Britain faces economic issues as nuclear power is privatized

The UK government announced plans in May 1995 to privatize the country`s two nuclear generating companies, Nuclear Electric and Scottish Nuclear. Under the plan, the two companies will become operating divisions of a unified holding company, to be called British Energy, with headquarters in Scotland.

Britain`s nuclear plants were left out of the initial privatization in 1989 because the government believed the financial community would be unwilling to accept the open-ended liability of decommissioning the original nine stations based on the Magnox gas-cooled reactor. Six years later, the government found a way around this by retaining these power stations in state ownership, leaving the new nuclear company with the eight advanced gas-cooled reactor (AGR) stations and the recently completed Sizewell B PWR station. The operating Magnox stations are to be transferred to BNFL, which operates two Magnox stations of its own at Calder Hall and Chapelcross.

Calder Hall, adjacent to the Sellafield reprocessing complex, was one of the world`s first nuclear power stations when it was opened in 1956. It is still operating, although its role as a source of steam for process and space heating has been taken over by a new 180-MW combined-cycle cogeneration system, and the plant`s electrical output is now sold into the pool with the non-fossil fuel premium. Both this station and the Chapelcross plant in Scotland have permits to operate until they are 40 years old.

In effect, British Energy will become a holding company with two operating divisions: the present Nuclear Electric, without the six operating Magnox stations; and Scottish Nuclear, with its two AGR stations–Hunterston B and Tomess–which together supply 50 percent of Scottish electricity demand. The AGR plants in England have seen dramatic improvement in operation and are now the cheapest electricity producers in the country, despite having been built over an extended period of high interest rates during the 1970s. The nuclear share of electricity supply has risen from 16 percent at privatization to more than 25 percent today.

Weighing costs

Estimates of decommissioning costs are considerably better than in 1989, because three of the original nine stations have been shut down. Further, work on decommissioning the first, Berkeley, about 40 km north of Bristol on the Severn estuary, has begun. A nuclear development laboratory was established at Berkeley by the Central Electricity Generating Board (CEGB), and subsequently taken over by Nuclear Electric. Also, Berkeley will serve as headquarters for the Magnox company.

Of the six plants which remain in operation, Bradwell is the oldest, dating from 1962. The plant will continue in service at least until 1997 and may be allowed to operate up to a total of 40 years. If the other five similarly continue in service, they will all still be operating at the end of the century. The revenue from electricity sales alone could contribute more than (US)$3.1 billion to the decommissioning fund.

In addition to the six Magnox stations, five nuclear plants operate in England and two in Scotland with the AGR design. Also, Sizewell B, a 1,100-MW PWR, began full commercial operation in early 1995.

As a preparatory step in organizing the industry for sale, management of the Magnox stations is being separated into temporary operating divisions of Nuclear Electric. The Magnox Generating Co. (MAGCO) will control a capacity of 4,000 MW. Bradwell, 70 miles east of London, is the oldest of these stations, completed in 1962; and Wylfa, completed in 1972 on Anglesey, is the largest and the last built.

AGR Power Co. (APCO) will operate the AGR and PWR stations, with an installed capacity of 10,000 MW, 2,570 MW of which is generated at the two sites in Scotland. The first of the stations to operate was the 1,250-MW Hinkley Point B, completed in 1977 on the north Somerset coast about 60 miles southwest of Bristol. Sizewell B is the latest.

A large inventory of nuclear plants is still operating, equivalent to about one-fourth of the total installed capacity in England and Wales. This represents base-load capacity, with the AGRs and PWRs offering limited flexibility. However, with steam conditions in the same high-sub-critical range of contemporary oil- and coal-fired steam plants, the AGR design may be more competitive.

With the separation of the two nuclear blocks in September 1995, the next step comes in January 1996 as the two companies start shadow trading in Britain`s power pool. MAGCO and APCO essentially will be independent trading companies bidding their generators into the pool along with everyone else. The same arrangement was used with National Power and PowerGen before the original privatization.

Meanwhile, the government is working to transfer the nuclear site licenses to the new companies. By April 1996 they will be legally separate companies, with privatization of APCO to follow in the summer. The privatized company will be a holding company with the two existing nuclear power operators, Nuclear Electric and Scottish Nuclear.

Preparing for privatization

The commissioning of Sizewell B, and previously the startup of the BNFL`s new Thermal Oxide Reprocessing Plant (THORP), passed without incident. Indeed, anti-nuclear activists have said little about the privatization, perhaps because they see it as the guarantee that no more nuclear plants will be built in the UK. Their argument is that under privatization the nuclear generators will build what will earn the best return for their shareholders. Given the low price of natural gas, a 1,200-MW combined-cycle facility could be built in less than half the time of a nuclear station of the same capacity and at substantially lower cost.

Another issue, however, involves the counter-environmental argument that nuclear power produces no gaseous emissions, including greenhouse gases like CO2. Nuclear power also provides a degree of long-term energy independence that other fuels cannot. Any serious escalation of electricity demand, as would come with the widespread adoption of electric vehicles, may require additional nuclear capacity.

Immediately before the 1989 privatization, applications were filed for four more PWR stations like Sizewell B. These plants would be installed at three existing nuclear sites–Hinkley Point, Sizewell and Dungeness–and a new site at Druridge Bay in Northumberland. Permission was obtained by Nuclear Electric for the first two of these.

The government is also keen on diversification of energy supply and would like to see about 25 percent to 30 percent of power supplied from nuclear sources, leaving the rest to coal and gas. Nevertheless, the British system still has excess capacity, with cheap gas available in the spot market, and about 4,000 MW of combined-cycle capacity still under construction. New nuclear construction may therefore be phased with the withdrawal of the Magnox stations from service to ensure that the balance of energy use is maintained. As a result, the future for nuclear energy is uncertain in the United Kingdom.