Despite the hype and sense of inevitability about a massive new nuclear power programme, it looks like some of the key players are less convinced.
Left Foot Forward reported some weeks ago that the chief of E.ON says new nuclear couldn’t be delivered before 2020.
Now the Telegraph reports today, in the final paragraph of a story buried in its business pages, that “analysts from Citigroup warned that lack of investment means it is unlikely that the UK’s 10 nuclear power stations will be built unless there is extra government support.”
Left Foot Forward has been examining the analysis by Citigroup. Here are some quotes from their report which casts doubt on the conventional wisdom on nuclear:
• “We see little if any prospect that new nuclear stations will be built in the UK by the private sector unless developers can lay off substantial elements of the three major risks.”
• “Cost overruns and time slippages of even a fraction seen by TVO [in Finland] would be more than enough to destroy the equity value (and more) of a developer’s investment unless these costs can be passed through somehow. Given the scale of these costs, a construction programme that goes badly wrong could seriously damage the finances of even the largest utility companies.”
• “The estimated cost of constructing a nuclear power plant has increased at a rate of 15% per year heading into the current economic downturn.”
• “We calculate that a new nuclear station will require €65/MWh (£58.5/MWh) in real terms year in/year out to hit its breakeven hurdle rate. As we show…the UK has only seen prices at that level on a sustained basis for 20 months of the last 115 months.”
• “A six-month breakdown can cost £100 millions in direct costs and lost output … This risk is too great for a single project to bear, in our view.”
• “In our view, it is extremely unlikely that private sector developers will be willing or able to take on the Construction, Power Price, and Operational risks of new nuclear stations. The returns would need to be underpinned by the government and the risks shared with the taxpayer / consumer.”
Indeed. No nuclear plant has ever been built anywhere without subsidy.
But Ed Miliband has told Parliament:
“We are not going to provide public subsidy for the construction, operation and decommissioning of nuclear power stations.”
So where does this leave the nuclear programme?
In other energy news, the Climate Change Secretary yesterday announced the latest instalment of the money put aside for renewables in this year’s budget – “£1.4bn of onshore wind projects to move to construction over the next 3 years.”
10 Responses to “Fresh doubts over the wisdom of nuclear power”
Joss Garman
I should’ve also linked to this excellent piece from Jeremy Leggett: http://www.guardian.co.uk/commentisfree/2009/nov/10/nuclear-power-uk-questions
Christian
Fresh doubts over the wisdom of nuclear power | Left Foot Forward: Now the Telegraph reports today, in the fina.. http://bit.ly/1diIFm
Richard Blogger
The point is very simple. When the wind stops blowing there is no electricity from wind turbines and tidal power is also variable and on it’s own cannot provide all the power we need. Pump storage solutions like Dinorwic are expensive and there are limited places that can be utilised.
Basically we have to have some way to produce base load electricity. Couple into the mess that our CO2 generating power stations are aged (the daft way that electricity generation was privatised meant that it was not economic to upgrade power stations) and it means that we are desperate to build *something*.
Here’s some figures from the Scottish Executive. By 2025 *all* existing power stations in Scotland will be closed. The Scottish Executive want to generate half of the country’s electricity by renewable methods by 2020, but the cost of that has been estimated at £100bn. It is not clear what will be used to generate the other half, or where the £100bn will come from.
I don’t have the figures for England, but I guess they are similarly doom-laden, but on a scale ten times larger. So frankly there are very few options available. There must be some base load generation and to keep to CO2 targets that means nuclear. As you say, there will have to be some public subsidy, but that is a price we will have to pay to stop our lights going out.
At least Labour is talking about nuclear power. The Tories currently have their heads in the sand and are more concerned with NIMBYs than the vast majority of us that need electricity. The Tories are also extremely unlikely to put any subsidy into any electricity generation, which means that if there is a Cameron government there is a very high chance of the lights going out towards the end of his first (and hopefully only) administration.
No Wisdom In Nuclear Power. « ModernityBlog
[…] 12, 2009 3:38 am Left Foot Forward presents some interesting facts to contradict the British Government’s statements on Nuclear power. Posted by […]
Peter Rowberry
Well the government have promised that no new nuclear power stations will be built unless the full cost of generation, including decommissioning and a fair share of waste disposal will be borne by the industry. I aksed Ed Milliband’s office to confirm that this was still government policy several weeks ago and they still have not replied. It is my belief that nuclear needs even more government support than it currently recieves to be cost effective and the existence of nculear, because of the way that much of the cost occurs at the end of the power station’s livfe (waste management and decommissioning) it undermines the take up of renewables, the only sustainable choice to meet our needs.