This is a more credible and critical evaluation than most recent discussions of the real energy future.
16 September 2005 21:05
Jeremy Warner's Outlook: Nuclear obsolescence threatens an energy crisis that renewables cannot fully address
Whatever the emissions targets, past experience would argue against the Government sponsoring a new generation of nuclear plants
Published: 17 September 2005
Perhaps oddly for a Labour administration, the Government's approach to the energy market thus far has been to let the market provide. If there is a threatened shortage in generating capacity, then prices will rise, encouraging the private sector to finance new capacity. That's the theory anyway. The big exception to this hands-off approach is in measures, forming part of the Government's wider climate change programme, to encourage the supply of renewable sources, such as wind, wave and biomass.
Government's target is to supply 10 per cent of
Since it is taken as read that renewables are a more expensive form of power, at least initially, suppliers are able to pass on the cost of meeting the obligation to consumers. The Committee reckons the renewables obligation will cost consumers £1bn a year by 2010 rising to £1.5bn per annum by 2015.
Is this value for money? The Committee doubts it. The programme only really makes sense in terms of cost effectiveness if it helps industry to lower the cost of renewable energy to levels which approach the combined financial and carbon dioxide costs of other forms of generation.
As things stand, renewables are at least four times more expensive as other means of reducing emissions, such as levying a charge on non-household users of energy or controlling the emissions of key industries. The money might also be more effectively spent on reducing household emissions.
if the Government meets its targets and renewable energy becomes more economic
than it is at present - high oil and gas prices are certainly narrowing the gap
- a much bigger problem awaits.
If the Government's targets are met, the growth in renewables should roughly compensate for the decline in nuclear, but with nuclear the only other completely carbon-free source of power generation, it's going to be a zero-sum game as far as emissions are concerned. What's more, nuclear generation fits into the category of base load capacity, in the sense that it is always on and can provide the national grid with 24 hour juice. The same is not true of many forms of renewable energy. Wind farms produce electricity only when the wind is blowing.
There are other big drawbacks with wind power too. Most people say they are in favour of renewables until permission is sought to site a wind farm somewhere close to them. Already they are proving a planning nightmare, threatening to derail the Government's renewables target.
the fact that much of the present generation of coal-fired stations would
become redundant if carbon constraints are imposed as planned, and it is plain
stand, the difference is being made up with the construction of gas-fired
stations, but it hardly fits with the Government's aim of ensuring diversity of
brings us to the question of whether the Government should be sponsoring a new
generation of nuclear plants. Whatever the Government's emissions targets, past
experience would argue against it. With the possible exception of the early
Nor could any supposed strategic advantage possibly have justified the cost, which ran to tens of billions of pounds more than any equivalent non-nuclear capacity. The need to put away further sums for eventual decommissioning adds even more to the marginal cost of the electricity produced. Even after privatisation, with the initial capital costs written off by the Government, the nuclear industry struggled to remain solvent in a soft market for electricity prices.
nuclear industry claims that today the situation is completely different. Technical
advances mean the latest generation of designs are more fuel efficient and
therefore produce less waste. Certainly at the present level of energy prices
they are more than economic. Furthermore, the uranium feedstock can be
accessed, unlike gas, from reliable and friendly nations like
Even so, it's impossible to believe that any new nuclear build could be privately financed without some form of government guarantee. Given the long lead times involved, financiers would have to be certain of the price that could be charged. Any mishap on the costs of decommissioning or safety would also have to be underwritten by the Government.
Might Labour be persuaded? The time to have announced a new programme of nuclear build, or at least a consultation on it, was immediately after the election, when politically the controversies involved would have easier to weather. The closer the Government gets to the next election, the more reluctant it will be to brave the waters.
Tony Blair was once all for it, then he seemed to lose his enthusiasm, conceding that the public may not be ready for it yet. The minister responsible, Alan Johnson, Secretary of State for Trade and Industry, is in any case keen to give renewables a chance before venturing into the nuclear debate. Few would want to invest in renewables, he would argue, if they knew there was a Government-underwritten programme of new nuclear heading down the road.
countries are proving more decisive. Both
All the same, ministers would be ill-advised to rely entirely on renewables and the market to solve our long-term energy needs. If the lights go off, it will be the Government that gets the blame. On a number of occasions of peak demand in recent years, the industry has come perilously close to ordering blackouts. It's only a matter of time the way things are going.