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Nuclear Industry

No, the problem would be that the nuclear stations could not be turned off and that is why the grid would fail. [Interruption.] It is dangerous, risky and expensive to turn nuclear power stations on and off. That is one of the difficulties of nuclear power. [Interruption.] I move on to other aspects of costing, because the oddity of costing nuclear power extends to the energy review. We have delved into the costing offered for nuclear in the energy review and we found some odd things indeed. First, one of the things that is known about nuclear power is that there are risks involved in the construction stage, not only political ones, but the inherent risk of the very long construction stage. As a result, experience from around the world shows that the relevant financing costs are about 3 per cent. higher than energy industry averages, yet the energy review’s figure for financing the build stage of nuclear power is exactly the same as the percentage cited for all other technologies. That is simply a false assumption. Nuclear new build will involve a much higher level of risk—a 50 per cent. higher level of risk—than that borne by other sorts of projects. We noted another odd thing. I suspect that this is for accounting nerds only, but it is important. The DTI’s energy review is not using standard techniques for calculating the weighted average cost of capital for nuclear projects. Instead, it is using a weird mixed technique that discounts only some of the costs and therefore gives a big advantage to long-term projects. In other words, it is favourable to nuclear power. Were standard investment appraisal techniques to be used and the right cost of capital inserted, nuclear energy would be shown to be vastly more expensive than the Government claim. We could include a carbon cost of about £20 a tonne and assume that nuclear energy has virtually no carbon cost—I am willing to accept that for the sake of argument. In even those circumstances, nuclear power would come out as being more expensive than onshore and offshore wind power—without any subsidy—and more expensive than tidal stream technology and carbon capture and storage. The only thing that it would be cheaper than is coal. Even without including all the figures for the hidden subsidies and without taking into account the arguments about nuclear power crowding out investment in renewables, the arguments about it undermining efforts at energy saving—that seems to have happened in Finland—and the arguments about locking in the grid system to a centralised system that would impact on the ability of the system to accommodate decentralised energy, nuclear power is not a good bet over the time scales that we are talking about.