Monday, September 24, 2007

The cost of nuclear new build

The UK Government’s public consultation on the possibility of building new nuclear power stations runs until October 10. Have your say.

This blog looks at the cost of nuclear new build and its context.

The international picture

There are 76 reactors on drawing boards worldwide - and uranium is scarce.

China aims to build 30 nuclear plants over the next 15 years. India is planning 19 and Russia is switching a quarter of its energy supply to nuclear power.

The US is looking at 17 plants over the next six years.

The UK picture

According to a New Economics Foundation report published last month, the costs involved in building new reactors is up to three times higher than supporters say.

"Nuclear power has been promoted as a solution to climate change and an answer to energy security. It is neither," the report concludes. "As a response to global warming it is too slow, too expensive and too limited."

The think tank rejects the government's cost estimate of 2.2-5.0 pence per kilowatt hour of power produced by new nuclear power plants, instead putting the cost at 3.2-7.5 p/kWh.

Another recent report agrees. Poyry Energy Consulting says the commercial case for building new nuclear plants is shaky and that none will be built without a higher long-term carbon price than that set by the current European Union Emissions Trading Scheme (ETS).

A nuclear power programme requires a huge capital investment of up to three-quarters of its costs, compared to a gas plant’s 25%. Interest costs during construction mean that delays can make or break a nuclear project.

"Despite the rhetoric, it is difficult to see much new nuclear capacity coming into the market before 2020," Poyry director Andrew Nind said.

"Beyond then prospects look better, but the future of nuclear probably depends on the creation of a long-term carbon price guarantee. In its current form, the ETS will not suffice."

Several recent estimates of future carbon price movement show that it won't reach €35, the price the White Paper argues makes nuclear economically feasible, for a long time.

Market forecasts say there will be an over-supply of credits from developing countries, and a continuing over-allocation of credits in Europe. The price has mostly been below 20 euros a tonne over the last year. This market over-saturation will keep the price low.

For this reason the nuclear lobby is arguing in Brussels that nuclear should be classed as renewable in order to be eligible for ETS-subsidies, like solar and wind are.

This would be barmy. But of course that wouldn't deter the EC.

As I said, uranium is scarce and the price will rise. The future of the ETS after 2012, however, is uncertain, and investors don't like that.

The nuclear companies' new plans

Here in Wales, Hugh Richards, of the Welsh Anti-Nuclear Alliance, also believes there are strong grounds for believing that new nuclear power stations may prove financially unviable.

He has examined the four power station designs that were registered with the nuclear regulator last month for pre-licence assessment. (The Government is moving to pre-license standardised designs and streamline planning procedures in order to reduce the lead times for nuclear construction.)

(However this increases the risk that the public will lose confidence in the regulatory process, and experience suggests that it will not speed up projects. In England, where public inquiries were scrapped for all the advanced gas-cooled reactors, an average 10-year construction over-run resulted.)

None of the four Generation III designs submitted to the regulators for pre-licensing assessment in July are proven commercially; they are design concepts without working prototypes to test their safety. No attempt has been made to test their financial robustness, says Richards.

British Energy, bought back out with £5bn of public money in 2002, has the only experience of operating nuclear reactors in Britain.

Of the six foreign operators expressing an interest in building reactors here, from Germany, France, Spain and Belgium, five say they want to have a choice of the best available designs, but none of these designs are proven.

The Finnish reactor under construction now, whose economic model is widely touted as being the way forward, by preselling power to private buyers, will not work here, and anyway has been shown to be based on faulty accounting.

Three of the operators have non-nuclear plants in the UK - Scottish Power recently acquired Iberdrola, npower is owned by RWE, and Eon-UK. Ironically, they all put great emphasis on renewables in their marketing.

So where are we?

  • Environmental regulations could force many of Britain's coal fired power plants to close over the next decade
  • all but one of its nuclear power plants are expected to shut by 2020
  • The government has refused to pay for nuclear or build the plants with public money
  • A spokeswoman for BERR said on 17.09 the government was already trying to work out how the country will cope if no nuclear power plants are built
  • It has admitted that the current target of getting 20 percent of its power from renewable sources of energy by 2020 is already "very challenging"
So we may have to become still more dependent on imported gas, while slashing demand.

And actually as the price of oil and gas rises coal becomes more and more economic.

Which is why they're currently trying to build the largest open cast coal mine in Europe in South Wales.

And all because the civil servants are allergic to renewables.

(And we haven't even talked about transport, responsible for more global warming than electricity.)

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