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Monday, 7 April 2014

'Bad value' UK nuclear subsidy deal ‘will kill renewables’

'Bad value' UK nuclear subsidy deal ‘will kill renewables’

'Bad value' UK nuclear subsidy deal ‘will kill renewables’

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The UK’s anti-competitive plan to subsidise nuclear power
may be the final straw that breaks the renewable industry’s back, say
critics. Paul Brown from the Climate News Network reports.

THE UNITED KINGDOM’S PLANS to build heavily subsidised nuclear power
stations have come under withering attack from a coalition of
politicians, academics, energy industry experts and environmental

Evidence has poured into the European Commission, which is investigating whether the deal with the giant French nuclear company EDF breaks
EU competition rules. The evidence from many objectors, whose
submissions had to be made by yesterday (Monday, 7 April), claims that
if the contract goes through it will wreck Europe’s chance of building
up renewable energies to avert the worst impacts of climate change.

They say renewables will have to compete in an unfair market where
one generator ‒ nuclear ‒ is guaranteed to be able to sell all its
electricity at a stable price and with a built-in profit until 2058.

The UK Government has agreed a minimum price of £92.50 (AUD $137) a megawatt hour from a new nuclear power station at Hinkley Point in
the west of England from 2023 — roughly double the existing price of
electricity in Britain. The price will rise with inflation and runs for
35 years — a deal unprecedented in the energy sector, and not available
to renewable energies like wind and solar. The guarantee will continue
for all future nuclear stations too.

And the Government has gone even further — guaranteeing loans for
construction, and providing insurance and compensation payments if
policies change for any reason.

It claims that the deal will save £75 (AUD $111) a year on the
average consumer’s bill if electricity prices rise by 2023, as it
forecasts. But if they do not, then consumers will be paying far more
for their electricity than they would otherwise.

EU test case

No-one involved in the investigation into whether the deal
constitutes unfair state aid doubts that climate change is a severe
threat and needs to be tackled. The argument is about which is the best
set of technologies to help deal with the problem.

There are 12 states in Europe interested in nuclear power generation —
slightly under half the EU’s members. All see the UK subsidies
investigation as a test case into whether they also will be able to give
state aid to nuclear stations.

One of the submissions, from the Nuclear Consulting Group,
with more than 100 signatures from MPs from six parties in the UK and
European Parliaments, plus engineers, academics and energy experts, says
the proposed aid to guarantee nuclear’s profitability is incompatible
with EU State Aid rules. The NCG says it unfairly discriminates in
favour of nuclear and will damage renewable energies with far greater

Given that this level of support is unavailable to other low carbon
technologies, it is certain to significantly distort competition and
strongly affect trade between member states.

Says the submission:

‘The development of sustainable and affordable low carbon energy
remains a growing economic sector with huge potential for job creation.
To seek to delimit this diversity through particular State Aid support
of nuclear power at the expense of other, potentially more flexible,
safe, productive, cost-effective and affordable technologies seems, at
the very least, unwise.’

It also says the British Government has also not been completely honest about the prospects for existing nuclear power stations.

In its announcement about subsidies, the Government claimed that all
but one of the eight existing nuclear power stations were due to close
about the time the new Hinkley Point plant is finished in 2023. In fact,
EDF ‒ which owns the plants and is also building the new one ‒ intends
to keep them open until 2030 or even longer if safety conditions allow.

If the Government’s current power station-building plans succeed,
then more than 50% of Britain’s electricity would be generated by
subsidised nuclear stations, effectively cutting out renewables from the

Delays and cost over-runs

One big problem for the UK’s plans, apart from the European Commission inquiry, is that the building schedule for the European pressurised water reactors (EPRs) ‒ planned for Hinkley Point and for Sizewell in eastern England ‒ is in doubt.

The first two prototypes, under construction in Finland and France,
are subject to severe construction delays and cost over-runs.

The Finnish Olkiluto 3 EPR
was due to be completed in 2009 at a fixed price of €3 billion (AUD
£4.45 bn), but the cost has now escalated to €8.5 bn (AUD $13.12) and
completion has been put back to 2018.

The French new build by EDF at Flamanville is already four years
behind schedule and the cost has more than doubled to €8.5 billion.

Other groups objecting to the UK subsidy plan also say that rather
than promoting a diversity of supply, as ministers claim, the decision
to back nuclear will reduce the scope for other technologies.

Bad value

Friends of the Earth says
that currently there are seven to ten viable renewable energies being
developed in the UK ‒ among them wind on and off shore, solar, biogas,
wave, under-sea turbines, small-scale hydro, biomass, and hot rocks ‒
all of which could contribute to the energy mix if nuclear had no
guaranteed unfair advantage.

These were all comparatively new technologies, where the price of generation was coming down all the time.

In contrast, FoE says, nuclear has been operating for 60 years and still requires a 35-year price guarantee.

By the time Hinkley is in operation, solar and on-shore wind will be
far cheaper, with costs falling fast, and it is likely that offshore
wind will be in a similar position.

The FoE submission concludes by saying that the nuclear subsidy deal

‘… represents extremely bad value for money for UK citizens.’

Climate News Network

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