E3G

The future will not be nuclear

By Tom Burke

Gordon Brown does not dither about nuclear power. His commitment to it is emphatic, advancing since the start of the year from a policy of simply replacing Britain’s existing nuclear capacity to one of doubling it, and now to there being no upper limit to its share of electricity generation. Brown has undertaken a radical reform of the nuclear regulatory and planning processes, aimed at clearing the path for new reactors. It is therefore particularly poignant that this is a policy doomed to fail.

Energy prices are rising, the climate is changing and power stations are closing—so we need more nuclear power. So runs the overwhelming volume of argument in the media. But what is missing is any critical examination of the case that underpins these dire warnings from ministers and utility industry nabobs about the lights going out. The lights are not going to go out. The government’s nuclear policy will fail. And all that will really matter is that we will have lost precious time in switching to a more climate-friendly method of electricity generation.

We live, these days, in what Eric Hobsbawm calls a “permanent present.” Even recent history is quickly forgotten. Somewhere in my personal archive are the minutes of a cabinet meeting held in October 1979, which arrived on my desk at Friends of the Earth in a proverbial brown envelope. They recorded the decision of Margaret Thatcher’s newly elected government to build ten nuclear reactors. The arguments were familiar. Oil prices were rising, An energy gap was imminent. Without a crash programme of nuclear reactors we would freeze in the dark. Sixteen years later, just one reactor had been built, at Sizewell in Suffolk. It cost more than double the original estimate. No one froze in the dark.

The story of British nuclear power

There is nothing in the history of nuclear power in Britain to inspire confidence. Most of our 19 reactors, which together have the capacity to generate 12,000 megawatts (MW), are of a design unique to Britain. These Advanced Gas-cooled Reactors (AGRs) were in 1974 described by Arthur Hawkins, chairman of the then-nationalised industry that placed the orders, as “a catastrophe.” Today, four are not working, reducing from 20 to 15 per cent the share of electricity that is produced by nuclear.

A popular mythology has developed that blames the nuclear accidents at Three Mile Island in the US and Chernobyl in Ukraine for the demise of nuclear power in Britain. Lately, the planning system has been added to this mythology. In fact, the only obstacle in the way of nuclear power for the last 20 years has been the unwillingness of electricity generators to take the risk. By the time of Chernobyl, in 1986, no nuclear power station had been ordered in Britain for eight years and in the US for 12. And the public inquiry that considered the application to build Sizewell B began in 1983 and took two years—only six months longer than the government now expects its accelerated planning procedures to take. The government then took two further years to give the go-ahead. Sizewell B opened in 1995, having taken a further eight years to build.

It is an irony that the government’s preferred plan for a nuclear renaissance involves renationalising British Energy as a French state-controlled utility.

What actually killed nuclear power in Britain was Thatcher’s decision to privatise the Central Electricity Generating Board—the previously nationalised generation utility. The City took one look at the books and told the government that the nuclear power stations were unsellable. They were promptly withdrawn from sale. The later privatisation of most of Britain’s nuclear power stations was only possible because the burden of the decommissioning and waste management costs—now standing at over £70bn—was transferred to the taxpayer. This was a good example of a practice that has been much in the news lately in relation to the banking industry: privatising profits and socialising losses. So much for market discipline. It is an irony that the government’s preferred plan for a nuclear renaissance involves renationalising British Energy as a French state-controlled utility.

Thatcher was as convinced about nuclear power as Brown. She was defeated by the lousy economics. Nuclear power has few attractions for private sector investors, especially in a competitive electricity market. All long-term investment in future electricity generation involves risks and uncertainties (including the price that will be put on carbon emissions). But nuclear power’s risk profile is the worst. To be economic, nuclear power stations need to be very large (at least 1,000MW) and built in a series, ideally four or six at a time, probably on the site of existing stations. They are very capital intensive at both the start and end of their lives and, because of the initial costs, much more sensitive to the cost of capital, which can add 40 per cent or more to construction costs. They take a long time to build, and, when built, have to run continuously into a market where the wholesale electricity price can change constantly. The operators have to make adequate provision for the (currently unquantifiable) costs of waste disposal.

Coal-fired stations take perhaps three to five years to build, cost a lot less per unit of generation capacity and have no back-end liabilities to speak of. They are economic to build singly and therefore each new one is less at risk of failing to sell the power it produces. Gas-fired stations can be built in smaller units much more quickly, and so are even easier to match to shifting demand. Wind turbines can be built in very small tranches, even faster than gas.

Very high, uncertain and rising capital costs on a project that will produce no revenues for a decade or more are not a compelling proposition at the best of times. Add a host of hard-to-quantify sociopolitical risks, and it is not difficult to see why nuclear power programmes have always relied on large and sustained public subsidies.