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The nuclear White Paper: an analysis
Posted by bex on 10 January 2008.
Our political unit has been trawling through the fine print of this morning's nuclear White Paper. Here's their initial analysis, outlining some of the more subtle ways the government has understated the real risks to the taxpayer and the lack of clarity on economics:
- The White Paper shows how nuclear companies will be able to cap their liabilities, leaving the tax payer exposed if estimates for dealing with waste change.
- It openly admits the government will have to provide extra money if cost estimates are wrong.
- It uses questionable financial estimates to build the nuclear economic case.
Decommissioning and waste
The critical issue for a new generation of nuclear power stations is ensuring there is enough money to decommission the stations at the end of their life and store the highly radioactive waste produced until it is safe. The cost of doing this, at this stage, is impossible to estimate. The length of time between starting a new nuclear plant and eventually putting the waste into a geological repository could well be over 150 years. Any discount rate or estimate on what costs might be in 2170 is pie in the sky.
Exposure to potentially exponential liabilities will make finding investment virtually impossible, so there is only one way to ensure money is available: cap the risk and provide a mechanism for the taxpayer to meet the costs. There are a number of specific paragraphs which show how the government will do this.
3.73 In response to the consultation, energy companies have indicated that they could be prepared to pay a significant risk premium, over and above the expected costs of disposing of waste, in return for having the certainty of a fixed upper price.
3.74 The Government plans to use the exercise on waste cost modelling to set a fixed price or upper limit for nuclear operators. This price would be set at a high level, including a material risk premium over and above expected costs. This risk premium will help to ensure that the operator bears the risks around uncertainty in waste costs and will provide the taxpayer with material protection. Should the actual costs of providing the service prove lower than expected, these lower costs will not be passed on to nuclear operators, who would have gained from certainty of a fixed price and would not have been exposed to the risk of price escalation.
These two paragraphs mean an investor will be able to limit the exposure to future costs - should they escalate beyond predictions.
3.52 Our policy on waste and decommissioning for new nuclear power stations is designed to ensure that operators make adequate arrangements to cover the full costs of decommissioning and a full share of waste management costs. Operators are responsible for decommissioning and waste management costs. If the protections we are putting in place through the Energy Bill prove insufficient, in extreme circumstances the Government may be called upon to meet the costs of ensuring the protection of the public and the environment.
3.58 The funding arrangements should ensure that the prospect of the operator's liabilities having to be met in whole or in part from public funds is remote at all times.
These paragraphs are even more blatant. The government admits that they will pick up the liabilities if the money is not available. In both para 3.52 and 3.58 there is also the implicit admission that the companies that build new nuclear stations could go bust. The recent example of Metronet shows that supposedly secure private companies with constant guaranteed revenue can still go into administration.
2.53 ... As mentioned in the consultation document, in accordance with our international commitments, there will continue to be certain potential liabilities that may fall to the Government as a result of a nuclear event.
This paragraph shows the government also remain the insurer of last resort for a large-scale nuclear incident. Para 2.66 on accidents "We have not estimated a monetary value that might be associated with potential accidents.... Though we cannot dismiss the risk"
Capping liabilities, and providing public insurance, lowers risk for the investor, and thus lowers the cost of capital. This dramatically effects investment decisions as accepted in para 2.46. Transferring liabilities to the taxpayer makes financing cheaper.
Economics of nuclear
Much of the argument for new nuclear stations is predicated on the assumption that it is now an economic form of generation. However, the white paper admits that the base case costs are not currently known. Indeed, they are planning a consultation on what they might be later this year.
Paragraph 2.48 uses a range of possible costs for new nuclear power in their cost-benefit analysis. Yet the UPPER end of their possible cost of construction (£1625/kW) is just over half the current cost (£3060/kW).
In addition, the White Paper makes various assumptions about the cost of connecting new nuclear stations the National Grid. Para 2.51 states that the government cost modeling has taken into account these costs, but Para 2.281 acknowledges that allocation of costs for large nuclear plant remains for Ofgem to review with the industry.
It is clear from reading the whole white paper that the economic case for new nuclear is far from certain. The government uses estimates in one paragraph to justify the economic benefits. In others they admit they have no idea where these costs will fall.
Tags:
The new power generation
The original definition of horsepower was based around the assumption that a horse could pull 330 lbs weight up a mine shaft, on a rope, for eight hours a day and is set at 750 Watts. Utilising a 10:1 lever and a geared up wind turbine mechanism mounted at ground level in much the same way as Anita Roddick (RIP) used childrens roundabouts in Africa to pump up ground water would it therefore be possible for one horse to generate 7.5 Kilowatts of useful energy?If that is the case would 2000 such sites nationwide have the capability to provide an alternative low voltage national grid?
Nuclear reactors
What can i say GREAT! i'm so glad the government has listened to common sense and people who know what they are talking about. To listen to johnny ball today on radio 2 was music to my ears. Get a grip! wind power is not the solution, if you people understand anything about the subject you should understand weather patterns and maximum demand on the grid. How do you plan to power the country when a high pressure weather system is sat over us in winter? it's freezing, power consumption goes up, the windmills don't turn! You people complain about every option but wind, yet fail to provide alternatives, get real nuclear power is the best solution to our power needs.
You can't have a low voltage
You can't have a low voltage national grid, the reason it's high voltage is to combat voltage drop due to the distances travelled, the grid would become massively inefficient, not to mention the cross sectional area of the cable would have to be huge over long distances. This is why transformers step up and step down voltages at precise locations.
white paper full of white lies?
Lets face it, from the beggining it was obvious that this was going to happen, we are supposed to support the government on this kamakaze power trip and to then foot the bill once it goes bottoms up, plus on the white paper it stated that if the demand decreases they will simply just rake up the prices
so there goes the goverments main promisies out of the window : the public will not have to pay, LIE and that it will be a cheap and efficient way of lowering emissions, LIE because these companies can raise their prices if they feel its right for them and with a emmision cut by 4% just how can they claim they have to do this when there are many more resources to explore.
I think that people supporting nuclear power are completely missing the point here because if they think that its sufficient to pump money and time into a project as diasasterous as this which will not even make a satisfactory difference then they are seriously mislead!
and lets face it only two that will benefit from this are politicans and business organisations, the earth only stands to lose in this battle.
For what avail the plough or sail, or land or life, if freedom fail? ~Ralph Waldo Emerson
Re: The new power generation
Unfortunately the answer is no. You'd still only be generating 750 odd watts (assuming there's no friction in the gearing system). The gearing system doesn't actually increase the horsepower ("energy can neither be creater nor destroyed"), it just makes the work 10 times easier, but take 10 times longer. So, going back to the horses/mineshaft example, if you created a 2:1 gearing system by introducing a couple of pulleys, a horse could pull twice as much weight, but it would take twice as long (in this example, the horse would have to walk twice as far, because of the extra rope needed for the pulley system).
But we do have lots of info on an alternative grid (decentralised energy), based on efficiency, combined heat and power and renewables, including tidal, wave and wind. There's an abundance of energy out there, waiting to be harnessed. Check www.greenpeace.org.uk/solution
Bex
Gpuk
Re: nuclear reactors
Far from complaining about everything but wind, we (like lots of other organisations, political parties and individuals) are campaigning hard for a total overhaul of the energy system, based on a diversity of energy sources. Wind would be a big part of the energy mix, as would tidal and wave (the gvt's own figures show we could produce twice as much energy from these sources as from nuclear in the same timeframe, and renewables don't have the same constraints as nuclear in the longer term). But efficiency is also crucial, as is combined heat and power (most of our emissions come from heating, and nuclear doesn't contribute to this).
On the wind sometimes not blowing, this can be overcome by getting the right energy mix, by linking wind farms up, by using CHP etc. Tidal, for example, is completely predictable, as is geothermal. And combined heat and power (basically burning fossil fuels or greener fuels like biomass in the most efficient way possible) can also be baseload.
Cheers,
Bex
Gpuk
Field telephones in the second world war
I seem to remember that field telephones during the war operated on a wind and talk principle and they only had small diameter cables, what range were they effective to? Surely the reason we say that we would need such huge cables is because conventional wisdom is bound by the understanding that all power supplies need to be 240 volts. Could you not have an internet link between two low voltage generating stations 10 miles apart bearing in mind that currently we transform down from (how much?) 50000 volts or so to a pitiful 12 or 18 volts for your average computer. Carbon friendly fuel. Sun tubes and led's?
Tractors versus horses. Who made the original definition?
If you try to start a car in fifth gear there wont be enough power to shift the mass of the car but once you're up to speed (and speed of a turbine is what we're talking about here for increased output) the engine can quite easily maintain speed.Thats down to gearing isn't it?Is momentum the issue in this example? or is it just that that increased speed results in increased oil consumption, as opposed to extra hay and grain for a horse?. Distance to walk isn't really an issue ( other than it would have to be sized to avoid cruelty) as the horse would be walking in circles anyway.
Malcolm Wicks on Newsnight
I was shocked by Energy Minister Malcolm Wicks on Newsnight Thurs 10th Jan 2008. After Jeremy Paxman asked what would be done with the waste from new nuclear, Malcolm Wicks replied that the advisory committee CoRWM had advised deep geological disposal.
CoRWM took its remit as to advise on the problem of existing waste and made no recommendation on waste from new nucear. The CoRWM report Chapter 14 paragraph 18 page 117 / 195 states:
"CoRWM takes no position on the desirability or otherwise of nuclear new build. We belive that future decisions on new build should be subject to their own assessment process, including consideration of waste. The public assessment process ... will need to consider a range of issues including ... ethical issues of a deliberate decision to create new nuclear wastes."
Green peace going round the houses or being historic
I have respected Greenpeace's contribution to the nuclear debate, however, after senting its convenient truth DVD to all MPs's, I would seem it has largely lost the debate. More so for pulling out of any talks when it wasn't getting what it wanted. Prof David King is correct, by denying the reality of technology as a solution; spinning the ideal in a non ideal world, Greenpeace are losing a large following. Greenpeace nust avoid frustrating climate change, and frankly looking like batty idealogs, harping and chewing over the same story, like a broken record.
Many folk migt not like nuclear as first choice. I happen note to like it. The reality of climate change and keeping the economy powered with electricity, nuclear is required in the mix. The only real debates are economic. Will Eon/EDP or British Energy indemify the UK purse tax payer for decommissioning and deep waste disposal; do the construction/ economica stack up for them, and what are the safeguard payment mechanism to ensure decommissioning costs are covered without an ENRON scenario. This is the economic, technological and environmental detail to be resolved.
Nuclear Power
I'm pleased the government has decided to go ahead with Nuclear Power. I support many Greenpeace initiatives but not the anti-nuclear-for-the-sake-of-it view. Are people aware, for example that many UK trains run on diesel which is a very inefficient fuel due to the lack of electricity generation capacity in the UK? Electricity is the right energy source for trains both for the environment and for fast acceleration to increase transport throughput. This is just one example of a nuclear win; there are many others. A balanced view of the pros and cons shows nuclear to be a valid part of the energy mix
Re: Malcolm Wicks on Newsnight
Absolutely. And members of CoRWM have made even stronger statements recently. Prof Andy Blowers OBE, member of CoRWM:
"Nuclear new build should not proceed until there is an acceptable solution for the permanent management of long-lived solid nuclear waste."
and
"Any new build programme should not proceed until it has been subjected to a thorough process of citizen and stakeholder engagement on the issue of radioactive waste including the quite distinctive and separate ethical issues that arise."
and
"The unresolved technical and ethical concerns related to managing radioactive wastes safely provide both a necessary and sufficient condition for rejecting the case for nuclear new build."
Pete Wilkinson, also of CoRWM:
"There is no 'solution' to the management of radioactive waste, be it 'legacy waste' or that derived from the operation of a new generation of nuclear power plants. That Government has assumed the recommendation from the Committee on Radioactive Waste Management represents such a 'solution' is wrong and deliberately mendacious."
And today, the government's also been accused of misrepresenting another set of advisers on nuclear. Prof Tim Jackson, chief economist at the Sustainable development Commission, said: "The government claims that it and the SDC see eye to eye on nuclear proliferation. This is disingenuous nonsense". He also said the decision to opt for nuclear power was "a blatant failure of moral vision".
Cheers,
Bex
gpuk
Diesel Trains and Electricity capacity
Daibell - trains are not forced to run on diesel because there is insufficient electricity generation capacity in the UK. Rather, many train operators choose not to electrify track because it is not in their short-term financial interest to do so.
Because train operator franchises only last a maximum of 10 years (though most are reviewed after 5 or 7 years), and because the payback time for electrifying the rails is longer than this (something that might change if the price of diesel continues to climb), companies cannot justify long-term investment to their shareholders and so continue to use diesel trains. Nuclear power has nothing to do with this.