If we want New Nuclear, we should be prepared to invest in it ourselves instead of paying others over the odds for electricity in order to de-risk their investment. This decisions isn’t good for the market, for consumers bills,for UK industry or for low-carbon energy when there are more realistic, practical and deliverable alternatives, e.g. onshore wind.
A recent Study by Prognos, published here demonstrates that the cost of nuclear power to the UK will be up to 34% higher than the cost of new Photovoltaic in Germany, or 50% higher than the cost of new onshore wind. The Conservative led backlash against renewable energy looks to be a much worse deal for consumers than large scale renewable energy. Even offshore wind is predicted to be 15% cheaper, so if you are willing to pay an additional 35% for your power to move it offshore, then even that is cheaper than nuclear.
The announcement that China is going to help to support the construction of nuclear power plants in the UK comes as no surprise to people involved in energy in the UK, this has been mooted for some time. The reasons why this is being welcomed by the Treasury are worth examining though, or they would be if there was any particular reasoning behind it. It is happening simply because no-one else wants to fund the addition of nuclear in the UK. The nuclear ‘market’ isn’t working because it doesn’t exist.
New Nuclear has been on the shopping list of successive governments in the UK for a decade, but because of the lengthy delays in bringing such systems to fruition elsewhere, most funders have backed off. There is little support for nuclear among the electorate, none among the banks, and only one power company, EDF, is still willing to consider investing in one, but is unwilling to do so alone, so hence the Chinese investment.
There are at least good reasons why the Chinese would want to do this, it gives them a stake in a major asset in the UK. It would demonstrate to the rest of the world that Chinese construction ability is up there with the best. Don’t we think this already? Do they need to build a nuclear power plant to convince anyone? Apparently they do, because this deal will give them an entry to the UK UK power market which could be followed by their building a new ‘safer’ reactor design that ‘cannot fail’ and if the Chinese can be part of new nuclear in the UK, then the reasoning goes, they could be part of one anywhere.
Whatever happened to the Conservative belief in the market? Let me remind you of Amber Rudd’s Savoy speech a few weeks ago.
“We are committed to climate action; committed to economic security; committed to decarbonising at the least cost.” A. Rudd Aviva speech.
Constructing this type of plant will take at least a decade, and cost £25 billion pounds at current estimates, and EDF haven’t confirmed that they are willing to go ahead, even with Chinese involvement. Costs will double, because that’s what happens with long term high cost infrastructure projects, and the investment of our money will fund technical development in China and France. The Treasury is even going to guarantee the Chinese investment money, so they are going to accept little risk, but will be rewarded if the project succeeds. How any of that contributes to climate action or economic security is unclear. It is very unlikely to deliver low cost power. It is currently projected to be profitable at double the current market rate. Yes, nuclear is low carbon, but it is a lot more risky than a distributed energy generation network based around a wide range of renewable energy systems. The proposed plant is planned to contribute 7% of the UK power demand. So when it goes wrong, and it will go wrong at some point, it is in the nature of technology to fail, then the UK Grid will have a big task to replace it. If a wind turbine in the North sea falls over, the network doesn’t blink. The economic benefits appear to be heading out of the country to other economies, presumably including the construction investment monies.
A 2010 DECC study showed that onshore wind and new nuclear were on a par when it comes to the cost of providing new power at a figure of £80-110/Mwh. What that fails to take into account is the by the time nuclear is delivered, the world will have moved on, inflation will have made nuclear much more expensive, and the changes to oil and gas prices will either have made £80/Mwh look very good or very bad. In either case the current crop of politicians won’t be here to take the blame or the credit. It is the ultimate cop-out, taking a decision that you cannot possible follow through on, for an electorate that cannot think ten years ahead.
Meanwhile a decade when low carbon de-centralised measures that could have been introduced is going to be wasted as effort and time are put into centralised nuclear power which is going to further strengthen the grip of the Big Six on the UK’s energy market.
The UK Government has no obvious decarbonisation or energy policy that makes sense. On the one hand green measures are scrapped ‘to protect taxpayers bills’ and because the Lib Dems supported those polices during the Coalition period; on the other hand a deal is proposed with a Government with an appalling human rights record to fund the riskiest and most expensive power system we can buy, from a market that doesn’t exist because everyone else apart from the UK Treasury thinks it is too risky to invest in.
This deal is being proposed so that this Government can say it has done something positive about energy after all the measures they scrapped in the summer, a deal which will cost us dear in the long run.
Some sobering reading on this subject can be read here: http://www.prognos.com/fileadmin/pdf/publikationsdatenbank/Prognos_A_Renaissance_of_Nuclear_Energy_final.pdf