10 | GOSSAGE
GOSSAGE Cluster muster
Atomic nightmare
Energy companies have ignited multibillion-pound plans in the Humber region for the UK’s first carbon-neutral “industrial cluster”. An alliance of companies, including National Grid, Drax and Norway’s state energy company Equinor, are leading a project designed to shrink the carbon footprint of Britain’s most polluting industrial zone. The cluster includes hundreds of refineries, factories plus the Drax coalfired power plant near the Humber estuary, ostensibly safeguarding 55,000 jobs and a local industrial economy worth £18 billion a year. It should be remembered that this area is also responsible for the highest concentration of industrial carbon dioxide emissions in the country, so daily undermining the UK’s goal to become a carbon-neutral economy by 2050. The alliance plans to undertake (yet another) trial of CCS technology and hopes to break down natural gas to, “create hydrogen, which can be used in industry, heating and transport without creating greenhouse gases.” Good luck with that.
I accept that no Annual Report issued by the Business and Energy department, BEIS, is ever likely to make the Sunday Times’ best sellers list. But as part of my devotion to my readers, I have been perusing the recently issued 2019 edition. In particular, the financial figures appearing in the section concerning the Nuclear Decommissioning Authority. The NDA is responsible for 17 nuclear licensed sites across the country, with a range of facilities including former nuclear power stations, research sites, and nuclear fuel fabrication and reprocessing facilities. The Authority has made its best estimate of the future costs of decommissioning these sites. In preparing these figures, we are assured that the methodologies used in the calculations follow the official “HM Treasury Green Book guidance” and (crucially) “the need to remove optimism bias.” Apparently, project estimates like these will typically have a range of from -50% to 300%. So, the range of costs for cleaning up nuclear contamination could range from just £99 billion up to the almost unimaginable sum of £232bn. But overall the Government’s official watchdog reckons that, over the next century, best bet is that costs will amount – at present prices – to approximately £123.3 billion. And all without producing a single usable kilowatt hour of electricity.
Bar RAB According to the latest wheeze from the Business and Energy Department, future nuclear power projects should be funded via something called the ‘Regulated Asset Base’ system. Called RAB for short. What is this when it is at home? Put simply, the RAB would fund new projects via an extra levy, placed on all consumers and payable from the moment construction begins. The objective is to reduce borrowing costs for companies building the projects – and thus in turn theoretically bring down the level of future bills. The dream is that the extravagant £92.50 per MWh agreed for the under-construction Hinkley Point C might come down to £80 per MWh for any future twins. The dream arrangement for any company must be to pass the burden of risk in any project onto someone else, whilst collecting a guaranteed stream of income once the project is up and running. This method of funding may be proving a serious option for other long-term projects with high upfront capital costs, having been used effectively in the water industry and elsewhere. However, as a mechanism for funding new nuclear, it is far from convincing. Water projects, such as reservoirs and pipeline systems, do require large-scale capital. But these operate in an entirely non-competitive market and their technology is proven, so construction risks are low. In contrast, we can observe across Europe that new nuclear construction’s financial risks are high, and getting higher. Placing them on the shoulders of consumers is unfair. Both to consumers, who will be landed with higher bills even though most are never likely to be customers of the nuclear company. And to rival companies offering different technologies and techniques. In my humble view, the unfairness of such an outcome makes this entire RAB model unsustainable. Lovers of the Great God Atom should go swiftly back to the drawing board.
Very un-smart meters Nobody now pretends that the long-standing Government target, to put 63 million smart meters, into every home and SME by this January, stands any chance of being met. What is most galling is the news that eight out of the 25 electricity vendors charged with delivering this scheme are still installing those seriously old-fashioned SMETS-1 meters. Those are the clunky old devices that don’t work if you change supplier, won’t operate with differential time tariffs, and consistently break down. They were officially supposed to be off the market four years ago. This spring, Energy Minister Claire Perry announced that henceforth absolutely no more old meters would be installed; only the SMETS-2 versions, which are vaguely worthy of the epithet “smart”. But the old meters remain – unsurprisingly because they are useless. And so, regardless of any ministerial diktat, there are now well over 13 million occupying space in British buildings. Every single one of which will require costly upgrading to work properly. When will we learn? Electrical Review | October 2019