Tuesday, 30 October 2012

New Nukes, allegedly!

Get well soon Mr Drew.

Sadly for today regular readers will have to put up with my interpretation of events in the world of energy which is somewhat slightly less informed and slightly more strident than our regular poster, Nick Drew.

But the Government is very over-excited today that Horizon, a German vehicle to build nuclear power stations has actually been sold to Hitachi of Japan. They are even paying a £1 billion for the privilege and have signed up Babcocks and Rolls-Royce as partners.

With the UK energy policy in a complete mess, this could be the way out the Government was looking for. What they are not answering though is the really big question - what is the subsidy being bunged at the Japanese?

Now Ed Davey, the rubbish energy minister (he is a sort of living embodiment of a reverse waste to energy process), is happy to tell the ill-informed hacks speaking to him that there is no taxpayer subsidy. Clearly, this is bullshit. What there is to be is an undisclosed massive guarantee around energy pricing which is in effect a tax on all energy users - so that would be everyone then.

Now, Hitachi, desperate as they are given the travails of nuclear in their home market post-Fukushima, are not going to have signed up to this without knowing what their bung is to be. But when will we find out?

The longer we are not told, the worse the news is likely to be. Somehow I doubt the subsidy to shale gas producers would be as big and also the energy would be cheaper, as we can see in the US....


Electro-Kevin said...

We don't half make things hard for ourselves.

dearieme said...

Nuclear is funny. There is a huge extra capital cost imposed by government regulations about radioactivity that are (probably) loopily over-the-top. There is the huge extra financial risk involved that a government will panic in future and impose huge new costs on you retrospectively. (It was such government action that played a role in the Piper Alpha disaster in the North Sea, but nuclear is particularly exposed.) And then the government will give you a subsidy that might perhaps negate part of the effect of those extra costs.

Meantime one of the rational things governments might have done in the long pause in nuclear construction - look at new reactor types - wasn't seriously attempted. Hey ho.

Blue Eyes said...

Agree with EK and Dearieme!

This should be relatively simple if we were a sane society. Sensible safeguards in place, sensible designs approved, suitable sites chosen, if people want to build then they are free to get on with it if they meet the requirements.

Bizarre that two supposedly private German companies would both pull out of developing new nuclear abroad, but also bizarre that Hitachi now have to go through another four years of licensing procedure. If their design is safe in the USA and Japan why would it not be safe here?

My guess is that by the time the stations switch on they won't need a subsidy because we will be prepared to pay hand over fist for scarce electric power.

Nick Drew said...

I'm not suggesting that £700 mm is a free option, but (a) who knows what the payment terms are ? - could be a big contingent %; (b) we are a month or two or fifty before Hitachi commits to an actual plant, methinks

BE - by the time the stations switch on they won't need a subsidy - that's supposed to be the Government logic behind a CfD, of course

but CfD's struck at 2x or 3x the current level of wholesale prices, for nukes and offshore windfarms and ... and ...

- starts to become a self-
fulfilling prophesy

EK - yes, pretty much all of our own making

dearime - Piper 'A' is a strange story with a counter-intuitive ending

Budgie said...

Dearieme said: "... huge extra capital cost imposed by government regulations about radioactivity ..."

Just so. And before anyone accuses me of wanting to go back to the 1950s, or ignore safety, or some such daftness, real safety has to be designed in, engineered in, from the bedrock up. Safety cannot be only regulated in.

Civil servants have a propensity to think that saying (or writing) is the same as doing. When the regulations become god, a sound job, even safety, come second. This is why government projects, even nominally undertaken by the private sector are normally over-budget, late and often function badly.

Blue Eyes said...

ND - self-fulfilling prophecy - exactly my point!

rwendland said...

"real safety has to be designed in, engineered in, from the bedrock up"

To an extent that is true, but there are also selectable design alternatives influenced by regulation - many of these can be retro-added into a design under the influence of regulatory requirements. eg the Russians and/or Chinese have recently added these as part of bringing thier VVER and ACPR1000+ designs up to the western Generation 3 level:

* double containment, to protect against some external explosions and airplanes
* remote operations centre, so unlike Fukushima after an accident operators have some clue what is going on in the reactor
* improved seismic capability
* corium catcher (hold core after meltdown)
* cooling water tanks good for a few days

Hitachi hoping to build thier Advanced Boiling Water Reactor will certainly liven up the anti-nuc lobby. It is after all a modernised version of the reactors that went poof in Fukushima, which won't give them a good press.

Substantially more economic than EDF'd EPR design though! And GE-Hitachi have proven they can be built in about 4 years, which must make EDF/Areva green with envy. About 4 years behind the EPR to get through the UK Generic Design Assessment process though.

Anonymous said...

No sign of Thorium molten salt reactors then.

Anonymous said...

Possibly just an aside, but didn't one-eyed Broon sell our nuclear research/design company (Westinghouse?)to Japan?

rwendland said...

Anon, Brown (t/a BNFL) did buy and sell Westinghouse - at an enormous profit. Bought it in 1999 for $1.1bn, and sold it toward the tail of the so-called "nuclear renaissance" in 2006 for for $5.4bn. Tidy profit for UK plc of $4.3 billion on the deal, many times more than lost on the little gold dealing accident.

Anonymous said...

thank you for refreshing my hazy memory.
The sad thing is if a profit was made it would have been frittered away during the mad splurge.
I wonder if we would have been better off retaining Westinghouse as an investment in the future.Seemed silly to me at the time but I seem to recall talk of the UK relying upon the French.

rwendland said...

I don't know of the reasons for selling Westinghouse, but I suspect we had no option for the good of the company.

The only country to build a new Westinghouse reactor, four AP1000s, is China - the deal was agreed soon after we sold Westinghouse at a high price. I suspect China would not have done the deal while Westinghouse was owned by another state - we take a similar view. So there was probably little choice in selling it; we got a ton of cash from Toshiba, and it helped secure Westinghouse's future.