The UK’s commitment to new nuclear

21 March 2016

UK legislation aimed at curbing carbon dioxide emissions is likely to have committed the country to a large expansion of nuclear power, according to a new book on nuclear power, writes Stephen Tarlton.

Successive UK governments over the last decade have been implementing measures to ensure that the country is, as the UK Nuclear Industry Association puts it, "one of the most desirable worldwide markets in which to develop new nuclear power". Getting to this point has been arduous and, with no nuclear concrete poured this century despite credible plans for around 18 GWe of new build, there is clearly still much to be done.

The journey from the high point of the first Magnox power reactors starting up in 1956 at Calder Hall, through to the cost and schedule overruns that characterized the AGR programme along with the PWR at Sizewell B, and then back to the recent renewal of optimism in nuclear, is described in The Fall and Rise of Nuclear Power in Britain by Simon Taylor, director of the Master of Finance Program at Cambridge University's Judge Business School.

Although the book is subtitled "a history", the author's principal interest is on the economics of nuclear, in particular the financing of new plant. The book's main focus is on the Hinkley Point C project, particularly the agreement between EDF Energy and the government for a contract for difference (CfD) guaranteeing a price of £92.50/MWh (about $132/MWh) over 35 years. Much of the material covered in an excellent earlier book by the same author, Privatization and Financial Collapse in the Nuclear Industry - the Origins and Causes of the British Energy Crisis of 2002, is also revisited.

The market and nuclear

The challenges of building new nuclear power plants in liberalized electricity markets, such as that of the UK, are considerable. Nuclear "is too large, complex and capital intensive to be left fully to the market", Taylor believes. As a result, new nuclear requires support, though how this is done is open to often fierce debate.

Furthermore, given that recent UK administrations have done just about everything that might be expected of them to encourage new nuclear, it would appear that the current government thinks it is getting a good deal. The CfD agreement may well commit future utility customers to pay around double the current price for electricity, but it will also allow the country to benefit from increased security of electricity supply for many decades. And perhaps more importantly, that nuclear-generated electricity will be virtually emissions free.

Cutting carbon

The UK has long recognized the environmental benefits of nuclear: over 25 years ago, on 8 November 1989, prime minister Margaret Thatcher gave a speech to the United Nations General Assembly where she emphasized that the problem of global climate change could be addressed through "the use of nuclear power which - despite the attitude of so-called greens - is the most environmentally safe form of energy". And more recently, when the Labour government of Tony Blair rejected new nuclear build in its 2003 energy white paper, it nevertheless acknowledged "the possibility that at some point in the future new nuclear build might be necessary if we are to meet our carbon targets".

Not long after, prime minister Blair realized that, without new nuclear build, the country's emissions targets may indeed not be met - particularly as it was looking likely that the AGR fleet would eventually be replaced mainly by gas generation. Nuclear was back on the agenda.

While it is easy for governments to pay lip-service to reducing carbon emissions, Blair's administration genuinely appeared to take seriously what it initially referred to as its "aspiration" to cut emissions. This aspiration resulted in the Climate Change Act of 2008, passed with overwhelming public and political support, which binds the country to carbon emissions reductions of 80% (from 1990 levels) by 2050. Given such an ambitious emissions target, Taylor observes that "it was hard to avoid concluding that the Climate Change Act had committed the UK to a large expansion of nuclear power."

In summarizing the situation, Taylor states: "The ambitious decarbonization targets, combined with the imminent closure of older nuclear stations and the difficulty of increasing the scale of onshore wind, left the government with little choice but to do whatever it took to bring private nuclear investment to the UK."

Whether the country goes ahead with its planned nuclear new build program remains to be seen, but not doing so would almost certainly result in those emissions targets not being met.

Worldwide carbon cuts

At the COP 21 climate change talks in Paris last December, governments committed to "holding the increase in the global average temperature to well below 2°C above pre-industrial levels and to pursue efforts to limit the temperature increase to 1.5°C above pre-industrial levels". Achieving this will be a major undertaking, given that there is a "significant gap" between the nations' mitigation pledges – which would see global emissions rise to 55 billion tonnes of CO2 by 2030 – and the 40 billion tonnes that would limit the average temperature rise to 2°C.

If those members of the United Nations really are serious about keeping temperature rises below 2 °C, they will need to pass similar legislation to the UK's Climate Change Act of 2008. For the countries with markets that fail to adequately price the external costs of greenhouse gas emissions, the UK's recent journey from a hostile environment for new nuclear to one where it is a very real possibility - as documented in The Fall and Rise of Nuclear Power in Britain  serves as a valuable case study. Thanks to COP 21, the outlook for nuclear has never looked more promising.

Stephen Tarlton

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Stephen Tarlton is a Writer & Analyst at the World Nuclear Association and a former Editor of Nuclear Engineering International magazine.