UK Nuclear Gambit Faces Long Odds Even With Sizewell’s Endorsement


The UK’s bold push to triple nuclear power capacity has progressed with the promise of government funding for the Sizewell C plant, but doubts remain over the government’s ability to license enough nuclear projects. by 2030 to achieve this goal.

Content of the article

(Bloomberg) —

Advertisement 2

Content of the article

The UK’s bold push to triple nuclear power capacity has progressed with the promise of government funding for the Sizewell C plant, but doubts remain over the government’s ability to license enough nuclear projects. by 2030 to achieve this goal.

Content of the article

Considering that it took about 10 years for the Electricité de France SA power plant to get there, the government’s bet on nuclear power – to help wean the nation off Russian fossil fuels and reduce emissions – is considered a long shot. And those odds could get worse for Prime Minister Boris Johnson’s successor.

“We’re going to push it through because it would be madness not to,” Johnson said Thursday outside the nearby Sizewell B power station. “Let’s think about our future, think about our children and grandchildren.

Advertisement 3

Content of the article

The government wants to deliver eight new nuclear reactors this decade – requiring approval at a rate equivalent to one a year. A building program of this scale has not been achieved on the continent since the French in the 1970s, prompting leaders to find alternative paths to achieve energy independence and legally binding emissions reductions.

“It will be extremely difficult for the government,” said Asgeir Heimisson, senior partner at Aurora Energy Research Ltd. “Investments are expected to take place approximately every three years from 2022, requiring a total of around £180bn of capital expenditure.”

It’s a challenge for the new prime minister, who will take over in the coming days amid a recession spurred by record energy prices and an inflation rate expected to reach 14% this winter.

Advertisement 4

Content of the article

By 2050, a fleet of new 24 gigawatt reactors is meant to provide a stable backup for offshore wind, Britain’s most advanced renewable technology. The short-term ambition here is also huge: to reach 50 gigawatts this decade.

If approvals do not arrive by 2030 and stations are not built by the 2040s, new gasworks may have to fill the void. They are relatively quick to build and can be raised or lowered depending on the wind supply. But the Committee on Climate Change has advised the government that stations must be clean from 2035, using carbon capture and storage technology to meet emission reduction targets.

The government’s stance on phasing out oil and gas supplies has softened in recent months. The Jackdaw natural gas field in the North Sea was approved in June, eight months after the regulator blocked the project on environmental grounds.

Advertisement 5

Content of the article

To help offset a windfall 25% tax on oil and gas profits, energy companies can make new investments in extraction.

Then there is coal, which may be removed from the list of imminent extinctions to relieve consumers.

The Sizewell project still needs significant support from private investors before a final investment decision is made. It would succeed Hinkley Point C, the UK’s first nuclear power station for three decades. Progress at Hinkley is costing more and taking longer to build than expected, raising concerns about whether the government is right to rely so heavily on technology.

Funding is the biggest hurdle for new stations, with Sizewell priced at £20bn ($23bn) at the start of this year, but material costs have since risen. An overhaul of the funding mechanism aims to attract more funds. The regulated asset base, or RAB, model is meant to encourage private investors and dilute the construction risk assumed by the developer and taxpayers.

Advertising 6

Content of the article

The government’s £700m investment is expected to constitute a 20% stake in the project, with EDF taking a further 20%. Greencoat Capital LLC, one of the UK’s largest renewable energy fund managers, is considering investing, founder Richard Nourse said in July.

Sizewell represents a “ray of hope” for the nuclear industry, said Vince Zabielski, partner at Pillsbury Winthrop Shaw Pittman LLC. “The investment is promising, but the decision is about 10 years behind schedule.”

The RAB model is a significant step to getting more projects approved, but it will not yet open the floodgates for funding, said Luba Kotzeva de Diaz, managing director of European energy and renewables at Lazard Ltd.

The 24 gigawatt target is “not viable if every project is done through negotiation that takes five to 10 years,” she said.

Advertising

comments

Postmedia is committed to maintaining a lively yet civil discussion forum and encourages all readers to share their views on our articles. Comments can take up to an hour to be moderated before appearing on the site. We ask that you keep your comments relevant and respectful. We have enabled email notifications. You will now receive an email if you receive a reply to your comment, if there is an update to a comment thread you follow, or if a user follows you comments. See our Community Guidelines for more information and details on how to adjust your email settings.

financialpost

Back to top button