John Armitt, chairman of Britain's Olympic Delivery Authority, sent a letter last week to Energy Secretary Ed Davey suggesting a nuclear authority should build the plants and then sell them into the market, rather than try to negotiate with foreign companies such as French energy giant EDF over largely unforeseeable future electricity prices, The Daily Telegraph reported.
The letter came as negotiations between the government and EDF have stalled over the 40-year "strike price" subsidies to be paid to the French company for the long-planned $22 billion Hinkley Point C plant in Somerset through levies on consumer energy bills.
Britain's coalition government is hoping to spark a new generation of five nuclear plants generating about 16 gigawatts of power by 2030. While EDF gained planning approvals in March for the first of them at Hinkley Point, the effort has since bogged down in protracted talks on "contract for difference" prices, raising questions about the timetable for the new plants.
The long-term CFDs, introduced in last year's Energy Bill, are meant to guarantee a supply of power at a certain price and thus provide predictable incentives for companies to invest in low-carbon generation.
In his letter to Davey, Armitt said Britain would be better served by instead establishing a government authority to build nuclear power plants, much as his authority raised $14 billion for the 2012 London Summer Olympics, the newspaper reported.
Rather than have the government and private partners "trying to peer into a crystal ball" to guess the future price of electricity and then writing contracts based on those estimates, "why not create a nuclear body like the ODA with the expertise of the nuclear sector and get it to build them? You would then sell each station back to the market, with the usual system of regulation," he wrote.
"We would have to choose a consistent design, consistency of operation. But once you've built one, building the next is cheaper. The supply chain would be geared up for it, you'd create a lot of skilled jobs. You could get a world class nuclear delivery industry."
The Olympics organizer refuted doubts the government could afford to pay the upfront costs of the nuclear stations, writing, "It's not an enormous sum of money per annum to build a nuclear power station." He compared it to the $23 billion it is costing to build the new 60-mile Crossrail train route connecting London, Heathrow Airport and suburban areas.
Armitt's nuclear energy proposal was part of a larger review commissioned by the Labor Party last year to study long-term infrastructure planning in Britain.
It calls for the establishment of an independent National Infrastructure Commission to identify long-term infrastructure needs and monitor the plans developed by governments to meet them.
"We welcome ideas and proposals to help the U.K. move to a low carbon economy," a Department of Energy and Climate Change spokesman told the Telegraph. "Our plans for electricity market reform have been widely consulted upon as part of the Energy Bill. We are confident these proposals, including contracts for difference, create the right model for delivering low carbon generation at scale."
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