{"id":56,"date":"2014-02-11T13:38:30","date_gmt":"2014-02-11T13:38:30","guid":{"rendered":"http:\/\/sussexnrggrp.wordpress.com\/?p=56"},"modified":"2024-01-10T14:13:55","modified_gmt":"2024-01-10T14:13:55","slug":"the-potential-for-a-hinkley-shaped-hole-in-uk-energy-infrastructure","status":"publish","type":"post","link":"https:\/\/blogs.sussex.ac.uk\/sussexenergygroup\/2014\/02\/11\/the-potential-for-a-hinkley-shaped-hole-in-uk-energy-infrastructure\/","title":{"rendered":"European Commission critique of UK nuclear strategy – the potential for a Hinkley-shaped hole in UK energy infrastructure"},"content":{"rendered":"

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Nuclear power returns and so does the state. The energy policy that spans England and Wales, unlike those of most European nations, includes strong commitments to construct new nuclear power, with 16GW of new capacity planned by 2030 (BIS, 2013)<\/a>. As nuclear has crept back onto the policy agenda, increasingly a state-apparatus that does not want to be seen – given ideological preferences for policy based around its apparent absence and the market\u2019s presence \u2013 has also become visible. There has been controversial consultations abandoned by NGOs and declared \u2018deeply flawed\u2019 and \u2018unlawful\u2019 by the High Court \u2013 a decision which then Prime Minister Tony Blair declared would \u201cnot affect [pro-nuclear] policy at all\u201d (BBC News, 2006)<\/a>; speeding up of the licensing procedures for new reactors, removal of the public inquiry, and a more general overhaul of the planning system, which has \u2018streamlined\u2019 the development process in order to remove the perceived \u2018barriers\u2019 to nuclear power (Hutton, 2008)<\/a>.<\/p>\n

In short, government activity has been extensive. However despite these policies, it was increasingly clear that nuclear was still not competitive in a liberalised energy market. The latest intervention on the part of the hidden state to address this problem, is the establishment of a Contract for Difference (CfD) entailing an agreement between Government and EDF over a \u2018strike price\u2019 for electricity produced from Hinkley C \u2013 a deal that in a recently published initial assessment of the policy, the European Commission declared could be \u201cillegal\u201d under EU state aid law (European Commission 2013)<\/a>.<\/p>\n

A strike price of \u00a392.50\/MWh for a 35-year period was agreed between Government and EDF in October 2013. The Strike Price works on the basis that if the wholesale price of electricity is below the strike price when the proposed Hinkley C reactor in Somerset starts producing electricity (thought to be in 2023), then the state will pay the difference, and if higher, EDF will pay back the difference. The deal also contains additional credit guarantees, the details of which are uncertain given the behind-closed-doors nature of the negotiations. When agreed, the Coalition government set about dawning hard hats, gracing turbine rooms and nodding seriously whilst pouring over maps declaring the deal to be a fantastic one for British consumers, contributing to the goals of energy security and climate change mitigation. This view is seemingly not one that is shared by the European Commission.<\/p>\n

The highly critical 68-page initial assessment, led by EU competition chief Joaqu\u00edn Almunia, inspects many aspects of the CfD. Using previous UK Government projections and EDF\u2019s own cost scenarios, it is questioned whether any support is required given that nuclear could be competitive in several years without additional support mechanisms to already established carbon pricing.\u00a0 The report raises concerns that the vast expense of Hinkley point may \u2018crowd out\u2019 renewables and disrupt European energy supply through reducing funds towards new interconnectors. It also queries why Hinkley should be given the extra support of a CfD on top of carbon pricing measures given that the two reactors of the same design currently under construction – Olkiluito in Finland, and Flamanville in France \u2013 were built without such measures.<\/p>\n

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Of course, those two reactors are billions of pounds over budget, and at least five years behind schedule. The European Pressurised Reactor (EPR) Generation III+ design, has essentially now been abandoned by the French government that funded its development, indicated by the cancellation of plans to construct another EPR reactor at Penly. Indeed, no new build aims presently exist in France, despite a looming energy gap due to old nuclear power stations closing. The European Commission intervention and current fate of the EPRs under construction in Finland and France, point towards a central problem with regards to the construction of new nuclear power in the contemporary landscape of energy policy.<\/p>\n

As George Monbiot (2013)<\/a> notes to his apparent surprise, current costs of nuclear power are double or triple most government and industry projections made several years ago \u2013 projections that formed the justificatory basis for new nuclear. This is a familiar story: previous rounds of nuclear power construction have seen government and industry projections consistently underestimate the costs and timings of nuclear new build (Hultman and Koomey, 2013)<\/a>. So far, the EU new build programme does not seem to be contradicting this pattern.<\/p>\n

Since the transformation of energy into a privatised and liberalised system, one of the key challenges has been whether nuclear can be considered an \u2018ordinary asset\u2019 (MacKerron, 2004<\/a>; Kahn, 1997<\/a>), entailing that the technology is not given special treatment by the state but exposed to the same market conditions as other technological choices. The British revival of nuclear power is predicated on their being \u2018no public subsidy\u2019 (BERR, 2008)<\/a>, where Government \u2018facilitates\u2019 but crucially, does not \u2018pick\u2019 the technology over others, thus enacting \u2018technological neutrality\u2019 with regards to decision-making on energy policy. This does not just relate to the UK\u2019s ideological preference established since the late 1980s for \u2018the market\u2019 to be the key decision-maker in relation to energy choices, but is also a matter of European legislation: the creation of a common European-wide energy market encapsulates regulation against \u2018illegal state aid\u2019 \u2013 understood broadly as the artificial distortion of markets through subsidization of particular technologies.<\/p>\n

The problem for nuclear, of course, is that, historically the technology has been reliant on unchallenged state protection and nurturing for its development. Take the prime example: France, with 75% of electricity supplied by nuclear entailed,<\/p>\n

\u201c\u2026a unique institutional framework that allowed for centralised decision-making, a high degree of standardisation and regulatory stability, epitomised by comparatively short reactor construction times\u201d (Grubler, 2010: 5174)<\/a>.<\/p>\n

Given the historic political framework that surrounds nuclear energy, the economics of the technology have been notoriously difficult to assess. However, the move towards liberalised energy markets has illuminated some of nuclear\u2019s \u2018extraordinary\u2019 elements which make it potentially prohibitively expensive. Nuclear costs can rise based on several factors including construction, reprocessing, storage, decommissioning, fuel, security, and research costs (Sovacool and Valentine, 2011)<\/a>. Studies have concluded that between 1966 to 1977, nuclear plants cost at least twice as much as expected (Ramana, 2009)<\/a>. Hultman (2011: 403) concludes that the period of 1960-1990 shows significant general escalations in costs, defined as a \u201cnegative learning experience\u201d. The general slowing construction rates of nuclear power over the past decade (Schneider and Froggatt, 2013), are in part likely to be a consequence of nuclear\u2019s \u2018exposure\u2019 to market forces.<\/p>\n

Nuclear proves to be a highly risky investment given the capital-intensive nature and long-lead times required, where electricity price fluctuations can inflict heavy profit losses if there is no stability and certainty with regards to energy prices. Nuclear is a fascinating point of contradiction within the age of rampant and largely unchallenged neoliberalism; something which seemingly cannot be built without notable state intervention, and cannot survive in the free market, is at the same time, the solution and an essential technology that must be built. A delightful \u2018third way\u2019 object: \u201cI want it because it is right\u201d.<\/p>\n

\"NUCLEAR<\/a><\/p>\n

Which brings us back to Hinkley C and UK energy futures. There does seem to be a form of collective memory loss with regards to nuclear power and the justificatory basis originally set out by the UK Government. \u2018There-is-no-alternative\u2019 (TINA) was the message. There was a need <\/i>for nuclear power \u201csignificantly before\u201d 2025 (DECC, 2011).<\/a> The rhetoric was strong enough to depict a picture of future British households scrabbling in the darkness for candles if this target was not met. Some people didn\u2019t buy it; they were generally North of Hadrian\u2019s Wall, but elsewhere, public opinion was changing. \u00a0If EDF were not granted early planning permission for \u2018preliminary works\u2019 at Hinkley point \u2013 the first of its kind in UK planning history, then \u201ctwelve million tonnes of CO2\u201d would not be saved (EDF, 2010). All would be OK however, if the policy was accepted: There was \u201cno Plan B\u201d declared Vincent de Rivaz of EDF (McGhie, 2012)<\/a>, elsewhere hubristically stating that people would be cooking their Christmas turkeys using power from Hinkley C by Winter 2017 (Webb, 2013)<\/a>. \u00a0Why are these statements of \u2018need\u2019 forgotten? Would they be so easily forgotten in Germany, or even, France? There is an incredible lack of scrutiny regarding the nuclear industry in the UK that represents more general political transformations underway \u2013 but I digress.<\/p>\n

The earliest estimate for power produced from Hinkley C is now 2023, so already we are 5 years behind schedule and this is assuming that time scales are kept to. Indeed the 16GW target has been set back from 2025 to 2030 \u2013this target again assumes the highly unlikely scenario that all reactors are built, and are built on time. \u00a0Thus the justificatory basis \u2013 the \u2018need\u2019 for nuclear is already fundamentally out of kilter with what is actually happening, which must automatically lead to a questioning on the nature of \u2018need\u2019. But words mean exactly what the enunciator wants them to mean, so, \u2018need\u2019 it is. As the European Commission Report illustrates, the \u2018energy gap\u2019 is occurring before 2020, and thus the justificatory basis for new nuclear has changed.<\/p>\n

The judgement of the European Commission leaves the real possibility that Hinkley C will be staggered, stalled, or abandoned and a Hinkley-shaped hole will emerge in the UK policy landscape. If Hinkley fails it is likely that other proposed sites will also not be constructed. Given this real possibility, it is perhaps no wonder that DECC are so enthusiastic concerning \u2018Fracking\u2019 \u2013 which fulfils the similar justificatory remit that nuclear does with regards to energy independence.<\/p>\n

Whether or not the deal between EDF and Government is deemed to be \u2018illegal state aid\u2019, like it or not, the state has already engaged in considerable effort to encourage nuclear: as the report also addresses, \u00a0questions must be asked about what the state was not doing, what alternatives or \u2018plan Bs\u2019 were not being explored, and what wasn\u2019t being \u2018facilitated\u2019 whilst so much energy was being expended on the promotion of new nuclear?<\/p>\n

Dr Phillip Johnstone<\/a> is a Research Fellow\u00a0at \u00a0the Sussex Energy Group <\/a>in SPRU<\/a> at the University of Sussex<\/a>.<\/p>\nFollow Sussex Energy Group \"Facebook\"<\/a>\"twitter\"<\/a>\"linkedin\"<\/a><\/span>","protected":false},"excerpt":{"rendered":"

Nuclear power returns and so does the state. The energy policy that spans England and Wales, unlike those of most European nations, includes strong commitments to construct new nuclear power, with 16GW of new capacity planned by 2030 (BIS, 2013).…<\/span><\/p>\n

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