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A dose of nuclear financial realism – is badly needed in Britain

Britain badly needs a dose of nuclear realism. If it remains a strategic necessity, the UK must find a way to win more bang for its buck, ,   , 21 Jan 19

One thing British politicians have never lacked when making nuclear policy is optimism. When it comes to atomic energy, they leave Dr Pangloss in the shade. Take the last big nuclear programme back in the 1960s, whose purpose was to meet a fifth of the UK’s electricity needs. Rather than using proven (if US made) reactor technology, the government bet instead on a homegrown gas-cooled type. The minister of power, Fred Lee, confidently predicted the experimental design would be a world beater. Britain had “hit the jackpot”, he declared. The UK certainly hit something. But it wasn’t pay dirt. The AGR programme dragged on for more than two decades and was, in the words of the man who commissioned it, Arthur Hawkins of the Central Electricity Generating Board, “a catastrophe that must not be repeated”.  ………
 Once again, there is plenty of wishful thinking. Indeed, policy has been driven largely by a series of optimistic guesses. These include not just the cost of new reactors, but also the willingness of private capital to fund them without assistance from the state.  …….
again there are multiple reactor types. Repurposing often almost untested equipment for UK safety rules means that each starts from scratch with its own prototype, learning as it goes along. Add the need to fund these “first of type” schemes with private capital and it’s not surprising that projects have been falling by the wayside. Toshiba pulled out in November and, last week, Hitachi shelved plans to install its boiling water reactor technology at a promising site in Anglesey, having spent £2bn just getting to the start line.
The result is that a decade in, Britain has just one project under way — at Hinkley Point in Somerset — for which the government has struck an eye-wateringly expensive contract. The owner, EDF of France, is now saying it could do subsequent projects cheaper, because it will have the Hinkley experience to draw on. But given the absence of competition (the only other participant left in is CGN of China, EDF’s partner at Hinkley), the government faces the unpalatable prospect of a series of potentially disadvantageous bilateral deals. The UK originally set a target of about 18GW of electricity coming from nuclear by the 2030s. This has since been reduced to about 12GW. With only Hinkley and an ageing Sizewell B likely to be in operation, just 4.4GW of that target is likely to be met.  ……….
Removing complexity (and wishful thinking) doesn’t come without cost. The government would have to acquire the necessary sites and assist bidders to get them to the start line. (Abu Dhabi cut some corners the UK might balk at, such as accepting the supplier’s home country safety accreditation). It means the government acting as owner, committing to fund construction itself rather than going through complex contortions to attract just a sliver of risk-bearing equity. There may not be the political willpower.
 Of course, Britain does not have to go ahead with nuclear. It can run the risk of relying on other zero-carbon technologies, such as renewables, and other countries by building interconnectors. It can legislate to change the carbon targets it has set itself. But if nuclear power remains a strategic necessity, the UK needs a realistic programme to meet it. Otherwise the country will end up building vanishingly little new capacity, and doing so only at extortionate cost.

January 22, 2019 - Posted by | business and costs, politics, UK

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