Double Standard For Nuclear Energy & Wind Energy In UK?

I’ll be honest — I’m not a “nuclear power hater.” But if you look at nuclear power objectively and calculate its costs — including insurance costs and waste management costs — it is simply a bad deal. It’s very, very expensive. The private industry would never develop nuclear on its own. The only way it gets built anywhere is from huge government support.

Dr David Toke, Reader in Energy Politics in the Department of Politics and International Relations at the University of Aberdeen, recently took a brief look at how nuclear power gets extra-special treatment from the UK government. First of all, he took a look at assumptions regarding the working lifetime of wind turbines vs nuclear reactors:

Ed Davey’s excuse for limiting wind power contracts to 15 years whilst Hinkley C gets a whopping 35 year contract is blown away by some elementary history checking. Lots of wind turbines in Altamont Pass – installed during the so-called Californian ‘windrush’ – are still turning after 31 years. Davey claims that the contracts he has awarded are in proportion to the technologies’ design life expectancy. Yet the Altamont turbines will be turning until 2015, a 33 year lifetime, and only then taken down because of a repowering exercise, and also modern planning conditions which they did not have back in 1982. See http://www.sustainablebusiness.com/index.cfm/go/news.display/id/23757. I am given to understand by a leading authority on the subject that it is likely that quite a few machines built in the early 1980s are expected to carry on running past 2015….

Certainly one can expect modern wind turbines to last a lot longer than these efforts right at the start of the modern windmill era.

So using the Davey formula (about 60 per cent of lifetime as a contract length), using even 33 years as an example, wind power should get a 20 year contracts, not 15. But if this happened, the ‘strike price’ for wind (£95 per MWh at year 2018) would be reduced below that set for Hinkley C.This would breed trouble as the UK Government tries to claim that they are giving the same incentives to renewables as nuclear to pass through the EU’s state-aid regulations (see previous blog post).

Dave then touched on the under-discussed issue of nuclear power loan guarantees:

Then there is the loan guarantee for Hinkley C, all £10 billion of it, that constitutes 65 per cent of the capital cost of the 3.2GW development. If wind power got such guarantees, their costs could be reduced much further as well, since the borrowing costs would be a lot less. Indeed borrowing costs could be reduced by at least 2 per cent – which makes a big difference to the economics of wind power.

And then he did a simple calculation on what the overall price effect would be from if two things were made the same for wind power as they are for nuclear power:

I have calculated what the effects of these two changes – increasing the contract length from 15 years to 20 years, and giving loan guarantees for 65 per cent of the capital costs. The result is that if this was applied to wind power then a strike price of £75 would be the equivalent of the £95 per MWh the Government is offering wind power from 2018. This figure is considerably less than what the Government is giving to Hinkley C.

Dave included much more in the full article, including some comparisons with pricing in Germany, so check that out for more.