nuclear-news

UK Parliament debates Nuclear Energy (Financing) Bill, with anxiety over the Government’s big nuclear plans

“…successive Governments seem to have developed a groupthink, following lobbying from the nuclear industry, that somehow nuclear is a prerequisite for our future.” 

…… … there is currently no economic or environmental case for the construction of any further nuclear stations in the UK.”   

Of course, consumers who have signed up to buy 100% renewable electricity could quite rightly feel aggrieved at having to pay the “nuclear tax” as well.

 SafeEnergy E Journal  No.92. December 21,  Large New Nuclear Update The UK Government has said it wants to secure a final investment decision on at least one largescale nuclear plant by the end of this Parliament. It is also supporting the development of Small Modular Reactors. 

The Government is putting nuclear power at heart of its net zero strategy. Kwasi Kwarteng, business secretary, unveiled the “Net Zero Strategy”, as well as a “Heat and Buildings Strategy” in October. The creation of a “regulated asset base” (RAB) model will be the key to the delivery of a future fleet of large nuclear power plants. The RAB funding model is already being used for other infrastructure projects, such as London’s Thames Tideway super sewer. Under this program, GB electricity consumers, including those in Scotland (but not Northern Ireland) will be billed for the cost of the plant via a “nuclear tax” long before it starts producing electricity, which could take a decade or more from the time the final investment decision is made. 

On Wednesday 3rd November, MPs debated the second reading of the Nuclear Energy (Financing) Bill. The Liberal Democrats and the SNP, both put forward amendments, but neither was accepted for debate by the Speaker  

  The Lib Dem Motion said the Bill does nothing to address concerns about costs around nuclear waste disposal and decommissioning and fails to bring forward meaningful reforms to accelerate the deployment of renewable power. The SNP Motion said there is no longer a justification for large nuclear power stations to provide baseload energy, because large scale nuclear is too inflexible to counter to the intermittency of renewables. It called on the Government to spend more money on energy efficiency measures and targeted support for those who suffering from fuel poverty.

 During the debate in the House of Commons (1), the Minister of State for Business, Energy and Industrial Strategy, Gregg Hands, said that we need a new funding model to support the financing of large-scale and advanced nuclear technologies. He said the lack of alternatives to the funding model used for Hinkley Point C has led to the cancellation of recent potential projects, at Wylfa Newydd and Moorside in Cumbria. He said the Bill was intended to get new projects off the ground, including, potentially, Sizewell C, which is the subject of ongoing negotiations between EDF and the Government, as well as further projects, such as on Wylfa.   

 He said the Bill would add, on average less than £1 per month to consumers’ bills during the construction phase of a nuclear project. But compared with the CfD model used to fund Hinkley Point C this could produce a cost saving for consumers of more than £30 billion.

Regarding Scottish Consumers being forced to pay for new reactors he said: 
“…the Scottish Government have a different position with regard to new nuclear projects. To be clear: this Bill will not alter the current approval process for new nuclear, nor the responsibilities of the devolved Governments. Nothing in this Bill will change the fact that Scottish Ministers are responsible for approving applications for large-scale onshore electricity-generating stations in Scotland. The steps taken in this Bill will mean that Scottish consumers will benefit from a cheaper, more resilient and lower-carbon electricity system, so it is right that Scottish consumers should contribute towards the construction of new projects.” 

Labour’s Alan Whitehead disappointed many when he said: “We need to support the need to finance new nuclear.”   

  The SNPs Energy Spokesperson Alan Brown said: “…successive Governments seem to have developed a groupthink, following lobbying from the nuclear industry, that somehow nuclear is a prerequisite for our future.” 
He went on to say: “…it was stated … the new funding model could potentially save the taxpayer £30 billion to £80 billion. How much money do the Government estimate has been wasted on Hinkley?” 
For the Liberal Democrats, Sarah Olney said “our position is very much that there should not be new nuclear power stations … there is currently no economic or environmental case for the construction of any further nuclear stations in the UK.”   

On the £30 billion savings the NFLA UK & Ireland Steering Committee Chair Councillor David Blackburn said:
 “The Minister is comparing one expensive environmentally unsustainable project with another expensive environmentally unsustainable project. If he really wanted to save consumers money he would introduce a National Homes Retrofit Scheme as quickly as possible having learned the lessons from its failed Green Homes Scheme, and introduce a scheme to support flexibility, demand management and smart grids so that we can use more of our cheap, sustainable renewable electricity.”

On Scottish Consumers paying this “nuclear tax” because they “will benefit from a cheaper, more resilient and lower-carbon electricity system,” Scottish NFLA Chair, Cllr. Feargal Dalton said:
“Renewables met 97% of Scotland’s electricity demand in 2020. The Scottish electorate has consistently voted for Governments opposed to building new nuclear power stations. With wind and solar now the cheapest forms of electricity Scottish consumers shouldn’t have to pay for the Tories’ failed energy policies.” (2)
 Of course, consumers who have signed up to buy 100% renewable electricity could quite rightly feel aggrieved at having to pay the “nuclear tax” as well.    https://www.no2nuclearpower.org.uk/wp/wp-content/uploads/2021/11/SafeEnergy_No92.pdf

November 27, 2021 Posted by Christina Macpherson | business and costs, politics, UK | Leave a comment

Question hangs over Bradwell nuclear project – Bradwell B (BRB) a partnership 66.5% China’s CGN and 35% France’s EDF

  
SafeEnergy E Journal  No.92. December 21  Bradwell Bradwell B (BRB), which is a partnership between the Chinese Company, CGN – with a 66.5% share and EDF Energy with a 33.5% share is hoping to build a Chinese reactor – the UKHPR100 at Bradwell in Essex. BRB appealed to the Planning Inspectorate against the refusal by Maldon District Council of Planning Permission for further land investigations at Bradwell. The Appeal was successful.

But this does not give a green light to a future nuclear power station at Bradwell, and given the current hostility to Chinese involvement in UK Infrastructure seems unlikely to progress much further. The Blackwater Against New Nuclear Group (BANNG) objected to land investigations on the grounds that they were unnecessary since the site is wholly unsuitable, unsustainable and unacceptable for the development of a mega nuclear power station and spent fuel stores.

The Planning Inspector chose to uphold the Appeal on the narrow grounds that the works would be temporary and would create little disruption and disturbance to the environment and human welfare. The Inspector declined to take into account the question of need for new nuclear, relying on the 2011 National Policy Statement on Nuclear (EN6) which deemed Bradwell a ‘potentially suitable’ site. In its latest policy statements the Government is silent on Bradwell and the project seems likely to be dropped altogether on geopolitical grounds.

 On 25th November The Times reported that China would be cut out of future involvement in developing new nuclear power stations. Boris Johnson said that a potential adversary could have no role in Britain’s “critical national infrastructure”. The Prime Minister, asked by Labour spokesperson, Matthew Pennycook if he could “confirm unequivocally today that plans for China General Nuclear to own and operate its own plant at Bradwell in Essex have been abandoned”, said:  

“Clearly, one of the consequences of our approach on critical national infrastructure in the National Security and Investment Bill is that we do not want to see undue influence by potentially adversarial countries in our critical national infrastructure. That is why we have taken the decisions that we have. On Bradwell, there will be more information forthcoming. What I do not want to do is pitchfork away wantonly all Chinese investment in this country, or minimise the importance to this country of having a trading relationship with China.” (3)  https://www.no2nuclearpower.org.uk/wp/wp-content/uploads/2021/11/SafeEnergy_No92.pdf

November 27, 2021 Posted by Christina Macpherson | business and costs, politics, UK | Leave a comment

UK government tries to save its nuclear skin by turning to dubious Regulated Asset Base funding

At a time of rising energy bills in the UK, it certainly seems risky of the government to commit to increasing them further and opening themselves up to a downside risk that could prove very costly.

The National Infrastructure Commission, a body designed to give impartial advice to the government, said in March 2020 that a “renewable-based system looks like a safer bet” and a “substantially cheaper” option than the construction of multiple new nuclear power plants.

The UK’s nuclear plan is a financial, environmental and political risk, Investment Monitor,   Jon Whiteaker , 16 Nov 21,” …………..The problem with financing nuclear power

…… Hinkley Point C has been a bit of a nightmare for the UK government. It is already seven years behind schedule, has controversial Chinese investors that the government is understood to be trying to get rid of, and is widely agreed to be far too expensive.

It was financed under the contracts for difference (CfD) model used for offshore wind. This guarantees a ‘strike price’ for the power plant owner, allowing them to raise capital for construction by having certainty of revenues.

Using the same funding model as offshore wind has, however, allowed for simple comparisons of the costs of the two power types. While the latest round of offshore wind projects saw strike prices of about £40 per megawatt-hour (MWh) over a 15-year contract, the owners of Hinkley are guaranteed at least £89.5/MWh over 35 years.

The reasons the Hinkley strike price is so much higher is because the capital costs are much higher, but also because the risks involved in developing them are much greater.

At least Hinkley Point C is being built. A number of planned projects, including the Moorside power station in West Cumbria and Wylfa Newydd plant on Anglesey, have been cancelled or shelved in recent years.

With the need to develop the UK’s next generation of nuclear plants increasingly urgent, the government has turned to the RAB model to save its skin.

UK government turns to the RAB model

The RAB model is known mostly for its successful use on the Thames Tideway Tunnel (TTT), the new super sewer in London that is helping to clean up the Thames River. The government says that like that project, nuclear power plants are complex, have high capital costs and long operating lives.

The RAB model allows developers of infrastructure to earn immediate revenues by adding charges to consumers’ utility bills during the construction. Bill payers will have to buy before they try their lovely new nuclear power.

This in theory widens the pool of potential investors, making the government less beholden to a small group of companies who typically invest in and build nuclear plants, lowering the cost of financing, and ultimately saving money for bill payers.

The government predicts that using the RAB model to build a new nuclear plant will save energy bill payers £10 per year compared with the CfD model.

Legislation allowing the introduction of the RAB model for new nuclear was introduced in October 2021 and is moving through the House of Commons. The government has pledged to reach a final investment decision on at least one new nuclear plant by the end of this parliament in 2024.

It is hoped by government that the previously stalled 3.2GW Sizewell C, owned by EDF Energy, will be the first nuclear project to use the RAB model.https://www.investmentmonitor.ai/business-activities/energy/uk-nuclear-rab-energy-renewable

The problems with RAB for nuclear

While this all sounds like a perfect panacea for the government’s problems, there are several downsides to using the RAB model.

The depth of investor interest in new nuclear power stations is yet unknown. As the UK government should be painfully aware, having just hosted COP26, the conversation about what does and does not meet different investors ESG standards is a live one. Whether nuclear power is seen as a sustainable investment is debatable.

Trying to get any of the investors in TTT to make clear their stance on nuclear power is not easy, and I have tried. For the government to achieve its goals, institutional investors, like those that supported TTT, should want to invest in new nuclear too.

Asset manager Aviva Investors, a major investor in UK infrastructure, has called on the government to present a robust ESG case for new nuclear, which it says is lacking at present.

Many investors will be concerned over whether nuclear meets the criteria of an environmentally sustainable activity. Institutional investors are incredibly cautious by nature and the shadow cast by the Fukushima disaster in Japan in 2011 is still long.

All energy suppliers will have to contribute to the costs of RAB nuclear plants, whether they want to or not, before passing those costs on to bill payers. That seems a retrograde step for an energy market that has been diversifying to provide customers with ‘green only’ options in recent years. Whether you have ethical objections to nuclear power or not, you will have to use a supplier that helps fund that technology.  

Hinkley Point C is seven years behind schedule. You would be brave to bet against any delays to the first RAB model nuclear plant too.

The government says that there would be a cap on how much extra investors could charge consumers but that this cap could be increased by the government if deemed necessary. If the costs became excessive, the government would have the option of covering the costs itself, although this is ultimately taxpayer money too.

At a time of rising energy bills in the UK, it certainly seems risky of the government to commit to increasing them further and opening themselves up to a downside risk that could prove very costly. Perhaps the government thinks these are all costs worth shouldering to ensure its net-zero plans stay on track.

The National Infrastructure Commission, a body designed to give impartial advice to the government, said in March 2020 that a “renewable-based system looks like a safer bet” and a “substantially cheaper” option than the construction of multiple new nuclear power plants.

That sounds like advice worth considering again.   https://www.investmentmonitor.ai/business-activities/energy/uk-nuclear-rab-energy-renewable

November 25, 2021 Posted by Christina Macpherson | business and costs, politics, UK | Leave a comment