Magazine article The Spectator

Go Nuclear, but Keep Your Hand on Your Wallet

Magazine article The Spectator

Go Nuclear, but Keep Your Hand on Your Wallet

Article excerpt

John Hutton, the energetic Secretary of State for Business and a few other things, has reason to be pleased with the expressions of 'significant interest' in constructing new nuclear power plants that he has received from British Energy, EDF Energy, E.ON UK and Iberdrola -- the British, French, German and Spanish utilities -- respectively. These are among the handful of companies in the world with the knowhow and financial resources to build and then successfully operate these capital-intensive and complicated plants.

The government's case for the need for new nuclear plants is straightforward. The nation's ten existing plants will be shut down by 2023, reducing this low-carbon source of energy from 19 per cent of the nation's total to 6 per cent. The government is hoping that the first of the plants to replace the existing fleet will come on line in 2017, or 2018 at the latest. If Britain is to avoid excessive reliance on natural gas from places that are not completely reliable trading partners, and if it is to meet its wildly optimistic plans to reduce carbon emissions, it will have to hold to some such timetable.

So far, so good. But this ignores the billion-dollar question: will the private sector provide the capital to finance this replacement-and-then-some of the nation's nuclear plants? The government is confident that it will, and at no cost to the taxpayer.

The first step will be to clear away the regulatory hurdles to new construction. The government has sworn to do this, but experience with wind farms suggests that there is a wide gap between legislation and practice.

It generally takes about two and a half years to do the research and paperwork to prepare an application for permission to build a wind farm. From that point, the law provides that the period between planning application and approval shall be no longer than 16 weeks.

That target is missed on 95 per cent of all projects; on average, it takes about three years to get a decision. If the application is denied, and an appeal for an inquiry filed, add an additional 18 months until a final decision -- up or down -- is reached. And wind farms, despite local opposition, are far less likely to attract the sort of well-funded, sophisticated opposition that nuclear plants will: there is a large international pool of expert opponents ready and willing to fight every new plant.

Assuming that the permitting process can be expedited, there is then the small matter of whether these massive, capital-intensive stations will be economic, without government subsidies. Reasons for optimism include the rising cost of fossil fuels, with which nuclear must compete; the inability of renewable resources to do more than make a marginal contribution to future electricity supplies and the reduction of carbon emissions; the proven ability of US firms such as Exelon to operate nuclear plants at 94.5 per cent of capacity, a doubling of efficiency in the past decade; and the likely increase in the cost of carbon permits, which must be included in the cost of electricity produced from coal.

But if we know anything about nuclear power plants, it is that their cost always exceeds estimates. Perhaps the situation is no longer as bad as it was a few decades ago, when the predicted cost of one plant in the New York area was put at $700 million, and the final cost at completion came to over $5 billion. But we can't be certain, since current estimates of the cost of these energy behemoths vary widely. Some American companies say they can bring a plant on line for $5 billion; others put the figure at twice that. …

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