There has been a great deal of commentary in the last few weeks that the nuclear crisis at the Fukushima plant is not as bad as the Chernobyl meltdown.
We can only hope that prediction proves correct. But for the nuclear industry, say the analysts at UBS, the consequences are already even worse.
In a mammoth 140-page report looking at the future of the global nuclear industry, they say:
While the 1986 Chernobyl accident, at least to date, had a significantly greater environmental impact, we would argue that Fukushima raises even larger credibility issues for the nuclear industry than previous accidents.
This morning’s clampdown by the UK regulator on the country’s big six utilities was unexpectedly hard-hitting.
Apart from the news that the companies may be forced to auction up to 20 per cent of their electricity generation output, there was the harsh tone struck by the regulator’s chief executive, Alistair Buchanan. He said:
Energy companies have failed to play it straight with consumers and so Ofgem is proposing to break the stranglehold the Big Six have over the electricity market.
And then there was one. After Eon announced on Tuesday that it would increase electricity prices by 9 per cent and gas prices by 3 per cent, that leaves only EDF of the big six who have frozen charges over the winter.
The row that has followed runs along the same lines as that which came after British Gas made a similar announcement last year. The company says wholesale energy prices have risen, but won’t go into detail about their purchasing agreements.
Consumer groups and some analysts argue that companies can and should be more flexible with their supplier agreements to take advantage of low prices when they can. They also say that companies are more reluctant to lower prices when wholesale prices fall than they are to raise them when they rise.
It seems consumers’ best chance of being certain they are getting a fair deal is to hope for decisive action from Ofgem when the regulator announces the results of its probe into energy prices.
British Gas customers brace yourselves. From December 10 you will have to pay an average of £53 extra a year for gas and £29 extra for electricity.
But given this global gas glut that we keep hearing about, the question is why are prices about to rise?
The answer BG gives is that whatever is happening on the global scale, they are paying more now than they were last year for wholesale gas – 25 per cent more in fact. They are also paying more for extra costs like transportation and other overheads.
Last week I wrote that one of the areas of complete agreement at a debate during the European Future Energy Forum had been the need for a high and stable carbon price to incentivise low carbon energy production. But I added that nobody knew how to bring it about.
During that debate, the foreign office minister Lord Howell said:
The government has got to keep its nerve and do some brave things which are highly unpopular and likely to lose nice votes. This is getting if anything more difficult, as gas gets very cheap, and the gap with renewables widens. We need to get costs down and carbon price up.
This resolution to make a potentially unpopular move will be tested on Wednesday evening. That is when the big six British energy companies, including Centrica, EDF and Scottish Power, will warn Chris Huhne over dinner that the government’s proposed carbon floor price is not going to achieve much.
The US government’s loan guarantee scheme has come under scrutiny in recent days after the collapse of the JV between Constellation and EDF for a new nuclear plant. But it appears the similar scheme for the solar energy industry is also coming under fire.
A fascinating Reuters report today spells out some of the problems US solar sector has had securing financing on the back of such guarantees. The authors write:
Applicants to the loan guarantee program have complained the process is too lengthy and murky, leading to just a handful of projects winning approval.
Can new nuclear energy be developed in the UK without government subsidies? This question has been rumbling on in the UK ever since the coalition government agreed to allow nuclear power stations to be replaced “provided that they receive no public subsidy”.
At first it was assumed this was a convenient way to shelve plans for new nuclear building, which the Lib Dems have long opposed. After all, how could companies embark on something as big and expensive as new nuclear building without government money?