KPMG says nuclear power 'won't happen'

Britain's new generation of nuclear power stations will not be built if the Government refuses them any more support, a KPMG report will say this week.

The study, commissioned by RWE npower, says it is still uneconomic for utility companies to invest billions of pounds in nuclear power.

The Government has offered to impose a minimum price on carbon permits – which would raise the cost of fossil fuel generation and make low-carbon nuclear more attractive. It has made a promise not to offer any direct subsidies.

KPMG's report will say a carbon "floor price" is not enough for the big utilities to commit large capital investments to the nuclear sector.

It will suggest that the Government ought to introduce a variable premium tariff for all low-carbon technologies – from nuclear to renewables – to make sure enough new power generation is built before Britain starts to run short on capacity in the second half of this decade.

Last week, Volker Beckers, chief executive of RWE npower, told The Sunday Telegraph that nuclear should get the same level of support as renewables, which are currently heavily subsidised by the government.

"I want to ensure that nuclear investments take place but because of the current situation, investments go into only gas-fired power stations or the renewable sector," he said.

"Only if you have a level playing field do you leave it with the market powers to make the right investment decision. If you have a stimulus for certain technologies, all the investments go into one specific technology and that would ultimately lead to a cluster risk."

RWE, the German utility giant, is one of four companies hoping to build the first nuclear plants in Britain since the 1970s. EDF and Centrica are planning to build the first by 2017, while a consortium of RWE and E.ON will follow with their first by 2020.