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Can Britain’s nuclear ambitions avoid a meltdown?

April 4, 2017
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By Paul Homewood

 

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http://www.telegraph.co.uk/business/2017/04/01/can-britains-nuclear-ambitions-avoid-meltdown/

 

There’s a very good analysis in the Telegraph about the state of Britain’s nuclear plans:

 

Along the Somerset coast 3 million tonnes of concrete has begun to flow into the foundations of the UK’s first new nuclear power plant in a generation.

Already, 1,600 workers at EDF’s Hinkley Point site have excavated 3 million cubic metres of soil and rock to lay the foundations for 230,000 tonnes of steel reinforcement for a power behemoth capable of meeting 7pc of the UK’s electricity demand.

But the awe-inspiring scale of the UK’s first steps into a new nuclear renaissance has nonetheless been overshadowed by events some 3,000 miles away. Last week, in a New York courtroom, the Toshiba-owned nuclear company at the heart of Europe’s largest planned nuclear reactor in the North West of England filed for bankruptcy amid spiralling losses brought about by heavy cost overruns and project delays.

Westinghouse has lined up $800m (£640m) bankruptcy financing from investment fund Apollo to help fund its ongoing maintenance work, supply of nuclear fuel, and decommissioning. However, the deal makes no clear provision for its giant 3.8GW Moorside nuclear plant in Cumbria.

Last week Westinghouse, the Toshiba-owned nuclear company at the heart of Europe’s largest planned nuclear reactor in the North West of England filed for bankruptcy

Last week Westinghouse, the Toshiba-owned nuclear company at the heart of Europe’s largest planned nuclear reactor in the North West of England filed for bankruptcy Credit: AFP

The Japanese conglomerate’s bid to contain the nuclear unit’s toxic financial contagion is the latest multi-billion pound jolt raising fears that the UK’s battle to build a £100bn homegrown nuclear programme could be heading for a meltdown. 

At the core of the UK’s struggle to secure new nuclear investment is the sheer scale of developing a nuclear power plant. The cost of such a high-risk development is typically north of £10bn and it can take almost a decade before the first spark of electricity brings a financial return on their eye-watering investment. Securing regulatory approvals for new nuclear reactor designs takes four or five years. Construction takes even longer, and the cost of delay is counted in millions of pounds every day.

“New nuclear build is not economic in the UK and probably never will be. It seems infeasible that the value outweighs the additional costs,” equity analysts at Jefferies suggest.

In the US four Westinghouse projects are running three years behind schedule and billions of dollars over budget. The overrun has dragged the company into debt, potentially forcing a write down of $6.2bn from its Japanese parent and an expected loss of $9.1bn for the year.

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The heavy cost of delay has taken a toll on French nuclear giant EDF too. Its projects in Flamanville in France and Olkiluoto 3 project in Finland have become the go-to cautionary tales for the UK’s anti-nuclear brigade. Olkiluoto is €5bn (£4.3bn) over budget and 10 years behind schedule, while Flamanville is €7bn over budget and expected to be six years late.

At the same time EDF faces a €55bn bill to extend the life of its own fleet of nuclear reactors, many of which were built in the 1980s. The heavy financial burden has forced it to borrow billions of euros in recent years just to pay dividends, racking up its net debt to over €37bn. The state-backed firm has also had to bail out struggling reactor builder Areva. Amid the financial gloom the company is preparing to take on the majority of the risk for building the UK’s most high profile new nuclear site at Hinkley Point C.

It is a risk former chief financial officer Thomas Piquemal was unwilling to take. He resigned last year over concerns the project would put too much stress on EDF’s balance sheet.

The once bright future for nuclear new build has dimmed with each blow to the embattled developers backing the plans, raising serious questions over whether the UK will be able to support investment in a fleet of 12 new nuclear reactors to plug the looming hole in the country’s energy supplies. “We have to,” says Tom Greatrex, a former shadow energy minister in the years of the coalition government and now the chief executive of the Nuclear Industry Association. “There’s an urgency to this which is fundamental to the UK as a country being able to secure a safe and reliable electricity supply which is still low carbon.”

Moorside

Fears have been raised over NuGen’s Moorside nuclear project  Credit: NuGeneration

The UK relies on nuclear power for almost a fifth of its electricity, but most of its reactors are due to close in the coming years. A decade ago the Government promised the first of its new nuclear fleet would be adding to the country’s low carbon power “well before 2020”. EDF is expected to drive investment in over half the new projects and promised Hinkley would help to cook the nation’s Christmas turkeys by the end of this year.

Most are now expected to deliver in the late 2020s, raising fears that the delayed roll out will open a gaping hole in the UK’s electricity supplies.

“The period from now until 2030 is crucial. Two thirds of the UK’s electricity generation will have retired by the end of the next decade, and that’s even after the lifetime extensions which have been announced for some nuclear plants,” Greatrex adds.

Government policy has been highly effective in shutting unwanted energy sources down, but less successful in firing new power plants up. By 2025 coal-fired power will have all but vanished, having made up the majority of UK power only a few years ago. Older nuclear power plants are due to close down too. Meanwhile, investment in gas-fired power has been slow to come forward.

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“What is required is for government to have a proper focus on this problem, so the pipeline of nuclear projects can go ahead. If they don’t, we will become increasingly reliant on sources of power which undermine the objectives of having low carbon energy which is reliable. It doesn’t make sense to have an electricity system which is reliant on the weather or the mood of Vladimir Putin, but that’s where we could end up if we’re not careful,” says Greatrex.

Even in an energy future booming with new renewable power sources and battery storage, nuclear power will be needed as a low-carbon “stabiliser” for the UK energy grid, explains EY partner Tony Ward. The advisory firm has worked closely with government and nuclear developers hoping to set up reactors in the UK.

“When people talk about National Grid needing to balance the system, it’s not just about balancing supply with demand, it also requires the physical characteristics of large-scale generation to maintain the frequency of the system,” he says.

In the past, power sources with the physical heft to handle the frequency of the power system were common. Large-scale generating behemoths such as coal- and gas-fired power plants can easily provide the “spinning mass” to lend the system the drive it needs to hum at around 50 hertz.

Government policy has been highly effective in shutting unwanted energy sources down, but less successful in firing new power plants up. By 2025 coal-fired power will have all but vanished, having made up the majority of UK power only a few years ago. Older nuclear power plants are due to close down too

A loss of frequency raises the risk of blackouts and has already shown signs of sparking volatile market prices which make their way to consumer bills, Ward says.

Tim Yeo, a Tory party grandee and the former chairman of the UK’s energy select committee, spearheads the industry-funded pressure group New Nuclear Watch Europe.

He says the compounding problems facing nuclear developers “add up to something of a crisis for the UK’s nuclear new-build programme”.

“If ministers don’t unlock the doors of the nuclear programme there’s a problem looming for our climate targets as well as security of supply,” he says. “The question is whether the Government is prepared to reverse the principled objection it has to using taxpayer money to help support the development costs.

“We have been arguing for some time that because the interest rate on the loans for the upfront capital costs of construction has such a direct effect on the ultimate cost of electricity, the Government should use its advantageous credit rating to borrow money more cheaply than any private company would be able to.”

Hinkley Nuclear Power Station

Hinkley Nuclear Power Station Credit: Getty

Yeo says the Government should make an arrangement with developers to provide a loan at a set interest rate which calls for repayments only once the project starts generating electricity.

“If the Government is serious about wanting to proceed with its nuclear programme, it needs to sit down with likely vendors about what the terms for such a loan would be,” he adds.

A government-guaranteed loan is one of many sets of discussions the Government will need to have in the coming two years as it manoeuvers through the tricky waters of the Brexit negotiations. In making a clean break from Brussels, the Government has also confirmed plans to abandon the European Atomic Energy Community (Euratom), which provides the regulatory framework through which the industry operates.

By leaving Euratom’s regulatory safety net, work on new nuclear build could grind to a halt and imports of nuclear fuels could run dry. Critics of the plans say the decision could delay the planned Hinkley Point and Horizon nuclear plants while complicated new bilateral agreements are formed. It could also bring imports of nuclear fuel to an immediate halt, leading to a shutdown of existing nuclear power reactors which make up a fifth of the UK’s electricity supply. 

By leaving Euratom’s regulatory safety net, work on new nuclear build could grind to a halt and imports of nuclear fuels could run dry. Critics of the plans say the decision could delay the planned Hinkley Point and Horizon nuclear plants while complicated new bilateral agreements are formed

“The concerns over our departure from Euratom is a fairly new anxiety because we hadn’t anticipated our exit from the group until a couple of months ago. It was a very serious, unhelpful and in some ways unnecessary complication,” Yeo says.

“I don’t think we had to exit Euratom simply because of Brexit. This was not an issue raised during the campaign at all and it’s of continued mutual benefit to allow continued free trade in nuclear components between the UK and the EU,” he adds.

Greatrex says the NIA is working with the Government to advise on arrangements to keep the nuclear industry ticking over amid Brexit talks. “There’s a lot to get done in a short amount of time when there are a lot of other things happening with regards to the wider negotiations of leaving the EU,” he admits. “The point that we’re making is that even though this is mostly technical stuff, it will make sense to have transitional arrangements or a phased approach so we won’t come to March 31 2019 and find there’s nothing in place.”

The threat that UK nuclear could be plunged into the dark is closer than many think.

http://www.telegraph.co.uk/business/2017/04/01/can-britains-nuclear-ambitions-avoid-meltdown/

 

[One quick note – the map incorrectly shows Oldbury coming on stream in 2020. In fact, construction won’t even start until Wylfa is up and running, meaning a date well into the 2030s.]

 

A number of important issues are raised though:

 

1) At last there is some recognition that we cannot simply rely on renewables and storage.

Not only is it an issue of providing power when there is no wind, but it is also a matter of system inertia:

 

“When people talk about National Grid needing to balance the system, it’s not just about balancing supply with demand, it also requires the physical characteristics of large-scale generation to maintain the frequency of the system,” he says.

In the past, power sources with the physical heft to handle the frequency of the power system were common. Large-scale generating behemoths such as coal- and gas-fired power plants can easily provide the “spinning mass” to lend the system the drive it needs to hum at around 50 hertz.

This is the first time I can recall this being mentioned in the Telegraph.

 

2) Given the delays and spiralling costs facing both EDF and Toshiba, I would not be too keen on throwing taxpayer money at the problem, particularly as there seems to be so little benefit.

I think we can discount the views in this respect of Tim Yeo and Tom Greatrex, given the vested interests they represent.

 

3) I have seen nothing in any of this to suggest that the costs of future plants will be much less than Hinkley. We are therefore locking ourselves into higher electricity prices for decades.

 

To simply assume that all of this nuclear capacity will come on stream in time to replace older plants due for closure is not only naive, it is also playing Russian roulette with the country’s energy security.

There is, of course, a very simple answer to all of this – invest immediately in a fleet of gas power stations. This can be done relatively cheaply and quickly. There are many avenues through which the government can achieve this goal, with either public or private ownership.

If Toshiba and co think they can build new nuclear power plants and compete against gas without subsidies, then good luck to them. Let them try.

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32 Comments
  1. April 4, 2017 4:10 pm

    A very timely article. Just in time to be ignored by the Government in its response to the consultation at https://www.gov.uk/government/consultations/building-our-industrial-strategy

  2. April 4, 2017 4:10 pm

    Toshiba/Westinghouse is effectively dead as a new nuclear plant supplier. Four facilities in US plus one in China all grossly overbudget and behind schedule.
    UK doesnt have the time luxury of waiting for new nuclear to be built. Only timely solution is new CCGT running on US LNG until UK gets fracking. Less than $1500/Kw, less than 3years greenfield or 2.5 years on an existing site with substation.

  3. April 4, 2017 4:18 pm

    You are right about the gas, there never was a true Free Market in electricity, even less so now, the govt has to ensure that the lights stay on in 5 years time, and that requires the quick building of power stations, gas and diesel are the main options, but coal should be kept alive, the govt should offer to buy existing coal fired power stations that are still viable, the price would be very low, as the owners would avoid the enormous site remediation costs, and the attention of hordes of Green Zombies.

    • dave permalink
      April 4, 2017 4:42 pm

      “…Russian roulette…”

      Not precisely. In Russian roulette only one of the chambers has a live round in it. In the present situation all the chambers have live rounds in them, stubbornly jammed home by the fingers of innumberable, half-educated, elitist idiots.

    • Graeme No.3 permalink
      April 4, 2017 4:50 pm

      Since the govt. is doing its utmost to make coal fired power stations non viable they may have trouble getting any still working.
      It is becoming obvious to those not making these decisions that the whole thrust towards renewables is turning into a disaster, yet both the House of Commons and Whitehall are determined to bring on that disaster.

  4. AlecM permalink
    April 4, 2017 4:39 pm

    Convert coal fired power stations to burn the new Soylent Green, made from the bodies of Green Zombies……….

    • Graeme No.3 permalink
      April 4, 2017 4:44 pm

      Alternatively feed them beans and collect the gas.

      • AlecM permalink
        April 4, 2017 6:10 pm

        Another option is liposuction in return for being fed…….

  5. Rowland H permalink
    April 4, 2017 4:56 pm

    No mention anywhere of developing and building Small Modular Reactors which could be dispersed around the country for greater security and power close to the point(s) of main demand. From what I have gleaned, they are much simpler and safer all round.

    • April 4, 2017 5:52 pm

      There are no approved commercial SMR designs anywhere in the world. Design approval leadtime rules them out formthe near future.

  6. Athelstan permalink
    April 4, 2017 6:05 pm

    “We have to,” says Tom Greatrex, a former shadow energy minister in the years of the coalition government and now the chief executive of the Nuclear Industry Association.

    we don’t have to yer fekkin’ shill.

    And I shall reiterate, Germany foresaw all of this, having dumped Nuclear there was only one of two options coal and gas or coal and gas. The Germans have just done this

    And as we know the Germans are. already building new Coal plant.

    The question I beg is this, if the Germans can openly flout all of its allies in pursuit of it own vital energy and economic interests………….why does Britain play the dupe – we are the insofar as greenpus and a army of green useless idiots/swampies along with, unilaterally imposing a hairshirt green agenda and also mass immigration is concerned, the world’s doormat – please feel free to wipe your feet on us – pretty please and don’t worry the taxpayer will pick up the tab!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!

  7. Bitter&twisted permalink
    April 4, 2017 6:09 pm

    Can’t believe that lying, perjuring twat, Yeo, is still offered up as a energy “expert”.
    The only thing he is expert at is lining his own pockets.

    • Paddy permalink
      April 5, 2017 6:23 am

      Self-styled “Grandee”. That means “has been”.

  8. Luddite Gray permalink
    April 4, 2017 7:07 pm

    Why are existing reactors that have worked successfully for years being closed down? If it’s an just an age thing why don’t we build new replacements of exactly the same design?
    Why bother in trying to improve something that works, with something that doesn’t?

  9. April 4, 2017 7:36 pm

    ‘As of November 2016, the People’s Republic of China has 36 nuclear reactors operating with a capacity of 31.4 GW and 20 under construction with a capacity of 20.5 GW. Additional reactors are planned, providing 58 GW of capacity by 2020.’

    http://en.wikipedia.org/wiki/Nuclear_power_in_China

    How hard can it be?

    • John F. Hultquist permalink
      April 5, 2017 3:19 am

      The article with the “planned — for 2020” statement is from 2014.
      If those are to be operational in 3 more years, likely they are well along by now. And have additional plants been planned in the last 3 years?
      Someone knows, but not me.

      • April 5, 2017 4:32 pm

        “And have additional plants been planned in the last 3 years?
        Someone knows, but not me.”
        Yes. Many of them.

        In fact there are 2 EPRs, like the two in Europe who are discussed in this post, which will start operation withing 12 months, and many which have already started construction recently.
        Just go on the web page of world nuclear news and you’ll find all relevant news articles.

  10. Jack Broughton permalink
    April 4, 2017 8:07 pm

    The vandals who are intent on not only closing our coal-fired power stations but ensuring that they are destroyed so that they cannot be re-used should certainly be brought to task: I know that they won’t as it is all part of the massive cover-up that is “climate change”.

    It would be too big a reversal to build new coal power as Germany has done.

    It looks to me as though the only long term solution now is to build a vast store of LNG and build GTCC plants as base load plants. This means that we will be totally at the mercy of world gas prices unless fracking can prove itself. This will not be funded by private capital as the pay-back has been killed by subsidised unreliables.

  11. Messenger permalink
    April 5, 2017 9:07 am

    Tim Yeo?- I thought (hoped) he was history.

  12. Europeanonion permalink
    April 5, 2017 9:08 am

    What I find a little unnerving is that the tardiness of a string of UK governments to commit to the expenditure required for energy plans is causing, currently, to run nuclear plant with extended licence to produce energy beyond their original decommissioning dates and that such plant is now flat-out on a daily basis.

    To take moral and financial control of such a key element in a major sector effecting all of our living experience and to be so ineffectual at weighing the balance is a scourge on our future prospects, even greater than that which we are weighing in terms of our Brexit situation. Where pragmatic, energetic council was required we have been subjected to the mores and the variability of populist sentiment. While government has so many demands on its revenue it would be inevitable that making do was always going to be the main objective of a state inevitably challenged for financial resources.

    Nuclear, an anagram of Unclear; botched, neglected and ‘frit’ may also be added. That our mores, many of which are but ill-sourced understandings, should be at the root of the general welfare and wealth is too uncomfortable to ponder. That commentators such as George Monbiot can swing casually from opposition to nuclear to ‘sanctioning’ it, a person that commands some adherents in his writing, is ludicrous. It is rather like asking columnists and minor personalities how many front line military aircraft the country should have and adhering to their suggestions. In a world of uncertainty there is room for someone of candour and spirit to put their name to that which demands clarity and serious intent.

  13. April 5, 2017 9:17 am

    Plenty of gas around and prices falling as US exports increase.

    ‘LNG trade in 2016 jumped the most in five years, contract lengths were sliced in half in the past decade, and spot prices slumped more than 60 percent in the past three years…U.S. plants will help boost global production capacity to 407 million tons a year by 2020, compared with projected demand of about 274 million tons, according to Bloomberg New Energy Finance.’

    http://www.thegwpf.com/gas-giants-share-opecs-shale-pain-as-u-s-shale-supply-flows-east/

  14. April 5, 2017 9:36 am

    The BBC and like-minded may be an unlikely ally for nuclear power, this morning it was discussed on the Radio 5 Live business slot (yes, the BBC does still give some airtime to it, but only in the early morning when all the public and charity sectors are still asleep), they were very concerned that nuclear delays may impact on the UK meeting its … carbon targets!

  15. April 5, 2017 9:55 am

    Dump the CO2 Planetary Thermostat idea and all would be solved!

  16. AlecM permalink
    April 5, 2017 10:05 am

    I have just invented a new temperature scale. The problem with Celsius is that it is defined thermodynamically. So the new scale is Scelsius; Celsius corrected by a factor which varies according to the politically required difference from the past average up to the end of the pre-industrial period..

    Hence it can create the required political imperative to enrich the Globalist banks. Their internal name for this scale is the ‘Mann-gap’. This term also applies to the physical gap between Mann’s ears, but don’t pass it on!

  17. Gerry, England permalink
    April 5, 2017 12:56 pm

    The ‘We have to.” statement only exists because of the government’s desire to have an ..’electricity supply that is still low carbon.’ It is a government imposed barrier not a real one. I don’t care where the electricity comes from as long as it is as cheap as possible and reliable. I suspect 90% of the population think the same.

  18. Vanessa permalink
    April 5, 2017 1:15 pm

    If anyone in the government had read anything, they would know that the deal done with EDF and the Chinese for Hinkley Point is the worst that could have been agreed.
    The technology is still untried – France and Finland have (or rather would have) the same nuclear technology BUT it does not work and is so “over budget” as to be thought unaffordable.
    South Korea built 3 nuclear power stations (I think in Russia) which were one third of the price and were up and running in time. I know which I would choose.

  19. A C Osborn permalink
    April 5, 2017 1:51 pm

    Well things may be about to change.

    http://www.thegwpf.com/at-last-uk-said-to-seek-end-for-2020-renewables-target/

    • Gerry, England permalink
      April 6, 2017 12:41 pm

      Or not depending on our EU masters. Committing to continue environmental goals is certain to feature in their trade agreement demands. If we do have a hallway house interim agreement we will be subject to all the EU rules but with no say on anything while the FTA is negotiated which is likely to last for years. The other option is the no deal one.

  20. April 5, 2017 4:30 pm

    The text says:

    “The heavy cost of delay has taken a toll on French nuclear giant EDF too. Its projects in Flamanville in France and Olkiluoto 3 project in Finland…”

    This is planly wrong!… the two projects, Flamanville and EdF have NOTHING to do with EdF, since EdF does not build nuclear reactors, it runs them. It is AREVA who is building them, and… yes, AREVA is about to be bought out by EdF, but this does not mean that EdF is/was/has ever been responsible for the delays and cost overruns of the two mentioned EPR reactors.
    It is just another example of bad journalism by the Telegraph, guided by anti-nuclear feelings.

    Cheers.

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