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Page added on April 30, 2016

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Let’s Stop Pretending Nuclear Power Is Commercially Viable

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First its new president, Jean-Bernard Levy, said French state utility EDF would delay a decision on its joint French-Chinese nuclear project in the UK, Hinkley Point. That was over a year ago. Then the CFO of EDF, Thomas Piquemal, quit reportedly because he opposed the project on financial grounds. That was a short time ago. Then after a slew of leaked memos, the French government just announced that EDF would be raising more money and the Hinkley decision would now come in September.

David Cameron’s government in the UK backs this exceedingly expensive project and the French government controls both EDF and Areva, the nuclear manufacturer that developed the nuclear system to be used at Hinkley Point. (Two other plants in Finland and China using this technology are still under construction, behind schedule and over budget.) As part of a plan to rescue Areva (which has lost money in each of the past four years and has negative equity, meaning the share-holder investment has been wiped out), EDF agreed, earlier in the year to buy Areva’s nuclear engineering division. Clearly, France views its nuclear ambitions as a matter of national prestige and intends to support Hinkley Point.

Now for the finances. These British nuclear units will cost roughly £18 billion ($27 billion). EDF has already sold a 35 percent share to the Chinese state nuclear company. However EDF still has to find more outside investors and get its ownership of the plant below 50 percent or it will have to consolidate Hinkley Point on its books and show all of the project’s debt on its own balance sheet.

At the end of 2015, long- and short-term debt made up 79 percent of EDF’s capital, an already high number, and two of the three major bond rating agencies have assigned EDF’s debt a “negative outlook.” EDF also needs more capital to take over Areva, finish the French nukes still under construction and refurbish its own domestic fleet of aging nuclear power stations. All this will take place during what amounts to a financial crisis within the European electricity markets.

So the French government just announced a $4.5 billion capital raising for EDF (the government will buy the lion’s share of the newly issued stock). But from the look of the numbers that share offering constitutes a modest fraction of what is required by a firm that will have to compete more and more in a competitive electricity market.

Last year EDF reported a return on shareholder investment of less than 5 percent (an adequate return for bondholders not stockholders). To reduce the total debt burden to a more manageable 70 percent would require the sale of another $16 billion of stock, a painful process, especially for existing shareholders when returns and share prices are so depressed. More than likely EDF will explore asset sales and other ingenious means to rearrange assets in order to shore up its overly indebted balance sheet.

If we were gamblers we would not wager that EDF will take the obvious first step towards restoring its financial health and cancels the Hinkley project. Of course, if David Cameron loses the Brexit vote (a referendum to take the UK out of the European Union) and is ejected from Number Ten Downing Street, a new Prime Minister might take a more skeptical view of Hinkley Point.

The real point of this story is that nuclear power is not commercially viable but has become a state-sponsored technology. There is nothing wrong with state supported technology. But we could save a lot of time and money by not pretending that it is something else.

OilPrice.com



19 Comments on "Let’s Stop Pretending Nuclear Power Is Commercially Viable"

  1. makati1 on Sat, 30th Apr 2016 7:03 pm 

    Nuclear power was promoted to manufacture the materials need for nuclear weapons at the hidden expense of the taxpayer. Nothing more or less. Those of us elderly remember when nuclear electric was advertised as going to be “Too cheap to meter”. LMAO

  2. onlooker on Sat, 30th Apr 2016 7:20 pm 

    Yeah and let us stop pretending nuclear can be made safe and clean.

  3. apneaman on Sat, 30th Apr 2016 7:26 pm 

    The Granddaddy of American cancer.

    Hanford, Not Fukushima, is the Big Radiological Threat to the West Coast

    “The Green Run

    In December 1949 the United States deliberately released an immense amount of radiation into populated areas at the Hanford Site during the notorious Green Run. It was the largest intentional release of radiation conducted by the U.S. government. While nuclear testing in Nevada exposed many people to significant amounts of radiation, this was a byproduct of the desire to test weapons. In the Green Run the intention was specifically to release the radiation into the Hanford area. The Green Run was conducted in reaction to the test of the first Soviet nuclear weapon in Kazakhstan several months earlier. The first indications that the Soviets had successfully tested a nuclear weapon came when sensors at Hanford picked up the radiation several days later. It was decided to release radiation “similar” to that of the Soviet test to develop and hone detection equipment and better analysis of the Soviet program.”

    http://www.counterpunch.org/2016/04/29/hanford-not-fukushima-is-the-big-radiological-threat-to-the-west-coast/

  4. onlooker on Sat, 30th Apr 2016 7:29 pm 

    Not really about Nuclear but thought i would slip this in. https://theintercept.com/2016/04/29/the-joke-of-u-s-justice-and-accountability-when-they-bomb-a-hospital/
    The Joke of U.S. Justice and “Accountability” When They Bomb a Hospital

  5. Hawkcreek on Sun, 1st May 2016 1:15 am 

    All big projects always end up in really being about big money or big power – or both.
    I used to get upset when I saw a government financed road or bridge remain a toll road, even after the original cost had been repaid. But big projects are always paid for by the little guys, and any profits taken by the big guys.
    Face it, we live in a sick world.

  6. Dubya on Sun, 1st May 2016 2:32 am 

    Nuclear fission will solve all our problems. After 75 years the only question is when do you think we should take out the trash?

    But we have top people working on that. Top. People.

  7. Meld on Sun, 1st May 2016 4:25 am 

    Anyone who is a nuclear proponent should be made to sign a form that says

    A) I will accept any and all nuclear waste to be buried safely on my premises as required

    B) In the event of nuclear meltdown I shall be first in line to sacrifice my life for the greater good of humanity.

    Lets see how many people are pro nuclear then hey?

  8. Meld on Sun, 1st May 2016 4:25 am 

    Anyone who is a nuclear proponent should be made to sign a form that says

    A) I will accept any and all nuclear waste to be buried safely on my premises as required

    B) In the event of nuclear meltdown I shall be first in line to sacrifice my life for the greater good of humanity.

    Lets see how many people are pro nuclear then hey?

  9. Kenz300 on Sun, 1st May 2016 4:35 am 

    Nuclear energy is poisoning the planet…………

    5 Years After Fukushima, ‘No End in Sight’ to Ecological Fallout

    http://ecowatch.com/2016/03/05/5-years-after-fukushima/

  10. Kenz300 on Sun, 1st May 2016 4:36 am 

    Fukushima Should Have Served as Wake-Up Call for U.S. Nuclear Regulatory Commission

    http://ecowatch.com/2016/03/10/fukushima-wake-up-call-nrc/

    7 Top NRC Experts Break Ranks to Warn of Critical Danger at Aging Nuke Plants

    http://ecowatch.com/2016/03/09/nrc-experts-warn-dangers-nuclear/

  11. Dredd on Sun, 1st May 2016 5:45 am 

    Let’s Stop Pretending Nuclear Power Is Commercially Viable

    “viable” means capable of living.

    Nothing that brings mass death (such as fossil fuels, Chernobyl, and Fukushima death engines) is viable.

    Fossil fuel based civilizations are not viable, nor any part of them.

  12. Go Speed Racer on Sun, 1st May 2016 7:19 am 

    If you are a proud Trump voting American, spell it correctly: NUK-YA-LUR. That is also how it is pronounced. Then use in a shirt sentence: I AM FOR NUKYALUR POWER.

  13. Dredd on Sun, 1st May 2016 11:42 am 

    Human civilization is not viable.

    “Human Extinction Isn’t That Unlikely” (Atlantic Magazine)

  14. Anonymous on Sun, 1st May 2016 12:25 pm 

    I am the only one that finds it funny that oilprice.com, a site that consistently produces articles as bad, or worse, then Rig-Porn, Wall St Urinal, or Forbes etc, whining about how nuclear is not commercially viable? Consider for a moment the nearly 1 Trillion (est) in subsidies the oil and gas cartel receives every year NOT including in-direct subsidies, which totally dwarf, direct subsidies, and for what again?. Yea consumption of oil.

    Now I dont disagree with the article’s premise. Nuclear power of course, is not commercially viable. And is not a lot of other things either. But hearing a site that shills for the massively subsidized(private profit oil) industry, complaining about the massively subsidized nuclear industry, well that’s a bit rich isn’t it?

  15. peakyeast on Sun, 1st May 2016 3:10 pm 

    @meld: You forgot point no.3

    3. I will act as a biological filter when the radioactive substances are spread across the country, the air and the water.

  16. peakyeast on Sun, 1st May 2016 3:12 pm 

    sry point c, of course.

  17. energy investor on Sun, 1st May 2016 3:49 pm 

    Makati,

    IIRC Freeman Dyson – in his autobiography spoke about the reasons why he and his colleagues got into nuclear power in the first place. It was because they recognised that oil was finite and would one day run out. In the latter stages of WW2, the scientific horror of the A-bomb tended to balance the hubris of politicians.

    So IMHO, the development of nuclear power was well intentioned, just as efforts to find nuclear fusion are today. When we look at the drawbacks of waste and cost, these just followed on.

    Humans are not perfect…but not everything is a conspiracy 🙂

  18. makati1 on Sun, 1st May 2016 6:22 pm 

    energy, yes they are. It’s ALL about money. The US government has to pay, for the nuclear industry to exist, totally, and ever since the first nuclear plant was built. Those plants are insured by the US taxpayer as no insurance company will touch the liabilities of a nuclear plant. Don’t tell me there was some altruistic person that just wanted to do good for humans. LMAO.

  19. Davy on Sun, 1st May 2016 7:04 pm 

    Right energy investor, not everything is evil as some of our board members want us to believe. In any case it was a door that should never have been opened but one that humans could never not open. Our inability to restrain ourselves will be our evolutionary dead end.

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