Saturday, 5 September 2015

The notion that nuclear is cheaper somewhere else is a myth

The British attitude to the notion that nuclear power is not cheap after all is a bit like a child who first hears that Father Christmas does not, after all, exist. Disbelief, and in this case a belief that if only Father Christmas is nationalised, then it will still be true. The psychologists call this cognitive dissonance, in other words if a fact is uncomfortable to you, you believe that the fact is wrong.

The belief that somehow nuclear power will be cheaper if somehow it is done differently here has been stoked by a recent IEA Report which says that British nuclear power, in the shape of the proposed contract for Hinkley C, is the most expensive in the world. In fact the IEA report is heavily reliant on a limited number of projections of costs, which in the world of nuclear power is a fantasy world in itself. However what is more apparent is that it is not so much that nuclear power is more expensive in the UK so much that it is only in the UK that something vaguely approaching a estimate of nuclear costs on the same basis as other energy technologies has been attempted. This is because of the need to make nuclear at least look like it was fitting into the contours of what passes for a competitive electricity generation market in the UK.

Of course nuclear power looks expensive if you do it that way. because it is! (assuming you want to treat nuclear power on the same costing basis as other energy sources). Even this (Hinkley C) comparison is somewhat biased towards nuclear because other technologies don't get 35 year contracts, and they don't get a Government offer to underwrite 60 per cent of the projected construction costs. So, the Government's declared price for Hinkley C is, in reality an underestimate of nuclear power costs compared to other energy sources. This is even more the case since the plant hasn't even started construction yet.

I'm scratching my head as to how the IEA could have come to the conclusion it did. The French EPR is now several years behind schedule in its construction and is said to now cost three times more than its original estimate (already!). As for the Finnish EPR, well, that cost just goes off the scale.

Even if you look at other reactors being built in the West, the high costs are also much in evidence. The AP1000 reactors being buult in the USA are as expensive as the EPR. See my earlier analysis at:

And the claims circulating about how the proposed Hitachi project will go better than Hinkley C are more exercises in fantasy. I commented about this earlier as well. See:

There's a lot of stories about how much cheaper nuclear power is in China. Well, I don't know whether anybody has noticed this, but easily analysable information on costs of nuclear construction in China is about as scarce as it was from the old British CEGB on a bad day (and it was, apart from the occasional leak, usually a very bad day).

But recent commentary of the Chinese nuclear programme is not especially encouraging: Take for example from the Global Times, whose news items seem to run in parallel with the priorities of the Chinese Government:

'Since 2004, China has been approving projects using advanced nuclear power reactors, including US-based Westinghouse's AP1000 and France-based Areva's EPR (Evolutionary Power Reactor), many of which are now under construction. Dubbed generation III reactors, they are designed to withstand the crisis that damaged the Japanese nuclear plant.

Construction of these projects has not been smooth. Sanmen Nuclear Power Station in Zhejiang Province was expected to be the first nuclear power plant in the world that uses AP1000 technology. The first of the two reactors was scheduled to finish construction and start operation in November 2013, but construction is now over 18 months behind schedule. The plant won't start operation until 2016 at the earliest, an official from China's State Nuclear Power Technology, the company building the power plant, said in January.'

Of course the Chinese Government has some grandiose plans for nuclear power construction. So did the UK Government back in 2010!

So where is the British flight into 'nuclear power is cheap somewhere' fantasy leading us? Well, to nationalisation, of course, a charge led by the IPPR, a centre-left think tank, which I suppose, is a more plausible vehicle for this than, say, a right leaning think tank such as Policy Exchange (who, incidentally, have recently discovered that onshore wind power is reasonable cheap after all and should be offered some contracts).

Nationalisation won't make nuclear power any cheaper. The claims that somehow the 'cheaper' money from the state will make the technology less expensive ignore some relevant facts. First, the Hinkley C deal already has access to state backed finance through the agency of the state owned (French and Chinese) companies that are building the plant and the state guaranteed loan offered by the UK Treasury. Setting up a state body to compete with others in the electricity market will also generate a further (interesting) EU state aid application. But really the talk of cheap state money, is not the key point that the nuclear people are aiming at.

What the pro-nuclear lobby now wants is for limitless sums of money to be siphoned off from public spending on education, health and whatever else and spent on building nuclear power stations. The money will be notionally borrowed, a contract that will be concocted that will claim that the electricity consumer will pay the money back at a later date, and the balance will be paid for by, well, less schools, hospitals etc. Meanwhile a story will be manufactured about how all of this is cheap. Cognitive dissonance will prevent people asking why if it is ok to fund nuclear power this way, then why isn't it ok to fund offshore winfarms and other things.

Of course, even this isn't 'the crack' as a Liverpudlian friend of mine used to put it. The 'crack' is that the state will end up giving the whole project a blank cheque so that the disastrous construction process can be bankrolled entirely from a bottomless pit of state finances. Talk about allegedly 'cheap' money from the Government is just a cover for what the nuclear people are really aiming for. A cost-plus contract, spend however much you want contact, a blank cheque. The road towards this will no doubt be littered with pretend signposts, like they'll be a tender process etc, but at the end of the day nothing will happen until the blank cheque has been sent. I have been pleasantly surprised to see that the UK Government has not signed such a thing. The Treasury has not been pushed into accepting this (one thing that me and George Osborne agree about). Yet.

Sunday, 16 August 2015

So which countries will take care of the likely ruinous debts for Hinkley C?

As widespread incredulity spreads about the UK Government's insistence that the plan to build Hinkley C nuclear power station is still on track, we must wonder which country and which companies will take the hit in the event of the near certain financial catastrophe that will befall the project. It is near certain given that the first three reactor projects, in Finland, France and China, have all suffered delays and thus heinous cost overruns. Indeed the failure of the European Pressurised reactor (EPR) design, produced by the French state owned nuclear constructors, AREVA has so far ruined AREVA. This company is now being merged with EDF who are already set to fork out billions to plug the financial holes in the company.

The UK Government is insisting that it will not pay for any cost overruns suffered by the Hinkley C project, which is due (on the latest word) to start construction in 2016. Quite how that squares with the £10 billion worth of loan guarantees to be offered by the UK Government is not clear. However, if the British Government will not pay for the cost overruns then who will? The Chinese nuclear companies involved in the deal? That sounds odd given that Chinese companies, whilst they are state owned, are incentivised to make money. There managers will not do well if they make large losses. Of course western state owned companies can continue making loss after loss, as typified by British and French nuclear operations, and expect to be continuously bailed out by the state.

So, is the French state effectively going to underwrite the whole project through a merged EDF-AREVA? Certainly British electricity consumers will be paying out large sums over a very long period for any electricity generated by the project (for 35 years after generation starts), sums that will  increase with inflation. I wish people would not keep quoting the agreed 2012 figure of £92.50 per MWh. It is now over £94 per MWh. Meanwhile of course the Government has stopped the scheme that pays for wind power to be paid just £80 per MWh for just 15 years (and no loan guarantees).

But it seems that EDF-AREVA could end up carrying the can for cost overruns on top of the £25 billion price tag already estimated. This could do serious financial damage to EDF. Ultimately the French electricity consumer would end up paying a high price to install a failed nuclear power design in the UK. Does the French public understand this? They ought to be acquainted with what they are taking on.

Andy Blowers, having read this post, sent me the following comment:
'More importantly, on whom will the debts fall? Given the financial provisions on pricing and on decommissioning, clean up and repository costs, part of the burden will be levied on future generations.  The intergenerational equity aspect of new nuclear policy gets scant attention. Presumably something will turn up.'

Monday, 10 August 2015

Solar Power is too cheap to meter! - so says Keith Barnham in 'The Burning Answer'

Making a parody of claims attributed to nuclear power in the 1950s as being 'too cheap to meter', as Keith Barnham does, may seem a cheap shot to some - but it is a reality even now. That is the claim made by Keith Barnham in his book, now available in paperback, 'The Burning Answer - A user's guide to the Solar revolution'. Much hay is made by critics of solar power (and Keith talks mainly about solar photovotaics) by saying it only produces electricity when the sun shines. But in fact a manifest advantage is rarely mentioned - it's operating costs are more or less zero. The capital costs have been, and are, falling rapidly.

So much solar energy will produced when it is sunny that it can be stored. Even in places like Italy there is a lot of 'free' energy is being generated, surplus to electricity requirements,so that it can be easily stored. Yes that's right, easily stored. Of course we know about the tumbling costs of batteries from factories established by Elon Musk and also the latest developments in sodium ion batteries that will undercut the costs of lithium batteries. But one of the things that Keith tells us about are the existing types of heat pumps. The fact that solar pv is electric doesn't matter if it can be converted, using heat pumps, into water. Yes, I'm talking about solar pv, electricity here, NOT solar thermal to generate the energy that will be turned into heat.

Of course buildings are becoming more energy efficient (despite the best efforts of UK Government to slow the process), so much so that new buildings should be 'zero carbon' in energy consumption - but we still need hot water for older buildings and also to provide for cleaning purposes. That's where heat pumps come in - often they work best linked to district heating systems. Heat pumps can be super efficient in that they use energy from the air or water to generate a lot more heat energy than the electricical energy that is used by the heat pump. So, solar power will provide a lot of electricity, but they will also provide a lot of our heat requirements as well.

By this point Keith will be annoyed with me for leading on the storage issue. Grinding his teeth probably. But........

Keith Barnham is at pains to point out that a lot of storage is not required to supply more or less 100 per cent of electricity from renewable energy. He highlights the Kombikraftwerk project, run by a German research institute, which demonstrates how a 100 per cent renewable energy system could provide electricity to Germany with little need for storage systems. You can see some coverage of this also on where there is an online hour by hour demonstration.

Storage is best for creating hot water out of the surplus electricity. Of course. Not to mention making electric cars work. Of course. Coming soon near you, powered by solar pv.

Besides making these (well the comments about making electric cars noisy are mine) and other crucial points Keith's book is an excellent guide to the history and technical aspects of solar electricity - all written in language that the average Daily Mail reader can understand. Order it now  - it's an absolute steal for just a few quid. The book is published by Weidenfield and Nicolson.

NOTE: in an earlier version of this post I made some uninformed comments about the need to make electric cars 'noisy' to help visually impaired people. Paul Gipe then wrote me a message saying:

'we have a 2015 nissan leaf. the warning sound only operates up to a speed of about 16 mph (probably a limit in kph) then it turns off. above that the noise of the tires on pavement is enough to alert people. that's the same with all cars ICE or EV'.

I suppose this ignorance of mine exposes the fact that I don't have an electric car (yet). I'll try and get one soon!

Friday, 7 August 2015

Why EDF is a good example of why we don't need public ownership of electricity generation in the UK

Jeremy Corbyn has just announced that he favours public ownership of the electricity industry in the UK. Does that mean a return to the days when electricity generation was one big nationalised monopoly as in the days of the CEGB? That would be a bad idea. We need innovation in electricity in the UK. Monopolies (nationalised or private) generally mean that the incumbent industrial interest groups merely perpetuate their existing technologies, which is certainly something we don't need in electricity at the moment. Admittedly privatised, liberalised, markets need various types of intervention - but nationalisation is definitely the wrong direction. Corbyn mentions nationalisation  sometimes, and then talks about decentralisation - confusing.

I appreciate that Jeremy Corbyn is opposed to new nuclear power plant, but nationalisation is more likely to to generate this outcome than present arrangements. The CEGB could only ever think of centralised larger and larger power stations, including a nuclear build programme which was stopped in its tracks by the fact that the newly privatised industry realised that nuclear power was a financial black hole. It is no coincidence that the only companies that will consider investing in nuclear power in the UK are themselves state owned - in France or China.

EDF, still owned by the French state, is quite a good example of what can go wrong with nationalised electricity industries. EDF works hand in glove (and indeed is soon to be formally amalgamated) with the state-owned nuclear constructors AREVA. The fact that nuclear power was becoming more expensive, its construction costs uncertain and that it was being overtaken by a range of other generation technologies has passed this state complex by completely. How can dinosaurs change?  This insistence on ploughing ahead with nuclear power technology has produced a terrible financial mess so far for AREVA along with the failure of the 'new' power station design, the European Pressurised Reactor (EPR). The French electricity consumer and taxpayer is paying large sums for this failure.

But instead of changing, this complex is still lurching in the same loss-making direction. EDF-AREVA seems poised to guarantee to pay the construction cost overruns of the already ill-fated Hinkley C. That is, at least, the only way that Hinkley C will go ahead now that the British Government appears to be saying  (that's the current story) that it will not offer a blank cheque for new nuclear power in the UK. But if EDF does underwrite the cost overruns (and large cost overruns seem a racing certainty, even on top of £25 billion already projected), then further financial disaster will beckon for the EDF-AREVA conglommerate.

The dinosaurs went extinct.

What would be good is if there was grass roots campaigning to start up local energy companies - that is useful decentralisation - and this can be supported by legislation to allow independent energy companies easier terms to set up as suppliers. But this is not to be confused with 'nationalisation', and it requires people and companies at the grass roots to do the organising.

Tuesday, 4 August 2015

EU is becoming laggard in world renewable energy deployment

The EU, much famed in previous years for its promotion of global climate change abatement treaties and its installation of renewable energy, is heading for 'laggard' status in the global drive for clean energy.

Until a few years ago the bulk of renewable energy installed in the world was sited in the EU. But now the proportion is falling quickly. In 2014 only a quarter of new wind power capacity and only a fifth of new solar pv capacity was installed in the EU. That proportion seems certain to fall significantly in the next two years. The UK's renewable programme is being mostly abolished, in Spain windfarms have already stopped being installed and Germany has decided to strangle its once impressive solar pv programme.

The EU no longer has credibility in claiming to lead the fight to reduce carbon emissions. It's efforts prior to Paris will be marginal at best, and the main action will be negotiations between the U.S. and emerging economies, particularly China.

One can point to industrial influences for this change - the increases in renewable energy has occurred against a backdrop of stagnant or, in some countries, falling electricity demand exacerbating the overcapacity of electricity generation. The climate friendly solution of course is therefore to cut back on fossil fuel production, particularly coal, and continue renewables expansion and energy efficiency initiatives. Yet in Germany policy is focussing on curbing the expansion of renewable energy in order to prop up the coal industry. Incentives have been taken away from renewables but preserved for coal - indeed new subsidies for coal plant are being discussed just as an annual cap on wind power expansion is to be put in place and all but a dribble of new solar pv capacity stopped.

Dave Elliott writes to me to point out that some lignite plant are being taken offline; fair comment. However, to me this looks like a bit of a grubby compromise given that more incentives will be spent to preserve some of that capacity as occasional reserve, power when it is plain the renewables industry believes that if reserve power is needed then much cheaper, lower carbon and much more efficient gas fired power plant should be built.

Energiewende is a busted flush, in reality - that's not because the nuclear phase-out is impractical so much as because Germany has, in effect, decided to give priority to coal over renewables.

The problem is EU wide, and it has been given a supposed 'rational' facade by the European Commission in its policy decision made two years ago to ask for 'auctions' for renewable energy schemes as means of awarding feed-in tariff contracts. This is billed as a cost-saving device, but the reality is that the costs are saved through not installing renewable energy plant rather than installing them more cheaply. Finally the big energy companies who have sought a means of protecting their centralised power plant from the threat of renewables have found a new weapon. Results of, for example, the UK's recent auction for renewable energy contracts are touted as proof that the policy works. But the price reductions recorded are either the consequence of falling renewable energy costs anyway because of technological improvements or the result of silly bids for uneconomic projects. People's attention has been diverted by this conjuring trick away from the fact that the volume of new renewable energy projects is being severely rationed.

Of course the renewable energy trade associations are currently are complaining about this, but alas, the owners of the big power stations have regained the whip hand.

But there's still hope in the case of China, and hopefully, in the future, India. For Europe, alas, their glory, like so many things now, is in the past.

Tuesday, 30 June 2015

Treasury poised to axe renewables programme

Largely because of the very success of the renewables deployment programme and the insistence by the Treasury of a cap on levies on electricity bills needed to pay for renewable energy, the UK's renewable energy programme is likely to be brought to an effective end by 2018, if not sooner.

Calculations suggest that the budget within the Treasury's 'Levy Control Framework' (LCF) set by the Treasury will soon be spent as onshore wind and solar pv farms are installed faster than expected. Indeed Nigel Cornwall reckons it could have been spent already. See

Of course this spending crisis is one that is manufactured by the Treasury itself. The Treasury decided not to increase the 'carbon levy' on fossil fuel prices last year, thus meaning that its own budget for renewable energy incentives would not support so much renewable energy. In addition to this wholesale power prices have fallen, again meaning that a given amount of incentives will develop less renewable energy. It seems that not only will funding for onshore wind and solar farms be ended, but it is likely also we will hear announcements soon about the tailing off of support for small renewables in the feed-in tariff including domestic solar pv, and one or two token offshore windfarms may be left in the offing if they can achieve much reduced prices.

You would think that the Treasury, cognisant of the fact that energy prices will be much lower anyway, would increase the amount budgeted in the LCF. But no. Rather the Treasury appear to be using the situation to cut back on renewable energy. The Department of Energy and Climate Change is reduced to being little more than a public relations cover for all this in the process.

The UK will fall a long short of its EU target of supplying 15 per cent of its energy through renewables by 2020. This includes all energy, note, just just electricity, and we would need well over 30 per cent of electricity to come from renewables to meet this target. The EU target could only be met if the UK greatly accelerated its deployment of renewables in the next five years, especially in the last 2-3 years. Yet all the signs are that the Treasury will ensure that this is precisely the time when the programme will be more or less shut down.

See some details on

Wednesday, 17 June 2015

Pressure grows for blank cheque for nuclear power

Now that it is plain that nuclear power has failed miserably to compete with renewable energy even on the somewhat skewed playing field represented by the (proposed) Hinkley C deal, nuclear supporters are trying to engineer a 'blank cheque' to be given to  nuclear developers. That would be the outcome of the call, made in a report issued by the Institute for Public Policy Research (IPPR).

The IPPR favour developing nuclear power as a publicly owned development, on the same basis as projects like HS2. There would be a 'cost plus' contract given to the nuclear power developers, who could, and no doubt would, be able to waste taxpayers money on a grand scale without any risk to their own profit margins. IPPR have finally cottoned on to the fact that nuclear power stations never get built on a competitive privately owned risk basis.

The fact that that nuclear power is so uncompetitive that it needs this sort of treatment should lead us to the conclusion that it is much better to spend the money on something else, renewable energy for example, of which there is no shortage. But no, the calls of the British engineering establishment must be met, no matter how mid-20th century they may be!

Curiously the IPPR report exaggerates the prices paid to onshore and offshore wind. The latest 'contracts for difference' issues to these technologies are at £80 per MWh and £120 per MWh, yet the IPPR puts them as being more expensive (see page 29). Maybe the IPPR should get its reports peer reviewed more carefully.

More seriously the IPPR is close to the Labour Party. It would be rather unfortunate if the Labour Party supported the IPPR's approach and came out as being, in effect, more pro-nuclear than the Conservatives if it adopted a 'blank cheque' approach. Jonathan Reynolds, Labour's energy spokesperson has indeed backed the report with a twitter message. Electricity Market Reform was dreamt up to fund new nuclear. That failed. Now were going to have the spectacle, sometime in the future (if Labour gets in next time) of policy once again being distorted to give a failing dinosaur technology supposed priority over renewable energy.

By the way, they'll need a new EU state aid application for this.

The IPPR's report is couched in terms of shifting the costs of spending on non-fossil energy from electricity bills to public spending bills. Renewable energy will be hopelessly constrained by this disaster as their budgets are squeezed.

Meanwhile the Government may take little notice of this call, for the moment at least. But, alas, the Government has a different set of policy horrors. It is currently focussed on cutting opportunities for onshore wind power. I understand that an announcement bringing forward the cut-off date for new onshore wind schemes under the Renewables Obligation from 2017 to 2016 will come soon.

See the IPPR offering at: