With gas storage supply in the recent cold snap down to dangerously low levels in the UK and far lower than in France or Germany, with coal carbon capture and storage (CCS) still at least a decade away, and with renewables still unlikely to meet even the modest 15% electricity generation target set for the UK by the EU for 2020, Government energy policy is becoming heavily dependent on its planned revival of nuclear. Yet it is already becoming clear that the conditions it has laid down for this nuclear renaissance are make believe. The UK Government has confirmed a few months ago that it is sticking to the cost estimates on which it based its forecast that nuclear was cost-effective with an average carbon price of 36 euros per tonne of carbon, and that plants could be built for only £1,250/kW (or about $2,000/kW). Neither of those conditions are realistic. As the UK Department of Energy (DECC) said in the Commons statement of 9 November last year: “We agree with the EU that there are significant risks in attempting to manage the carbon price. Introducing price caps or floors makes emissions trading a game of betting on the next government intervention in the market”. Quite so. Nor is the other condition any more soundly based.

On the cost of new nuclear plants, all the available evidence shows that it is realistically 2-3 times the Government’s forecast. Even the UK’s most recent nuclear power plant Sizewell B, completed in 1995, cost more than £3bn in 1995 money (or over £4bn today). US utilities now planning new nuclear build were quoting prices at the end of last year of $5,000/kW. The Finnish plant now being built at Olkiluoto originally had a price tag in 2004 of nearly $3,000/kW, but just about everything has gone wrong with its construction so that now after 4 years in the process of building it is still now about 4 years from completion and more than 75% over budget (around $5,000/kW).
Frankly the nuclear dream is in financial meltdown. It makes nonsense of the commitment given by Ed Miliband on 9 November last when his White Paper pledged that “it would be for the private sector to fund, develop, and build new nuclear power stations in the UK, including meeting the full costs of decommissioning and their full share of waste management costs”. Nuclear won’t work in the UK without subsidies, and very big subsidies at that, as the US and Finnish evidence shows. In the past in the 1980s when the electric utilities were monopolies, if anything went wrong with a nuclear plant that raised their costs, they simply put up their prices to recover their costs and the consumers paid through their electricity bills. Now that the electricity sector is privatised and open to competition, any company whose power is too expensive will simply go out of business. This is precisely what happened in 2002 when the privatised nuclear generation company British Energy collapsed, and the Government had to rescue it at a cost to the taxpayers of more than £10bn. If that is the cost of nuclear energy, is it viable, and do we want it?

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