U.K. Builds Nuclear Plants While France Scales Back

The British and French have swapped nuclear energy postures

Nations that are considering nuclear energy must grapple with its high capital costs and Fukushima-scale risk. An energy-policy riptide along the English Channel shows how unpredictable the calculations can be: Both France and the United Kingdom have scrapped fundamental planks in their energy policies, with one ramping up and the other dialing down.

In the U.K., where Margaret Thatcher set off a global movement by deregulating the power industry, the current prime minister is offering subsidies to attract financing for new nuclear reactors. Across the water, France, which staked its economic future on nuclear power a generation ago, is now planning that technology’s decline. These policy shifts have been in the works since 2012, but they are coming to a head as both governments put the finishing touches on sweeping energy-reform legislation.

A coalition composed of Socialists and the staunchly antinuclear Greens vows to scale back France’s reliance on nuclear power from more than three-quarters of electricity at present to roughly one-half by 2025, delivering on a 2012 election promise made by President François Hollande. Legislation to be introduced early in 2014 could include a new nuclear electricity tax, which would help subsidize an accelerated transition toward renewables. A third-generation reactor under construction in Normandy since 2007 could be the country’s last.

The British government plans to sustain or even enhance nuclear’s role, which was 19 percent of generation in 2012, by proffering taxpayer dollars. Its plan is to inspire construction of a new generation of reactors—enough to provide up to 16 gigawatts of new generation by 2025—by guaranteeing a base price for the electricity. If market pricing falls below that threshold, a government-backed “contract for difference” would make up the shortfall.

There is another layer of irony in the cross-Channel nuclear-policy split: France, which plans to tax nuclear generation, is pushing the U.K. to subsidize it. State-owned utility Électricité de France (EDF) wants to build two 1600-megawatt reactors at Hinkley Point on England’s southwest coast, where two 1970s-era reactors could shut down as early as 2023. But EDF insists that without the contract-for-difference guarantee, U.K. power prices, as well as carbon credits that the plant would earn, are too low and uncertain to justify the £16 billion (US $26 billion) investment.

In October, British prime minister David Cameron’s government clinched a deal to guarantee EDF approximately £93 ($150) per every megawatt-hour generated at Hinkley Point. That is more than double the average price paid to U.K. generators in 2012, and more than 50 percent higher than the projected price of offshore wind power in 2020, according to the London-based market analyst ICIS.

In the U.K., subsidies for nuclear energy are politically unpopular, but building new nuclear power plants generally garners broad support. New plants would help meet ambitious greenhouse-gas reduction goals that call for a near decarbonization of the electricity system by 2030. The U.K. has made no headway toward capturing carbon dioxide emissions from its fossil-fuel-fired power plants, and offshore wind farms are growing too slowly to help. If aging nuclear plants such as those at Hinkley Point are not renewed, the task becomes that much harder. “What’s needed is reliable base-load zero-carbon energy,” says Bryony Worthington, shadow minister for energy and climate change in the House of Lords for the opposition Labour Party.

The U.K. government must apply to the European Commission for an exemption to allow its contract-for-difference policy, because European open-market rules limit state aid only to renewable generators. That will be a long road, says Dörte Fouquet, who heads the Brussels office of German law firm Becker Buettner Held and represents the European Renewable Energies Federation. The U.K. will have to show that the subsidy does not have anticompetitive effects. In Finland, for instance, new nuclear generation has saturated the power market and dramatically slowed investment in renewable energy. “This is a huge amount of megawatts being put into a market. If you massively support nuclear, renewables don’t have a chance,” says Fouquet.

Fouquet predicts that legal challenges against the U.K. subsidy from competing generators will take years to resolve, denying investors such as EDF the certainty they need to start building. So in the end, the British and French may go their separate ways on nuclear policy, but their reliance on nuclear power may yet fade away in harmony.

This article originally appeared in print as "The British and French Swap Nuclear Energy Postures."

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