Chancellor’s Autumn Statement and the Government Gas Generation Strategy

EDF Energy agrees that the country needs a balanced energy mix in which gas has a role to play alongside nuclear and renewables. We also believe that large-scale “shovel-ready” infrastructure projects have the potential to deliver significant benefits for the UK economy.

Energy policy must help the UK fill the energy gap and build new generating capacity in the 2020s with power that satisfies the need for:

• Low carbon energy

• Security of supply

• Stable and affordable prices for customers

• Infrastructure spending which will boost the economy and create jobs and long-lasting skills.

EDF Energy has always believed that gas generation will help keep the lights on as the country moves towards a low carbon economy. The company has recently invested around £850m million in a new CCGT gas power station at West Burton in Nottinghamshire which is being commissioned now and will supply 1.5m homes.

Our decision yesterday to extend the life of two nuclear power stations at Hinkley and Hunterston will provide low carbon and reliable electricity for an extra seven years to at least 2023 for around 2m homes. It follows life extensions at Heysham 1 and Hartlepool in 2010 and we hope to extend the life of our other nuclear power stations in the future.

Unlocking investment in energy will provide the UK economy with a real boost. At Hinkley Point C in Somerset, we have a new nuclear project as large as the Olympics which is “shovel-ready”. Subject to a final investment decision, it has the potential to create thousands of jobs on-site and with UK suppliers. Our objective is to have all the components in place around the end of the year to allow the final investment decision at the earliest possible date.

It is imperative that the Government maintains its continued momentum on Electricity Market Reform (EMR). Reform of the existing electricity market arrangements is necessary to ensure the market is capable of delivering the reliable diverse energy mix required to bring about the UK’s energy policy objectives.

We believe that the Government’s market reform proposals will provide the investment framework that is crucial for the low carbon investment that the country needs, and will keep costs down for consumers.

A fuel mix solely based on fossil fuels such as gas but without new nuclear and renewables will not help us deliver the level of decarbonisation needed to meet the UK’s climate change commitments unless carbon capture and storage can be successfully demonstrated at industrial scale. Dependence on imported gas poses potential risks to supply and price volatility.

Development of cost effective domestic sources can help meet this demand. This could include shale gas. The UK needs to build a better understanding of its potential impacts in order to develop public confidence. There are also conflicting views on production costs and volumes available of shale gas in Europe.

EDF Energy believes that fossil fuel plants such as CCGTs will operate at lower loads in the future which could cause increased revenue uncertainty and lower levels of investment in reliable capacity. We therefore welcome the Government’s proposals to introduce a capacity market to address concerns over security of supply and look forward to seeing more detail by the end of the year.

EDF Energy CEO Vincent de Rivaz says: “Huge “shovel-ready” infrastructure projects like our planned new nuclear power station at Hinkley Point can quickly provide a significant boost to the economy and create thousands of jobs.

“I welcome the Government’s solid and continuing commitment to pressing ahead with the market reforms which will help deliver the UK a safe, secure and low carbon energy future and unlock the vast investment in infrastructure which will follow.”