French nuclear trade exposed

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Exports of nuclear electricity from France benefit neither the country nor its neighbours according to a new report by the French agency Inestene, commissioned by Greenpeace. The report claims that France's increasing trade in nuclear power is costing the country upwards of $1000 million annually -- and that UK consumers have been paying dearly for base-load electricity imported through the cross-channel link, to the tune of $45-$90 million annually above market rates.

For renewables such as wind -- which in future are expected to compete with nuclear on the liberalised UK electricity market -- such imports are rubbing salt into the wounds already caused by the massive subsidisation of nuclear. The value of French nuclear exports to Britain is enhanced by a quirk of the Non Fossil Fuel Obligation as it is assumed that the energy is generated by non-fossil (nuclear) sources. In practice, however, the report notes, "a significant part of the production exported must be attributed to fossil sources." The report substantiates this claim by charting parallel increases of exports and energy production from fossil sources in France, although these have fallen back in the last two or three years.

The report attempts to unravel the complex economics of French nuclear electricity. If the "official" price figure is corrected to only take account of lower-than-expected reactor load factors, the energy price is around FRF 0.28/kWh ($0.056/kWh). But when cost overruns during construction and operation are taken into account, this rises to about FRF 0.33/kWh ($0.065/kWh) and above. As the price of French coal-based electricity is around FRF 0.30/kWh ($0.06/kWh) the report argues that exports should be priced above the 1994 average of FRF 0.23/kWh ($0.045/kWh), which is about half the average selling price of electricity in France.

The French electricity exports stem from over-capacity and are justified on the grounds that their marginal costs are covered. The Inestene report argues that scheduling plant on the basis of marginal costs tends to encourage such over-capacity. As a corollary, it argues that it would make economic sense to freeze work on nuclear reactors currently under construction. It also concludes that the European Commission has accepted the secrecy of electricity transactions and has not, so far, acted to safeguard consumers and manufacturers from discriminatory practices; it is in any case ill-equipped to investigate whether breaches of EU competition regulations have occurred.

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