The cost of decommissioning a nuclear power station

Conveniently ignored.

Much has been made in the press of Britain’s looming energy crisis over the past few years, with the more hysterical among us claiming that rolling blackouts are just around the corner. It is certainly true that if demand for electricity rises as predicted over the next decade or so, Britain will not have the generation capacity to keep up with demand. The problem is exacerbated by the fact that much of the country’s current power supply, especially its aging nuclear power plants, is reaching the end of its design life and will shortly be closed down. In fact, by 2023, all but one of Britain’s currently operating nuclear plants will have ceased operation, with the remaining reactor at Sizewell B soldiering on alone until 2035.

This has spurred the government into action, searching in earnest for new generation capacity to plug the looming gap. The cheapest and quickest solution would be to build larger and larger coal-fired thermal power plants, an especially attractive option given the current low price of coal on the international market, thanks to demand falling in the US as a result of its boom in shale gas production.

Of course, as well as being environmentally-toxic, this solution is also politically-so, with few willing to advocate a non-green solution to our energy needs. This leaves the government with the choice between renewables and nuclear power, both much cleaner alternatives, barring any Fukushima-style meltdowns. At this stage, it boils down to the cost of the electricity produced, on a per megawatt hour (MwH) basis. By the time the first of the new power plants is up and running in the 2020s, experts are predicting nuclear power to sell for around £95/MwH , whereas the leading renewable alternative, offshore wind power, would come in at just over £100/MwH. So, nuclear it is, simple as that.

Having reached this conclusion, so followed a global search for investors willing to stump up the cash for a fleet of new ultra-efficient, ultra-safe nuclear power plants. So far, the Horizon project, with plans to build reactors in Oldbury and Wylfa has been spearheaded by Japan’s Hitachi, and new reactors at Sizewell and Hinkley Point have been agreed with France’s EDF. The Financial Times has also reported that state-owned Chinese and Russia nuclear power suppliers are keen to enter the UK market, showing no shortage of potential options. At £95/MwH, investors know they can turn a profit, despite the large initial capex of nuclear power, estimated by EDF to stand at £14bn for the construction at Hinkley Point.

But what this price prediction fails to recognise is the massive cost of decommissioning nuclear reactors once they are finally closed after decades of service. The Nuclear Decommissioning Authority (NDA), the body responsible for coordinating the dismantling of closed nuclear power facilities and the disposal of radioactive waste, is learning the hard way just how much decommissioning can cost.

A government white paper in 2002 estimated the cost of decommissioning Britain’s current fleet of plants would be £43bn, many times greater than EDF’s investment at Hinkley Point. This estimate has slowly been revised upwards since then, finally reaching £73bn in 2007, before the NDA admitted the following year that it could still go up by several billion more.

One of the major costs is the safe disposal of highly radioactive material, which will not decay sufficiently as to become safe, for hundreds of thousands of years, most of which is held in temporary storage at the Sellafield reprocessing facility in Cumbria. Home to what The Observer calls “the most hazardous industrial building in western Europe”, building B30 houses an ageing cooling pond whose contents is not entirely known, even to the managers at the site, being a collection of spent fuel rods and other reactors parts from Britain’s earliest forays into nuclear power. This is just one of several such buildings on the site, whose contents is not known and is too radioactive to be adequately investigated.

Decades of successive governments have not quite known how to deal with this legacy of highly toxic waste materials accumulating at Sellafield, with further waste coming to the site and stored as other reactors from plants around the UK have produced spent fuel rods. Earlier this year, the Public Accounts Committee heavily criticised the cost of operations and clean-up at Sellafield, which has risen from £900m a year in 2005 to £1.6bn today.  In 2006, an idea was floated for deep geological storage of some of the highly toxic waste, some 200-1000m below the surface. But again, this plan has yet to receive firm funding, so the saga continues.

The current government knows that it will be long gone by the time these new reactors are shuttered and authorities must face up to their decommissioning, so it is convenient for them to continue conveniently ignoring the additional cost this process will have on the total overall financial impact of nuclear power on the UK taxpayer. It may be the cheaper and easier sell now, but certainly the more expensive in the long run. The spiralling costs at Sellafield are testament to that.

Sellafield nuclear power station. Photograph: Getty Images

Mark Brierley is a group editor at Global Trade Media

Photo: Getty Images
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Autumn Statement 2015: George Osborne abandons his target

How will George Osborne close the deficit after his U-Turns? Answer: he won't, of course. 

“Good governments U-Turn, and U-Turn frequently.” That’s Andrew Adonis’ maxim, and George Osborne borrowed heavily from him today, delivering two big U-Turns, on tax credits and on police funding. There will be no cuts to tax credits or to the police.

The Office for Budget Responsibility estimates that, in total, the government gave away £6.2 billion next year, more than half of which is the reverse to tax credits.

Osborne claims that he will still deliver his planned £12bn reduction in welfare. But, as I’ve written before, without cutting tax credits, it’s difficult to see how you can get £12bn out of the welfare bill. Here’s the OBR’s chart of welfare spending:

The government has already promised to protect child benefit and pension spending – in fact, it actually increased pensioner spending today. So all that’s left is tax credits. If the government is not going to cut them, where’s the £12bn come from?

A bit of clever accounting today got Osborne out of his hole. The Universal Credit, once it comes in in full, will replace tax credits anyway, allowing him to describe his U-Turn as a delay, not a full retreat. But the reality – as the Treasury has admitted privately for some time – is that the Universal Credit will never be wholly implemented. The pilot schemes – one of which, in Hammersmith, I have visited myself – are little more than Potemkin set-ups. Iain Duncan Smith’s Universal Credit will never be rolled out in full. The savings from switching from tax credits to Universal Credit will never materialise.

The £12bn is smaller, too, than it was this time last week. Instead of cutting £12bn from the welfare budget by 2017-8, the government will instead cut £12bn by the end of the parliament – a much smaller task.

That’s not to say that the cuts to departmental spending and welfare will be painless – far from it. Employment Support Allowance – what used to be called incapacity benefit and severe disablement benefit – will be cut down to the level of Jobseekers’ Allowance, while the government will erect further hurdles to claimants. Cuts to departmental spending will mean a further reduction in the numbers of public sector workers.  But it will be some way short of the reductions in welfare spending required to hit Osborne’s deficit reduction timetable.

So, where’s the money coming from? The answer is nowhere. As the last five years proved, the Conservatives don’t need to close the deficit to be re-elected. In fact, it may be that having the need to “finish the job” as a stick to beat Labour with actually helped the Tories in May. They have neither an economic imperative nor a political one to close the deficit. What we'll instead get is five more years of the same: increasing household debt, austerity largely concentrated on the poorest, and yet more borrowing. 

Stephen Bush is editor of the Staggers, the New Statesman’s political blog.