One thing British politicians have never lacked when making nuclear policy is optimism. When it comes to atomic energy, they leave Dr Pangloss in the shade. Take the last big nuclear programme back in the 1960s, whose purpose was to meet a fifth of the UK’s electricity needs. Rather than using proven (if US made) reactor technology, the government bet instead on a homegrown gas-cooled type. The minister of power, Fred Lee, confidently predicted the experimental design would be a world beater. Britain had “hit the jackpot”, he declared. The UK certainly hit something. But it wasn’t pay dirt. The AGR programme dragged on for more than two decades and was, in the words of the man who commissioned it, Arthur Hawkins of the Central Electricity Generating Board, “a catastrophe that must not be repeated”. Which brings us to the present, and Britain’s latest programme. Once again, there is plenty of wishful thinking. Indeed, policy has been driven largely by a series of optimistic guesses. These include not just the cost of new reactors, but also the willingness of private capital to fund them without assistance from the state. There are multiple reactor types. Repurposing often almost untested equipment for UK safety rules means that each starts from scratch with its own prototype, learning as it goes along. Add the need to fund these “first of type” schemes with private capital and it’s not surprising that projects have been falling by the wayside. The result is that a decade in, Britain has just one project under way – at Hinkley Point in Somerset – for which the government has struck an eye-wateringly expensive contract. The owner, EDF of France, is now saying it could do subsequent projects cheaper, because it will have the Hinkley experience to draw on. But given the absence of competition (the only other participant left in is CGN of China, EDF’s partner at Hinkley), the government faces the unpalatable prospect of a series of potentially disadvantageous bilateral deals. If more plants are to be built, the government needs much more bang for its buck. Logically the answer is to tender competitively for a fleet of reactors of the same design. The potential gains are substantial. Consider the difference between Hinkley and the deal Abu Dhabi struck by tendering for a fleet of four reactors, won by Kepco of Korea. While Britain is getting 3.2GW of capacity for £20bn, Abu Dhabi will get 5.3GW for an estimated $24.4bn, and in far quicker order, too.
FT 20th Jan 2019 read more »
Hitachi’s decision to freeze its $28 billion nuclear power project in Britain strengthens the hand of France’s EDF and its Chinese partner in talks with the government on how to finance new reactors. Funding new nuclear plants has become critical as Hitachi became the second Japanese firm to say its British nuclear power project had hit the buffers over financing. The two projects would have covered about 13 percent of Britain’s power needs. EDF and its partner China General Nuclear Power Corporation(CGN) want to use a financing model under which investors in their nuclear projects receive payment from the moment they start construction, reducing their risk. But to proceed with this approach, the government must first win over lawmakers and consumers, already frustrated by hefty energy bills and costly nuclear projects that often face delays. “The question is whether it is sellable to parliament that all the risks go to the public. But if that is not the case, they will get no investors,” said Stephen Thomas, emeritus professor of energy policy at Greenwich University. EDF is negotiating with the government on funding the Sizewell C project using the so-called regulated asset base model in which investors earn a government-set fixed return from the start, instead of waiting years until construction is completed before receiving a return. China General Nuclear Power Corporation (CGN) has a 20 percent stake in Sizewell C, while EDF has a 33.5 percent stake in CGN’s project to build a reactor at Bradwell, Essex.
Japan Today 20th Jan 2019 read more »