'Green' Investment Bank to fund nuclear power?

The Government has refused to rule out funding nuclear power through the 'Green Investment Bank' (GIB). In a response to the Environmental Audit Committee the Government said:

'Ministers will set the strategic direction of the GIB in due course. In view of the breadth of opportunities and challenges associated with greening the economy, the intention is to maintain a broad remit for the GIB. No decisions have been definitively taken as to what particular sectors might be prioritised at different times.'

With electricity giants such as E.ON and RWE having abandoned their interests in building nuclear power stations this leaves EDF struggling to put funds together to build their first power station at Hinckley C. Utilities are currently under great financial pressure at the moment to reduce risky investments (like nuclear power) and it seems likely that Centrica, EDF's partner, will decide not to take up their option of a 20 per share in nuclear investments. With private sector banks and pension funds unlikely to fund nuclear power stations, EDF's need for Government underwriting of its construction risks (or actual funds in advance of construction) is growing. In other words, nuclear power will not only need the 'same' subsidies as renewable energy, it will need a lot more! (this is on top of even the insurance and nuclear waste handling subsidies that nuclear power receives).

The total funding of the Green Investment Bank is slated as being £3 billion. This would not even fund half a nuclear power station, but, if EDF can reduce its risk, it might help it go ahead. It's just hard luck for the offshore windfarms or energy efficiency schemes etc who might hope to get the investment funds instead..........

See the Government Response on http://www.publications.parliament.uk/pa/cm201012/cmselect/cmenvaud/1437/143704.htm

Nuclear power is less mature than renewables - says UK Government!

The UK Government's pro-nuclear mask has slipped. It has admitted, in the cold print of its latest formal Energy Policy statement, that nuclear power has to be given preferential types of subsidy compared to renewable energy. The reason, it says, is because nuclear power, along with CCS (carbon capture and storage), is less mature than a lot of renewable energy technologies.

On page 45 of the White Paper the Government states that onshore wind is a 'mature' technology, other renewables (offshore wind, solar, biomass) are 'rapidly maturing'. Meanwhile low carbon technologies like CCS or nuclear 'have less mature markets.'......'The sheer scale of the capital costs associated with these projects and the risks they face mean there is lower scope for new entry in the short term'. Yes, that is the Governement talking! They talk about the lack of possibilities for 'short term' market entry. Short term !!!!(????) nuclear power has only been going for 60 years as a major grid connected technology! All of this seems to support the view of nuclear critics such as Amory Lovins who has argued that nuclear power has been de-maturing as a technology whilst renewables have been maturing. 

As I discussed in the last blog, the Government-appointed Committee on Climate Change has produced a piece of pro-nuclear propaganda in its claim that nuclear power is the cheapest low carbon electricity source. The Committee on Climate Change fail to account for the financial risks involved in building nuclear power stations which massively increase the costs compared to technologies such as wind power. Now, in their policy statement, the Government have effectively agreed with this criticism of the Committee on Climate Change’s analysis.

The Government suggestion (now hedged) that renewables feed in tariffs will be decided by 'auctions' or 'tenders' is still a policy that threatens to reduce the renewables deployment programme to a crawl. It would be a return to the Conservative Government's policies of the 1990s which led to a low implementation rate for projects. But for nuclear power, it seems, there will be some special terms.

Of course the Government, having abandoned its (Tory and Lib Dem) manifesto commitments not to subsidise nuclear power, now says that (on page 9) that 'nuclear power stations should receive no public support unless similar support is available to other low-carbon technologies'. Yet the nuclear industry is pressing for extra subsidies and/or loan repayment guarantees to be given to nuclear power that will not be available to renewable energy. Certainly, reports from the financial markets indicate that without this there will be no nuclear power stations built in the UK anytime soon (or later). See, for example,  http://www.reuters.com/article/2011/07/06/us-nuclear-citigroup-idUSTRE76548820110706.

Check out the details in the Government's statement on the Electricity Market Reforms for yourself  at http://www.decc.gov.uk/en/content/cms/news/pn11_061/pn11_061.aspx