The Committee on Climate Change, which said in May[1] that nuclear power was currently ‘the most cost effective of the low carbon technologies’, has now effectively abandoned that claim. A Senior Analyst of the Committee told Dr David Toke of the University of Birmingham earlier today that: ‘Whilst we think it is likely that nuclear will be cost competitive, consideration of the uncertainties demonstrates why it is inappropriate to base policy on a conclusion that nuclear (or onshore wind, or offshore wind...) is “the” cheapest option.’
The new story from the Committee on Climate Change emerged in response to a complaint by Dr Toke about the way that the Committee had analysed relative costings of nuclear power and renewable sources such as onshore and offshore wind power. Dr Toke argued that ‘the contention that nuclear power is the cheapest low carbon source is highly tendentious in the case of onshore wind, and somewhat debateable even in the case of offshore wind power’.
In his letter Dr Toke argued that the real world attitudes of the financial markets to uncertainties about nuclear power station costs and performance were not taken sufficiently into account by the Committee in their calculations. Onshore and even offshore Windpower involve rather less financial uncertainty. Hence investors and banks will require higher rates of return for investments in new nuclear power stations compared to investments in wind power. Alice Barrs, the Committee Analyst who replied to Dr Toke, maintains that ‘The possibility of rates differing between technologies increases the uncertainty involved in assessing in relative costs. The analysis further demonstrates the overlapping ranges of cost estimates for different technologies, depending on assumption, and supports the key conclusion to follow a portfolio approach.’
Dr Toke commented: ‘This response restores some faith in the Committee in that they concede the points made by me criticising the notion that nuclear is the cheapest low carbon technology. The Committee now need to re-examine their portfolio approach, including their view, also made in its Renewable Energy Review in May, that there ought to be a limit of no more than 13 GW of offshore wind being installed by 2020. Making this sort of judgement implies that there is some sort of trade-off in investment between nuclear power and renewable energy. In re-examining its portfolio approach The Committee on Climate Change ought to consider whether subsidies from electricity consumers should be reserved solely for renewable energy rather than offered also to nuclear power, as is planned by the Government in its proposals for Electricity Market Reform.’
[1] Committee on Climate Change (2011) Renewable Energy Review, http://www.theccc.org.uk/reports/renewable-energy-review
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