West Cumbria nuclear new build remains on track

[FBaggins]

Cumbria County Council’s Cabinet member for nuclear issues and the Leader of Copeland Borough Council have welcomed assurances from the two main shareholders behind NuGen that the withdrawal of SSE (Scottish and Southern Energy plc) from the NuGen partnership is not going to affect the partnership’s plans to develop a new generation of nuclear power stations at Sellafield.

The two majority shareholders in NuGen, GDF Suez and Iberdrola, have acted swifted to assure the county council, district council and local MP that they remain fully committed to the development of a new nuclear power station in West Cumbria. The companies have now confirmed that they will buy out SSE’s stake so that they each have 50% of the partnership and they are “highly confident about our prospects in respect of our development plans in West Cumbria”.

In a letter to key Cumbrian stakeholders, NuGen’s Chief Operating Director Olivier Carret said: “There is no reason why this decision by SSE should impact upon our plans or timetable. SSE has made an important contribution to what we have achieved so far and they leave on good terms with the project in good shape.”

http://www.cumbriacrack.com/2011/09/23/west-cumbria-nuclear-new-build-remains-on-track/

There there's the opposition from the local cabinet and borough council...

"The plans to secure a low-carbon future for the UK’s energy supply and invest in the Sellafield site remain on track. SSE were always the minority partners in this joint venture and I’m delighted and encouraged by the positive reaction of the main members of the partnership."

[kristopher]

1. UK's Scottish Southern second European company to quit nuclear business in recent weeks

UK's Scottish Southern becomes second European company to quit nuclear business


09/26/2011


UK's second-largest energy company Scottish and Southern (SSE), has dropped plans to enter the nuclear energy business and instead opted to generate more electricity from renewable energy sources, the second company in Europe in recent weeks to walk away from nuclear energy altogether.

SSE's move comes barely a week after Siemens AG, Europe's largest engineering company, said that it would cease building nuclear power plants globally and focus on renewable energy following the Fukushima nuclear power plant accident in Japan. (See: Siemens AG to exit nuclear business, focus on renewable energy (http://www.domain-b.com/companies/companies_s/Siemens/20110919_nuclear_power.html))

Although SSE's decision on quitting the nuclear business has nothing to do with the Japanese nuclear disaster, more and more companies in Europe are planning to abandon nuclear power and go in for renewable energy.

...The decision by SSE would come as a big blow to the UK government's ambitious atomic energy plans of boosting nuclear energy generation in the coming decades.

http://www.power-eng.com/news/2011/09/1507715041/uk-s-scottish-southern-becomes-second-european-company-to-quit-nuclear-business.html

[FBaggins]

2. So?

A small company that has never operated/built/financed a nuclear plant decides to stick to their knitting (while indicating that they might get back in as investors later)... and the two parters that have experience in the field make clear that they're still committed to the project.

Some "pall" eh?

And Siemens has really been out of the business since before Fukushima. They just never got around to recognizing it. Ever since their partnership with Areva broke up they've been looking for a new dance partner (aware that they were capable of going it on their own). They flirted with Rosatom, but were bound by a non-compete deal with Areva.

Much ado about not much. But that's pretty much what you're stuck with these days, eh?

[kristopher]

3. That was the Wall Street Journal that wrote that, and PEI - both nuclear friendly

The issue is investment.

2 December 2008
European Nuclear Generation
New merchant plants bear too high a risk for equity investors

- Political agenda key driver — The push for new nuclear capacity is being driven mainly by the public policy goals of tackling climate change and security of supply rather than the probable economics of the investment opportunity.

- Nuclear is materially “riskier” than other technologies — The period from design to commissioning remains more than double that for other technologies, as do construction costs, while payback periods are also 1.5-2.5x longer. In a pool system, nuclear plants will be price takers. As a result, we argue that the cost of capital should be higher than CCGTs or coal plants, all else equal.

- Unattractive risk-reward for merchant new nuclear — Our base case scenario analysis shows that equity investors in new nuclear plants that operate as merchant capacity would need to see power prices higher than €78/MWh to earn a competitive return to that offered by conventional thermal technologies.

- Support is required to improve the economics in merchant markets — In our view, unless governments are willing to underpin either the financing, the pricing of output and/or decommissioning costs then equity investors are unlikely to earn a competitive return on new nuclear. The UK is the only country where new nuclear is currently being proposed without the financial case being underpinned.

In other words people can't make money on these projects unless the government guarantees the investors a return. The analysis goes on to detail how the problem for nuclear is that there is no market for its high priced electricity in a market that meets the established EU goals for efficiency and renewable deployment. It is a textbook case of what I've long pointed out - that nuclear and renewable deployment is an either/or proposition. If you build nuclear, the economics of renewables and efficiency deteriorate; if you enact efficiency improvements and deploy renewables, the economics for nuclear deteriorate.


This is from Citi's 2009 follow up review:

9 November 2009
New Nuclear – The Economics Say No
UK Green Lights New Nuclear – Or Does It?

- The five big risks — Nuclear power station developers face five big risks: Planning, Construction, Power Price, Operational, and Decommissioning. The government today has sought to limit the Planning risk. While important for encouraging developers to bring forward projects, this is the least important risk financially.

- The three Corporate Killers — Three of the risks faced by developers — Construction, Power Price, and Operational — are so large and variable that individually they could each bring even the largest utility company to its knees financially. This makes new nuclear a unique investment proposition for utility companies.

- No where else in the world — Government policy remains that the private sector takes full exposure to the three main risks; Construction, Power Price and Operational. Nowhere in the world have nuclear power stations been built on this basis.

- Nor will they be built in the UK — We see little if any prospect that new nuclear stations will be built in the UK by the private sector unless developers can lay off substantial elements of the three major risks. Financing guarantees, minimum power prices, and / or government-backed power off-take agreements may all be needed if stations are to be built.

[FBaggins]

4. If the issue is investment... why didn't the other two partners drop out?

Rather than increase their commitment to the project?

That was the Wall Street Journal that wrote that, and PEI - both nuclear friendly

You're saying that a local news website ran a WSJ piece about a local issue?