nuclear-news

Tax-payer faced with the costs of UK government’s big nuclear blunder

According to the agreement, EDF will construct two plants at Hinkley Point, a site on the Bristol Channel in the west of England. They say this will cost £16 bn, somewhat more than the £14 bn that was being discussed last year and a great deal more than the £5.6 bn in the White paper ([1] p61). In return, they will be guaranteed a price of £92.50/MWh in real terms (i.e. corrected for inflation) for 35 years. This is almost double the current wholesale price of electricity. It is estimated that by 2023, EDF will be receiving £121/MWh, which will be higher than the cost of electricity from gas unless the latter goes up by 130% over the next 9 years.

We are told that EDF will cover “a share” of the cost of decommissioning the plant and disposing of the waste when the reactors reach the end of their useful lives. It will also be liable for the first £1bn of damages in the case of an accident; this may sound like a lot, but we can get an idea of the risk the taxpayer is taking on by comparing it with the Fukushima accident. The cleanup alone is now expected to cost $58 bn (£35 bn) [4] and the total loss could be $250 bn ((£152 bn) or more. EDF will also have a £10bn loan guarantee, which will allow it to borrow at a lower interest rate.

Why so much?

The obvious question, which even advocates of nuclear energy are now asking, is why the strike price is so high. No one seems able to provide an even vaguely plausible answer. In 2008, EDF told its investors it could produce nuclear power at £45/MWh. That may only have been an approximate figure, but they were hardly likely to have underestimated the cost for fear it could be used against them in negotiations. In 2012, the head of EDF, Vincent de Rivaz, announced that he would be asking for no more than £140/MWh. When asked why there had been such a big increase in so short a time, he explained that it was because [5] “a lot of things have changed: four years inflation, cost of commodities, steel concrete. And it was based on Flamanville.”……..

Industry can’t afford it and we don’t need it

Jim Ratcliffe, the head of the major chemical company Ineos, says that £92.50 is far too much and UK manufacturers will find it unaffordable. Ineos is a very large consumer of electricity and has recently agreed to buy nuclear power in France at €45 (£38) per MWh [7]. When asked about this, a spokesperson for the World Nuclear Association (WNA) responded that the cost of nuclear energy in the UK was a “complex issue” [8]. That’s not much of an explanation, and if it is the best the WNA can offer, it is difficult to avoid the conclusion that the UK has been taken to the cleaners.

The government certainly seems to have gone out of its way to make itself an easy prey for EDF. It produced a White Paper with unreasonably low cost estimates and a commitment to no subsidy. This reassured many of the critics and made it easy to get parliamentary approval…..

The government has been dragging its feet on energy conservation and renewables, thus making it easier to argue for nuclear and further weakening its position in bargaining with EDF. Yet we can manage without it in the medium and long term [10] (Green Energies – 100% Renewable by 2050) and in the short term it has nothing to contribute because the earliest the new reactors at Hinkley Point can be producing their 3.2 GW of electricity is 2023. In contrast, the Department of Energy and Climate Change estimates that 11.3 GW of solar photovoltaic could be operating by 2017 [11]. Nigel Williams, the head of systems operations at the National Grid and so the man whose job it is to make sure the lights stay on, has accused the energy companies of scare-mongering [12].

Paul Dorfman of the Energy Institute at University College London estimates that the deal amounts to a subsidy of between £800m and £1 bn a year for the owners of Hinkley C [13]. The European Commission has started an investigation into the contract which it estimates could amount to a total subsidy of £17 bn [14]. (A subsidy of £1 bn a year for 35 years is naturally worth considerably less than £35 bn paid up front, so the two estimates are closer than they appear at first glance.)……..http://permaculturenews.org/2014/01/09/uk-governments-great-nuclear-blunder/

January 13, 2014 - Posted by Christina Macpherson | Uncategorized