The Nuclear Question. Is Britain bold and brave or en route to a White Elephant?
On Thursday 8th November, Toshiba publicly announced what the industry had long expected, the abandonment of its subsidiary Nugen tasked with the the construction of a new nuclear plant in Cumbria, UK.
Energy policy hasn’t seen much daylight since solar (no pun intended) and other renewable subsidies were trimmed by the incoming 2015 Government, under (then) secretary of state, Amber Rudd.
While it’s easy to criticise the past largesse of some renewable subsidies, it needs to be put in context relative to the scale of support which (in one way or other), Government is committing to nuclear, through direct subsidies, price supports (CFDs), or other forms of loan guarantees.
Take Hinckley Point. When (or if) Hinckley is built, it will have a capacity of 3.2GW. Assuming like traditional reactors it generates about 80% of the time (and is under maintenance or faults 20% of the time), then it will generate around 22TWh of low carbon power a year. The same power from a gas power station would create about 11m tonnes (11bn kg), assuming it creates 500kg CO2 for each KWh of electricity.
The current project cost of Hinckley is around £20bn, about 2.5 times the UK’s annual net EU budget contribution. For each £1 spent, we save 1.8kg.
Now imagine you spent the £20bn on something else energy related. Speaking very loosely, because it depends largely on house size, for around £500 per home you can install cavity wall insulation, and reduce a home’s annual carbon emissions by around 500kg. For each £1 spent, you save 1kg.
So, on the face these (very) fag packet economics, Hinkley maybe isn’t as bad value as it seems. But the argument quickly starts to break down when you factor in other trends and risks.
First, I assumed that the sole alternative to nuclear is gas. In reality, we can a growing proportion of this can be renewable, largely wind (and some solar). In 2017, grid emissions were about 300g / KWh. Without nuclear (and assuming we made all the shortfall up with gas), this would be around 400g / KWh. So, instead of saving us 1.8kg of CO2 for each £1 spent, Hinckley only saves us about 1.5kg.
Next, let’s consider financial security and reliability. Wall insulation is a pretty tried and tested technology. Aside from dangerous cladding, we can be pretty confident of the installation costs in advance, particularly when pooled or averaged over a large number of individual homes. The industry has learnt lessons from installing similar technology in millions of similar homes already. As an investment, it’s pretty sound.
Hinckley Point (and other nuclear projects) are much shakier. EDF haven’t commissioned a single nuclear reactor since 2002. And the only other one they have under construction, at Flamanville in Normandy is grotesquely over budget, schedule and riven with security fears. Elsewhere, EDF’s sister company Areva has a similar project in Finland. Hungary has two nuclear reactors for which construction has been at a stand still for nearly a decade. Hinckley’s commissioning date is perpetually delayed, a situation Brexit uncertainties can hardly help.
Nuclear power is a losers club, a dead horse, which virtually no one else apart from Britain is flogging.
Next, consider household finances. With the nuclear build, you burden all energy users with a liability for the guaranteed price EDF receive, which (at current prices), suggests higher energy bills. With an insulation programme, you cut household bills, and boost consumer spending power. And much more of the supply chain is likely to be in the UK than for EDF’s nuclear reactors, meaning more jobs, spending and tax revenues. An economist might feasibly give this a multiplier effect of 10–20% of total value, which would only be higher if you could target it to poorer households.
Next, consider our uncertainty over development of other technologies. We’re not sure exactly which technology we’ll use to heat our homes, whether most will stick with gas and oil (and if so, for how long), or whether we’ll make the jump to heat pumps, biomass/biogas or other alternatives. Either way, insulation is compatible all these options as it reduces demand, and isn’t money wasted. Indeed, actually makes heat pumps more feasible and efficient in older properties. Meaning it will enable or encourage households in time to invest in it themselves, or reduce the required levels of subsidies. And as many homes are electrically heated, it also reduces electricity demand, particularly on the coldest days of the year when the power grid is most strained. Which is when we might otherwise have to build lots of new, largely backup oriented gas power plants for.
This article could quickly develop into a never ending novel, that might resemble the snail (or should I say, escargot) pace of nuclear plant development.
It’s not too late to stop and rethink what could be a parlously expensive mistake. Britain envisaged a whole new fleet of nuclear plants. If this had succeeded, we may well have established a track record for building safe, reliable new nuclear plants. And costs may have fallen over time as (most recently with solar and wind), we learnt from mistakes. I’m not the biggest sceptic of nuclear safety, but on balance, if we have better alternatives, then it makes sense.
Nuclear is now a sinking ship. It’s time to concentrate on the future, smart grids, wind, solar, storage and forget a particularly and risky technology of the past. Everyone else is.