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Nuclear Power Stations: Costs

Volume 476: debated on Monday 2 June 2008

To ask the Secretary of State for Business, Enterprise and Regulatory Reform pursuant to the answer of 13 May 2008, Official Report, column 1464W, on nuclear power, if he will disaggregate the 10 per cent. discount rate into its component parts in accordance with Green Book methodology. (207667)

The 10 per cent. discount rate used to appraise nuclear power against other generation options is based on an assessment of the cost of capital faced by private sector electricity generators. It is used to produce estimates of generation costs for fossil fuel and low carbon generation options so that their costs can be compared against each other. The Treasury Green Book discount rate is then used to discount the cost differences between options over time in order to estimate the cost or benefit to the economy of one generation option over another.

To ask the Secretary of State for Business, Enterprise and Regulatory Reform pursuant to the answer of 13 May 2008, Official Report, column 1464W, on nuclear power, what the titles are of the studies on which the choice of a 10 per cent. discount rate was based. (207668)

A summary of the analysis of the costs of different electricity generation options is contained at annex B of the 2006 Energy Review. This is available at

http://www.berr.gov.uk/files/file32014.pdf

It provides a list of the studies which were used to compile the financial model used to make the cost estimates, including those which used a 10 per cent. discount rate. Most notable is the International Energy Agency (2005 Update) Projected Costs of Generating Electricity.