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Viktor Katona

Viktor Katona

Viktor Katona is an Group Physical Trader at MOL Group and Expert at the Russian International Affairs Council, currently based in Budapest. Disclaimer: views set…

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The Nuclear Power Struggle In The EU

Reading through the nuclear news of the past weeks, the attentive reader might have come across an under-the-radar dispute of Austria and United Kingdom, perhaps one of the most unfathomable confrontations in Europe, considering the distance and difference in national policies. The crux of the matter is the following: when Britain reversed in 2006 its previous policy of scraping all nuclear power and has made nuclear one of the key components of its carbon-emission reduction strategy, it has set in motion an entire array of countries ardently against building new nuclear assets. When the policy plan evolved into a real prospect of Hinkley Point C, one of the most anti-nuclear nations, Austria, decided to take the issue to European courts, claiming that the UK’s aiding of nuclear projects by means of subsidies contradicts EU norms.  In its definitive ruling dated September 22, 2020, the European Court of Justice has found that UK’s aid for Hinkley Point does not violate EU rules and regulations, providing its commentary on the 3 main disputed elements of the deal. First, the ECJ found that the “contract for difference” which ensures that the price of electricity Hinkley Point will get does not drop below a specific threshold is perfectly valid. Second, Austria felt some resentment over the UK government’s signing onto a compensation scheme whereby London provides binding guarantees that were Hinkley Point to shut down due to political reasons the project stakeholders would receive appropriate compensation. The third objectionable measure (in the eyes of the Austrian authorities) consisted of the UK government’s credit guarantee towards the company’s project company NPC yet even this was considered sustainable. 

Austria has been one of the most vocal opponents of nuclear energy within the European Union, its decades-long concerns aggravated by the fact that every single neighbor of theirs has a functional nuclear plant (the tiny nation of Liechtenstein being the only exemption to the rule). In the 1970s when many of Central European nations started their nuclear paths Austria was also bound to have its own nuclear plant in Zwentendorf, some 30km from Vienna. However, as the construction progressed Austrian anti-nuclear movements have intensified their protests, compelling then-?hancellor Bruno Kreisky to call a referendum on the issue. The “no” vote prevailed at the 1978 referendum and Vienna has been a staunch opponent of all nuclear developments in Europe ever since. Related: China Believes Natural Gas Demand Will Soar

For the United Kingdom, the renaissance of new nuclear capacities resulted from the sound understanding of the nation’s limitations, namely that it could not get rid of its “undue reliance on coal” without resorting to nuclear. Compared to European peers, Britain has rather sharp targets in terms of reducing its greenhouse gas emissions – decrease of 80% by 2050 against the 1990 base levels – and intermittent wind power alone (even though the UK might become the Saudi Arabia of wind power, to use Boris Johnson’s simile) would simply not be enough. It has to be noted that Britain was one of the first countries historically to build a nuclear reactor, the (non-commercial) Harwell plant was commissioned as early as 1947 and excepting the 1957 Windscale incident has had a fairly safe history of operation. 

Graph 1. United Kingdom Nuclear Electricity Generation in 1970-2019 (in Terawatt-hours).

Source: BP Statistical Survey 2020. 

But why has Hinkley Point angered continental Europe that much? Hinkley Point C would not be the first nuclear plant in Somerset – Hinkley Point A was decommissioned in 2000 after a relatively seamless 35 years of functioning, whilst Hinkley Point B is still producing electricity by means of an advanced gas cooling reactor (AGC) and is expected to be shut down in 2023, just as Hinkley Point C is commissioned. Point C would consist of two European Pressurized (EPR) reactors, both 1630 MW capacity, designed by the French Areva. If everything goes well, Hinkley should be the third EPR to be built in Europe after France’s Flamanville and Finland’s Olkiluoto. The nuclear plant’s operator, the French EDF, has agreed to a strike price of 92.50 GBP per MWh which is palpably higher than the current baseload price in the UK – the strike price would drop 3 GBP per MWh if the UK government were to sanction the Sizewell C nuclear plant. 

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The relative high cost of nuclear energy remains the main point of contention for Britain’s industry, many are arguing that Europe’s other EPR projects do not necessitate hidden government subsidies. Cognizant of this liability, Whitehall is still pushing forward with nuclear energy. Hinkley Point C might be the first fruit of the 2006 nuclear policy reversal, as the UK Nuclear National Policy Statement has pinpointed 10 potentially suitable sites for nuclear development. It is assumed that once fully operational, Hinkley Point C will provide some 7% of the United Kingdom’s total electricity needs – combined with Sizewell C, this ratio would raise to 13%. As of today, it is the only envisaged nuclear plant that has already moved into the construction phase.

There is very little probability that the issue of Britain’s nuclear policy will elicit any further confrontation with EU countries. Austria has seemingly lost its battle fervor. The peculiarity of the current situation lies in the fact that following the United Kingdom’s leaving of the European Union, the country has also left the European Atomic Energy Community (Euratome) on January 31, 2020, hence much of the contention became devoid of meaning in a post-Brexit perspective. Still, the Austro-British spat has accentuated certain peculiarities in the European Union’s ambivalent approach to nuclear energy – for instance, the European Commission’s €7.5 billion Just Transition Fund, whose purpose is to facilitate the energy transition from polluting forms of energy to clean and non-polluting ones, was created with the proviso that investments into nuclear energy will not be supported, despite being a clean (albeit a non-renewable) source of energy.

By Viktor Katona for Oilprice.com

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Leave a comment
  • Pekka Lehtikoski on October 31 2020 said:
    This question can break EU. EIA: Belgium, Bulgaria, the Czech Republic, France, Hungary, Slovakia, Slovenia, Sweden, and Switzerland use nuclear energy for over 30% of their electricity generation. At least for France and Finland (probably for several others too) eliminating or reducing nuclear investments is simply not possible. They are "permanently married" to it.
  • One Second on November 01 2020 said:
    "the renaissance of new nuclear capacities resulted from the sound understanding of the nation’s limitations"
    These limitations are imaginary and anything but sound. There is no fundamental reason stopping the UK from going 100% renewable + storage. Imho Hinkley C and other possible nuclear plants are due to the concerns of losing nuclear know how needed to operate their nuclear weapons and nuclear submarine programs.
  • Pekka Lehtikoski on November 01 2020 said:
    "Hinkley should be the third EPR to be built in Europe after France’s Flamanville and Finland’s Olkiluoto." The two European Areva EPR projects have been total failures, both are 10+ years late, cost N x original estimate (big N), and neither of those works to date. Olkiluoto 3 has the dubious honor to be the third most expensive building in the world, just after ITER and Abraj Al-Bait. Areva has done everything it can to escape responsibility and blame customers. There are two more Area EPRs Taishan Nuclear Power, Wikipedia claims that these started in 2018 and 2019. Still, it is hard to believe that Brits would into technology, which is proven to be an experimental failure.

    A better choice would be Rosatom's VVER (V-320) pressurized reactors. These are the most common reactor type in the world, about ~990MW. Relatively old and proven design, no serious accidents, low price. French P4 design for ~1400MW would probably also work, although general trust in Areva a problem. There are 20 of these reactors operating in France, and none has blown up yet.

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