So finally the Government has, after I feared so long it would, chosen the doomsday option to fund new nuclear power stations - one that will be disastrous for the consumers and taxpayers. After years of swearing that they would not offer subsidies to nuclear power, and saying that in the future the terrible drain of (historical) over-spending on nuclear power would stop, the Government has gone back to square zero. Essentially, under the Government's proposals for so-called 'Regulated Asset Base' (RAB) of funding nuclear power (described in a recent article in 'Unearthed', a Greenpeace publication), the nuclear developers will have no real limit on what they can spend to build the power stations. It is a recipe for national disaster.
No private developer is willing to take the construction risks of funding nuclear power in the UK, whatever 'strike price' is offered for the electricity that might be generated in future. Doesn't that tell you something? So EDF stepped up to the mark. EDF, the French state-owned company, may be starting the real part of the construction of Hinkley C in 2019/2020. The French state will pay for the inevitable cost overruns that come along with building the plant, combined quite probably, with an out-of-contract bailout by the British Government when the going gets tough.
But now the Government is casting around for another nuclear power plant to be built, - Wylfa or Sizewell C - but neither developer (Hitachi or now EDF) wants to take the risk of paying the almost inevitable losses on the project.
So enter the Government's new proposals which will no doubt be promoted as a simple accountancy trick to lower costs, but hide the fact that the state will take the losses, to be divided up between us as taxpayers (loss of guaranteed loans and construction risk guarantees) and electricity consumers (advance payments on top of electricity bills). And, note this, whatever ministers may say, the exposure by taxpayers and consumers in UNLIMITED.
Under the RAB arrangements electricity consumers will start paying extra on their bills from when construction starts, which could be anything from 7-10+ years ahead of any energy being generated.
This system has a lot of similarities with what has happened in South Carolina and Georgia where nuclear power plant (around 2.2GWe each case) began construction in 2009 and have been subject to mounting delays and problems - so much so that in South Carolina the project was cancelled, part built. But consumers in South Carolina have been paying around $250 a year on average for the nuclear power plant. In Georgia consumers are paying around $100 a year.
Now remember, this is without a single KWh of electricity being generated.
In Georgia the project to build two reactors has only been saved because the Federal Government has agreed to lend $12 billion in loans to the project to build two 1100 MW reactors.
This looks like the shape of things to come in the UK.
Now how much renewable energy could you get online from the sort of spending the Government will end up ploughing in to the nuclear black hole for one nuclear scheme? Probably enough to supply most of UK electricity with plenty of any back up needed thrown in!
The recent Greenpeace research was well done - I must add however that I remember commenting to Doug Parr (of Greenpeace) several years ago that consumers could end up with a system like in the USA where consumers where locked into paying for the nuclear build in advance. The end result will very likely be the debacle we are witnessing in the USA right now! - Or, perhaps, what has happened at Sellafield with decommissioning contracts organised on a cost-plus basis. What's to stop people just chalking up whatever bills for the work they like? Well, under the RAB/cost plus system, not very much!