UK govt struggles with escalating costs of planned nuclear power

What’s not sorted is the money…One way or another the government does seem desperate to provide support for nuclear companies . But the financial risks are large – and apparently growing.

Nuclear on the ropes? environmentalresearchweb, 30 Nov 10, 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’………
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 US were evidently not enough for Constellations EPR project – expected to cost $10 bn. 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……

Nuclear on the ropes? (environmentalresearchweb blog) – environmentalresearchweb