Nukenomics: The commercialisation of Britain’s nuclear industry, by Ian Jackson, Nuclear Engineering International, 2008
After two decades of relative stagnation, the British nuclear industry is once again experiencing rapid and turbulent commercial change, transforming from a handful of public sector owned organisations into a series of private sector ones ready to tackle Britain’s £100bn plus nuclear clean-up legacy. BNFL and the UKAEA have been virtually swept aside, replaced by the Nuclear Decommissioning Authority (NDA) which is more like a financial regulator than a nuclear agency. At the same time new reactors look set to be ordered soon – a situation that was unthinkable just a few years ago. Former Environment Agency nuclear regulator, Ian Jackson examines this revitalised nuclear market.
Radioactive waste in figures
Spends £2.5bn of taxpayers money each year – 1p on the basic UK income tax.
Current estimated clean-up cost = £73bn;
Plus £9.7bn for military plants and submarines;
Plus £8.6bn for British Energy Reactors;
Plus £10bn+ for an underground disposal facility.
TOTAL £101bn and rising…
Jackson explains that three different market experiments were tried in the 1990s: the £2.1bn privatisation of British Energy (sale of assets); the £228m privatisation of AEA Technology (sale of people); and the full contractorisation of Ministry of Defence establishments (sale of management contracts). After six years BE effectively went bust, and AEA Technology is no longer in the nuclear business. The latter proved to be highly influential on the Department of Trade and Industry’s 2001 quinquennial review of the UKAEA, which said private companies were deliberately avoiding the nuclear industry.
In principle the government’s new vision for a competitive decommissioning marketplace sounds great for the industry and the taxpayer, but Jackson gives examples of privatisation in other areas which resulted in industry consolidation and reduced competition. Investors in nuclear clean-up will require good profit margins to make the difficulty of entry into the market worthwhile. Nuclear salaries in the public sector in Britain have been low, compared with the rest of Europe, and a looming skills shortage will inevitably drive salaries upwards, and decommissioning is a labour intensive industry. The result is that, far from privatisation reducing costs, the bill for clean-up will most likely continue to spiral upwards.
In Chapter two Jackson counsels against relaxing clean-up standards in the hope of reducing costs. Setting tough but transparent standards for land restoration provides a driver for innovation and reduces total lifecycle decommissioning costs. The shift towards more flexible and uncertain standards raises questions about public confidence; buyer perception and market economics. It doesn’t matter that radiological clean-up costs are usually greatly out of proportion to scientific assessments of the actual public health risk – what matters is the market’s perception of the property. Even if proposals for accelerating the decommissioning of retired Magnox reactors within 25 years are successfully achieved, the partially restored land will not be available in time for the first tranche of new stations expected to be built during the 2010s and 2020s. Construction will probably take place adjacent to existing sites on undeveloped green-field sites. For most contaminated sites, the cost of the clean-up operation will be far greater than the value of the land. The government will face severe difficulty in making a profit from selling or leasing previously contaminated land even after it has been cleaned up.
Chapter three deals with nuclear waste ‘repositories’. Jackson says there is a tendency to assume that, if predictions of repository leakage are a bit fuzzy, the likely outcomes will cluster around the central prediction. Unfortunately this isn’t necessarily the case. Some leakage scenarios show doses to future human populations up to ten times higher than today’s 1,000 microsievert dose limit. He reminds us about three caveats which came with CORWM’s recommendations: stores with a lifetime of 100 years should be built as a contingency; local communities should be asked to volunteer in return for a compensation package; and communities should have a right to veto and withdraw. Jackson estimates that the cost of ‘disposing’ of intermediate and high level waste will be around £67,000 per cubic metre, compared with £2,000 per cubic metre for low level waste. In contrast, foreign utilities with reprocessing contracts who exercise the option to take a little extra high level waste in return for leaving their intermediate waste in the UK, are paying £201,000 per cubic metre.
The companies interested in building new reactors want a fixed price cap on nuclear waste disposal. Jackson says this is understandable given the 647 per cent profit margin the NDA expects to make on foreign intermediate level waste. The extra repository space needed for the waste from a ten reactor programme might cost the NDA as little as £500m, but could be worth up to £8.2bn.
In Chapter four Jackson looks at the MoX market, leaving anyone who opposed the opening of the Sellafield MoX Plant struggling not to say “I told you so”. In 2006 the NDA revised the ultimate production targets for SMP downwards to 40 tonnes per year, which is the minimum to recover running costs. Realistically if the NDA continues to bankroll SMP the taxpayer stands to lose several billion pounds on top of the half billion sunk costs. If SMP manages to increase its current production rate from 2.6 tonnes per year to 20 tonnes per year it will take 37 years to convert the 37 tonnes of foreign owned plutonium into 740 tonnes of MoX at a cost of £1.6bn, making a loss of £0.7bn.
Jackson discusses using SMP, along with perhaps three new PWRs, to ‘dispose’ of the UK’s 109 tonne stockpile of plutonium. 77 tonnes of this could theoretically be converted into 1,540 tonnes of MoX, but it would have to be spread over a timescale of no more than 60 years – so the plant would need a capacity of at least 26 tonnes. He concludes that the construction of another British MoX plant looks to be on the cards.
In his final chapter Jackson gives away his view that we either have to deal with nuclear waste or carbon dioxide – not an Energy [R]evolutionary. On the other hand his arguments are in many cases severely critical of the establishment view. This is a fascinating book, full of useful insights, and some very handy numbers. A must for any nuclear campaigner’s bookshelf.