UK Nuclear Energy Policy could be Fundamentally Flawed

01 February 2008

Dieter Helm, Professor of Energy Policy at New College, Oxford, who has helped to shape energy policy for the past decade, is about to publish a paper in which he will lambast the Government’s new push on nuclear power.

He told The Times that no country had developed nuclear power stations in such a way and that he believed that the Government would be forced to rig the market to ensure that new nuclear stations were built.

Dr Helm said that the Government’s position, set out in a White Paper this month, was questionable on several fronts. “There never has been and never will be a nuclear power programme that is totally dependent on the market,” he said, adding that this was because of the extremely long time-frame required for nuclear investments – at least 50 years between upfront costs and decommissioning.

He said that the Government should drop its “fig-leaf” approach and start detailed long-term planning itself.

One problem that complicates the Government’s approach is that there is no long-term guarantee that a high price will exist for carbon, a vital prerequisite if funding is to be attracted. Dr Helm proposed a system in which the Government would auction long-term contracts for the supply of carbon emissions reductions over a far longer period, for instance 20 or 30 years. This would provide a revenue stream that could be used to secure finance.

Dr Helm also criticised the linchpin role of British Energy, the struggling generator that owns eight of the most desirable UK sites earmarked for new build, as a potentially huge strategic mistake that could lead to “piecemeal decision-making” and spiralling costs. Because there are few other credible sites for new plants, the company is effectively able to pick and choose which will be used and which utilities it will choose to operate them.

“The allocation of sites is being distorted by British Energy’s agenda and its desire to play a role in new nuclear generation,” he said. Dr Helm called for the Government to strip British Energy of the sites and for these to be auctioned to bigger utilities.

British Energy rejected his claims, arguing that it is “ready for new build and has the sites, people, skills and experience essential to success”.

Dr Helm said that on the issue of waste, the White Paper had effectively proposed a system in which utilities would pay for the State to absorb the risks of handling nuclear waste in exchange for payments into a fund: “It’s a fixed-price contract for the Government to take the waste. The Government absorbs the final-end risk.”

Dr Helm, who is chairman of an advisory panel to the Department for Environment, Food and Rural Affairs and a member of the panel on Energy and Climate Security at the Business, Enterprise and Regulatory Reform Department, was a member of the Department of Trade and Industry’s Sustainable Energy Policy Advisory Board from 2002 to 2007.

A spokesman for the Department for Business, Enterprise and Regulatory Reform said: “We have been clear that new nuclear will be paid for by the private sector, so it is for energy companies to make a judgment about the economics of nuclear power.”


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