Renew On Line (UK) 41

Extracts from the Jan-Feb 2003 edition of Renew
These extracts only represent about 25% of it

   Welcome   Archives   Bulletin         


1. Energy Review: White Paper

2. PIU on Waste

3. Green Energy- the good, the bad and the ugly

4. Tidal and Wave Power move ahead

5. EAC takes on PIU- and Wilson

6. Taking the high road: 40% of power from Scottish Renewables ?

7. After ARBRE

8. Wind backlash: Over the sea..

9. Coal use grows: UK Renewables move only slowly

10. Regional Renewable Rivalry

11. World Roundup: WSSD aftermath,

Thailand, China, USA,Australia, Canada ,Germany

12. Nuclear Economics: Wilson, and the public, on Nuclear

12. Nuclear Economics

Gordon Brown, in his spending review statement last year, allocated an extra £38 m for sustainable energy initiatives in 2005-06. That sat rather oddly alongside the £650m provided to bail out British Energy, and, even more starkly, the £48bn in nuclear liabilities that the government is planning to take over from BNFL and the UKAEA via the Liabilities Management Authority (LMA). It certainly was a mind numbing sum, converting BNFL from, in effect, a bankrupt company to one that might be seen as profitable- ready for privatisation/PPP/PFI ?

Last year BNFL reported an overall loss of £2.3 bn, which reflected the £1.9 bn cost of dealing with its backlog of waste, and the early closures of Calder Hall and Chapelcross power stations, which will cost another £375m. But the LMA could come to the rescue, taking over the financial drain of waste management but allowing BNFL’s operating activities (which made a £22m profit last year), to show through. However, not everyone is happy with all aspects of the LMA proposal. A report from the Trade and Industry Select Committee on ‘Managing the Nuclear Legacy: Comments on the Government White Paper’, although generally welcoming the idea of a new independent agency, was worried about some of the details, especially since the 2002 BNFL accounts were not available to the Committee. In particular it asked, if the BNFL balance sheet shows a surplus of liabilities over assets of £1.843 bn, why is it necessary to transfer £4.3 bn more in liabilities than assets to the LMA? This would appear to leave BNFL with a balance sheet surplus of £2.5 bn.’

Last Sept., the UK’s main nuclear plant operator, British Energy had to give up its struggle to survive in the increasingly competitive wholesale electricity market- which, following the introduction of NETA last year, has seen prices fall from 2.5p to 1.5p/kWh. It needed around 2.1p to break even. The Financial Times (26/8/02) commented ‘As a pure nuclear generator it is burdened with high fixed costs and inflexible capacity management- mothballing power stations, as some other conventional suppliers have done, is not a realistic option’.

Problems with its Torness and Dungeness AGR plants further deepened the crisis, as did increasing insurance cost since Sept 11th 2001- and the £300m p.a. it has to pay BNFL for reprocessing spent fuel (which BE would rather dry store). Just before BE crashed, the Independent (25/8/02) claimed that ‘British Energy faces having to come up with around £450m in the next year to pay off debts and cover losses’ but said that ‘the group does not have the money’, noting that shares in the group stood at 59p, less than a third of the price they were at when it was privatised in 1996 and just 8 % of their peak three years ago. It added that, with wholesale electricity prices down 25%, British Energy was ‘losing around £4 for every megawatt hour of electricity it sells’. It clearly couldn’t go on like that. So the Government loaned them £650m, now rolled over until March, with, in addition, the government eventually providing, the Indepdent claimed, £3.5bn. BE will sell off its American nuclear assets, but will not pay its immediate creditors. This package put the shares up to 75p. What next? BNFL and BE had also been negotiating the idea of transferring the MAGNOX reactors from BNFL to help boost BE’s income. But as noted above, BNFL is also in trouble financially, and no amount of fiddling with the deck chairs seems likely to change to fact that nuclear power, new or old, is not economically viable in the present market.

BE have claimed that things could improve with new technology, like the AP 1000, but they admit they would need 2.5p-3p/kWh. Would the government step into bridge the gap? Exempting nuclear from the Climate Change Levy would be one option, although even that would only go half way to making up the difference. Prefiguring the governments White paper on Energy, Energy Minister Brian Wilson, told the Times (2/8/02) "There has to be recognition that the biggest non-carbon contribution by far comes from nuclear power and nuclear generators do not get any benefit from that reality." He added: "I think signals are important, and it is essential to reassure investors that the Government sees a long-term role for nuclear generation which is absolutely essential to meeting our climate change obligations". So much for the consultation exercise- that was clearly overtaken by the BE crash.

Wilson on Nuclear

With the White Paper on Energy still awaited, UK policy on nuclear power remains unclear. When the Environment Audit Committee cross examined Brian Wilson last year, it didn’t get much clearer- he simply referred the EAC to the PIU report as a ‘good balanced view’. The Committees examination of this topic started with a nice rhetorical question from Mr Wright ‘the PIU report basically takes the nuclear football and kicks it long and far into the long grass, does it not? Do you think it should stay there?’

Wilson: ‘The first thing I would say is that I do not think anything we are doing on renewables is in conflict with the retention of our civil nuclear industry. I think that there is room for both renewables and nuclear power in our energy policy. In fact, if we were to look to France, the happy combination, where I think 95 per cent of their electricity comes from either nuclear or hydro electric, and that, of course, has the great virtue of being a very low emission energy mix. The starting point in this country is that about 25 per cent of our electricity comes from nuclear, and nobody has satisfactorily explained to me how we are going to meet our environmental aspirations while at the same time wishing away the contribution from nuclear. Everything we have talked about today points to the difficulties and the challenges of meeting our 10 per cent. If you lost nuclear from that mix, you certainly would not be talking about 10%.’

The Committee tried to get further elucidation on nuclear policy, but Wilson responded with variants of the standard formula I am obviously not going to pre-empt what the White Paper says, but I think the PIU report is very sensible on this whole area’. Thus when Chairman tried to get a response on overall strategy, by pointing out that the PIU Report says that renewables plus energy efficiency, if properly applied, could make up for nuclear. Wilson simply replied, I think in the very long term that is conceivable, but I think it would be very foolish at this stage to make over generous assumptions of what either of these headings are going to contribute’.

Joan Walley however felt that there was a need for a decision. As long as you keep that option open forever, you are really preventing the direction being given to renewables on the scale and with the pace that is really required’.

Wilson responded ‘I do not believe that the progress of renewables in this country is being inhibited by our continuing reliance on a nuclear industry. That is my honest position. I think that as an example, Germany has been quoted a good deal, and Germany has stated as an aspiration to get rid of its nuclear industry. Of course it has not yet got rid of its nuclear industry, but let us see how far it goes along the renewables road before it finalises that view. I would also point out, of course, that the Germans are, at the same time, very anxious to maintain enormous subsidies on coal because of the same decision to get rid of the nuclear industry, and I do not think anybody here would regard that as a particularly happy environmental policy.’

85% want renewables, only 10% nuclear

National Opinion Poll research last year, carried out for the Energy Saving Trust, found that, of those asked:

  • * 76% believe the Government should invest in new ways to reduce energy consumption
  • * 73% wanted more information about why the should save energy
  • * 77% say they wanted information on how to save energy
  • * Only 10% said that the government should invest time and money in building new nuclear
  • * 85% wanted government investment in renewable energy

The general public are not the only ones who are less than keen about nuclear power. Following the Sept 11th attacks in the USA, the group of insurance companies who provided part of the cover for UK nuclear plants (up to the first £140m per incident, with the remaining liability being covered by government) withdrew cover, and the government has had to step in to take it all over, although it is charging the operators for this.

NATTA/Renew Subscription Details

Renew is the bi-monthly 30 plus page newsletter of NATTA, the Network for Alternative Technology and Technology Assessment. NATTA members gets Renew free. NATTA membership cost £18 pa (waged) £12pa (unwaged), £6 pa airmail supplement (Please make cheques payable to 'The Open University', NOT to 'NATTA')

Details from NATTA , c/o EERU,
The Open University,
Milton Keynes, MK7 6AA
Tel: 01908 65 4638 (24 hrs)

The full 32 (plus) page journal can be obtained on subscription
The extracts here only represent about 25% of it.

This material can be freely used as long as it is not for commercial purposes and full credit is given to its source.

The views expressed should not be taken to necessarily reflect the views of all NATTA members, EERU or the Open University.