Updated: 21/11/2024
Giant portions of public spending are now at risk of pouring down a nuclear power black hole as calls for the Government to make direct investments into new nuclear power plant intensify.
Ultimately the sums at risk would be much larger than the Government’s own estimates of the cost of the Trident nuclear weapons system.
Former Minister and House of Commons Energy Committee Chair Tim Yeo is the latest to call for the Government to take ‘minority’ equity shares in new nuclear projects.
There has been a flurry of such demands in the wake of the near bankruptcy of Toshiba, who spearhead the 3GW proposed plant at Moorside in Cumbria. The company now appears likely to seek Chapter 11 bankruptcy for its US nuclear subsidiary Westinghouse.
And of course these demands for limitless taxpayer cash were supported by all (but one, the Green) of the candidates in the recent by-election in the Copeland constituency where Moorside is due to be built, and their respective party leaders.
We can only hope that with that out of the way, a semblance of sanity might return. But we cannot count on it. The British government has long been fanatically pro-nuclear, even as evidence mounts of the massive problems facing the industry, and the mind-boggling cost of new nuclear build.
Meanwhile it has been deliberately strangling the growth of the UK’s renewable energy industries, aiming particular venom at the most competitive technologies, onshore wind and solar.
So why does nuclear need this monstrous taxpayer ‘investment’
Simple: because nuclear power is proving to be virtually undeliverable and ruinously expensive in western countries. Toshiba’s problems stem from the fact that they own Westinghouse who are responsible for the construction (so-far non-construction) of AP1000 reactors in South Carolina and Georgia in the USA, which are creating massive multi-billion dollar cost overruns and liabilities.
These plants are as costly as the failing French EPR design that is so disastrous in the cases of the Finnish and French reactors at Olkiluoto and Flamanville, something which is bankrupting the French nuclear industry and EDF.
Even lured by a promise of £92.50 per megawatt hour of electricity production (in 2012 pounds, so now worth close to £100), more that double current wholesale prices, and the promise of taxpayer guarantees on construction finance, EDF has been unable to summon up the vast capital sums needed to build the planned twin-EPR plant at Hinkley Point in Somerset. Hinkley C (3.2GW planned) will cost over £24 billion according to the European Commission.
Despite the manifest bankruptcy of the technology, rather than question whether it is right to continue with the new nuclear programme, its supporters are in effect wanting to bet the British economy on it.
If the Treasury are forced against their will to sanction ‘equity’ stakes in new nuclear reactors, the losses and, eventually, all the liabilities will fall on the UK Government. Nobody else will invest in the projects unless the Government guarantees the lot. The reactors at Moorside and Wylfa, assuming they cost similar amounts, would thus make the taxpayer responsible for around £50 billion of debt.
People will claim that the Government is ‘only’ taking a minority equity stake. That’s how it will start, and then would represent an enormous amount of state spending and liabilities. After all one quarter of £24 billion is still £6 billion. But it won’t end there, as sure as night follows day, not with the construction costs as well as the rest. It never does with nuclear power!
One rule for nuclear – other rules for everyone else!
Normally of course under the Government’s ‘low carbon’ programme, project raise their own finance and the project owners earns their money from premium price contracts (CfDs) awarded through the Government.
That is always the case with renewable energy projects. They find their own money. Electricity consumers pay a premium price to enable this on their bills. But now for nuclear to go ahead, so it is said, not only will the consumers have to pay a high premium price, but taxpayers will have to fund at least part of the construction as well.
This is money, please note, that will disappear from the Government’s coffers as the plant is built – draining billions of pounds of public money that could be paying for schools, hospitals, housing, social care and decaying public infrastructure. It is not something that will be shuffled onto future generations like decommissioning.
The fact that the Government is effectively financing the building will produce a conflict of interests with the Government negotiating with itself in setting the CfD price. No doubt a ‘lower’ CfD price will be set (that is less than the notorious Hinkley C price) when in fact it will be the taxpayer that will end up paying out countless billions for the projects.
Annual spending on primary education is around £26 billion. Hence building just Moorside will give the Government liabilities (which are likely to be paid by the Government) which will rival this spending.
But then to listen to some people, you’d think building Moorside was more important than closing down all primary schools for a year.
It isn’t.
David Toke is Reader in Energy Policy at the University of Aberdeen.
He blogs at Dave Toke’s green energy blog where this article was originally published.
Additional reporting by The Ecologist.
Some sources:
‘Copeland by-election: opposing nuclear power, and voting Green, is the only rational choice‘
‘Keep UK taxpayers off the hook for Moorside nuclear black hole!‘
‘Endgame for Cumbria’s nuclear nightmare – Moorside or Doomrise?‘
‘Not just Toshiba – the global nuclear industry is in crisis everywhere‘
‘AP1000 reactor design is dangerous and not fit for purpose‘
