A few weeks ago the UK government made its long awaited power play as regards its plans for new nuclear plants in the UK. For many years now successive UK governments, both labour and Tory, have been keen on new nuclear reactors . Unfortunately they’ve both been struck by a problem, nuclear power isn’t economic! While the power companies certainly want them and many large corporations are salivating at the money to be made building new nuclear plants. But both recognise that nuclear power is essentially uneconomic (according to Citigroup, see here) and so they’d rather like it for the British taxpayer to pick up the tab. As we saw with the banking crisis, its a case of socialising risk and privatising profit. Or in this case socialising the costs and privatising the utility bills we’ll be paying for the next fifty years.Unfortunately for both the government and the nuclear industry for many years they’ve been keen to point out how “oh! We don’t want subsidies!”…then blinking three times to give the coded message to the government that actually, they DO want and subsidies. But for a good decade now, successive UK governments have been trying to invent a way of subsidizing the nuclear industry….without giving it a subsidy. They’ve tried everything, from slipping them a few quid through various back channels, most notably via the proposed Green investment bank, but at every turn they’ve found themselves out smarted by the environmentalists who’ve caught them at it. With options and time rapidly running out, the political and economic fallout from Fukushima making nuclear less popular with the public, or indeed corporations, the UK government has essentially run out of options. Already the Horizon Deal has collapsed, largely because the corporations behind it were not convinced that the UK government was ever going to be in a position to finance the project, and it was obvious that without government backing of some kind the project was DOA. As Robert Peston of the Beeb pointed out, the only way nuclear power plants are getting built in the UK is if the government opens up its cheque book. And to a degree, that’s what’s happened. However, its actually us the electricity consumer who’ll be paying for new nuclear plants. The government’s plan is to put a premium onto all electricity bills in order to finance these projects.
Now, while I tend to agree that the current policy of privatisation of electricity supplies simply isn’t working (as private companies simply don’t have the long term incentive to invest in the sort of infrastructure needed to meet future low carbon energy demands). However if we’re going to crack open the public piggy bank to pay for nuclear power, what about renewables? The installation costs and levelised costs for renewables have been lower than nuclear for quite sometime now, and with the costs of nuclear rising and renewables falling, it occurs to me that if we’re going to put tens of billions of taxpayers money towards securing energy supplies, surely the same should be done for renewables.
After all we are not talking small change here. According to Greenwich University professor Stephen Thomas new nuclear reactors will cost us up $4,500 to $6,000 per installed kW (articles on that here and here), or about £3,000 to £4,000 per kW, against £1,300-1,500 per kW for wind energy and between £5,000 to £3,000 per kW for tidal energy (although some supporters of tidal stream turbines reckon they can cut the costs down to £2,500 to £2,000 per installed kW). And we need to factor in the costs of decommissioning, as I mention here , that’s coming in at around £10,000 – 3,150 per kW for Magnox reactors, with a probable figure of £5,300 – 1,300 per kW for LWR’s. So assuming that the UK governments figure of £2,500 per kW was the “break even” price for nuclear (its roughly what the Finns are paying for there first reactor, less the French subsidy), then assuming 6,000 MW’s installed in the UK (that’s about as much in practical terms that I reckon the UK can realistically build in the next few decades) implies a government subsidy (paid for by us) to the tune of £10.8 billion to £55.8 billion.
And if anyone thinks I’m being unfair here, a number of other sources have calculated on an LCOE basis that it will cost between £100 billion to £155 billion over 30 years to subsidise the UK nuclear industry using the proposed Contract for Difference (CfD) mechanism.
This process shall also potentially favours natural gas fired stations. Indeed, its quite possible that this policy won’t see a single nuclear station built, but large numbers of gas fired stations constructed, while tying the hands of renewables (they plan to phase out subsidies to renewables by 2020, even though they plan to continue subsidising nuclear well beyond this date, probably right till the decom date of these new power stations a century from now) and by pushing up utility bills it will push more people into fuel poverty.Indeed, it interesting to bring up on this point the topic of the Severn Barrage, which was cancelled by the government on the grounds of being “too costly” at £30 billion. However, it would have delivered up to 8.6 GW’s of power, or around £3,488 per kW (well below the combined decom and install costs of nuclear). Indeed, I’m not even being fair here, as many will argue that a simple barrage is obsolete. Tidal stream turbines, or tidal lagoons would be no only cheaper (the figure quoted earlier suggests tidal turbines might be roughly 2 to 3.5 times cheaper than nuclear), less environmentally damaging, can be installed at many more locations countywide, but they also offer a sort of “pay as you go” option. In which small number of turbines and lagoons are rolled out gradually as needed (both in the Severn estuary and beyond). And of course one of the advantagesof tidal energy is that tides are regular and predictable.
And of course wind energy, both onshore and offshore has not only lower LCOE (study on that here) but lower installation costs than nuclear. For that same £10.8 to £55.8 billion subsidy we could add 8.3 GW’s to 20 GW’s of wind energy (the former figure assumes the lower £10.8B & onshore wind, the latter figure £55.8B and a 50/50 mix of onshore and offshore wind).
It is, to say the least deeply hypocritical for the government to refuse to provide funds for such schemes as I’ve outlined, while seemingly quite happy to sign a blank cheque for its darling nuclear – A blank cheque that future generations of UK bill payers will be paying the cost of for decades to come. It again merely serves to illustrate that nuclear energy is just more trouble (and money!) than its worth. And that UK governments need to overcome they’re single minded obsession with nuclear energy.