Analysis: Brexit and Wylfa B’s nuclear fuel

Wylfa Power Station. Picture: Andrew Woodvine (CC BY-SA 2.0)

 

When Theresa May triggered Article 50 a couple of months ago, she also signalled her intention that the UK leave the obscure EURATOM treaty.

The treaty covers nuclear power, an issue which neither the Remain nor Leave camps even mentioned during the referendum campaign.

How this decision will affect plans for a new nuclear power station at Wylfa on Ynys Môn does not appear to have been noticed in Wales at all.

But what is interesting is that EURATOM is central in the UK’s trade in nuclear materials. The nuclear fuel used in our power stations is actually owned by EURATOM and its safe handling and storage is overseen by that organisation.

When May took over as PM, the core of her Government’s energy strategy was the commitment to building new nuclear power stations, starting with Hinkley Point C in Somerset, just 12 miles from the South Wales coast across the Bristol Channel.

It should be remembered that she called in the decision on that project when she took over from David Cameron, only to go ahead with it last Autumn, so it is worth asking what is going on.

As World Nuclear News (WNN), the mouthpiece of the nuclear power industry reported at the time, “The multi-billion-pound question is to what extent UK participation in EURATOM should continue post-Brexit, and what happens if it doesn’t.”

What most worried WNN was that the two-year deadline for renegotiating the EURATOM treaty could not be met as the UK has very little experience of negotiating nuclear agreements.

It took four years of negotiations in the 1990s to upgrade the EURATOM-US co-operation agreement when it was due to lapse.

Since then EDF has been pouring massive amounts money and workers into the building of Hinkley C, seemingly unconcerned about the possibility that the UK might leave EURATOM.

When asked about this recently, they said: “We are encouraged by the UK Government’s strong commitment to maintaining the successful and mutually beneficial civil co-operation between the European Union and the UK.

“EDF Energy believes that alternative or transitional arrangements need to be put in place to ensure continuity for the UK nuclear industry if the UK leaves EURATOM.”

It is worth noting the word “if” as it seems bizarre that they should have been encouraged to go ahead with hundreds of million pounds of investment in building Hinkley C, if they think it likely that the UK will leave EURATOM.

So, there we are then – they don’t think that they have a problem, either because the UK will miraculously renegotiate a highly complex set of regulations with the International Atomic Energy Agency (IAEA) within the two-year deadline, somehow arrange an extension of that deadline or perhaps not leave EURATOM after all.

Tim Richards

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6 Comments

  1. There is another way of looking at it. Nuclear power is far too expensive, and is becoming less and less competitive as the price of renewables continues to fall. The strike price agreed for electricity from Hinckley C was £92.50/MWh at 2012 prices, increasing with inflation. So it is probably about £100/MWh now, and rising. Inflation has now hit 2.9% and Brexit will push it higher. In contrast, Dong agreed a strike price of €72.50/MWh for an offshore windfarm in the Netherlands, and Vattenfall bid €60/MWh for offshore windfarms in Denmark, both last year.

    http://www.telegraph.co.uk/business/2016/10/02/cut-throat-competition-is-slashing-offshore-wind-costs-to-unthin/

    I’d take issue with the claim that “EDF has been pouring massive amounts money and workers into the building of Hinkley C”. It all depends what you mean by “massive”. Whatever has been committed so far is only a tiny fraction of what Hinckley C would eventually cost, even if there were no cost overruns … something which in itself is highly unlikely. EDF have only been putting in enough money to keep the project alive, in the hope that something will change in the meantime to make the project viable. This would clearly need to be a political change, because the economics are hopeless.

    So, I would suggest that a better explanation for the UK government’s lack of foresight (which is obvious) is that they don’t expect Hinkley C to go ahead. And if Hinkley C doesn’t go ahead, neither will Wylfa B, because if they could match the Hinckley C strike price they would surely have done so already.

  2. Tim Richards

    I agree that it makes no financial sense compared to wind farms and solar power but that is missing the point of the article and that is – what on earth is going on when the UK is supposed to be leaving EURATOM?

    While what has been committed by EDF is only a fraction of what the final cost will be ( and yes it will actually end up far higher – it always does when it come to Nuclear Power stations ) it is not “a tiny fraction” Michael as I think committing to the best part of £1 billion so far is pretty massive and they will need an awful lot of workers to build the infrastructure necessary before they even start building Hinkley C itself see the EDF link below

    https://www.edfenergy.com/energy/nuclear-new-build-projects/hinkley-point-c/construction

  3. Tim, I accept your point fully. Something should be happening to address the issue, and it isn’t happening. I’m just offering an explanation as to WHY it isn’t happening.

    In terms of commitment to construction projects on the page you link to, a good number of them will have value for local communities even if Hinkley C doesn’t get built. Indeed they’re designed to. For example, the Cannington bypass will be appreciated by locals because it takes ALL through traffic away from the village, not just construction traffic. They call it a “permanent lasting legacy”. And the worker accommodation projects are intended to be used as local housing after construction is complete, just like an Olympic village is intended to be used as local housing after the games are over. They call it a “positive legacy for the future”.

    The question is ask is how much of what is now being built will actually be useless if the project is abandoned. And my answer is that some of it will be wasted, of course, but not as much as you might think. It needs to be put into context. The anticipated construction cost of the project has more than doubled to £18bn, excluding financing which might take it to £25bn. Let’s say a billion has been spent, then let’s triple or even quadruple it. Cutting your losses at a few billion would still be a better option than facing a further cost overrun of 25% … and compared with other nuclear projects, a 25% overrun would be quite modest.

  4. Michael, the western bypass at Cannington really only handles Hinkley traffic. The majority of traffic through Cannington goes east-west along the A39 (taking tourists to and from Minehead and Exmoor) and bypasses the village perfectly well using the existing bypass (opened in 1994). The western bypass takes traffic going north-south, the majority of which is Hinkley traffic (north of Cannington there are just small villages and isolated farms, which were adequately served by the existing “Hinkley Point” road as we locals all it). When the whole Hinkley C white elephant eventually bites the dust, we’ll be left with an expensive “road to nowhere”. Not much of a “positive legacy for the future “.

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