Extracts from the Nov-Dec 2002 edition of Renew
These extracts only represent about 25% of it

15. The British Nuclear Energy Crisis

The UK energy scene was thrown into turmoil in early Sept by the announcement by British Energy, the UK’s main nuclear operator, that unless a new deal was made to improve its economic situation it would be ‘unable to meet its financial obligations as they fall due and therefore the company may have to take appropriate insolvency proceedings’.

The government stepped in with an initial £410m interim loan, pending the development of a rescue plan. But the damage had been done. By the end of the month, BE’s shares had fallen to 5p, as against 320p a year ago, with the business being valued at only £37m against £2bn a year ago. This despite the fact that it was in effect given the seven AGR’s free, and the Sizewell PWR at a knock down price- £1.5bn, whereas it had cost £3bn to build. The end result has been what John Kay writing in the Financial Times (19/9/02) called ‘the biggest write-off in the history of capitalism’. The extension the loan period until the end of November, and the expansion of the loan to £650m, helped a bit- shares prices rallied a little, but clearly BE was in a mess.

BE’s problem was that, at 1.6p/kWh, wholesale electricity prices in the competitive market created by NETA, the New Electricity Trading Arrangements, are not high enough to cover the day-to-day operating costs of the reactors, and on top of that BE has to pay £300m pa to BNFL for its fuel to be reprocessed at Sellafield. Worse still the Torness and Dungeness AGR’s had to be shut down due to safety worries, reducing its cash flow further - and there were also problems with Heysham 2.

Perversely, some help may be on hand in that electricity wholesale prices jumped to a four-month high due to uncertainty about BE’s future. Winter baseload prices climbed to £18.25/MWh - or 1.825 p/kWh. That’s still nowhere near what BE needs to break even, at least £2.1p/kWh. It has been reported to be losing £4 on each MWh sold. Interestingly that’s about the size of Climate Change levy, which is why BE was keen that its nuclear electricity should be excluded from the levy, just as renewables are. One problem with that option is that then the green power market would be swamped by nuclear, pushing renewables to the margins. Providing some sort of Obligation like the Renewables Obligation, with tradable carbon credits, would create the same problem.

While the government chewed over the idea of letting BE go into administration, or asking the proposed Liabilities Management Authority to run the plants, some Trade Unions called for full renationalisation, and environmental groups like Greenpeace and SERA made their views clear. They weren’t keen on renationalisation – after all that would only be for industries you wanted to keep going. SERA argued that ‘there is no public interest in saving British Energy’ adding that ‘the taxpayer is best served by the early phase out of nuclear power. Instead, an accelerated programme of investment in renewable energy and energy efficiency measures, with associated employment opportunities, should be put into effect’. Bill Eyres, SERA Chairman, said: ‘The Government should offer no bailout for British Energy but instead force the company into administration. There should be no handout for a lame duck business. We believe it is in the best interests of the taxpayer to phase out nuclear power rapidly as to do otherwise would leaded to mounting economic losses that would ultimately fall to the public to pay. It would be a disgraceful waste of resources to prop-up a failed, dirty and dangerous industry when clean technologies and jobs need priority support.’

Greenpeace was even more forceful, claiming that the governments bail out was illegal in terms of EU state aid rules and arguing that ‘the safest and most cost effective thing the Government can do is to close British Energy’s nuclear reactors. They are artificially distorting the market for power by propping up the bankrupt nuclear industry. The market refuses to back nuclear power and the public want renewable energy instead .The Government should end its flirtation with nuclear power and develop a new energy industry for the UK based on renewable energy and energy efficiency’.

Greenpeace added ‘A recent report by AEA Technology demonstrated that offshore wind farms off the coast of East Anglia would generate the same amount of power as the entire UK’s nuclear sector. Britain has wind reserves that could generate three times the nation’s current electricity needs’.

In the same press release, Dale Vince, Managing Director of Ecotricity, said," If we were given the £410m instead of British Energy we could build enough onshore wind energy to power 10% of the country.  Onshore wind energy is a very competitive form of energy as well as being renewable, clean and safe, everything nuclear is not. That's a better way to spend public money than propping up nuclear power stations for a few weeks " Later, taking the £650m on board, he raised the potential renewable contribution 15%!

These estimates sound optimistic, unless he is just talking about domestic consumers. Assuming £800/kW installed, £650m would support around 800MW, and assuming a 40% load factor, that would only be about 0.5% of total UK electricity generating capacity. Even so, investing in renewables would surely be a better way of spending £650m than bankrolling BE and incurring further losses.

The Government however would have none of it. Brian Wilson told the FT (22nd Sept): "The question remains whether there is any logic in allowing the nuclear industry to fade away in the UK at exactly the time we are trying to increase our non-carbon sources of electricity generation. I don't think it makes any sense." And on Oct 2 the Times reported him as saying "It would cost more to walk away from British Energy than it would to address the problem." On Oct 11the FT reported that the DTI had indicated that exemption from the Climate Change Levy was not an option. One possibility is a revamp of NETA, letting nuclear (and renewables) off the hook, but that would surely have to await the full Energy Review, not now expected until early next year.

As far as we can see, with the UK having 30% excess generating capacity, we wouldn’t miss BE’s power input as long as new carbon free capacity was gradually phased in to meet increasing demand without increasing emissions. So the simplest option would be just to let BE die, hand over its plants to the LMA to phase out (using BE’s assets to start decommissioning), and increase the 3p/kWh Renewables Obligation ‘buy out’ price to say 4p, so that investment in new renewables would speed up. That would eventually lead to small increases is electricity prices, maybe 1% by 2010. But so would almost every other option – apart from a continued bailout of BE by the taxpayer.

UK Nuclear Waste Crisis

As if the nuclear industry didn’t have enough problems with the collapse of British Energy , the waste issue re-merged to haunt them.

‘There is a serious and urgent problem of how to manage and dispose of the legacy of 50 years of nuclear waste production by the nuclear weapons programme and the civilian nuclear industry,’ according to Professor Geoffrey Boulton, a geologist from Edinburgh University, who chaired a study for the Royal Society, which has now emerged as a strongly worded report. It claims that Britain has failed over a period of several decades to address an issue that is going to get far worse as existing nuclear power plants are decommissioned, and notes that "the relevant scientific and technological research base has been seriously diminished".

In its submission to a consultation conducted by DEFRA on the management of radioactive waste, the society says: ‘The industry seems to have regarded treatment of waste as of secondary importance, and to have focused its efforts on countering what it saw as unfounded hostile public opinion and on economic concerns’. The report also claims that some nuclear waste is not currently stored as safely as it should be and that the institutions and processes set up to deal with nuclear waste disposal "do not command public confidence".

The report recommends the creation of an independent waste management commission to find out how the public wants waste disposed of in the long-term and to provide technical advice to the government. Successive governments and the nuclear industry, it says, "have failed to recognise the need for public consent about policies relating to toxic and long-lived wastes, as well as for public confidence in the institutions that manage them".

The report concludes: "The problem of disposal of existing radioactive waste is serious and urgent. It needs to be resolved regardless of whether a new generation of nuclear power stations produces fresh volumes of waste."

Prof. Boulton added: "It is vital that the UK adopts the best available technologies to ensure the safest possible management of waste, and invests in the research and development of technologies for waste types for which there is not currently a proven treatment. The UK has lost much of its expertise in the areas of research needed to find solutions for the storage and disposal of waste. There has been a failure to recognise that the management, decommissioning and clean-up of radioactive waste require the same focus on research and technological innovation as the original programme to develop the nuclear industry."

He went on "Neither BNFL nor Nirex have been investing in research, so the relevant science base has been much degraded. It’s our view that this is a serious and urgent problem."

Prof. Ekhard Salje, head of earth sciences at Cambridge University, who contributed to the report, said: "Since the first power stations in the 1960’s, there was almost a decision not to research the waste for all sorts of political reasons, so absolutely nothing happened at all, particularly on the high level waste. This is reaching crisis levels".

However, Prof. Boulton said that deciding whether to build new nuclear stations need not necessarily wait for acceptable long-term management methods to be found for existing waste. But there would have to be acceptable plans for the waste the new stations would produce.

The Royal Society’s report ‘Developing UK policy for the management of radioactive waste’ is at www.royalsoc.ac.uk/

The Governments White Paper on Nuclear Clean Up which emerged soon after, confirmed the idea of creating a Liabilities Management Authority, relieving BNFL/AEA of £48bn in historic liabilities, but it didn’t propose changes in NIREX’s role. Greenpeace saw it as ‘a piece of creative accountancy that the likes of Enron and WorldCom can only look on with awe’.

. See: www.dti.gov.uk/nid/nuclearlegacy/whitepaper.htm

Fabians say we must all take responsibility

‘The existence of radioactive waste breaks the first principle of sustainable development, the precautionary principle. Many in the Green movement will always make the final demise of the nuclear industry a prerequisite for engaging in discussions about the waste management solution. But this is deliberately to miss the point. The waste exists and it has to be dealt with regardless of any future nuclear programme. To refuse to face up to this fact is deeply irresponsible and perpetuates the failure of the previous Tory government. Some in the Green movement already see the benefits that could accrue from positive engagement both in influencing the outcome and in showing responsibility. They need encouragement and recognition that their help in developing policy will be welcomed.’ So says Tom Watson MP, in a paper for the Fabian Society entitled ‘Taking Responsibility - Dealing with the legacy of radioactive waste’.

He argues that NIREX, the waste agency, should be made clearly independent of the nuclear industry and decisions about waste disposal should be more ‘transparent’ and ‘inclusive’, with the involvement of the full range of stakeholders via full consultation.

See: http://www.fabian-society.org.uk/documents/document_latest.asp?id=46&catid=52

Comments on this paper : freethinking@fabian-society.org.uk

* The Radioactive Waste Management Advisory Committee recently warned that 88% of the UK’s intermediate waste had not been properly conditioned for long term storage.

But it wasn’t all bad news for nuclear…

Germany Rescues BNFL

The controversial Mixed Oxide plutonium plant at Sellafield may survive after all, despite the problems with the Japanese contract for MOX and the protest from Ireland about the extra risks, given that British Nuclear Fuels recently won a contract for supplying MOX to the German utility E.ON- which, meanwhile, has been in the process of buying Powergen. BNFL claimed that the E.ON deal would fill 15% of the MOX plant's capacity and, coupled with earlier contracts with Swiss and Swedish nuclear plant operators, guaranteed it a viable 40% capacity utilisation over the coming years. But Greenpeace and Friends of the Earth insisted that the deal still left the plant far short of economic viability. MOX is around 5 times more expensive than fresh uranium, of which there is plenty for the moment. But countries who use Sellafield to reprocess their spent fuel have to accept the resultant plutonium back, and taking it in the form of MOX has some attractions (including maybe some price concessions). But we thought Germany was supposed to be giving up on reprocessing? And will the powerful German anti-nuclear movement let MOX be shipped across Germany?

...Finland Rescues Nukes

Finland has given up on reprocessing (which Russia used to do for them) but it has not given up on nuclear power. Despite fierce opposition from anti-nuclear groups, the Finnish parliament has voted in principle to build the country’s fifth nuclear power plant of up to 1600MW- at a cost of up to £1.5bn. Meanwhile it has a 10 year programme for trying to find an acceptable site for spent fuel, and it will be perhaps 2020 before a site is actually ready.

* The EU’s Euratom Research Framework Programme for 2002-06 includes a Euro 1.23 bn programme to promote ‘sustainable nuclear power’. Research Commissioner Philippe Busquin said: ‘Safe and clean nuclear energy is a priority for sustainable development: it can greatly contribute to meeting Kyoto Treaty requirements.’

Most of the budget (Euro 750 m) will fund nuclear fusion research.

See http://europa.eu.int/comm/research/energy/fi/fi_en.htm (and / fu/fu_en.html)