Oliver Tickell
It seems like a long time ago now: the Conservative party’s catastrophic 2017 election manifesto. Yes, the one that promised a new care home tax on the elderly, and an end to the pensioners’ winter fuel allowance. And that went on to turn Teresa May’s repeated mantra of ‘strong and stable’ government into hubris of the first order as she lost her overall majority in Parliament.
But not everything in the manifesto was a disaster. Indeed it contained one excellent policy – on energy. Remarkably – given the long-standing Tory obsession with nuclear power – the word ‘nuclear’ did not appear once in the entire document.
Solar auction
Instead the manifesto insists that a future Tory government would remain utterly indifferent to how electricity is generated, so long as it’s reliable, cheap and low carbon. “Above all, we believe that energy policy should be focused on outcomes rather than the means by which we reach our objectives,” it read.
“So, after we have left the European Union, we will form our energy policy based not on the way energy is generated but on the ends we desire – reliable and affordable energy, seizing the industrial opportunity that new technology presents and meeting our global commitments on climate change …
“We want to make sure that the cost of energy in Britain is internationally competitive, both for businesses and households … Our ambition is that the UK should have the lowest energy costs in Europe, both for households and businesses. So as we upgrade our energy infrastructure, we will do it in an affordable way, consistent with that ambition.”
This sounded good to the green brigade because renewable energy prices, in the UK and elsewhere, have been hitting new lows. In a September 2017 contract auction, two offshore wind projects came in at a record low price of £57.50 / megawatt hour (MWh).
Onshore wind costs even less: contracts awarded in Germany in May went as low as €42.80 / MWh (£38.24) – less than the UK’s wholesale power market price. And in October, Germany’s solar auction delivered bids as low as €42.90 / MWh – just a few pence higher than onshore wind.
Reactor designs
It is also clear that new nuclear plants are an incredibly costly way of generating power. Hinkley C, now under construction at Hinkley Point in Somerset, is set to receive a guaranteed £92.50 / MWh, for 35 years. That’s in 2013 money, so is now worth around £100.
With current wholesale power prices around £40-45 per MWh, that’s one hell of a deal for its developers, France’s EDF and its Chinese partner, CGN. But even at this price, many analysts think EDF should walk away from the project, such are its technical and financial risks.
So now we have power from onshore wind, solar and offshore wind all much cheaper than new nuclear. So we can safely assume that the UK government has seen the writing on the wall and dumped hyper-costly nuclear power in favour of increasingly low-cost renewables, can’t we?
No: its nuclear obsession continues unabated. The Tories’ election manifesto – which some old-fashioned ‘my word is my bond’ types might view as part of a binding covenant between government and electorate – is clearly only so much chip paper to the incumbent technocrats.
Instead, we see a renewed determination to press ahead with massive nuclear power construction no matter what the cost. In addition to the twin EPR’s at Hinkley Point C, the government is pushing ahead with plans to build reactors at Moorside in Cumbria, at Wylfa on Anglesey, at Bradwell on the Essex coast, at Oldfield in Gloucestershire, at Sizewell on the Suffolk coast – employing surprisingly diverse reactor designs.
Design enhancements
These include the Westinghouse’s AP1000, Hitachi’s Advanced Boiling Water Reactor (ABWR), China General Nuclear’s Hualong HPR1000, and South Korean group Kepco’s APR1400.
In total, the government wants to procure 19GW of new nuclear power, much of it to be operational by 2030 as the UK prepares to close some 10 gigawatts (GW = 1,000 MW) of existing nuclear capacity. But that’s not the limit of its nuclear ambitions.
Business Secretary Greg Clarke recently announced that the winner of a competion for a new generation of ‘small modular reactors’ (SMRs), an industrial consortium led by Rolls Royce, will receive an initial £100 million from taxpayers to progress its project to design and manufacture reactors around a tenth the size of the 1.2GW behemoths to be deployed at Hinkley Point.
The idea is that these SMRs will be built by the hundreds on production lines, and installed in urban fringes across the UK, achieving ‘process engineering’ improvements and enormous economies of scale. But the policy suggests the triumph of hope over experience.
The first SMRs were built in the 1950 and hundreds have been installed in nuclear powered submarines and other ships since. If there were huge cost savings available from design enhancements and production-line construction, why have the last 65 years of nuclear engineering enhancements failed to deliver them already?
New nuclear
The truth is that nuclear reactors have got ever bigger for a very simple reason – that it’s cheaper that way, a fact recently confirmed in a July 2016 analysis by Atkins consultants for Clarke’s BEIS Department which revealed that the first SMRs would probably cost 30 percent more to build than existing large nuclear designs.
Only after 5-8 GW – that’s 50 – 80 100 MW units – had been deployed might the price finally be competitive with the large reactor designs that are already way too expensive. “SMRs could become cost competitive against large nuclear after 5-8 GWe of global deployment of a single design”, states the report.
The report goes on to estimate a ‘net present value’ (NPV) of a 2 GW UK SMR programme, compared to large nuclear, of minus £4.8 billion – indicating a likely thumping loss of taxpayers funds. And even that strongly negative assessment depends on generating improbably high SMR exports of 300MW to 750MW per year.
The same volume of offshore wind – even based on 2015/16 prices of around £100 / MWh, almost double the lowest achieved in 2017 – delivered a plus £400 million NPV.
So what’s the likely bill to tax payers and energy users of all this new nuclear power? Assuming an average 2030 wholesale power price (constrained by zero marginal cost wind and solar) at roughly today’s level of £40, an average nuclear power price of £100 (both in today’s money), new nuclear will need a subsidy of £60 / MWh.
Jobs and pensions
Assuming the nuclear plants work flat out for 90% of the time, 19GW will deliver 150 million MWh of power per year, earning £9 billion in support payments. Split over Britain’s 25 million homes, that comes to about £360 extra on energy bills each per year.
Assuming 35 year contracts for nuclear (as at Hinkley C) rather than the 15 year contracts given to most renewables generators, the bill comes to a total £315 billion ‘nuclear tax’ to be paid by British power users. That’s a massive £12,600 per household.
So here’s the key question: how can a government that has declared in its election manifesto its commitment to delivering the lowest cost power in Europe, and its utter impartiality in deciding between any one power generation technology over any other, justify an obsessively pro-nuclear energy policy that could land every household in Britain with a £12,600 ‘nuclear tax’?
No less pertinent a question is: where is the political opposition to this nuclear madness? Despite a stinging critique of Hinkley C from the House of Commons Public Accounts Committee last month, The Labour party and its leader Jeremy Corbyn have been notably silent on the issue, apparently under the influence of the big nuclear sector unions, GMB and Unite.
But at least that’s consistent with its manifesto statement, which states that: “The UK has the world’s oldest nuclear industry, and nuclear will continue to be part of the UK energy supply. We will support further nuclear projects and protect nuclear workers’ jobs and pensions. There are considerable opportunities for nuclear power and decommissioning both internationally and domestically.”
Democratic process
The LibDems, who were strongly against nuclear power until they joined the Tories in coalition government in 2010, were then hugely for it in office. Now it appears the party has turned against it again.
Its manifesto promised to “accept that new nuclear power stations can play a role in electricity supply provided concerns about safety, disposal of waste and cost are adequately addressed, new technology is incorporated, and there is no public subsidy for new build.”
And since the public subsidies are enormous, that means the LibDems should be fiercely opposing the government’s plans. But – with the recent exception of former energy secretary Ed Davey MP, talking good sense this week on Greenpeace’s Unearthed – they too are keeping quiet about the monstrous subsidies the Tories are ready to throw at nuclear power.
This leaves the UK is now suffering something arguably even worse than a disastrously ill-judged energy policy: a total failure of democratic process and governance that will cost us this country dear for half a century or more to come.
