Another study shows the stupidity of Scottish nuclear

Over the course of the Scottish Election, Common Weal has been trying diligently to correct the misinformation which has been promoted by the nuclear industry. We have written letters to newspapers to correct reporting, produced numerous briefings on the facts of nuclear energy, placed stories in national newspapers and had guest articles published.

Today, we are joined by a powerful ally: the National Audit Office. It has looked at the UK's current (never mind expanded) nuclear commitments and is struggling to find a reliable business case. It identifies the benefits to come from a completed plant serving six million households in the London area.

But it recognises these benefits are uncertain because they are realised only at a point in the process where the capital costs of the project have been paid down sufficiently that households are gaining in comparison to alternative options.

That is a lot of uncertainty given the constantly-rising price for Sizewell C. When the new nuclear plant was constructed, it was scheduled to cost £20 billion. That cost has more or less doubled to £38 billion. Given that the public financial gain from the project relies on the final construction cost staying below a threshold point, that places a lot of the weight of the calculation on the risk side.

This is what is concerning the NAO – energy users all over Britain are already paying for this facility (whether they are using it or not), on top of already high energy bills. It is a modest charge at this point - £14 a year. But that is still a significant sum to ask every household in Britain to pay for ten years, but to get no electricity from it.

That means a lot of weight goes on the breakeven point – at what point in the lifetime of the facility will end up producing electricity for consumers at a price cheaper than the low carbon alternatives. That is where the uncertainty comes in. At the moment, the NAO estimates that the breakeven point will be sometime in the middle of the 2060s.

Let's put that into perspective; if you are 40 or above, the likelihood is that you will pay for the construction of this facility for the rest of your life, but you will never gain a penny of benefit from it.

So who will? We know the private investors in this project (the UK is only a minority shareholder, though it is the largest single partner). We also know that there is a cost cap – if the project goes another £8 billion over budget, from there all risks are borne by the public.

In fact, this is part of a very generous yet pretty opaque agreement with the private partners on the costs. As this analysis shows, the terms required to bring in private investment into nuclear power were remarkably generous to the private sector. This tells us a lot about the real business case for nuclear in Britain.

Fundamentally, we do not know how much private profit will be extracted from this project, so it is hard to be certain about the exact value for money. But we know that there is surprisingly little risk to anyone other than the taxpayer in this.

That is the fundamental point the NAO makes – the risks are high and certain, the rewards clear but uncertain, and the risk is unevenly spread. The Auditors’ own words are helpful here:

“Sizewell C is a project of exceptional scale, complexity and significance for taxpayers. Experience from comparable nuclear projects in the UK and overseas highlights their vulnerability to delays and cost overruns.”

It makes clear that the potential benefits are “considerable but uncertain” while risks are “immediate and substantial”. And that is before it starts generating the most expensive electricity in Britain.

Scotland is already energy self-sufficient. The idea that we have any incentive to travel this same path is very strange indeed.