Britain's Nuclear Energy Plan: Too Little, Too Late?

| About: iShares MSCI (EWU)

Britain’s Industry Secretary, Alistair Darling presented a government white paper to the House of Commons this week setting out the government’s energy strategy for the future. The Industry Secretary’s first priority will be to ban “stand-by switches in households in favour of smart meters.” Well we suppose every little helps but isn’t the problem bigger than this we ask?

Apparently we should be looking towards off shore wind farms, wave power and solar panels in our homes. So that secures the green vote but what about keeping warm? Yes we all know about tiny windmills on the shed roof and we have been talking about alternative energy as the answer since I was a kid but the truth is that we are not much further on. Britain still relies on nuclear power for 20% of its electricity but these power plants such as Dungeness and Sizewell are long in the tooth and are due to be decommissioned by 2015. So Britain has to replace that 20% and provide for any extra electricity that may also be required by that date.

So what is the answer? PFI of course! The Private Finance Initiative will come to Britain’s rescue via Engineering Contractors offering the complete package. Or will they? This is not an extension to the rail system or a new road its around $3 billion for a nuclear power station and a lot more for a larger plant. This is a considerable undertaking for a contractor who would no doubt seek a number of expensive ‘assurances’ that the risks would be covered. Having had personnel experience of this type of project procurement I know that it takes a long time to work through and agree who is responsible for what and at what cost. This paper is of the ‘consultative’ nature so all of the objections from the various pressure groups and interested parties will have to be listened to and somehow accommodated. That will takes us into 2008 before Britain gets to the starting line. Then there is the small hurdle of Planning Permission, yes we need these ghastly horrors but not near us thank you very much. Allow another year for that sort of wrangling and we are into 2009, which leaves Britain with about six years to build around ten new nuclear plants. This is a big ask for Britain as any slippage to this schedule leaves Britain well and truly in the dark.

What of plan B then? Well there are coal-fired power stations but some of them are coming to the end of their usefulness and they will be decommissioned in this time period. Plan C? There was always gas, but with the North Sea now in decline we are more and more dependents on the Russians as they hold the worlds 3rd biggest reserves. For someone who believes and treasures independence in all its forms this is not a pretty picture.

So while the government seeks refuge in the private sector Britain must wait as the private sector negotiates appropriate terms of surrender for the government. The government will no doubt claim this surrender as a victory!

In the meantime has anyone considered just where the supply of uranium will come from and placed advanced orders accordingly?

No, of course not, this is another case of ‘too little too late’ with the downside being that Britain’s trading partners will put this once proud country over a barrel and extract the penalty for dithering!