Greenpeace’s Analysis Of The UK’s New Nuclear Deal

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Originally published on Energy Post.
By Karel Beckman.

The European Commission (EC) has delivered what can only be called a scathing initial verdict on the UK Government’s deal with French state-owned EDF to build the first new nuclear reactors in the UK for a generation, according to a blog post from Greenpeace UK

A nuclear power plant in Iowa.
Image Credit: Jssteinke.

The Commission announced on 18 December that it would investigate the proposed deal. It has now published a 70-page initial analysis on its website, which suggests that, as Greenpeace puts it, “that the deal may not be proportionate and risks substantially overpaying EDF”.

The Commission says additional support to EDF (on top of market prices) could end up costing anywhere between £5bn and £17.6bn.

The analysis makes the following points, notes Greenpeace:

  • Support to build new reactors may be unnecessary. Private investment is expected to invest in nuclear by 2030, without the need for government sweeteners.
  • The deal is expensive. It “could hardly be argued to contribute to affordability – at least at current prices, when it will instead and most likely contribute to an increase in retail prices.”
  • The UK may be paying too much for the new reactors because EDF can borrow money more cheaply thanks to the Contract for Difference and loan guarantees. This means EDF would be able to build the reactors for less than the UK government is paying. UK taxpayers will be protecting EDF and its investors.
  • If the price of electricity falls below the fixed price guaranteed to EDF, the company stands to make a fortune while consumers are forced to pay artificially higher bills.
  • There wasn’t a tender for Hinkley C. Low-carbon electricity sources don’t seem to have been considered instead of new nuclear reactors which could put the project in violation of EC directives.
  • The Commission doesn’t believe the UK government when it says the reactors are needed to keep the lights on. They won’t be ready until 2023 at the earliest.
  • The Commission also said that all these favours being done for the nuclear industry “might crowd out alternative investments in technologies or combinations of technologies, including renewable energy sources.”
  • The fixed electricity price offered to EDF shields the company from risks that its competitors can’t avoid. The Commission concludes the package, especially Contracts for Difference, could severely distort the market. The combination of Contract for Difference, a credit guarantee, and compensation for political risk means the project “is not far from being risk-free at the level of operations.”

The bottom line, says Greenpeace, is that the Commission isn’t sure nuclear power deserves state aid. Why does a mature technology like nuclear need assistance in this way? Two nuclear reactors being built in Finland and France didn’t need state aid and the Commission can’t see why Hinkley C is “fundamentally different”.

The Greenpeace blog concludes that the Commission “is now launching a full investigation into the package of measures supporting Hinkley C, including a contract providing a fixed price for power (known as a Contract for Difference), guarantees for loans to the project and political guarantees.”

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8 thoughts on “Greenpeace’s Analysis Of The UK’s New Nuclear Deal

  • “Private investment is expected to invest in nuclear by 2030” – Surely, you’re ‘aving a larf?

    Only one thing will attract private investment into British nuclear power – UK state guarantees of a ROI for the French/Chinese STATE industries.

    Only one word adequately describes BOTH the European Commission and the British government – they’re completely BONKERS!!

    • They’ve bought into the nuclear fantasy. Unfortunately there are a number of people who hear only the claims of the nuclear industry and don’t attend to the facts.

      As long as the industry can keep selling the claims the people generating them can keep their jobs. Their “nuclear renaissance” failed so now they’ve moved on to some new really affordable nuclear technology that is only 10 – 20 years away.

  • Two reactors at Olkiluoto and Flamanville were stated to cost only 3-4 billion euros. Therefore it was no-brainer to invest. Hinkley point is estimated to cost three times as much from the beginning. Therefore if investors were told that Olkiluoto EPR will cost 9 billion euros, there just would not be any investors who are willing to take the risk. Although nuclear fanatics are delusional and many person who are in influential position still think that nuclear is cheap and they are refusing to face the reality.

    I think that this government support was the ultimate win for corporate lobbying. This is sad.

    • The nuclear industry has a long history of estimating low and delivering high. Very high.

      Every time the industry is put into a position where they have to be responsible for cost overruns – to give a real cost estimate – the number is high. Nuclear electricity for > 15 cents/kW.

      Ontario, San Antonio, Turkey and now Hinkley Point. No BS contracts. From over 15 cents to as much as 21 cents.

      • And then in addition to the 15+ cents a kilowatt-hour an extra amount, I don’t know how much, has to be tacked on to cover the small but real chance of a major nuclear disaster. We know from the example of Fukushima that these can be incredibly expensive. I’m sure that if nuclear power plants had to pay the full cost of insurance almost every one would be shut down in short order.

        • In the US at least, the federal government picks up the tab for the nuclear industry’s liability insurance, without which the industry could NEVER be viable. (Look up the Price-Anderson Act.) The potential damages from just one meltdown range into the $100B level and go up from there. While the feds have never had to cover any major incidents yet, the fact that they provide this backstop to the industry is a huge subsidy considering nuclear operators would be hard-pressed to find liability coverage at ANY price…

          • Yep, Japan was very lucky the winds blew the radioactive plume out to sea instead of inland. The worst result would have been along the heavily populated coastal strip towards Tokyo. The cost of the disaster would have been vastly higher if this had been the case. As private insurance companies don’t have deep enough pockets to insure nuclear plants, it seems reasonable to get private insurance to cover a percentage of the insurance and then base the government provided cover on those rates. Of course, this would almost certainly result in all nuclear plants shutting down. Maybe some of the safer plants would hang on for a while, but I doubt it would be long.

      • I don’t understand how anyone can think nuclear power is somehow “cheaper” than the 10 cents (and falling) that solar PV can generate, or the 2.5 cents wind power is selling for. Nuclear power is really just a way for monopoly utilities to concentrate the most guaranteed profits and government pork they can into one massive pile. The extremely opaque financing of reactor builds means that taxpayers and / or utility customers are almost always saddled with the risks and actual costs of the inevitable budget overruns that come with building nuclear reactors. It’s just too expensive and it takes too long to build these things properly…

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