Examination of Witness (Questions 120-131)
PROFESSOR SIR
DAVID KING
12 JUNE 2007
Q120 David Howarth: These are the
figures I never believe. We are now getting to the credibility
problem.
Professor Sir David King: You
must tell me whether you do not believe it from a detailed analysis
of the numbers or—
Q121 David Howarth: Yes, from the
MIT study.
Professor Sir David King: The
MIT study indicated a similar figure.
Q122 David Howarth: What it showed
was that there was always a premium because of the extra risk
of building nuclear power stations of a mark-up of about three%
above ordinary costs of financing energy projects. Often when
the government has been putting figures it has not included that
sort of premium. I think that kind of premium would exist in the
market if it was purely a market decision. There is also a political
risk because the build time is so long that policy might change.
Professor Sir David King: There
is an interesting point I would like to make in relation to possible
policy changes and that is even in those countries, such as Germany,
where a decision has been made not to build new nuclear plant,
no old plant has been closed down, so I think there is an assurance
that most of our European utilities are taking on board that once
a government decision is made on these issues, subsequent governments
stay with that. It is an expensive marketing decision to get that
wrong I can see, but at the same time I think history would back
the investment.
Q123 Joan Walley: Sir David, I cannot
help noticing that you have not included the political costs in
the various costs that you have just referred to. I am thinking
particularly of political costs if it is the case that there is
not and would not be public support for a replacement programme.
Professor Sir David King: There
is only one way in which the British public are going to support
nuclear new build and that is in the context that we are now discussing
it, which is meeting an objective of carbon dioxide emissions
reduction. I think that many of the arguments I have heard against
nuclear do not come down to a detailed analysis of energy production
for the United Kingdom. If you sit behind that analysis, as I
have had to, and then try and work it through without nuclear,
I challenge anyone to show how it works. There is a lot said about
combined heat and power, about using much smaller energy systems
that are micro generating systems and are distributive, but at
the same time we are where we are at the moment with our large-scale
power stations. Although I am very keen to see much more micro
generation, considerably more combined heat and power, if you
now take from where we are to where we want to be, it is extremely
difficult to get there and continue to reduce emissions over that
period of time. There has been much made of the fact that carbon
dioxide emissions have increased over the last three years. Much
of that increase is because of the loss of power from nuclear
power stations. If you factor out the nuclear then we have done
rather well by bringing renewables on board, by increasing energy
efficiency, we have certainly done very well on greenhouse gases
from landfill, but the one area we have done badly on is that
we were at 30% of our electricity from nuclear, which by the way
would be a very sensible percentage, you can leave that on all
the time, and we are now at 19%. Just factoring in big efforts
to reduce emissions against what actually happens as soon as one
nuclear power station goes out of commission, it is a difficult
one to argue.
Q124 Dr Turner: You cited Finland
as an example of a country using nuclear power to good effect,
I have to say, but it is quite easy to see by looking at the Finnish
situation and our own that it makes very good sense for the Finns
in their terms to do this because they have an under-generation
of capacity which means that they can run their nuclear stations
flat out for the whole of the year, which is the way to get the
best economics, and they also have a virtual lack of available
renewable energy resources compared with us. We have massive renewable
energy resources yet untapped around our coast in terms of our
marine resources which the PIU estimate some years ago was that
between them could account for twice as much electricity as we
currently generate and consume in this country. Certainly my reading
is that because of the enormous capital intensity involved in
developing new nuclear stations it will starve potential renewables,
and especially marine renewable deployment, so we will get the
nuclear capacity partly at the expense of the renewables and we
would not be getting the benefit of CO2 savings from nuclear and
renewables; it could not be and/and, it could to a large extent
be and/or. Can you think of any way of guaranteeing that displacement
does not happen?
Professor Sir David King: Yes.
Q125 Dr Turner: How?
Professor Sir David King: The
Renewables Obligation on the utilities is an obligation that was
introduced to place non-nuclear carbon free energy sources on
to the grid for each utility, and that obligation was aimed to
be ratcheted up in time to a set target of 2010, 2020. Each of
the utilities said they would be happy with this provided it had
a long timescale in front of it. In other words, they wanted to
make sure that their investment in what turns out to be largely
wind farms was going to pay off over a long period of time, so
the obligation has been carried through to 2023. What we have
got running in parallel with the potential for carbon dioxide
pricing is an obligation for renewables on the grid. In a way
this comes back to your point, Chairman, about public acceptability.
At the moment we have about two gigawatts of wind farm energy
on the grid, of renewable energy under the Renewables Obligation.
That is the maximum by the way; it is intermittent so generally
it is producing rather less than that. There are another eight
gigawatts, it might even be nine gigawatts, caught up in planning
permission. This is where locally the public are saying, "no
thanks". Of course, the Government is trying to see that
a streamlining of that planning permission process takes place
but, nevertheless, it is already an indication that public acceptability
is not a simple issue. It is also a question of whether wind farms
are going to be generally accepted at different places in the
country, and I would suggest in Cumbria the local population might
be a little happier about a new nuclear power station rather than
wind farms over the mountains that we so love to climb. Public
acceptability is an important issue. Just coming back to your
point, the Renewables Obligation, if you like, takes renewables
out of the normal competition, so when we talk about building
new large-scale power stations this is the utilities looking,
as David said, I think rightly, at a choice between a new CCGT
or a new nuclear power station. It is the large-scale power facilities
we are talking about. Frankly, I do not think the money is going
to come out of what would have gone into renewables. I do not
see the connectivity.
Q126 Dr Turner: I would suggest to
you that there are two other things to consider. Firstly, what
you say about wind, fine, wind has difficulties with the public
but it is not wind which is our great potential, it is wave and
tide. Tide does not have the intermittency problems that wind
has at all, it is totally predictable.
Professor Sir David King: It has
a different intermittency problem.
Q127 Dr Turner: It has a different
intermittency problem but properly deployed it could provide baseline
load to precisely the same degree as nuclear power currently does.
On the other hand, the nuclear industry, and I have heard various
representatives say it time and time again, yes they can build
nuclear stations without subsidies, fine, but they want guaranteed
long-term contracts.
Professor Sir David King: Like
the Renewables Obligation.
Q128 Dr Turner: In other words, they
want the monopoly of the baseline load because that gives them
economic production but that then denies access to renewables
which by definition, because they are at an earlier stage of development,
have not achieved their maximum economies of scale and, therefore,
may have higher generation costs. Unless they too benefit from
the baseline load and use their full capacity they become uneconomic.
It is not just a simple question of the capital involved but also
it is a generating cost economic issue where nuclear could—just
could—act as a cuckoo in the nest.
Professor Sir David King: If I
may just respond. The various forms of energy that you are describing
there are low density energy and they all have massive challenges.
Wind is a low density energy and this means you have to spread
your wind farm over a significant area of the countryside. If
we take wave, again it is low density and you really have to spread
those floats in order to capture relatively small sums of wattage.
On the question of tidal, the two rivers that have been most carefully
looked at are the Severn and the Mersey. I think you could probably
generate around a gigawatt, which is the equivalent of a large-scale
power station, from the Severn, you certainly would not get that
much from the Mersey, but then again the question is going to
be whether people find it acceptable to have the Severn used in
that way. All I am saying is I feel each one of these technologies
needs to be factored in and brought through to the maximum utility
and we do need a proper system that will bring them through to
the marketplace. The Renewables Obligation actually factors that
in. The utility that first brings on board the Severn barrage,
or whatever it is going to be, will play that into their utilities
Renewable Obligation. I think the mechanisms are in place and
I need persuading otherwise.
Joan Walley: I think finally David
Howarth wishes to come in to pick up one point.
Q129 David Howarth: A different way
of putting Des's point about crowding out. If you model to 2050,
just ignoring what the policy issues are, just on the basis of
carbon price, an effect comes out which is very clear given the
massive capacity, which is that nuclear has to in the end displace
renewables because of the way the grid works. The grid needs balancing,
flexible power which it gets largely from gas plant and nuclear
is very inefficient, economically inefficient, at full load. There
is an amount of gas that nuclear can never displace because it
cannot do the same job that gas does on the grid, therefore the
only thing left for nuclear to displace is renewables, which shows
Des's point by subtraction rather than by addition as he was trying
to do it. Is that not a problem, that in the long-term nuclear
will displace these energy renewables? There is a question of
public acceptability of different technologies but that has to
be its effect given that it cannot do the job that gas does on
the grid.
Professor Sir David King: My reading
of the economic drivers leads me to a different conclusion.
Q130 David Howarth: Very different.
Professor Sir David King: Let
us suppose we were optimising the UK grid electricity sources,
then I would suggest 40% of maximum demand in a given year should
be from nuclear and renewables. You are then leaving nuclear and
renewables optimally producing electricity round the year. That
means that right round the year your base load supply is all carbon
free, so you can meet the needs of the target and then at that
time of the year, the winter, when there is great demand for electricity
and we see the demand rise then you need to switch into those
power stations—this is meeting your point—that can
be rapidly turned on and off, and those power stations are likely
to be gas. What you would be left with is coal and gas with carbon
capture and storage providing the above baseline supply. I do
not see the economic argument that would drive nuclear plus renewables
above that 40%, maybe 50%.
Q131 David Howarth: The minimum demand,
which I suppose is the other way to operationalise this role,
the largely fictitious notion of base load, is a fifth of the
maximum demand. If you go for 40% some of that 40% needs to be
flexible in some way, flexible downwards mainly because the grid
has to balance in both directions, which I still think leads to
a situation where nuclear is going to be very expensive.
Professor Sir David King: The
pricing of nuclear does not assume that it is 100% producing full
load. The pricing, this £38, is a realistic price based on
an estimate of off and on time. It is going to be on all the time
but I am talking about actually sellable electricity going on
to the grid. You are right, minimum base load may be down at that
20% level but that is not very often.
David Howarth: It is in the summer.
Joan Walley: Sir David, I do feel this
whole issue of renewables and nuclear is going to run and run.
We have come to the end of our time now. Can I thank you for what
has been an absolutely illuminating discussion on the Climate
Change Bill, the Future of Energy White Paper and our further
report into the whole structure of Government. Your contribution
today will really inform future debate and action linked to that.
From my own point of view as a constituency MP I intend to bring
this to the attention of the science colleges in my constituency
because it is something we all need to be aware of. Thank you
very much indeed for your time this morning.
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