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Nuclear fuel for the wind lobby

Deregulation of the European electricity supply industry will eventually create opportunities for renewables. There is now little doubt of this. Not only is the importance of renewables being increasingly recognised in European Union energy policy, the time is coming when markets will be structured to encourage the use of as much clean power as possible. What's more, a number of influential bodies are pushing hard to make sure this happens. Last month alone, an unofficial gathering of European energy ministers in Denmark spent two days discussing matters related to the twin goals of a single European energy market and far greater use of renewable resources. Also last month, the Milan Conference, a follow-up to the Declaration of Madrid event in 1994 -- which formed an action plan for promotion of renewables in Europe -- reiterated the need for a firm commitment to achieving a substantial penetration of wind and other clean energy technologies by early next century.

Plans for the single competitive electricity market for Europe are inching forward. Yet the Utopia of a level playing field in which renewables have a chance of fair competition is still a long way off. This is all too clearly illustrated in a new Greenpeace report on French electricity exports (page 21). In a nutshell, the report argues that French power is definitely being sold at below total cost and almost certainly below the marginal costs, with taxpayers losing out all round.

Does this matter? Yes. Any distortion of the electricity markets in favour of nuclear -- or any other technology -- will inevitably retard the introduction of wind energy, now that it is starting to be competitive. Wind lobbyists need to know the facts of such distortions to argue their case with conviction. The report puts the cost of French nuclear electricity at $0.05 to $0.06/kWh -- slightly lower than the levels which emerged from the UK nuclear review last year. These levels are higher than official estimates of the nuclear industry because reactor availability inevitably turns out to be lower in practice than originally envisaged. This is beyond dispute. (Wind turbine availability, on the other hand, is often higher than anticipated.)

It is clear that nuclear power still has a charmed existence, on both sides of the English Channel, despite the mounting evidence on its poor economics. Privatisation of British Energy -- the more modern bit of the UK's nuclear industry -- is ploughing ahead, come what may. The sale price is expected to be about half the construction cost of the latest nuclear station, just completed. So, seven stations will almost certainly be sold for less than the cost of one, a graphic illustration that nuclear economics cannot be brilliant. And that's without taking into account a detailed analysis of decommissioning liabilities, undertaken in a report initiated by Friends of the Earth and a consortium of local authorities, which argues that the true value of British Energy -- when the liabilities are taken into account -- is negative.

This editorial is not, however, a diatribe on economics. There are other lessons to learn. The analysis of French exports teaches us that energy privatisation legislation must be clear, sensible and simple and should not be rushed. In Britain, these criteria were not met. An effect of this has been to allow the French nuclear utility, EdF, to claim exemption from the 10% levy imposed on fossil sources in the UK. It does this by claiming it is exporting nuclear-generated electricity to Britain. Yet the Greenpeace report presents strong evidence that a proportion of the French energy is generated from fossil fuel. In drawing attention to this anomaly, the report is reiterating what the UK government was told by one of its own select committees four years ago, when the need for closure of coal mines was examined. The UK government, however, does not want to know. In responding to its select committee the government naively claimed "the electricity imported from France is supplied from designated nuclear stations" and anticipated that bid prices for the interconnector would move to "more closely reflect the marginal cost of supply." Again, this matters. If the imports from France are underpriced, it means opportunities for indigenous coal-fired electricity -- and renewables -- are being unfairly excluded.

The most worrying aspect of all this is that there appears to be no effective mechanism for settling the uncertainties. Despite the importance of energy, the monitoring process in Europe for breaches of EU legislation in this area is conspicuous by its absence. Without such monitoring, all the fine words on open access, transparency, and a fair crack of the whip for wind, do not amount to much. As the Greenpeace report notes, the only EU department with investigative powers, the competition directorate, has nobody employed full time to keep an eye on energy networks. In an area as important as energy, the people of Europe need to know the players are abiding by the rules. That much security is the least wind should ask for.

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