Liberal Democrat Energy and Climate Change Secretary Edward Davey has been talking to ITN’s Laura Kuenssberg after £700 million private companies following the announcement that Hitachi were investing £700 million in new nuclear plants. He said:
It’s a real vote of confidence from a major international company…. This is good news for the public because it’s part of our energy security strategy to keep the lights on and to make sure energy is affordable.
We have made it very clear that there will be no public subsidy for new nuclear. There is no taxpayer subsidy in this at all.
Questioned on the fact that there will be a minimum price guarantee for suppliers, he added:
Because these are high capital projects, you have to put out a huge amount of money up to build an offshore wind farm, or a carbon capture and storage plant or a nuclear plant, by making sure that the risks are reduced, by having a clear price, that reduces the cost of capital which reduces the total cost so it reduces the price people pay for their electricity.
You can see the whole interview here.
* Caron Lindsay is Editor of Liberal Democrat Voice and blogs at Caron's Musings
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23 Comments
If true this is greatly welcome given the inevitability of nuclear to provide base load ie keep the lights on while the wind turbines are still. What a shame we didn’t construct non-nuclear generation green capacity while we could. Are the notionally carbon-neutral nuclear stations benefiting from the climate change levy which I see as a subsidy? Their construction certainly won’t be carbon neutral and we must remember that we have not effectively dealt with a single gram of nuclear waste since Calder Hall was commissioned in 1956. What a legacy to leave to future generations!
This is nonsense. There is a clear case for nuclear power but to suggest that it isnt being subsidised is simply not true. The subsidy is from electricty users who will have pay more for their power if the guaranteed price is higher than the price of other ways of generating electricty.
Does Davey think the public are fools?
Anyone seen the “high alert” for a nuclear station in New jersey? Fukushima really should have been our big alert in Britain, as it was in Germany and elsewhere. How long does it take to learn here? And how is it that the Lib dems, of all parties, when actually in power, have given way to new nuclear, just at the wrong moment. Now we are seriously entering the era of climate change with accompanying frequent extreme storms etc we cannot afford to take major risks with human, or other populations.
So, let me get this right;
Hitachi helps to build Fukushima
Fukushima can’t withstand a Tsunami and breaks up
Japan decides it’s safer to withdraw from nuclear power
Hitachi buys the rights to build two nuclear plants in the UK
…now where did I put my passport
Edward Davey must think that we zip up the back . The government consultation was questioned about the alleged zero CO2 emissions and their response was ‘Not in our opinion’ with no links to justify that opinion.
Nuclear power insights
In fairness to Ed Davey, he has not said that there is no subsidy from electricity users; clearly there can be, and probably will be.
He said “There is no taxpayer subsidy in this at all.”
He clearly means that there will be no government disbursement of tax revenue to support this scheme.
The fact that most electricity users are also taxpayers is beside the point; what Davey said is correct.
So in 25 years when Hitachi UK nuclear power unaccountably goes bust just at the point where the power stations need to be decommissioned and all that tasty nuclear waste stored – who picks up the tab? Looks just like a revamped PFI scam to me. The taxpayer is on the hook for minimum price per kw, and almost certainly for decommissioning. Why don’t we just own the things? Or would it be bad for the “market” if the private sector didn’t make a profit out of the taxpayer making a loss?
“New nuclear plants will have no taxpayer subsidy”
What?
No access to the to the zero-carbon subsidies available to windfarms and solar!
Hardly seems fair……………
😉
Simon, I thought they werent offering price guarantees…. The main issues are around planned decomissioning or cleanup costs resulting from an accident, as the taxpayer is likely to be on the hook for that saying now there is no subsidy is about 40 years premature. Im saying this as a supporter of Nuclear. I dont trust the Government to run this in such a way that shareholders and insurers bear the risk rather than taxpayers.
I accept that Ed Davey was correct when he said there would be no taxpayer subsidy for the building of these plants. However in the Radio 4 interview I heard he also said there had been no discussions about pricing. While I may not have to pay extra in taxes I am no better off if the money saved has to go in premium prices for the electricity I use. The bottom line in my bank account ends up the same.
I am not saying we shouldn’t go down the nuclear route but we do need a very clear picture of all the implications.
@Tim13: “Fukushima really should have been our big alert in Britain,”
I would be interested to know what lessons you would learn from Fukushima.
Firstly, there are no plans to build nuclear power plants in the UK based on designs that are nearly half a century old.
Secondly, there are no plans to build nuclear power plants in areas of the UK at risk from earthquakes, tsunami or (as you also referenced another half-century old design of reactor) hurricanes.
Thirdly, the impact on the health of the local population as a result of pollution from the accident at Fukushima last year is far lower than the impact on the health of the average city resident from urban pollution, let alone the impact from most non-nuclear power stations.
The big alert we need to worry about is the lights going out in 2020 when we discover we haven’t got sufficient energy capacity, or the big alert resulting from rising energy costs impacting on poor consumers and the owners and employees of companies in energy-intensive sectors.
@Tom P
There are arguments about the susceptibility of the Bristol Channel and North Sea to storm surges, but I can’t see a reason why they couldn’t be resolved and it’s still very different to an earthquake/tsunami zone.
@Tim13
To expand on Tom P’s point, Oyster Creek is the oldest operating nuclear power station in the US, so again anything happening there is not necessarily a guide to what would happen with a newly built plant (comparing Fukushima Daiichi or Oyster Creek to Wylfa B would be like saying, “My Ford Prefect doesn’t start on cold mornings, so I won’t buy a Focus now…”)
On the overall point, I think Ed is right in what he says, but it goes to show the difficulty we have in pinning down what we mean by subsidy, because everyone seems to have this idea that there are going to be brown envelopes being handed over marked “Nuclear Subsidy”. There are things like climate change levy which are market interventions/distortions (according to taste) but which are not nuclear-specific, there are also our obligations under the Paris and Vienna Conventions on Third-Party Liablility which amount to a certain level of underwriting in the case of Chernobyl-scale accidents.
The trouble is, these sorts of interventions/distortions also exist to a greater or lesser extent with other forms of generation; our electricity market is still highly structured and with those structures and the politicial decisions that underlie them come such complications. The question therefore is not, “are there any interventions/distortions that are beneficial to nuclar power”, but “does the sum total of all the interventions/distortions for all forms of generation lead to a market and a network that meets our needs”. If the answer to that question is no (and it certainly seems to be given the gathering storm of power cuts by 2015/2020, we shouldn’t be surprised if governments try and fix that.
Market price support is a subsidy
http://www.iisd.org/gsi/subsidy-types
However, the main subsidy nuclear receives, and which is taxpayer-funded, and which Mr Davey consistently ignores, is when the government acts as an insurance company without charging any premiums.
“Governments also serve as an insurer of last resort for private investments. All OECD governments with nuclear power plants, for example, are signatories to an agreement that limits the financial liability of power-plant owners in the event of a catastrophic accident. Similarly, many governments would be stuck with part of the bill following the failure of a large hydro-electric dam. For this type of support, years may pass before a government incurs any actual costs. But when an accident does occur, the financial burden (not to mention human cost) can be huge.”
Nuclear should have a premium charge levied against it commensurate with the level and scale of risk that the government underwrites.
@Tim13 – “Fukushima really should have been our big alert in Britain,”
Alert about what? Even the Great Moonbat gets ‘it’, and he’s daft as a bag of spanners!
http://www.guardian.co.uk/commentisfree/2011/mar/21/pro-nuclear-japan-fukushima
It’s a real vote of confidence from a major international company….
Within the lifetime of many still alive Britain ruled a large part of the world; now we have fallen so low that a government minister thinks it appropriate to boast that a large foreign company is prepared to invest here.
Get real! In a global recession what is mainly lacking is demand and that is something we have plenty of thanks to the dithering that has characterised energy policy for so long and the resulting investment backlog we now have to make up. Ditto airports, trains etc. So Hitachi must be absolutely delighted and amazed to get the lion’s share of the action – in nuclear now, in trains only recently. They would never get this chance in, say, China except on strict conditions of technology transfer and local content.
Of course, given where we are there just isn’t time to develop a domestic alternative so Ed Davey was probably left with little real choice but that in turn rather shows up the emptiness of successive governments’ committments to develop an industrial revival based on high tech. How are we actually going to earn our living in the future?
I had the opportunity to chat to an energy industry expert at lunch. He provided some useful answers.
@Simon McGrath: “The subsidy is from electricty users who will have pay more for their power if the guaranteed price is higher than the price of other ways of generating electricty.”
This is true. However, he told me that EDF negotiated a price floor that was lower than that agreed for off shore power. While that does, still, represent a subsidy – or, at least, an intervention in the market at the expense of consumers – it is interesting that it is one that is favourable, in comparison with the deal struck for what one might caricature as “The Lib Dems’ and the Green’s production method of choice.”
@jenny barnes: “in 25 years when Hitachi UK nuclear power unaccountably goes bust just at the point where the power stations need to be decommissioned and all that tasty nuclear waste stored – who picks up the tab?”
The power stations do. Apparently, part of the deal is that a proportion of the operating profits of the power stations is hived away each year in a decommissioning account that is outside Hitachi’s control (and so not part of their assets if they go into receivership). Effectively, the decommissioning costs are already “priced in”.
But Simon, your example makes the point that it isn’t a nuclear-specific issue; by all means ask nuclear to do it, but also ask hydro to do it and watch as the one reliable renewal electricity source we have collapses in five seconds flat…
Gareth – so long as the premium is commensurate with the level and scale of risk – and is applied to all instances where the government provides insurance – I doubt the few pennies per MWh hydro would have to pay would have any effect – whereas Nuclear’s premium would make it unaffordable. Fossil fuel power likewise, since the government is acting as insurer of last resort on their environmental impact.
In October 1957 Britain spread a plume of radioactive contamination into the atmosphere from a nuclear reactor fire at Sellafield. (Re named Windscale) 1957, Three Mile Island, Chernobyl and Fukishima disasters followed.
The Fukushima accident has affected the whole world of ‘recycled’ fuel. The Sellafield plant accepted spent nuclear fuel waste products from Japan, and now Japan will not take that nuclear waste back, after it cancelled all of it’s plans and shut down all 50 plus nuclear power plants in the nation of Japan.
So who pays for decommssioning, who pays for burying or storing the nuclear waste, who pays the billions needed for a clean up after an accident.
Whatever happend to geothermal power, Wave and tidal power, effective solar power, and alll those fine alternatie that the Lib Dems used to promote. Now we have imported coal, gas, oil and nuclear, exactly what we had in the 1970’s
We were told that nuclearpower would be too cheap to meter………..
http://media.cns-snc.ca/media/toocheap/toocheap.html
It seems that was a reference to fusion power, not fission, and it was the US, not the UK.
So no, no-one told us that nuclear power would be too cheap to meter.
That doesn’t excuse Ed failing to acknowledge the ongoing subsidy provided to nuclear power, and the subsidy-like impact of the plans in the energy bill.
Has government policy on low carbon energy, particularly wind, changed?
I would appreciate reassurance here from Ed Davey, the noises off are starting to sound like the main story.
As for nuclear, just offer reasonable guarantees and have it built. We won’t entirely decarbonise our economy at the present without a new generation of nuclear reactors. Build the Severn Barrage as well, please, roll out all the interconnectors and the smart grid adaptions that are needed. Just get on with it.
The opponents of nuclear tend to demonise the industry with enormously exaggerated risks, whilst the track record has been one of an impressive safety record. A comparison of world wide deaths over the last half century per generated terawatt hour per annum between coal, oil, gas and fission will certainly not provide evidence that the opponents of nuclear will wish to hear. And that is without the certainty of climate change with devastating global impact weighed against the mere potential for localised harm should all the safety systems of a nuclear plant fail in their entirety.
It seems that reluctant acceptance of nuclear is the order of the day and that means living with a small risk of a big accident. Fortunately there are ways to reduce that risk; unfortunately they involve doing things that we’re not very good at in Britain as I have explained in a new post.
http://liberaleye.wordpress.com/2012/11/01/nuclear-power-renaissance-or-nightmare/
tom papworth > Apparently, part of the deal is that a proportion of the operating profits of the power stations is hived away each year in a decommissioning account that is outside Hitachi’s control (and so not part of their assets if they go into receivership). Effectively, the decommissioning costs are already “priced in”.
So they have to pay for the decommissioning during operation. But they’re being subsidised, and they know the y are, so the taxpayer / energy buyer has to pay, really. At least it’s up front, but the company doesn’t have a magic money pot which doesn’t come from one of those 2 sources.