Monday, 4 April 2016

The Fall and Rise of Nuclear Power in Britain – review

The Fall and Rise of Nuclear Power in Britain - a history by Simon Taylor.
UIT Cambridge. 2016

As an engineer or scientist it is easy to focus on the technical merits of different low carbon technologies, but financial, economic and political considerations are vital too – especially when it comes to nuclear power. In fact it seems that commercial considerations trump technical ones very often. If you want to know why we started rolling out the Advanced Gas-cooled Reactor back in the 1960s, even though it was more expensive, unproven and turned out to be far less reliable than the US Pressurised Water Reactor – read this book. If you want to know how it is that the design we plan to build (if it ever happens) at Hinkley Point C is also unproven - the first four installations are all vastly delayed and running over budget due to construction problems - then read this book. If you want to know how government policy evolved from reliance on the free market with ‘no public subsidy’, to controversial price and loan guarantees, read this book.

It is a surprisingly compelling story. As Taylor points out, there are no villains, the actors have good intentions and even some individual successes. However, buffeted by commercial constraints, inconsistent government policy and financial disasters at home and abroad, nuclear power in the UK has had a rough ride.

If it wasn’t for the Climate Change Act in 2008 we wouldn’t be even thinking about building more nuclear installations now. The act requires that the government meets increasingly ambitious targets for reductions in carbon emissions. Most strategists agree that doing this with just renewables would be staggeringly difficult. Even the Liberal Democrat party was persuaded - members voted to support new nuclear power stations at their conference in 2013. However, nuclear power is just too risky and too expensive for the private sector to take on alone without significant guarantees.

Taylor is neither pro- nor anti-nuclear. He relates the whole epic and tortuous history without bias up to the middle of 2015. Part 1 covers the early years of the CEGB and privatisation. Part 2 explains how government policy changed from making encouraging noises to actively wooing the private sector with incentives. Part 3 describes the painful evolution of planning and waste management policy, electricity market reform, and the initial agreement for Hinkley Point C, taking in the impact of the Fukushima disaster at home and abroad along the way. Part 4 is about the Hinkley Point C project specifically. There has been more water under the bridge since then – but still no final deal and if it doesn’t come through there is a good chance that the other projects in the pipeline will also be abandoned.

Taylor explains some of the detail in the Hinkley Point C deal such as company structures minimising risk exposure, how the loan guarantees work and how the price for generated power was set. This is designed to give investors a return of about 10% which sounds high but includes a high risk premium in case of cost overruns, delays and reliability problems. I was particularly interested to read that the European Commission is responsible for improving the deal for electricity customers. They refused to give approval except with the addition of two conditions, one of which is that if the project comes in under the projected cost the extra profits will be shared with consumers (via the Contract for Difference payment scheme that comes from our electricity bills).

Most of the difficulties with nuclear power stem from high up front costs and long lead times. It can easily take 10 years or more to jump through the regulatory hoops and then at least another 5 years to build. Other renewables have similar problems but to a lesser extent – though I should think one could write another book about the history of the London Array offshore wind farm development.

I thoroughly recommend this book to anyone interested in how financial and economic interests interact with politics and government. The nuclear industry is an excellent example as well as a fascinating story with lots of lessons for the future.

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