Nuclear power can't happen without subsidy. So it shouldn't happen.

Wylfa nuclear power station on Anglesey/Ynys Mon.

“A new generation of nuclear power stations will only be possible with vast taxpayer subsidies or a rigged market.”

Guess who said that? Well, it was our very own Secretary of State for Energy and Climate Change, Ed Davey, when he was the Liberal Democrat's Shadow Trade and Industry Secretary, on 17th July 2006.

And, on 6th February this year he followed this up with: “new nuclear can go ahead so long as it’s without subsidy".

Put these two statements together, and what do you get?

Quite. Mr. Davey was right in 2006, and he is even more right in 2012: nuclear power can't happen without subsidy.

The decision by Horizon, the consortium run by German energy firms EON and RWE npower to pull out of developing new nuclear power projects in the UK supports this thesis and has brought dismay to the governments in Westminster and Cardiff.

The Welsh Assembly Government feels particularly let down because it had only just published its Energy Wales policy document which, for the first time, had committed Wales to support nuclear power and had placed Horizon's anticipated new power station on Anglesey as a key plank of its policy to ‘create a sustainable, low carbon economy for Wales’.

What will it now do to make sure it meets its policy targets? A spokesperson for the Welsh government would add no more to the official line that "there is live and significant interest in the site", and "we are seeking the full support of the UK Government as we work with Horizon to deliver this investment and secure jobs for workers at Wylfa in the future".

Perhaps it hadn't really sunk in that Horizon is no longer interested. And what did he mean by support from the UK Government? It couldn't be the S-word, could it?

Volker Beckers, CEO of RWE npower, told BBC Radio 4's Today programme that the decision has been made purely on strategic grounds, both adding that the recession was a factor.

Westminster is putting a brave face on this major setback to its masterplan. There is interest from other companies, but the undeniable truth is that the capital intensity of constructing and underwriting the costs of nuclear power makes it impossible for any player to enter the market without state support.

This was in effect admitted on Friday morning by Malcolm Grimston, associate fellow at the Energy, Environment and Development programme at Chatham House, when he said that "electricity is too important to be left to the free market and therefore the government has a central role to play".

Existing nuclear subsidies

Of course, subsidies already exist. Here are six of them:

1. Charles Hendry, Minister of State for Energy, has just made nuclear power even more expensive for operators (although this move was widely expected), by announcing on Friday that the operator's liability in the event of a nuclear accident will be raised from £140 million to €1.2bn, or just over £1 billion.

This removes some of what is an effective subsidy from the taxpayer to nuclear operators. However, in the event of a really serious accident, there is no doubt that the cost of reparation would be much higher than £1 billion: £800 billion is the current level of the cleanup bill at Fukushima. And this will be borne by the taxpayer.

2. Under the proposed Electricity Market Reform, the Contracts for Difference Feed in Tariffs will provide a subsidy of between £63 billion and £75 billion to EDF, the only nuclear player left in town, over the next 35 years. That is nearly £2.0 billion a year.

3. Waste disposal costs will also be subsidised since the Government has proposed capping the nuclear industry’s liabilities. Currently, DECC spends £6.93 billion a year, 86% of its budget, on managing nuclear waste and other liabilities from Britain’s current nuclear power programme: over eight times more than it spends on securing our future energy and climate security.

4. The four campaigners calculate that it is likely that new nuclear build in Britain will require the creation of special purpose financing mechanisms to protect the balance sheets of the proposers, even a well-apitalised company like EDF in the form of loan guarantees.

5. Dozens of agencies, offices, quangos and departments support the nuclear industry, costing billions of pounds per year. Similar levels of support do not exist for other low carbon technologies.

6. Finally, it is impossible to have nuclear power without huge security and counter-terrorism costs. Most of this is paid for by the taxpayer, but official secrecy prevents us from knowing how much.

These and other ways in which the taxpayer supports nuclear power and will support new nuclear power stations, are summarised in a briefing prepared for the government this week by antinuclear ex-directors of Friends of the Earth, Tom Burke, Tony Juniper, Jonathon Porritt and Charles Secrett.

It's not just the UK

The same S-word dilemma is occurring everywhere and getting worse. And it's not just woolly eco-freaks saying so.

At a symposium this week on the Future of Nuclear Power hosted by the Dick Thornburgh Forum for Law and Public Policy of the University of Pittsburgh, this extremely authoritative and august body, speaking from the birthplace of nuclear power, admitted the following in a comprehensive report on Nuclear Safety and Nuclear Economics, written by Mark Cooper, Ph.D., Senior Fellow for Economic Analysis, at the Institute for Energy and the Environment:

"The subsidy problem in nuclear reactor construction has actually become much more severe," he writes.

Besides increased liabilities resulting from heightened safety awareness following the Fukushima accident, "The utilities proposing new nuclear reactors have demanded many more and larger direct subsidies".

He continues: "Since construction of nuclear reactors cannot be financed in normal capital markets, federal loan guarantees and partnership with public power that has independent bonding authority appear to be necessary ingredients to move projects forward."

We shouldn't have to point out the ludicrous irony of the Tory part of the coalition, which is the half that actively supports nuclear power, relying on a socialist French government, which supports a nationalised industry, to bring about with British subsidies the nuclear power it wants in the UK.

Why not just abandon nuclear power?

All of this makes absurd the claim that nuclear power is the cheapest form of new generation that is continually made by the Government, most recently in its 2011 update of the costs of new generation capacity.

If even just one of EDF's proposed new nuclear power stations goes ahead (and they still haven't submitted a timetable for construction) there is absolutely no doubt that the country will regret it in the future.

And to those who say we need nuclear newbuild to combat climate change, I say with the billions saved from scrapping all the currents subsidies listed above we could build the equivalent amount of new renewable generation plant and install more energy saving products far quicker and with far better value for money and far more British jobs.

Wylfa nuclear newbuild favoured by Welsh Government; EDF abandons Heysham

Cardiff has announced that it expects to power Wales' future with a diverse range of low carbon technologies, including nuclear power, just as news emerges that EDF has cancelled plans for a new nuclear power station at Heysham, Lancashire.

The French company has annulled an agreement with the National Grid to set up any new connection to the grid from Heysham; all its plans for new stations are now focused on their sites at Sizewell and Hinkley Point.

Meanwhile, Wales expects to deploy new nuclear power at Wylfa on Anglesey as part of its transition to a low carbon economy, according to its new energy strategy, Energy Wales published yesterday.

This key policy document sees gas as the key transitional fuel because greenhouse gas emissions from it are "less than that of coal subject to the method of extraction". In the long term, it foresees the addition of carbon capture and storage to gas plants.

The document focuses almost exclusively on electricity, and to a lesser extent waste, almost neglecting the areas of heat and transport. It does share the UK Government's opinion that more electricity will be used in the future for transport and heating.

Its most controversial aspect is its support for nuclear power, the first time that the Welsh Government has been so unequivocal on this point.

Nuclear Wales

Energy Wales says the Cardiff Government supports the development of a new nuclear power station on Anglesey, which is being taken forward by Horizon Nuclear Power, a joint venture between E.ON UK and RWE npower.

The document uncritically repeats Horizon's claims that building a new nuclear power station at Wylfa B would "create around 800 permanent jobs and up to 5,000 during construction".

However, Horizon has not yet appointed the contractor to build a reactor on the site.

Both Areva and Westinghouse are in the running for this job. Westinghouse has warned that if Areva wins the contract it may call for an investigation under competition law because it would mean that Areva would secure the market monopoly, being already selected to build reactors for EDF Energy.

In addition, Westinghouse, owned by Toshiba of Japan, claims this would have a detrimental effect on jobs in Wales.

"It will have a permanent and significantly negative impact on the UK nuclear industry, jobs, manufacturing skills, supply chains and SMEs. Westinghouse have pledged to 'buy where they build' and source 70% UK content, Areva have existing supply chains in France and their UK commitment would be significantly less," says a legal document prepared on its behalf.

“There are undoubtedly risks associated with nuclear power but the risks posed by climate change are now so serious that we cannot dispense with a key proven low-carbon technology,” says the Energy Wales report.

This commitment was immediately criticised by Friends of the Earth Cymru, which said that it was the first time the Welsh Government had supported nuclear power in full.

"To believe that nuclear power can help build a prosperous Wales is misguided – renewable energy provides far more jobs than nuclear power per unit of energy generated,” said Gareth Clubb, its director.

Anglesey was the site over the weekend of a protest to mark the first anniversary of the Fukushima disaster in Japan by a group called People Against Wylfa B (Pawb).

But the energy document and support for nuclear power has won support from Plaid Cymru leadership contender Dafydd Ellis-Thomas and William Powell, the Liberal Democrat spokesman for Environment and Sustainable Development, who said the party accepted that non-renewables would continue to play an important role in Wales’ energy mix.

The international engineering and project management company AMEC has today been appointed by the Isle of Anglesey County Council as chief consultant for the Energy Island Programme, in a four-year contract with an unspecified value.

It will provide the Council with capacity and expertise in areas such as planning policy and development management, environmental impact assessment, consultation, Infrastructure Planning Commission (IPC) process and procedure as well as socio-economic regeneration aspects. The appointment recognises AMEC’s environmental, planning and engineering strengths in renewables and in the nuclear sector.

It is anticipated the programme could contribute nearly ￡2.5 billion to Anglesey and the North Wales economy over the next 15 years.

Renewables and energy efficiency

Energy Wales also sees a role for every other kind of renewable energy including the introduction of renewable bio-methane into the gas supply from anaerobic digestion, as well as for greater end use and conversion efficiency in space and water heating to reduce overall demand.

But little mention is made of Wales' vast resources of forestry timber for biomass generation of heat in the context of community heat and power generation.

The policy document vows to "relentlessly pursue energy efficiency so that we do more with less", but also exploit the principality's huge resources for marine and offshore wind power.

The Welsh Government is developing a Wales Infrastructure Investment Plan in which it will set out the strategic priorities for investment of what it sees as around ￡50 billion-worth of necessary low carbon electricity projects by 2025.

It expresses frustration that whereas some aspects of its legislature are devolved, such as planning, responsibility for large-scale energy development (above 50MW onshore and 1MW offshore) as well as the electricity transmission network that connects them, lies not with Wales but the UK Government.

It has commissioned Hyder to review current energy consenting systems, and its report is expected in the summer. Any necessary legislative changes will be fed into the Planning White Paper and subsequent Planning Bill. In the meantime it will continue to press for greater devolution of energy consenting powers.

Gerry Jewson, the chief executive of onshore wind energy firm West Coast Energy, said that the report showed that the Government "has listened to the representations of all stakeholders in Wales’ renewable future and has a real understanding of the issues" and called on "Cardiff to deliver action, not just aspiration".

He said that "specific and unambiguous commitments to targets for renewable technologies will be essential to focus the minds of planners and developers alike and catalyse the industry otherwise this good intent could be lost."

Other assets

Wales holds several major assets which are essential to the entire UK economy, such as the two LNG terminals at Milford Haven which are linked by a controversial pipeline to England.

It also holds deep sea ports which are potentially useful for establishing offshore energy infrastructure.

Although Energy Wales says that we "believe the development of the grid in Wales can and should be carried out in a way that is sensitive to its impact on our natural environment," no direct reference is made to the prospect of burying grid connection cables from onshore wind farms, a highly sensitive subject in Wales.

While the administration is opening its doors to developers to take advantage of a skilled workforce already with a tradition of the steel and coal industry, it expects developers to return the benefits of the investment to communities in Wales in the form of jobs, training and a share of the returns.

It sees a particular advantage in the fact that it can draw match funding from Brussels, such as through the European Regional Development Fund.

It points to its 'arbed' program and support the Anglesey Energy Island programme as examples of successful pilot projects, and sees that nuclear power on Anglesey as well as marine, solar, biomass, hydro and others can all play a part.

Launching ‘Energy Wales: A Low Carbon Transition’, the First Minister Carwyn Jones, said “Last year the renewable and low carbon sectors supported 29,000 jobs in Wales.

"I want to see these figures increase and see Wales securing the highest possible number of the 250,000 additional jobs predicted for the energy sector in the UK in the coming years."

Although renewable energy supplies only a little over 5% of Wales' electricity, 62% of this comes from wind and solar with a further 25% coming from thermal renewable generation and 13% from hydro generation.

Existing windfarms have a capacity of 562 MW, which will more than double next year when Gwynt y Môr offshore windfarm comes onstream to join a further 263MW from onshore developments.

On energy efficiency, Wales already has a comprehensive supply-chain, from manufacturing to installation, within its boundaries.

Insulation measures and micro-generation technologies are made in Wales by businesses including Rockwool, Knauf, Kingspan, and Sharp.

What EDF doesn't want, Npower picks up

Npower has bought the farmland next to Wylfa nuclear power station, which EDF bought in the summer and then hurriedly sold.

While the ignorant local MP, Albert Owen, and the council, equally ignorant, are in favour of a new nuclear power station here, a recent survey found opposition running at 80%.

The fact is, as I have blogged before, marine current turbines would represent a much more sustainable, long-lasting and low impact solution to any perceived energy or jobs crisis on the island of Anglesey.

Such turbines are already being installed by Marine Current Turbines.

There is an opposition campaign to Wylfa-B called, appropriately enough, People Against Wylfa B - PAWB. Go there and sign the petition.

As they point out, the fact that EDF sold the land next to Wylfa A, demonstrates that Wylfa is a weak contender for a second nuclear plant anyway.

Tidal vs Nuclear

Even as Gordon Brown gives support for more nuclear newbuild, tidal stream energy makes big strides forwards while nuclear costs rise and problems continue

Decommissioning costs rising

The cost of cleaning up the UK's nuclear facilities - some of which date back to the 1950s - will rise above £73bn, even as Gordon Brown is rushing to build new ones. Jim Morse, a senior director at the Nuclear Decommissioning Authority (NDA) told the BBC this week that the costs of dismantling 19 sites will rise by billions of pounds. The National Audit Office upgraded the figure to £73bn. it just keeps going up.

Morse said: "I think it's a high probability that in the short term it will undoubtedly go up. We've still a lot to discover. We haven't started waste retrieval in those parts of the estate where the degradation and radioactive decay has been at its greatest. No-one's done this before."

Nuclear shutdowns

In other nuclear developments this week, two of British Energy's ageing nuclear reactors - the Hunterston B7 reactor at Largs, Ayrshire, and the Sizewell B reactor in Leiston, Suffolk - also shut down unexpectedly triggering blackouts.

Robin Oakley, head of Greenpeace's climate and energy campaign, said: "The nuclear industry has had a woeful 24 hours that must be shaking confidence in this outdated technology. Sizewell B shut down unexpectedly, clean-up costs are soaring and the reactor that France wants to sell us has had construction halted for safety reasons."

EDF's not to be trusted

On Tuesday, the French nuclear safety authority (ASN) ordered EDF Energy to partly suspend the construction of its new-generation nuclear reactor in Flamanville after concerns about the quality of the construction work. This is the same company that has recently been buying up farmland adjacent to Wylfa nuclear power station on Anglesey, expecting to be given the green light to build a new nuclear power station there.

The local council is in favour of the project, because it is fearful that a nearby steel plant, dependent on the energy from the power plants, will have to close down when the power station is decommissioned after 2012. But the Welsh Assembly government has not given its view.

Marine current turbine world first

A Friends of the Earth Wales report has said a marine tidal farm could generate the equivalent energy to Wylfa rendering a new nuclear power station unnecessarily. The marine currents just alongside the power station are amongst the strongest around Britain's coast. Construction is to begin on a 10.5MW project, expected to be commissioned around 2011/2012.

The pioneering project is a joint initiative with Marine Current Turbines and npower. Marine Current Turbines has successfully installed the world's first megawatt-scale tidal turbine, a 1.2MW SeaGen tidal energy system, in Strangford Narrows, Northern Ireland in May. It should start regularly feeding power into the Northern Ireland grid in August.



Martin Wright, Managing Director of Marine Current Turbines said: "This has been a ground-breaking operation, the like of which has never been attempted before and it has attracted interest from around the world. SeaGen's installation has been filmed by TV crews from North America, Germany and France as well as from Ireland and the UK." When fully operational the tidal system's 16m diameter, twin rotors will operate for up to 18-20 hours per day.

These turbines are modular, so if these installations are successful more may be added later, spreading the cost, unlike with tidal barrages or nuclear power stations.