As far as new nuclear investment is concerned, well I did say… But that, in itself is not going to get us very far. The real significance of the Eon/RWE announcement last week that they were abandoning plans to develop reactors at Oldbury and Wylfa is that as a result we can see what the limit of ambition for new nuclear plant is likely to be. EDF (with Centrica) are pressing ahead with their plans to develop plants at Hinkley Point and Sizewell , but are warning of commissioning delays and have anyway, in the shape of EDFs CEO Vincente De Rivas, indicated that the four reactors at the two sites are all there is going to be from them. They have sold interests in other sites as if to put a thick line under that statement. Possibly six gigawatts by the early 2020s. Nugen ( the GDF/Iberdrola consortium) have a site, and presently are suggesting that they may submit plans in 2015 for up to 3.6 gw of power operational perhaps by 2023 or so. And er….that’s it.
The idea, suggested by Energy Minister Charles Hendry in his ‘whistling in the dark’ statement following the Horizon withdrawal that the ‘Horizon sites offer new players an excellent chance to enter the market’ is pure whimsy. There are no new players. A new venture would almost certainly have to be a consortium because of the cost involved (cited now as a severe problem by the Horizon consortium) and the big six are now all either in consortia, have resigned (SSE) or have pulled the plug (Eon RWE). That leaves small players and Russian Oligarchs. My advice is… don’t watch this space.
So this all now poses a difficult dilemma for the Government. For quite a while it has been apparent that the initially stated ambition that there should be some 16gw of new installed nuclear capacity in place by 2025 is wildly overambitious. At most now, it looks as if there will be perhaps six gw of installed plant in the early 2020s and perhaps a little more later in the decade. Whether you are a supporter of a future energy mix with nuclear in it or not, it is becoming clear that , on present arrangements, there won’t be much in the mix at all, and that all the effort that has gone into preparing the ground in planning, decommissioning and an electricity reform plan that provides quite substantial implicit subsidies for nuclear may vastly overcomplicate the market and create a hiatus in renewable investment for little discernable outcome.
A nuclear contribution that small to our future energy needs in 2025 also means that, if estimates of capacity needs in 2025 (such as those set out in the national Planning Documents) are to be believed then there really will be a ‘gap’ to be filled up to that point. So does the Government :-
a) do nothing and hope for the best (with the clear implication of gaps for the future)
b) Go for even more gas as an alternative, as Ed Davey’s recent suggestion of ‘grandfathering’ new gas plant as far as emissions are concerned until 2045 seems to point to (with the implication that to do so would ,at a stroke bust apart any ambition to reach carbon emission targets for the future)
c) bite the bullet and announce that there will, after all be a subsidy for new nuclear and hope the buffalo return.
I would not be surprised if , in the autumn, the ground is prepared for option c. But that in itself is fraught with problems, over and above what it means for the solemn vows exchanged in the Coalition pre-nuptial agreement. Some commentators are now talking (e.g. Robert Peston BBC – here) as if simply taking a decision on subsidy is the big turning point – but it isn’t. Any new arrangement would be highly likely – like the Green Investment Bank – to run into ‘State Aid’ objections form the EU, at least delaying and possibly derailing any new programme. The whole point of the byzantine Electricity Market Reform programme is that it tries to build in extensive implicit operating subsidies both for old and new nuclear without incurring any action on ‘state aid’ from the EU, and even that looks not to have cut any ice with the Horizon consortium, which has baulked now at the upfront costs of what they were letting themselves in for. It looks like EMR as it stands may narrowly avoid ’state aid’ questions from the EU but an upfront explicit subsidy announcement certainly would not.
But an equally substantial point would need to be considered if (and when) explicit subsidy proposals emerge. The question that then arises, is quite simply what you get for how much. If we really are going to subsidise nuclear power as part of ‘the mix’ forever, is that, in the end, better value than shorter term subsidies to develop renewable or abated forms of new power instead? At that point the debate is not a pro- or anti- argument: simply a best value dialogue, which I’m not sure on full and open comparison, new nuclear would win. And by the way, if you did have that debate, where would the Gormenghast castle of interlocking ‘pillars’ of EMR then stand? Not in very good stead, I think.