Nuclear On The Ropes?
What’s not sorted is the money…Stephen Thomas, professor of energy policy at the University of Greenwich, says that when the ‘nuclear renaissance’ was first talked about six years ago, the capital costs quoted were about $1,000 per kilowatt. Now they have risen to about $6,000 per kilowatt.
The UK government has now dismissed three proposed sites for new nuclear power plants: first it dropped Dungeness in Kent, and then Braystones and Kirksanton in the Lake District, so that now leaves eight locations, all of them at already established nuclear sites. The revised National Policy Statements, Regulatory Justification and Generic Design sign-offs are all done, more or less, or will be done soon, with, following consultation exercises, the Secretary of State deciding that ‘it would not be expedient to the making of his decisions to hold a public inquiry or other hearing’.
What’s not sorted is the money. It may be hard to reform the market and the EU-Emission Trading System enough to make nuclear viable without formal subsidy. Energy and Climate Change Secretary Chris Huhne’s shifting definition of subsidies has raised some eyebrows. While he still says ‘there will be no levy, direct payment or market support for electricity supplied or capacity provided by a private sector new nuclear operator’ he now adds ‘unless similar support is also made available more widely to other types of generation.’
So Huhne seems to end up diluting his initial hard anti-subsidy line: ‘Arguably, few economic activities can be absolutely free of subsidy in some respect, given the wide ranging scope of state activity and the need to abide by international treaty obligations. Our “no subsidy” policy will therefore need to be applied having regard to proportionality and materiality.’
Letting developers duck the full potentially huge insurance liability is no doubt one such grey area. The Government says that it ‘has not ruled out the maintenance of a limit on operator liability set at an appropriate level provided that it is justifiable in the public interest, is the right way of ensuring that risk is appropriately managed’. Energy Minister Charles Hendry has explained that DECC were ‘not ruling out action by the Government to take on financial risks or liabilities for which they are appropriately compensated or for which there are corresponding benefits.’
Hendry has also indicated that, in addition to the EU-ETS floor price, other forms of support might also be offered – a capacity payment for low-carbon electricity generation and an obligation on suppliers to provide a certain proportion of low-carbon power i.e. something like the Renewables Obligation extended to include nuclear.
One way or another the government does seem desperate to provide support for nuclear companies. But the financial risks are large – and apparently growing. Stephen Thomas, professor of energy policy at the University of Greenwich, says that when the ‘nuclear renaissance’ was first talked about six years ago, the capital costs quoted were about $1,000 per kilowatt. Now they have risen to about $6,000 per kilowatt. The problems with the European Pressurised-water reactor- a candidate for the UK programme- have further weakened the case for nuclear. EDF-Avera’s EPR construction projects in Finland and France are now years behind schedule and heavily over budget. And the loan guarantees for new plant construction on offer in the USA were evidently not enough for Constellations EPR project- expected to cost $10bn. It has now been abandoned, leaving EDF in an even more difficult financial situation: this was meant to be one of the follow-ups to the Finnish and French projects. In a new report on the EPR, Prof Thomas says, ‘from a business point of view, the right course for EDF and Areva seems clear. They must cut their losses and abandon the EPR now’.
Meanwhile, the other major contender for the UK programme, the Westinghouse AP1000, is also in trouble. Westinghouse has been told by the US Nuclear Regulatory Commission (NRC) to resubmit its assessment of aircraft impact on the AP1000 reactor. The NRC said that documents put to it did not include ‘realistic’ analysis.
The UK Health and Safety Executive the Environment Agency has been engaged with a ‘Generic Design Assessment’ (GDA) of the AP1000 and EPR and issued a statement of design acceptability (SODA) for each design in August, though they said there were a still ‘number of potential issues still to be resolved’ and put their conclusion out for consultation. They noted that GDA is ‘solely to decide the acceptability of a design for permitting in the UK, and will not be used to express a preference for any particular design’. Following the consultation they hope to come to a view about the acceptability of the designs in June. https://consult. environment-agency.gov.uk/portal/ ho/nuclear/gda
Meanwhile opposition continues at the proposed UK sites, led by local groups, like BANNG at Bradwell, who are in particular concerned about the plan to keep highly active spent fuel on site for many decades, and are perturb that the overall Justification Process has been completed before regulatory approval of the designs, and before we have any idea where the waste will ultimately go.
Opposition is even stronger elsewhere, notably in Germany, where in September yet another 100,000 strong protest in Berlin indicated the scale of resistance to the plan to delay the agreed nuclear phase out, and extend the operating lives of Germany’s existing nuclear plants. More major demonstrations are likely, right up to the end of year deadline for the plan to become law, and beyond, with the government coalition’s majority clearly being threatened. No one in the government dares to even consider new replacement plants, much less a nuclear expansion.
A study by Engineering the Future (EtF), an alliance which includes the Institution of Civil Engineers (ICE) and Royal Academy of Engineering (RAEng), brings together lessons learnt from past and current nuclear projects which if adopted should it say help ensure the success of the future UK nuclear new build programme. The report, Nuclear Lessons Learnt, includes a look at what went wrong at Olkiluoto 3 (Finland) and Flamanville (France). It’s here