The BWEA calls Nuclear Electric's generation cost estimates of £0.029/kWh "unrealistic," saying it is based on public sector accounting which is not comparable with costs of competing technologies. The BWEA argues that if private sector parameters are used, the cost would be at least £0.048/kWh -- possibly more. Moreover, introduction of a carbon tax would add another £0.005/kWh pushing the cost above £0.05/kWh. This compares with costs for renewables -- including wind -- which are expected to fall below £0.05/kWh by 2000. The BWEA also attacks inaccuracies and exaggerations in Nuclear Electric's submission to the review which predictably is dismissive of wind's contribution.
The BWEA's paper was one of around 400 submissions received by the Department of Trade and Industry and the Scottish Office when the consultation period for the review came to an end on September 30. The prospect of the review has been hanging over the nuclear industry since 1990 when most elements of the UK electricity industry were privatised. Privatisation brought to light the true economics of nuclear power and the government was forced to abandon its original intention of selling off the nuclear stations. This meant that the two nuclear companies -- Nuclear Electric and Scottish Nuclear -- were left in the public sector. The government pledged to look anew at nuclear in 1994, giving it four years to put its house in order.
In a separate submission to the review, the Association of Independent Electricity Producers (AIEP) favours privatisation of the nuclear industry to create a level playing field for all electricity generators in the UK. The AIEP represents some 100 members, half of them renewable energy generators -- including 15 involved in wind. It believes the nuclear companies should compete on equal terms with other technologies. "The market should decide the commercial viability of new nuclear power stations," it says. However, the AIEP warns that if the privatisation route is chosen, nuclear must receive no subsidies giving it an unfair advantage.
The AIEP also points out that nuclear power is not the only generating technology that is free from carbon dioxide emissions. It draws attention to the success of the Non Fossil Fuel Obligation (NFF0) in bringing many renewable technologies towards competitiveness. Although it admits to "serious misgivings" about some NFFO mechanisms, this type of support, which allows renewables to be developed in a demonstration market environment, offers better value for money than direct government funding of research, it claims.
Electricity Regulator, Steven Littlechild, is also in favour of privatising the nuclear industry. Like the AIEP he is concerned that the nuclear companies should not be subsidised. New nuclear plant is not needed on either capacity or diversity grounds, he says. Both Littlechild and the AIEP target the Fossil Fuel Levy for criticism. Proceeds from the levy support nuclear and renewables. It is paid by public electricity suppliers through a 10% surcharge on all electricity bills. At its present rate Littlechild says the levy is unfair on other generators and has also caused distortions in the electricity market. He argues that financial support for renewables through the levy, lasting until 2015, would only need a levy rate of 1% and he calls for a progressive decrease in payments to the nuclear industry.