Are the Government trying to tell us something, and if so, what? Whatever it is, they’re certainly beginning to appear mob-handed. First it was Chris Huhne, saying on 21st March that the UK may ‘back away’ from nuclear: then Nick Cleggweighed in on the 29th, opining that new nuclear may now be too expensive if new safety measures are required, and that ‘ private firms may be unable to raise the money necessary to build new reactors’. So far so predictable, you might say; they never liked nuclear much anyway: but here’s Charles Hendry popping up on April 10th talking to the BBC about how ‘if nuclear were to be delayed the government will find alternative forms of clean energy to meet carbon objectives’. Hmmm. There will be delays, we know and the latest minor delay, the postponing of the generic approval for new reactors, will set the planning process back a few more months. But is it that serious? No-one expects Mike Weightman’s report on nuclear safety to come out with anything other than a ‘yes it is safe’, so the show is surely on the road again, with the aforementioned delays taken on board.
Well, not exactly, and for reasons not connected with concerns about safety, disposal , siting, or any of the other staples of the yes/no debate. I’ve wonderedhere previously about the tenacity of the magic date of 2018 as the predicted switch-on for new nuclear: at least one in 2018, and then, apparently , one every nine months thereafter until 2025. Improbable I know, but that is the position.
But what if delays really do force potential switch-ons well away from 2018? If they do, it isn’t then simply that they will switch on a little later and all’s well. This is because of the conjunction, uniquely to the UK of the energy market, reformed or otherwise, and the programme of switch-offs for currently operating nuclear power stations. For between 2016 and 2019, there’s a traffic jam of nuclear power stations closing: the bulk of the UKs remaining nuclear capacity is scheduled to close during that brief period. Some stations have already had their life extended, and further extensions look unlikely.
All these stations presently provide high capacity ‘base load’ to the grid, on long-term bilateral contracts to suppliers and industry. They don’t participate in any trading around settlement time: they can’t because Nuclear power is either long-term ‘on’ or long-term ‘off’. These are very long term contracts, and, when those nuclear plants close they will need to be replaced elsewhere: hence Charles Henry’s ‘assurances’ about sources of power.
The assumption has to be that, when new nuclear power stations come on stream, they dovetail into the closures of existing plants to maintain these long term contracts: one out, one in, as it were. If however, new nuclear plants come on stream after – say – a gap of five or so years after the slew of closures has passed, then those long-term contracts would be well and truly gone, and would be well established in other sectors of provision. So new nuclear would need to enter the market afresh, and compete to get them back from other suppliers: not the kind of risky procedure likely to galvanise the huge up front investment that will precede this eventuality.
So all this has a bearing on funding decisions now: Nick Clegg’s point. Two years to plan: five years to build, if Nuclear is to succeed in switching contract horses as older plants close. That means money on the table very soon: perhaps within the next twelve months, if this timetable, even for one or two stations is to be met. The irony then is that if the timetable slips further and the gap between contracts for old and contracts for new widens, then the likelihood of money being on the table in the first place decreases in proportion. The longer the delay, the more likely it is that the delay will be even longer. Perhaps that is what they are all trying to tell us.