UK: Lights Out in Five Years

2008 September 18

In last week’s Thursday Post, we looked at the UK government scheme to help households with rising fuel prices. We saw that a deal was struck with privately-owned energy companies. And we saw that straight away those companies hinted they would pass on the costs to households.

We also saw that the UK government said they allowed the companies to keep huge windfalls to finance future power generation. And we also saw that a National Housing Federation report warned the companies were instead passing the windfall on to shareholders.

This week, how energy companies are:

  • Charging consumers £1Bn a year in bills for wind farms that aren’t being built fast enough,
  • Yet we will have blackouts as early as five years from now, because
  • The companies cannot build nuclear plants fast enough to meet the government programme, and yet
  • Despite saying publicly the nuclear industry must fund the building, taxpayers’ money is being offered.

Yesterday, the BBC reported that the energy companies are not replacing energy capacity fast enough. One third of generating capacity will be decommissioned in the UK by 2020. But in about five years UK households will have long power cuts unless action is taken now.

The warning comes from a report by nuclear supporters Fells Associates. They said that new reactors will not be ready in time. And that renewables cannot fill the gap. Energy secretary John Hutton said the report overstated the risks. Professor Ian Fells, report co-author, said: “Let’s put it this way, the current UK energy policy is not fit for purpose.” He went on to say: “It is all very well for the prime minister to decide that we need to build a lot of new nuclear power stations, but implementing that is really rather difficult.” He said it would be decades before new nuclear power plants could begin producing energy. In the meantime, the UK will lose between 23 and 35 GW of capacity by 2020. This will happen as old nuclear plants and coal- and oil-fired plants are decommissioned.

Co-author Candida Whitmill warned the energy gap would have economic consequences far worse than the credit crunch.

The government however cannot only be blamed for this. As far back as February the Daily Mail reported that energy companies are giving profits to shareholders. Rather than keeping money back for investment in renewables. And yet, British consumers pay £1Bn a year to subsidise the move to renewable energy. To meet the European plans to meet 40% of energy needs by renewables by 2020, Britain would have to build two wind turbines a day for the next 12 years. The cost is passed onto consumers in their fuel bills. Without further price rises, the £600 million in 2006 will rise to £3 billion by 2020. And yet, the rise in renewables is just 0.4% from 4.2% in 2005 to 4.6% in 2006.

Could it be that the energy companies oppose renewables because they are subsidised for nuclear plants? And that they hope to have more? Officially, no. Energy companies are not subsidised for the government’s ambitious nuclear programme. Or are they?

Two weeks ago, the Guardian exposed what looks like secret government subsidies for the nuclear programme. In a complex written answer from energy minister Malcolm Wicks to Labour backbencher Paul Flynn MP, the government appeared to slip that subsidies are already being offered. The Guardian, publishing parts of the letter, said: “The issue is complex, but the only conclusion that can be drawn is that a significant taxpayer-funded insurance subsidy is being offered to the nuclear industry.”

And the Guardian went on to say that the annual report from the Office for Civil Nuclear Security released on August 15 shows “an unquantified taxpayer subsidy, through DBERR, also went to pay for part of the necessary security arrangements applied to commercial nuclear power.”

And the Guardian added:-

“…in the September edition of Prospect, Tom Burke, formerly executive director at Friends of the Earth, pens a excoriating critique of the optimism of the nuclear sector that an atomic renaissance is within their grasp. He wrote:

“‘The government has pledged that there will be no subsidies for new nuclear construction. But this was never credible, and it is already possible to detect signs of retreat. In 2006 the government bravely promised to ‘make sure that the full costs of new nuclear waste are paid by the market‘. By 2008 this had mutated into the more nuanced: ‘The government will [set] a fixed unit price [for] waste disposal at the time when approvals for the station are given.’ This effectively caps the costs of nuclear waste disposal to the operator and transfers the risk of cost overruns on to the taxpayer.’

“Burke concludes: ‘It is hard to argue that this is not a subsidy.'”



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