Happy New Year to readers new and old! Thanks for the ongoing support you offered throughout 2013. A great deal of good outcomes were achieved for those seeking a faster, deeper and better route to decarbonisation through the deployment of nuclear power, both internationally and here in Australia.

From my local point of view there were several highlights:

In a triumph of activism taking primacy over analysis, Jim Green of Friends of the Earth declared 2013 the “annus horribilis” for nuclear, and declared the nuclear renaissance “stone cold dead”.

To quote Monty Python, that is very, very silly. monty_python_silly

To quote myself from 18 months ago, it’s also very, very predictable:

It is a longstanding tactic of anti-nuclear ideologues to paint the nuclear industry as a technologically stagnant, declining dinosaur with no future, for the simple reason that no one likes to back a loser. It’s a great way of keeping Australians from bothering to look more closely.

Nuclear power broke exciting new ground all over the world in 2013. Some of my international highlights for 2013 include:

  • Funding for NuScale Power to license their 45 MW Small Modular Reactor, joining Generation mPower with their 180 MW unit
  • China bringing online new large nuclear for around $2,000 per kWe installed, demonstrating the learning we expect when nuclear is implemented at scale. Curiously, these prices are for the same reactors as have seen cost overruns in Europe, which highlights the importance of seeing the whole in trying to understand the trajectory of nuclear
  • The UK securing a funding model to support investment in the high-capital, low operational cost generation such as nuclear and off-shore wind, with the go-ahead for 3.2 GW of new nuclear power that will underpin lower electricity emissions for the UK this century
  • Russia announcing plans for 21 new reactors including metal-cooled fast reactors
  • Saudi Arabia announcing a major new nuclear program to join the UAE, Jordan and Turkey in building large nuclear generation, quickly, in the middle-east
  • Tom Blees’ Integral Fast Reactor proposal scoring a major win in the MIT Climate Co-Lab competition
  • Michael Shellenberger laying bare the fallacies in the arguments of the NRDC and Ralph Nader in the televised analysis of Pandora’s Promise on CNN

Sanmen AP1000 plant under construction in China

Sanmen_Oct2013_1
Generation III+ reactors moving closer to completion in China

Of course it would be equally silly of me or others to suggest that nuclear power is blossoming in the way some might have expected a decade or more ago (it isn’t), that the current environment for nuclear power is, without exception, fabulous (it isn’t), and that it is smooth seas ahead for a dramatic expansion (it isn’t).

We can see whatever we want to see. It’s a big and complex world out there. We achieve more by having the courage and honesty to seek to see the whole as much as we can.

The truth for the nuclear sector, as best as I can make out, remains uneven and mixed depending on where and what we are talking about. Green is not telling fibs when he describes the tough conditions for the nuclear sector in the United States. Nor is he making a mountain out of a molehill when he discusses the evident corruption and regulatory failures in South Korea. Nor is he alone in questioning the cost and value of the new nuclear developments in the United Kingdom (I beat him to it). Japan’s slow road to re-start of reactors continue to act as an anchor on confidence in the sector. Nuclear power generation continues to face real challenges to expansion.

Perhaps the most important distinction to be made is that to the anti-nuclear activist who cares little for analysis, signs pointing to the loss, constraint or demise of nuclear power is, without exception, good. To those who care enough about mitigation of climate change to understand the role of nuclear power, it is cause for deep concern. There remain simple truths amidst the complexity that are underpinned by decades of clear evidence:

  1. Constraint of nuclear power does not drive other zero-carbon alternatives to a position of energy supply dominance
  2. Constraint and rollback of nuclear power does reinforce the dominance of fossil fuels and drives rising greenhouse gas emissions. Count Germany, Japan and now California as stark examples
  3. Embrace of nuclear power in partnership with renewable sources has delivered deep decarbonisation and reliable energy for fully developed nations and economies with large populations, as demonstrated in France, Sweden, Switzerland, and now Canadian province Ontario (population 13.5 million), and soon to be joined by Finland
  4. Embrace of renewable energy sources alone has never delivered deep decarbonisation and reliable energy for fully developed nations and economies with large populations
  5. Nuclear power is our safest major energy option
  6. The Integral Fast Reactor can provide all electricity for the whole world with existing stockpiles of spent fuel and depleted uranium, using little land, and eliminating energy mining in the process
  7. We live in a growing world, and we need very large amounts of clean energy

It’s those truths that keeping bringing intellectually rigorous people in behind new clean generation of power through modern nuclear technology. When those concerned with climate change mitigation give analysis primacy above activism, pro-nuclear activism is so often the result, spurring efforts to remove the silly barriers to nuclear and overcome the genuine ones. These truths will continue to spur my efforts as I seek to contribute to lasting, meaningful and scalable answers to our climate conundrum by following a new path of professional development via my recently commenced PhD with University of Adelaide.

It’s a journey I look forward to sharing with you. Welcome to 2014. Onward!

Like what you see here? Please subscribe to the blog, Like Decarbonise SA on Facebook and follow @BenThinkClimate on Twitter. Read more about the potential for nuclear power in Australia at Zero Carbon Options

43 comments

  1. Let’s not forget the ABC’s Mark Willacy for telling us Fukushima was the end of civilisation as we know it then going back there several times in 2013 to swan about oblivious to the mortal danger. Then there’s Germany, Japan and California who all prematurely shut down NP while throwing everything at renewables the result being increased emissions every time.

    1. Fair go though. He did keep on harassing TEPCO as they are an abhorrent example of a Nuclear operator, and reporting on the hardship for the evacuees and their concerns.

      From my perspective a lot of the angst towards Willacy is the fact that it is ammo for the Anti-Nuke lobby, and people that support Nuclear Power do not like that fact.

      One thing I’ve learnt is that professional Journalists (not bloggers, no offence Ben) get messages out to the masses, isolating and pissing them off does no good what-so-ever.

  2. I fully agree that journalist get messages out to the masses, better than bloggers. This makes it even more important that we point out errors or misrepresentations when the journalist publishes them. Alas some journalists, the above mentioned one included, do not seem to accept that they have made any such misrepresentation. The ABC prides itself on fact checking yet it can be one of the worst offenders when it comes to nuclear power.

  3. I think we’ve got a long to way to convincing many people that the high renewables nirvana is not even close. George Orwell warned us of doublespeak which I see in the claims of the true believers, for example in Australia
    – a heat pump water heater that may live in a darkened cupboard and get 80% of its power from coal fired electricity is regarded as ‘solar’
    – methane vented from a coal mine that is set alight (ie flared) is entitled to renewable energy certificates
    – hydro built before 1997 is not eligible for RECs
    – dry rock geothermal that needs diesel powered drilling rigs to regularly drill new holes is ‘renewable’.

    And so on. Then there’s absolute porkies like the claim an energy storage breakthrough is imminent. If people want to believe this stuff you have to wonder if their opinion is worth anything. However even if these people are not a strict majority they seem able to lay a guilt trip on everyone else, notably including politicians. Hopefully in 2014 others will notice the strength of the rebuttals and that vocal minority will lose ground.

  4. With Adelaide’s hot week (temps to 43C) I wonder how much air conditioning demand will be covered by PV as opposed to gas, coal and interstate electricity imports but not much wind. I’d guess the Adelaide metropolitan area has maybe 15% of homes with enough PV to cover daytime air con needs but 70% have aircon, a few remotely switched on while the owner is out. Some will prefer to eat ice creams in the Arctic blast of shopping mall air conditioning. PV should be good to say 7.30 pm since sunset is at 8,30. So that’s maybe 200 MW of dispatchable generation avoided til late afternoon. Unknowns are how much aircon people will want after dark noting temps may stay around 30C or so all night.

    When the gas price doubles or trebles it would be nice to have a large seawater cooled NPP powering all those air conditioners. No CO2 to add to the problem. Better still if vulnerable pensioners can afford the electricity prices so they actually use the aircon when they need it.

    1. Check http://www.wattclarity.com.au and windfarmperformance.info to see how the NEM managed and what power was gained from the windfarms (1 day lag).

      Wattclarity already have a Heat Wave post up on what spare capacity AEMO have predicted will be available.

  5. Gawd all frickin’ mighty I’m just reading AEMO’s new report
    http://www.aemo.com.au/Electricity/Planning/South-Australian-Advisory-Functions/South-Australian-Fuel-and-Technology-Report?sc_camp=F8E9D2F9F35E466EA25FBD0CDF0CF2CA&ec_as=CD6AB5ED16AE438F8D0F4D52BC0A0528
    The naughty N-word in not mentioned once. Not even that SA has the world’s largest uranium deposit at Olympic Dam. Plenty on clean coal and combined cycle gas even pointing out Table 2.5 that while piped gas is ~$5/GJ that export LNG is $12. More coal it is then unless the report has a hidden agenda as a wake up call.

    1. It’s never considered because it’s illegal to license a facility, so the point would be moot and run counter to the scope of technology that is able to be implemented.

      Once that hurdle is overcome AEMO will consider it. The Energy White Paper is going to consider it so that’s a step in the right direction.

  6. The new Hinckley Point nuclear reactor in UK, can only be built because it is for ~75% subsidized by tax- and rate-payers.

    – UK government takes main part of the costs and all risks of decommissioning the new NPP. EDF will pay only a small amount.
    – UK government takes also the major share of the cost of the radio-active waste;
    – The costs of the loan guarantees (insurance premium; invisible until it goes wrong) are also paid by the tax-payer. Chance that things go wrong is substantial as estimated by Banks which add ~8% more interest as insurance premium, and shown by history.
    That is again a subsidy of ~£800million/year.

    All in all these imply that the real costs of the new NPP are £40/MWh more than the strike price which is inflation corrected.
    With 2% inflation the strike price will be £112/MWh at the start of the NPP in 2023 and £158/MWh in 2040 halfway the guarantee period.

    So with the subsidies added the real costs are ~£152/MWh in 2023, going up with inflation.
    ___
    It seems to me that the Germans are far better/cheaper off with their Energiewende:

     – FiT solar in Germany now €99/MWh (=£83/MWh) during 20yrs; then whole sale market prices. Long term trend ~8%/year decrease.
    So in 2023 ~£36/MWh. Going down towards towards £10-20/MWh levels according to experts (present yield of ~16% will rise towards >40%, the Dutch solar car that won the N-S Australian solar race had some of those panels).

     – Fit wind now €88/MWh (=£74/MWh) during 15yrs; then whole sale market prices. Long term trend ~3%/year decrease. That is £55/MWh in 2023.

    We have to add the cost of storage and grid expansion (also some savings with solar on the roof; and the grid costs are also subsidized for Hinckley Point C). German scenario studies, estimate that those are ~£10/MWh (they spent ~€200million on those studies).

    So at the start of Hinckley Point C the costs are ~£152/MWh, going up further with inflation.
    While then (solar+wind+storage) cost ~£65/MWh, going down.

    Whole sale prices in Germany are now <€40/MWh (=£32/MWh) on average. The futures for 2015-2018 show further price decreases.
    UK whole sale prices much higher, so Netherlands has a nice trade transferring German electricity to UK.

    Since wind+solar became substantial in Germany, customer electricity supply reliability improved greatly. It was 30min./a total outage time per customer connection, now it is 15min/a. UK is still at the 60min level (4 times worse).
    Causes: the more distributed generation of wind+solar in combination with excellent prediction of changes (weather, also grid operator sees a flaw in the wind slowly passing his area in e.g. 2 days as he can monitor wind turbine production all over, so he can exactly predict).

    1. I don’t generally find unreferenced “magi-nomics” convincing; that process of generously applying unreferenced assumptions through a back-an-envelope calculation that magically produces a desired result. That seems to be what we have here, with several of the core assumptions being incorrect, as you can see in the comment below.

      A word about wholesale prices in Germany. When large quantities of intermittent renewables are heavily subsidised to enter the system, to then produce sometimes large amounts of supply with nearly zero marginal cost, which must be preferentially purchased, lower wholesale prices will result. In this situation the renewable electricity is not cheap, the cost has simply been shifted elsewhere. So low wholesale prices alone are a poor indicator of the overall financial health of an electricity supply system.

      Checking the retail price too provides a fuller picture. For both households and industries, Germany has nearly the highest prices in the EU. Second highest residential price, both absolutely and corrected for purchasing power parity http://epp.eurostat.ec.europa.eu/statistics_explained/index.php?title=File:Half-yearly_electricity_and_gas_prices.png&filetimestamp=20131106132508

      1. …Checking the retail price too provides a fuller picture. For both households and industries, Germany has nearly the highest prices in the EU…
        Your statement is certainly not true for the industry.
        Just a month ago our (Netherlands) last aluminum smelter went bankrupt because it could no longer compete against the German smelters that pay far less for their electricity! Our government was prepared to build a special connection to the German grid so it would have a more level competition field, but that would take at least 2 years.

        Consumers pay €28cent/KWh. About €14cent/KWh is several types of general taxes (a.o. ~€5cent/KWh VAT). Than ~€5cent/KWh of it is the Energiewende levy (so real price ~€9cent/KWh). So if one compares with USA/UK/Australia, that total different tax situation also has to be taken into account.

        The fact that support for the Energiewende in Germany grew from ~55% in 2000 towards ~90% now (polls and last elections), indicates that German citizens are quite happy with it.
        I do not know any country with that level of support for nuclear.

        1. I direct you, again, to the reference.

          German industrial prices are 19% above the EU 28 and EU 27 average, and 13% above the Euro Area average. The only countries with higher prices for industrial electricity are Cyprus, Malta and Italy. The EU and Euro Area averages are virtually unchanged over the last three years. German industrial prices have risen 14% in that period, and from 2012-2013 the year-on-year rise was nearly 12%.

          Yes, I see the contribution of German taxes and levies very clearly in the same reference I provided.

          At 5.3 c (expected to rise to 6.2 – 6.5 c) the levy is 18% of the total retail price. If your “real” price is 9c, then we are talking about 38% of the price.

          As with my other comment today, on points of fact please construct arguments around referenced data, not anecdotes.

          Your opinion polling is unreferenced, would you please provide a reference?

          If this policy was being enacted in the name of quitting coal, rather than nuclear, then I would say “if the Germans are happy and the coal is going, it’s their party, let them have it”.

          However it is being enacted in the name of replacing one zero-carbon generation source with another. This is completely absurd and it is failing, having been implemented over the top of an ETS that everyone knew was completely oversupplied. Consumption of brown coal is at the highest point in 20 years, emissions from German electricity are rising, not falling. The Energiewende is contributing to a net loss from a climate change mitigation perspective.

  7. Hi, I’m based in the UK and can offer a response to your concerns about Hinkley.

    To address the trilemma of energy security, environmental goals and affordability, the UK government recently passed a new Energy Bill. This is designed to attract investment in new low carbon energy infrastructure including renewables, nuclear and carbon capture and storage. As Ben says, low carbon tech has high upfront capital costs (but low operating costs). So left to its own devices, the market would build gas (cheap and quick to build), and the risk (volatile fuel price) can be passed on to the consumer. To reduce the risk for investors, but guarantee a fair and stable price for consumers, the energy bill enables long term contracts to be agreed to fix the price for electricity from new low carbon energy infrastructure. This is called the “strike price” and is different for different technologies.

    The agreed strike price for Hinkley is cheaper than nearly all other low carbon technology, with the exception of onshore wind. The length of contract is for less than half the anticipated life of the plant. Everything is subject to inflation, so the cost does not increase in real terms.

    With the Hinkley project, the construction risk sits *entirely* with the investor. In other words: the project does not start generating any revenue until it starts generating electricity. There is not back up cash from the government in case of delays in construction. The loan guarantees you mention granted by the Treasury, (also for many other major infrastructure projects) are to lower the cost of financing such a large loan. If this was being paid for through the public sector the cost of borrowing would be lower. So this is clear benefit to the consumer as well as the investor.

    The costs associated with managing and disposing of waste, and decommissioning the plant, will be paid for by the operator. A legal contract, overseen and regularly reviewed (every five years) by an independent panel will ensure the operator puts aside enough funds during the lifetime of the plant to meet these costs. In fact they will amount to a relatively small amount of the overall cost of the plant, approx 2% I believe. This is called the Funded Decommissioning Plan, *bound by law*.

    In terms of Germany’s energywende, it certainly is ambitious in terms of the renewables goals. However, this comes at unprecedented cost to the consumer in terms of subsidies, and risks energy insecurity by destabilising the grid. Phasing out nuclear energy increases long term dependence on coal. Germany is building 10GW of new lignite coal, since renewables cannot replace base load power. Emissions are increasing and air pollution is rising. The real question is not nuclear vs renewables, it is nuclear vs coal.

  8. …The agreed strike price for Hinkley is cheaper than nearly all other low carbon technology, with the exception of onshore wind…
    Taking into account that the new nuclear plant starts in 2023 earliest and the strike price than goes on during 35years, it is twice the most expensive renewable: Offshore wind.

    Note that the strike price of offshore wind has no inflation correction, and is restricted to only 15years.
    Nuclear gets inflation corrected (base line 2012) strike price that is now already more than twice the whole sale price. And the Futures as well as Germany shows those whole sale prices will go down in the period to 2023.

    1. The contract length for nuclear strike price is intended to be around half the lifetime of the plant (60+years) and likewise the strike price for offshore wind is also around half the expected operational lifetime.

      All the strike prices will be subject to inflation, so their comparative value stays the same in real terms.

    2. When in flat out disagreement on a point of fact, particularly something so easily verified, commenters on this site are expect to provide credible references, not simply repeat themselves.

      All prices under the contract-for-difference (strike price) arrangement, both nuclear and renewable technologies, are corrected for inflation, as clearly stated: “In summary, the approach to the standard CfD contract terms is as set out in August, with a 15 year contract for renewable technologies, with payments indexed to inflation (CPI), and obligations to deliver the contracted capacity in a timely manner”

      https://www.gov.uk/government/uploads/system/uploads/attachment_data/file/263937/Final_Document_-_Investing_in_renewable_technologies_-_CfD_contract_terms_and_strike_prices_UPDATED_6_DEC.pdf

      If you wish to continue discussion please concede the point and move on, amending your arguments accordingly.

      1. Sorry that it took me some time to react (time..).
        Regarding strike prices:

        I based myself on publications of the Guardian but also on this government document:
        https://www.gov.uk/government/uploads/system/uploads/attachment_data/file/209361/Levy_Control_Framework_and_Draft_CfD_Strike_Prices.pdf
        That has no indication of inflation correction.

        Compared to your more recent document the strike prices for 2018/19 are now lower, e.g:
        Onshore wind now £90/MWh and solar £110/MWh after 2016/17,

        And indeed, it is inflation corrected for the 15years of the strike price period.
        Especially for solar that seems a little strange since a solar panel has hardly any costs after the initial investment, so that inflation correction is profit.

        Anyway, these strike prices are high compared to Germany (e.g. onshore wind £74/MWh during 15years without inflation correction), also taking into account the UK has more wind.
        But then the document states those strike prices are the maximum. If more capacity than budgeted is put forward, UK government considers competition or so, resulting in lower strike prices.
        That clause ends my ideas of moving to UK and start there with solar at the coast of Cornwall as that would bring huge profit with the announced prices.

        Regarding the Hinkley Point C strike price:
        Apart from the Guardian, Wikipedia also indicates it is inflation corrected and based on 2012 prices: http://en.wikipedia.org/wiki/Hinkley_Point_C_nuclear_power_station

        I cite from the Wikipedia page (below header Economics):
        The UK wholesale electricity price in 2013 is about £48 per megawatt-hour. EDF has negotiated a guaranteed fixed price – a “strike price” – for electricity from Hinkley Point C of £92.50 per megawatt-hour (in 2012 prices),[1][2][20] which will be adjusted (linked to inflation) during the construction period and over the subsequent 35 years feed-in tariff period agreed upon. Energy company analysts have described the strike price as ‘economically insane’…

        So with 2% inflation that results in a strike price of:
        – £115/MWh in 2023 at the start of the NPP
        – £161/MWh in 2040 halfway strike price period
        – £230/MWh in 2058 at the end of the strike price period

        Note that long term cost prices of electricity (£../MWh) produced by:
        – wind turbines went down with ~4%/year. Until 20MW wind turbines are standard, most experts see continuation (may be in the future a decrease of ~2%/year).
        – solar pv-panels went down with ~8%/year. All experts expect the price decrease trend to continue, some expect an acceleration.

        That explains why a financial analyst in the London city has described the strike price for Hinkley as insane.

        1. I made remarks that UK strike prices are much higher than German Feed-in-Tariffs.
          This link gives you an overview of these German FiT’s so you can judge yourself:
          http://www.germanenergyblog.de/?page_id=14068
          Note:
          – prices are in euro cents and not inflation corrected.
          – the fast decrease of the FiT’s for solar.

          That decrease depends on the installation rate. If it is less than 2GW/a than the decrease stops for the next three months. The decrease rises, the higher the installation rate following a formula. Each three months the decrease per month is fixed for the next three months.

          They made that arrangement because in 2011 and 2012 things got out of hand (~7GW/a). Installation rate of solar in second half of those years became huge due to price fall of solar.
          And the grid couldn’t handle so much extra solar production.
          So now they check and adapt the FiT each quarter.

        2. Thanks.

          FYI no argument from me about declining prices for wind and solar hardware, that’s a given, though my industry friends are wondering just where the further price falls for solar can come from. The manufacturing portion of the price can only fall so much, and the rest is less easily reduced. That’s an aside.

          As the purpose of the Contract for Difference arrangement is to provide long-term price certainty to encourage investment in high capital, low operational electricity generation, to not correct for inflation would simply do the opposite. The point is to provide price assurance, so it’s inflation corrected. I don’t see the concern here unless one disagrees with the whole approach of the policy, which would be a different matter. FYI also, the proportional of operational costs of nuclear are not zero but they are very, very small compared to capital, just like wind and solar. It’s not “profit” so far as I can see, it’s the agreed price for the agreed period to get the investment underway.

          Is the price too high??? That’s another question again. I think it will prove to be good value for the UK given the expected life of a new nuclear plant could be up to 80 years. I also have made the call that the price is too high for the major shift away from fossil fuels that is required. I don’t have insights into the process that saw this consortium negotiate this price, however I suspect it has a lot to do with established operators. Much better prices are being seen elsewhere. Be all that as it may, UK have confirmed a massive investment in a massive clean energy project, using as process that should work equally well for renewables, in a private energy market. That’s a good effort.

          1. … though my industry friends are wondering just where the further price falls for solar can come from. The manufacturing portion of the price can only fall so much, and the rest is less easily reduced…
            There are several developments which make solar cells much cheaper (calculated as $/KWh):

            yield improvements.
            Single Si junction has ~25% yield max. Most panels installed now have 16-18% only. Sunpower recently started selling panels with >21.5% yield. Guarantee for 25years including that the yield will be >18.5% after 25years.

            Further yield improvements will come form multi-junction cells that catch bigger parts of the light spectrum. Dutch solar car which won the last N-S Australia race, had (in part) those cells which have a yield of ~40%.

            In general yield goes up with 0.5%/year. You may expect cheap panels with yields of ~36%.
            That imply one needs only have the panels for the same amount of electricity, which implies the installation costs are also much less.

            solar sheets
            The yields of those are catching up. The idea is that you can simply glue them on your wall.
            Furthermore to produce them with a mill, the same way as paper.

            converter improvements
            With the falling prices of panels, costs of converters are now also coming down (dedicated integrated circuits, etc). Taking into account the low complexity, this may end at the costs level of a transistor radio, while having a yield >99.5%. So every panel may get its own converter, which eliminates thick DC wiring and inefficiencies due to differences in sun light intensity, etc. between panels.

            Installation efficiency improvements
            Even in Germany we see such improvements all the time with more easy to install/fix small mounting materials, etc. Easy licensing, etc. Those generated a huge difference between USA and Germany. In USA an e.g. 8KW rooftop installation costs twice as much as in Germany while both install the same Chinese panels. According to MIT (which investigated) the difference is almost completely caused by soft costs (more management, promotion, etc. Less efficient installation, etc).

            You may expect that new houses will get solar integrated in their roof.
            Last summer I saw the first of those houses in Italy.

            Not sure where these developments end.
            I expect cost prices will fall below US$40/MWh, may come down to $20/MWh.

            1. Sounds interesting, should be fun to watch.

              It all does little to diminish the case for nuclear power. The only problem I have with renewable boosting is when it comes in a package with promoting the presumption that it means we don’t need to deploy large amounts of nuclear power. This is innumerate from a climate and energy perspective.

              Your comments regarding renewables are interesting and somewhat informative. Your studious avoidance of conceding any argument against nuclear is concerning and, to be frank, becoming a little irritating. Playing renewables and nuclear against each other has been among the dumbest, most costly mistakes of environmentalism at large.

              1. It all does little to diminish the case for nuclear power
                It does a lot as it implies nuclear needs more subsidy, when solar and wind deliver for very low prices.
                Worse, once wind+solar deliver all electricity needed on windy nights and sunny days, nuclear has to down-regulate to near zero (whole sale prices become zero or negative).
                That affects profitability of nuclear further or implies even more subsidies.

                1. That’s not diminishing the case for nuclear power. That’s cutting the number of generating hours available to any technology that is selling dispatchable generation into a system where penetration of variable technology is high, and they are hostage to those generators being given priority. If that’s your idea of a good outcome, don’t ever run networks

  9. …There is not back up cash from the government in case of delays in construction…
    Neither for any renewable.

    The loan guarantees you mention granted by the Treasury, … are to lower the cost of financing such a large loan…
    Yes. That implies the risks of those loans are transferred to the Treasury. Considering the risky history of nuclear projects, the extra interest of >8% that the banks ask without that loan guarantee equals an insurance premium which is transferred to the Treasury, hence the tax-payer. A yearly amount of ~$1billion!

    ..The costs associated with managing and disposing of waste, and decommissioning the plant, will be paid for by the operator. ..
    Not correct. All costs exceeding the low estimation will be paid by the government. Similar as with the nuclear waste pile at Sellafield for which the tax-payer will have to pay at least $100billion!

    *bound by law* ” implies here that government takes all further risks and costs without any escape possibility.

    …Germany’s energywende, … comes at unprecedented cost to the consumer in terms of subsidies, and risks energy insecurity by destabilising the grid.
    Since wind+solar took steam in Germany, its grid reliability doubled!
    The average total annual outage time of a customer connection is now 15minutes (was 30min.).
    In UK the grid is four times less reliable with outage time of 60min.

    About half of the €28cent/KWh that a German consumer pays is general tax (we in NL have similar). Only 5cent/KWh is the Energiewende levy.

    If one calculate the real costs of the new Hinckley nuclear plant, those are ~€18cent/KWh, without the costs of the grid (~5cent/KWh) and the taxes.
    So the UK citizen using this new nuclear in 2023 pays a lot more than the German citizen for renewable. And halfway the strike price period (2035), the difference will become a factor two more as wind+solar become cheaper all the time and the nuclear strike price goes up with inflation. [Moderator: As repeatedly informed, now with reference to the Government publication, all contract for difference prices will be inflation-adjusted, irrespective of technology. Acknowledge the point and reform your argument or comments will be moderated out]

    1. Comparison with Sellafield is entirely flawed.This was the earliest reactor site with multiple functions beyond power production, including the production of radioactive material. Extrapolating that experience to a brand new EPR to be constructed under these contract conditions makes little sense. It’s more “magi-nomics”: if the answer does not suit, come up with a reason why it has to be incorrect.

    2. Moderator,
      Regarding the strike price, I adapted (also showing reference links) in my post above.
      Btw. the strike prices for Hinkley that James shows in his post assume that the £92,50/MWh is a 2013 price. However it is a 2012 price, so the price is one year of inflation (2%) higher.

      Regarding the £10billion loan guarantee, check e.g. this article by Bloomberg:
      http://www.bloomberg.com/news/2013-06-27/u-k-s-nuclear-plan-advances-with-15-billion-treasury-backing.html (same published by the Guardian, etc).

      What value has that loan guarantee?
      Normally banks are prepared to deliver loans until interest rates of ~10%. Above that they consider it speculation, to which they will not agree if it are good banks. Also in USA, banks were not prepared to finance the two new NPP’s (Vogtle, and VC Summer). So they estimate the risk so high that they need more than 10%.

      By the loan guarantee EDF only pays the government interest rate of ~2%. That implies that government takes the 8% risk. Which is annual and amounts £800milion/a (=8%).
      We should also take / assume:
      – during the construction period of 10 years no production (=5 x 800mln) = 4billion.
      – during exploitation linear pay back;
      That implies the subsidy has a value of £400milion + ~£4billion/35 = ~ £500milion/a.

      The new NPP produces with a load factor of 90% yearly 25,229GWh.
      Distributing this subsidy over the produced electricity: £500milion / 25,229,00MWh delivers an add on to the strike price of £19.8/MWh, say £20/MWh.

      So with this subsidy calculated the price of Hinckley is:
      – £135/MWh in 2023 at the start of the NPP
      – £181/MWh in 2040 halfway strike price period.

      One can converse the other subsidies in a similar way. Those are liability for accidents taken by government, decommission and waste risks and the parts of those costs that are more than minimal (e.g. waste only for first 100years responsible, after that the future tax-payer).

      1. Bas, your reference makes the point that this scheme is available to all technologies.

        This table shows the projects that have prequalified under the scheme. You will see it includes biomass, port infrastructure to support off-shore renewable energy development, renewable energy from waste, coal and biomass co-firing, gas storage, transportation, education, transmission…

        https://www.gov.uk/government/publications/uk-guarantees-scheme-prequalified-projects/uk-guarantees-scheme-table-of-prequalified-projects

        This was not a subsidy dreamed-up for the exclusive benefit of the nuclear energy industry, it is to facilitate and accelerate important infrastructure developments across the board, energy and otherwise

        I think it’s a great idea, and simply a necessity, unless we want UK to invest in either fossil fuels, or pissant junior burger sized renewables that don’t cost very much because they don’t do very much. Hinkley C alone will provide more electricity than the entire UK wind sector did in 2012! It’s huge. That does not come easily.

        1. Agree it is.
          But as shown in your other linked government document, those very profitable strike prices for wind and solar will go down if people ask to install more capacity than budgeted.

          Little doubt that that will be the case for solar and onshore wind. As the published strike prices imply profits of ~50%, the interest will become overwhelming.
          One can also consider this as a manipulation of public opinion to make Hinkley more acceptable for the public.

          1. Agree it is what? Not a subsidy for nuclear power? I look forward to not seeing that spurious argument again. That’s inflation, loan guarantee subsidy and waste management subsidy we can throw out.

            The price paid to Hinkley will fall to 89.50 if Sizewell D goes ahead. Again, what you are saying are the conditions for renewables under this plan are the same for nuclear.

            Bas, I’m making the call that you are pretty much talking out of your ear on all of this. You have not done your research, you have either swallowed or propagated myths about the Contract for Difference process in the UK. I’m getting bored of the 30 second fact checks I need to keep doing to respond to these comments less readers get the wrong picture

            You are obviously very smart and the blinkers seem to be on. A big solar PV fan it seems. Mate, relax. The future of nuclear power has virtually no bearing on the future of solar PV. Solar PV is popular, quiet and basically unobtrusive with plenty of developments to come. Difference between a little and a lot of nuclear in future is not a little or a lot of solar, it’s a little or a lot of coal.

            1. My point is that the high strike prices for onshore wind and solar, are fake prices!
              They will never occur due to the clause which allows government to lower the strike price once there is more interest than the budget allows.. One may expect that the real strike prices will become 50% lower…

              Only the strike price for nuclear will stay at the same high level as that has no competition.
              I am Dutch, my English is not good.
              But I believe ‘a scam by UK government’ may be right expression here.

  10. Just a quick question on the issue of inflation. Is it just the individual contracts that are matched to inflation or are the actual strike prices matched to inflation as well?

    From the document you linked it’s clear that the contract gets payments increased with inflation but would, for example, a wind project commissioned in 2017/18 get paid £90/MWh in 2017/18 money plus inflation from there or £90/MWh in today’s money plus inflation?

  11. Really this is the fundamentally important point about whether Hinkley C is a little bit more expensive than wind (92.50 GBP/MWh against 90 GBP/MWh once it begins operation with the wind price still dropping slowly) or vastly more expensive than wind.

    If the renewable strike prices aren’t tied to inflation then with 2% inflation, assuming no change in the strike prices and assuming 2 years between commission and energy output for solar and wind then the real strike prices for Hinkley C compared to solar and wind coming on the market at that time will be:

    2023 – Nuclear: 112.76 GBP/MWh
    Onshore Wind: 93.64 GBP/MWh
    Solar PV: 114.44 GBP/MWh

    2040 – Nuclear: 157.89 GBP/MWh
    Onshore Wind: 93.64 GBP/MWh
    Solar PV: 114.44 GBP/MWh

    2058 – Nuclear: 225.50 GBP/MWh
    Onshore Wind: 93.64 GBP/MWh
    Solar PV: 114.44 GBP/MWh

    That’s was just a quick calculation so I apologise if I’ve made any mistakes. On the one hand surely the UK government wouldn’t have agreed that strike price for nuclear if they’re expecting renewables to drop in price at least level with inflation. But on the other hand I thought solar PV and wind were dropping in price to more than keep up with inflation (perhaps I need to read more on whether this is the case). Surely they’re linked with inflation…

    Overall the Hinkley C economics are pretty deflating (pardon the pun) to me. It’s seems hard to get a tag on costs of nuclear in developed economies but most of the news from the last few years has been pretty poor. With the delays and cost over-runs in the US, Finland and France (are any other western economies building new plants?) I’m starting to think, even if we got past all the politics and social pressure against nuclear, the chance of a plant being built is basically nill simply due to the economics of it. Maybe it’s best to encourage our government to join the international community with research development aimed at dramatically reducing costs of nuclear rather than pushing for nuclear plants to be built now. If a nuclear plant is built now and suffers badly from cost over-runs and delays or requires a big, long-term purchasing deal like Hinkley C it could actually set back nuclear in Australia long term.

    For the moment the best move seems to be to maximise current, relatively cheap (and getting cheaper), renewables in wind and where it’s viable solar PV and then if we can get nuclear costs down look that way in a decade or so. The first part is essential anyway since even in a best case scenario and going nuclear ASAP, it won’t be here for over a decade. Hopefully with that research nuclear becomes cheaper and also quicker to build so that the change over can happen relatively quickly.

    1. “For the moment the best move seems to be to maximise current, relatively cheap (and getting cheaper), renewables in wind and where it’s viable solar PV and then if we can get nuclear costs down look that way in a decade or so. The first part is essential anyway since even in a best case scenario and going nuclear ASAP, it won’t be here for over a decade. Hopefully with that research nuclear becomes cheaper and also quicker to build so that the change over can happen relatively quickly.”

      I think that’s an astute observation from the Australian perspective, and pretty much what I advocate (despite what some say I am not anti-wind, I just seek to be universally realistic). In particular there is plenty more space for wind in the NEM before system costs mounts to anything particularly serious. Solar PV, well, there’s no stopping it however so far it’s a relatively small electricity in national contribution terms despite over a million systems installed, with a pretty disruptive market impact. Utility-scale with storage is needed, and then we are right back to a cost problem.

      As I wrote in my piece on Hinkley, that is not the price that is going to see nuclear take off and displace fossil fuels in the way it must. The prices being delivered in China, Korea, UAE (through Kepco) are vastly different, very attractive, and may well be available to Australia through a competitive tender process. We also keep a watching brief on SMR technology.

      I would still like to get confirmation however I seriously doubt the inflation on renewables is as suggested. A project of the same technolology commissioned just two years later would be paid 4-5% less than the earlier? I can’t see that happening.

      Bear in mind, solar in the UK is a bit of a furphy. It’s a small dark island with a crap solar resource by global standards. To a point, the cost is irrelevant, it can only ever have a certain role. On-and-off shore wind and nuclear looks, to me, to be a sensible decarbonisation pathway for the UK and they are investing seriously in both. Good on them. Their emissions should actually go down, unlike Germany’s.

      1. …on renewables is as suggested. A project of the same technolology commissioned just two years later would be paid 4-5% less than the earlier?…
        That is happening all the time in Germany, and even stronger.
        Feed-in-Tariffs (=~strike prices) for wind and solar go down year after year.

        So in Germany:
        – 2MW solar installed Jan.2013 gets €118/MWh during 20years.
        – 2MW solar installed Jan.2014 gets €95/MWh during 20years.

        No inflation correction which is correct since the operating costs of those are near zero.

        http://www.germanenergyblog.de/?page_id=14068
        You can see the FiT’s for older years in the menu at the right.

    2. James,
      Taking the prices we see now in USA and Germany, the renewable strike prices you state would deliver huge profit.

      In USA prices of wind are now $60-100/MWh (depending on place and wind turbine; in general bigger = cheaper). That is £40-60/MWh. Similar for Germany.
      Same regarding solar: Feed-in-Tariff in Germany now €95(>1MW) – €137/MWh (small rooftop). That is £80-113/MWh.

      And those prices go down (~1-4%/year for wind, ~8%/year solar) so at 2023 they will be substantial lower (in the £30-60/MWh range).

      But UK government added a clause in the December document (linked by the author in his post above of Jan.27 11.25AM):
      … maxima (caps) and minima (floors) for particular technologies … within the budget available … The Government noted in the consultation document that it would
      consider moving immediately to allocation rounds and will also consider introducing
      competition for certain technologies or groups of technologies..

      Taking into account the huge profits these strike prices imply for wind and solar, one may expect the max. will be far exceeded. So UK government will then lower those prices, probably following a competition model.
      That implies that in the end the granted strike prices will be much lower. More near the expected German ones in 2023, which is less than half those for Hinkley Point C.
      As there is no competition regarding nuclear, those for Hinkley will stay the same.

  12. The third last sentence in this link says SA got 91% of its extra power needs in the heatwave from burning gas http://www.businessspectator.com.au/article/2014/1/27/resources-and-energy/strike-while-wires-hot
    Pelican Point combined cycle power station gets gas from Victoria and the larger single cycle Torrens Island gets gas from both Victoria and Moomba, the latter directly connected to the Santos LNG plant under construction in Queensland. I suggest when Moomba gas gets expensive Vic gas will get expensive as well.

    Ironically Santos was the major sponsor of the bike race which luckily started a few days after the 46C temps subsided. Perhaps they will offer discount gas to keep the aircons working.

    Other articles agree with my upthread estimate that SA rooftop solar contributed about 200 MW peak though they suggest a strong tapering off after 6 pm. While large Gen 3 nuclear may not load follow well if SA had a cluster of SMRs then peak demand could be met by bringing modules online. At some point that will be cheaper than gas with or without carbon taxes. In terms of hot weather or the future need for desalination we ain’t seen nothin’ yet.

    1. This gives an indication on how the spot gas price* is becoming closely linked with high electricity demand from gas generators:

      http://www.wattclarity.com.au/2014/01/reviewing-the-contribution-of-gas-in-south-australias-heatwave-last-week/

      *This doesn’t take into account those plants with long term supply contracts that are de-linked from the spot prices.

      As for the supply to the Gladstone LNG facilities, majority of the supply will come from Qld CSG and some will come from Moomba. However the bulk from the Cooper Basin (Moomba) will be routed south and east for domestic consumption. I remember seeing the chart in a SANTOS presentation so I’m going to have to dig that out. I think it was in the last Annual Report.

      1. We’ll see what happens in 2015. I guess the price shock will come when those long term contracts get renewed. A factor in favour of Cooper and Surat Basins for unconventional gas in the lack of nimbies. A hot version of the Bakken formation on the US/Canada border. That won’t be the case in NSW or onshore Victoria. Even if the outback areas have plenty of gas if we aim to export more LNG than Qatar it will soon get expensive. I also regard gas as high carbon.

        I’ve mentioned my surprise discovery that the Habanero geothermal well and the radially drilled Moomba no. 191 shale gas well are not 1,000 km but just 54 km apart in the vast outback.

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s