Britain rejoins the nuclear family

21st June 2012

Pressing the button on nuclear

Energy giants have taken significant steps over the last couple of days towards building the first new nuclear power stations in the UK for 20 years.

Yesterday, EDF announced its preferred bidder for a £2 billion contract to build a plant at Hinkley Point in Somerset, in the form of a joint venture between engineering and construction firms Bouygues TP and Laing O'Rourke, covered here by sustainable thinking website Business Green.

However, EDF cautioned that the contract is still subject to planning consent, and the company has yet to make a ‘final investment decision'.

Meanwhile plans to build nuclear plants at Wylfa on Angelsey and at Oldbury in Gloucestershire, shelved when German energy giants RWE and E.on dropped out and put their Horizon nuclear development joint venture up for sale, may yet show sign of life.

Germany pulled the plug on nuclear power after the Fukushima disaster, but now Chinese backing could revitalise bids for Horizon, as reported in The Daily Telegraph yesterday.

French firm Areva has submitted a bid with China Guangdong Nuclear Power Holding Co, while Toshiba-owned Westinghouse has submitted its bid with China's State Nuclear Power Technology Corporation. GE Hitachi could apparently be a third bidder.

UK backing while Japan backs away

Currently, all but one of the UK's existing nuclear power stations are due to close by 2023. Faced with soaring energy prices, dwindling stocks of fossil duels and climate change concerns, the UK government has renewed its support for nuclear power  – while still vowing not to provide any direct subsidy to the sector.

Energy and Climate Change Secretary Ed Davey reacted to the EDF announcement by tweeting:  "I want to see new nuclear come forward as part of our future energy mix and for the UK to be a leading global destination for investment in new build."

National opinion remains divided about the advisability or otherwise of the nuclear option.

Following Fukushima, Japan has shifted away from nuclear power, and on Monday the Japanese government approved incentives for renewable energy, with the introduction of feed-in tariffs. The scheme requires Japanese utilities to buy electricity from renewable sources such as solar, wind and geothermal at pre-set premiums for up to 20 years.

Alternatives to nuclear

Controversial environmentalist James Lovelock, originator of the Gaia theory and a long term supporter of nuclear energy, railed against the "religious opposition" to nuclear in an interview in the Guardian last week.

Lovelock said: "The most sensible thing is nuclear, but I'm afraid the great bulk of people are not going to have it after Fukushima."

Instead, Lovelock has come out in favour of "fracking", a highly-criticised technique for extracting natural gas from the ground. Lovelock recommended fracking as a bridging technology that will buy the UK time to adapt.  He said: "The US have gone for fracking in a big way. Let's be pragmatic and sensible and get Britain to switch everything to methane. We should be going mad on it."

Other sustainability experts continue to back solar energy as an alternative to nuclear. Over at FT Alphaville, Gregor MacDonald, energy journalist and renewables guru, flagged up the exponential growth in global solar consumption since 2001, mainly at the expense of nuclear power.

MacDonald said: "As world nuclear power goes into retreat, because of its enormous expense, catastrophe-risk, and complexity, it is power generated by solar that offers easy time-to-completion benefits and project clarity, especially in the developing world."

MacDonald attributed the rising capacity for solar to plummeting prices for solar voltaic cells, and improving solar panel efficiency.

Fuelling investment opportunities

With the experts split on the attractions of nuclear power, investors should be selective when plugging into energy opportunities.

Despite the money poised to pour into building new reactors in the UK, Ketan Patel, senior investment analyst at Ecclesiastical Asset Management, warned that the investment potential in constructing nuclear power stations was limited , as "the know how to build a power station on time and within budget is quite rare, and doesn't have a glittering track record".

Instead, Patel considered there was "money to be made in the utilities, once the power stations are up and running".

He said: "Long term, the opportunities are in health and safety, and the transportation and storage of nuclear waste, because the waste will be around for thousands of years and no-one wants it in their back yard.

"There is also lots of money in the decontamination of old nuclear power stations."

Patel also advised investors to consider a balanced suite of energy options, right across nuclear, solar, wind, carbon, bio-waste and bio-fuel alternatives, rather than relying on a single energy source.


More on Mindful Money:

How smart technology can revolutionise the energy sector and change the world

Can B&Q turn eco-awareness into cold hard cash?

Why biofuels could be bad for the world and for your wallet

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