Irwin Stelzer

Go nuclear, but keep your hand on your wallet

The government claims that the private sector will meet the costs of new nuclear plants, says Irwin Stelzer. But there is every risk that the public will end up footing the bill

John Hutton, the energetic Secretary of State for Business and a few other things, has reason to be pleased with the expressions of ‘significant interest’ in constructing new nuclear power plants that he has received from British Energy, EDF Energy, E.ON UK and Iberdrola — the British, French, German and Spanish utilities — respectively. These are among the handful of companies in the world with the knowhow and financial resources to build and then successfully operate these capital-intensive and complicated plants.

The government’s case for the need for new nuclear plants is straightforward. The nation’s ten existing plants will be shut down by 2023, reducing this low-carbon source of energy from 19 per cent of the nation’s total to 6 per cent. The government is hoping that the first of the plants to replace the existing fleet will come on line in 2017, or 2018 at the latest. If Britain is to avoid excessive reliance on natural gas from places that are not completely reliable trading partners, and if it is to meet its wildly optimistic plans to reduce carbon emissions, it will have to hold to some such timetable.

So far, so good. But this ignores the billion-dollar question: will the private sector provide the capital to finance this replacement-and-then-some of the nation’s nuclear plants? The government is confident that it will, and at no cost to the taxpayer.

The first step will be to clear away the regulatory hurdles to new construction. The government has sworn to do this, but experience with wind farms suggests that there is a wide gap between legislation and practice. It generally takes about two and a half years to do the research and paperwork to prepare an application for permission to build a wind farm.

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