U.K. Expert Says U.S. Is Not LOSING International Nuclear Power 'Race'

No “Nuclear Renaissance” on the Continent: French, Finnish, and U.K. Experiences Hold Little Relevance for U.S. – Other Than As Cautionary Tales; Copying France “Would Require Nationalization of U.S. Electric Utilities.”

(WASHINGTON D.C.) - Lobbyists and utility company officials who claim that the United States is missing out on a so-called “Nuclear Renaissance” have their facts wrong about what is going on in Europe with nuclear reactors, according to University of Greenwich Professor of Energy Studies Stephen Thomas. The U.K. energy expert said that, not only is nuclear power in France, Finland, and Great Britain now plagued with problems, but almost nothing that is positive about the experiences in those nations would translate to the United States. Thomas is the author of “Areva and EDF: Business Prospects and Risks in Nuclear Energy” (March 2009) and the co-author of “The Financial Crisis and Nuclear Power” (February 2009).

Thomas said: “We’ve been waiting in vain on a ‘Nuclear Renaissance’ in Europe since the early 1990s. Even before the recent collapse in energy prices and the financial downturn, it was clear that all of the talk of a new resurgence in the prospects for nuclear reactors was just that: talk. It is for this reason that I find it so odd that the case for more nuclear power is being built in the United States on an entirely mythical notion of some kind of international ‘race’ that the U.S. supposedly is losing. In reality, the nuclear power industry in Europe is in the midst of the same kind regulatory and financial uncertainty that makes the future of the industry murky at best in this nation.”

The University of Greenwich Professor added: “For example, the mistaken notion that the United States need only copy the ‘French model’ on nuclear power is particularly bizarre. The two main French entities in nuclear power – Areva and EDF – originally were and remain today largely branches of the French government. They are directed as a matter of state policy and have benefited from extremely favorable government financing and credit assurances. To duplicate this experience in the United States, you would essentially have to nationalize your electric utilities and have all new power plant siting decisions emanate from the White House.”

In a briefing for reporters, Thomas focused on three nations often cited by U.S. proponents of moving ahead with new nuclear reactors in this nation:

* Finland: This month, the Olkiluoto 3 nuclear power plant in Finland was supposed to start producing power. Instead, the plant is at least three and a half years late and more than 50 percent over-budget. Olkiluoto was to be the “poster child” for the new generation of nuclear power plant designs that would drive the “Nuclear Renaissance” and if any nuclear project was going to go well. Instead, it has become an example of all that can go wrong in economic terms with new reactors. The vendor (Areva NP) and the utility are in bitter dispute over who will bear the cost overruns and there is a real risk now that the utility will default.

* France: Even in France, where the same design as at Olkiluoto is under construction at Flamanville, things are not going smoothly. After 18 months of construction and a series of quality control problems, the project is more than 20 percent over budget and EDF is struggling to keep it on schedule. However, the French government strongly supports nuclear power through the utility, EDF (85% state-owned), and the vendor, Areva NP (more than 90% state-owned).

* United Kingdom: In the U.K., Tony Blair’s assertion in 2006 that nuclear power was “back with a vengeance” is proving slow to turn into reality. The first new order is unlikely before 2013 and by this time there could be two general elections and waning governmental support, which has driven things so far. In 2006, the British government began a safety assessment of the competing designs and announced it would streamline licensing and planning processes, believing that this would be sufficient for orders to be placed without the need for government subsidies. Progress has been slow, the reforms to planning are still being formulated and skill shortages in the safety regulator are delaying licensing. The French utility EDF, which owns the Britain’s nuclear utility, British Energy, is saying that existing renewable energy targets must be reduced if they are not to hamper efforts to build nuclear plants in the U.K. Falling fossil fuel prices (less than US$40 per barrel of oil), have already substantially reduced wholesale electricity prices and this could put British Energy in major difficulties, as happened in 2002 when the government had to bail it out at a cost to taxpayers of more than $15 billion.

Thomas said: “In the countries where there have been suggestions that existing nuclear phase-out policies would be reversed -- Italy, Sweden, Germany, Belgium and Spain -- new orders for reactors are a long way off. Even if the public can be persuaded that its earlier decisions to phase-out should be overturned, the process of rebuilding nuclear capabilities, assessing the safety of reactor designs, establishing sites and, most important, getting the financing in place puts orders a long way away and vulnerable to changes of government.”

The lesson for the United States, according to Thomas, is that there is no international race on nuclear reactors to be won or lost. He explained: “U.S. efforts to revive nuclear ordering, begun in 2002, were originally expected to get a new plant on-line by 2010. Even if there are no further delays, the earliest a new plant could be on-line is now looking closer to 2020. In the meantime, the nuclear industry has upped its demands for taxpayer-backed loan guarantees to build demonstration plants from about $5 billion to more than $100 billion. The prospect that these demonstration plants would lead to unsubsidized ordering now looks fanciful. Far from leaving the U.S. lagging behind Europe in reviving nuclear power, the delays in the U.S. program may allow the Obama administration to free up resources to be channeled to energy efficiency and renewable energy that are able to meet the urgent environmental and security-of-supply issues that the U.S. faces.”

========================================================= Professor Thomas has been a researcher in energy policy for more than 25 years. He writes particularly on economics and policy towards nuclear power, liberalization and privatization of the electricity and gas industries and trade policy on network energy industries. He is a member of the editorial boards of: Energy Policy, Utility Policy, Energy and Environment, and International Journal of Regulation and Governance.