Government over-reliant on EDF for nuclear energy
Kaveh Pourvand, 29 May 2013
£110bn worth of energy investments required to keep the lights on. Europe’s most challenging decarbonisation target. All coal plants being decommissioned by 2016. Only one of nine nuclear plants remaining operational after 2023.
These are the facts about energy in the UK. It is a potential crisis waiting to happen and it is about more than economics. Securing energy supply is also an issue of national security, a matter which political conservatives usually think warrants state involvement.
There is however a discrepancy between the scale of these energy challenges and the government’s bemusingly timid attempts to secure a deal with EDF energy for new nuclear build. Negotiations have been going on for some time now, with reports on Sunday suggesting a final deal was near except for the details of the guaranteed electricity price EDF would recieve.
Some background: EDF energy is a subsidiary of state-run French utilities company, EDF SA (Électricité de France S.A.), which operates 58 nuclear plants in France and 20 overseas (nearly half of which are in the UK).
It is a profoundly ironic state of affairs that Britain’s nuclear sector has in affect come to be owned by the French state. The sector was privatised in the early 1990s with the hope of creating competitive and world-leading British firms. Instead, as the sector consolidated following privatisation, EDF rose to become the main player. Britain’s attempt at electricity privatisation merely ended up swapping domestic state ownership for foreign state ownership. This has appeared to make expanding nuclear supply rather difficult.
EDF have reportedly asked for a guaranteed price of £100 a megawatt hour for 40 years. Some estimates claim that this would amount to a subsidy of up to £50bn. Lacking recourse to alternatives, the government has seemingly struggled to gain the upper hand in the negotiations.
The problem here is not EDF per se but the ideological unwillingness of the government to take the proactive approach such a national security issue demands.
One intriguing way forward was put by Conservative MP Phillip Lee. In parliament last year he asked energy minister Ed Davey why the government hadn’t taken a stake in reactor designer Westinghouse or purchased Centrica’s share of EDF UK. Such stakes could have been leveraged to facilitate nuclear investment. The Liberal Democrat minister brushed aside Mr Lee’s question as asking for ‘nationalisation’. Yet, this is not a question of interfering in some free market. Our nuclear energy is already de-facto nationalised, but just not by our own nation.
The real question is whether the government is prepared to be proactive in an area so key to our national security, as Mr Lee suggests, or whether it wants to ‘leave things to the market’, negotiating with one hand tied behind its back.