Who will foot the nuclear power bill?
Mon Sep 10, 2007 1:36 PM BST

By Jeremy Lovell

LONDON (Reuters) – Nuclear power may be close to a revival after two decades in the shadow of the Chernobyl reactor accident as governments search for clean sources of power to beat climate change.

But ask the industry who is going to foot the potentially massive bill and it becomes coy and mutters about governments, public/private partnerships and equity financing.

“There is a lot of talk about the nuclear renaissance, but in reality only China is really building,” says Steve Kidd, director of strategy at the World Nuclear Association (WNA). “No one wants to go first.”

According to the WNA — the nuclear power industry’s umbrella organisation — there are 439 reactors operating globally, generating 371,000 megawatts of electricity or about 16 percent of total demand.

A further 34 are under construction, with 81 planned and 223 proposed — 88 of which are in China.

The WNA estimates nuclear power could double over the next 30 years but, given the forecast surge in population and demand, it will still only account for about the same percentage.

Cost estimates vary depending on location and number of plants — with economies of scale — but the ballpark figure is around $2 billion (1 billion pounds) for a standard 1 gigawatt nuclear plant.

“The first one will cost more than that. But get an order for three or four and the price drops sharply,” said Kidd. “The best is 10 or more.”

“The fact is that once it is running, a nuclear power plant is like a cash machine. Yes, six to eight years of pain because of the high initial capital costs, but then 60 years of almost pure profit because of the low running costs,” he said.

WHO WILL TAKE THE LEAD?

So why, ask the doubters, is no frantic nuclear construction activity already underway, given it is a low-carbon emitting technology and seems to fit the global warming bill perfectly?

“We are on the cusp of action. Everybody has been waiting for someone to lead,” Thomas Meston of reactor builder Westinghouse, which has just sold four of its AP-1000 plants to China, told Reuters at the WNA’s annual meeting in London.

Britain is contemplating a new generation of nuclear power plants to replace its existing fleet, all but one of which will be closed due to old age within two decades.

As nuclear provides 18 percent of the country’s electricity, the issue is urgent.

The government has repeatedly said nuclear power should be part of the energy mix but that it will not give public money.

It is conducting a public consultation on the issue that is largely a public relations exercise as there is no legal block other than cumbersome planning regulations — which are being cut — to utility firms going ahead with a new plant.

The utilities say they are interested as long as certain regulatory issues — like who pays for decommissioning and storage of toxic waste — are sorted out.

But potential financiers decline to discuss the matter, saying on one hand that they won’t talk about hypotheticals and on the other that they can’t betray client confidentiality.

It is a game of brinksmanship, with the utilities holding out for the best deal they can get from government — particularly any price guarantees they may be able to extract.

The problem centres on public acceptability.

China and Russia may now be building nuclear plants, but neither has a strong record on safety — which is why what happens in Britain, which does, could be a global catalyst.

France, which now gets 80 percent of its electricity from atomic power, is already firmly set on a nuclear path.

“Britain is seen as a springboard for nuclear expansion,” said Kidd. “The utilities will finance it. The challenge is to make sure all the risks are allocated to the people who can best bear them.

“I am optimistic that is will happen, but maybe not in the 10-year timeframe some people are talking about,” he added.

IS IT WORTH IT?

Scientists predict that global average temperatures will rise by between 1.8 and 4.0 degrees Celsius this century due to carbon gases, bringing climatic and humanitarian catastrophe.

Nuclear proponents say atomic power is the answer, but environmentalists say that not only have the nuclear waste, proliferation and security issues not been resolved, but nuclear power will not significantly cut carbon emissions anyway.

Electricity generation accounts for some 20 percent of global carbon emissions.

Given that even under the WNA’s most optimistic outlooks nuclear will only account for 18 percent of electricity demand, the amount of carbon foregone comes in at just four percent.

And that, says the environmental lobby, is simply not worth the risk entailed in the mooted new nuclear age.

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