EDF boss set to quit as new nuclear talks falter

According to the Times EDF's boss in Britain, Chief Executive Vincent de Rivaz, is set to quit his job as talks with the Government about subsidies for new nuclear power stations falter. See the Times report at:

http://www.thetimes.co.uk/tto/business/industries/utilities/article3756956.ece?CMP=OTH-gnws-standard-2013_05_05]<br /><span style=

This will be a disappointing end for an energy company executive who has focussed much effort over the last decade on building a framework to give guaranteed minimum prices for new nuclear power. In fact he succeeeded in this - and in getting the Government to deny that the framework, through electricity market reform (EMR), was a 'subsidy' to nuclear power. The thing that let him down was the technology, nuclear power, that he sort to promote. The latest reactor design, touted as being cheaper than deisgns such as that for Sizewell B nuclear reactor (completed in 1995), has proved to be no cheaper after all. To many of us this was not an unexpected result. Civil nuclear power's 60 year history has been one long story of 'jam tomorrow', replete with myths about the 'cheapness' of the French programme (state funded, and it has got more expensive, not cheaper, as time has gone on). Nuclear advocates seem to have fallen in to the trap of believing their own propaganda. That, and a belief that the Government would eventually come around to doing what was really needed to get nuclear power stations built - give them a state backed blank cheque.

But blank cheques are not on offer. There are at least two reasons for this. First, it runs exactly counter to a basic premise of liberalised markets in that competition is supposed to obtain cost reductions, something that cannot happen if the costs are guaranteed like in a nationalised industry. The second is that nuclear power has technological competitors including renewable energy. How can the Government justify in a democratic polity giving a blank cheque to nuclear power when it does not do the same for more popular renewable energy and energy conservation technologies? Why should nuclear be preferred over renewables and energy efficiency?

One could list other institutional obstacles of course, for example the politics of obtaining consent under EU state aid rules. Indeed the new nuclear build programme looks more and more implausible the more one delves into the detail. In fact the headlines in the newspapers about EDF demands for £100 strike prices and 35-40 year contracts only tell part of the story. The irony is that nuclear is so uncompetitive that even these terms would be unlikely to lead to Hinkley C being built. The headline figures can be viewed as a public relations exercise that obscures an even deeper financial failure. That is because in addition to the £100 per MWh and ultra-long term contract EDF would also request loan gurarantees (which will amount, in the end, to a government awarded 'blank cheque'). Otherwise EDF will not raise the money needed to build the project. Offshore wind, as argued in previous posts on this blog, really is cheaper than new nuclear power if you compare it using private sector, market based, business criteria. Onshore wind, of course undercuts nuclear power by a very large stretch indeed. In fact the Treasury seem to be basing their preferred strike price for nuclear power (£80 per MWh) on a plausible rate for onshore wind for a 15 year contract.

Last year in one of its more prescient features, the Economist magazine heralded 'The End of the Nuclear Dream'. They are right, it is just that a lot of nuclear advocates are taking a long time to wake up.