The best thing to do to win back public opinion in Europe and globally is to build reactors on time and on budget, Jean-Paul Poncelet told EURACTIV.sk at the European Nuclear Energy Forum in Bratislava.
Jean-Paul Poncelet is Director General of Foratom and former energy minister of Belgium.
Poncelet spoke to EURACTIV.sk’s Pavol Szalai
The United Kingdom is an important country for nuclear energy. Is Brexit a hurdle for the development of nuclear energy in the EU?
First of all, Brexit goes well beyond nuclear. We are losing the EU’s second economy.
Regarding nuclear, it is a pity they are leaving. Because in the course of the last years they demonstrated exactly what we should do. They were courageous enough to review what they did before. They were the driver of the deregulation of the electricity market 25 years ago. They have (again) deeply reformed the electricity market with a system called contract for difference. It is an agreement allowing them to support private investment in the long term. I definitely believe this is the way the EU should go.
You mean the contract for difference for the new nuclear power plant at Hinkley Point C?
Not only contract for difference. All of this together: the political analysis of the situation, the ability to reconsider what was done, the capacity to rethink it with a new proposal of energy market reform, a strong commitment vis-à-vis climate change and on top of this a system with governmental intervention to support and encourage long-term investment.
By the way, the policy (of contract for difference) does not differentiate renewables, potentially carbon capture and storage (CCS) and nuclear. They want to decarbonise. Strangely enough, this is not well known on the continent. Of course, we were very supportive of the Hinkley Point case in the EU, because we are the nuclear lobby.
But I discovered that even in the European Parliament many were not aware of the British reform. It is the right way to go. I know it is difficult to extrapolate what a single country did to the EU as such. For example, they have a very strong regulator. We miss such a regulator EU-wide.
Hinkley Point C is criticised mainly for its price, £92.5 per MWh. The cost of wind is maybe half of that in the UK.
No, not at all. And that is why I am thankful for the question. The advantage of the contract for difference is that it applies to all technologies.
And there are precedents. In the files of the Department of Climate Change, you can see they did agree on other contracts for difference to support renewables. And nobody knows they were more expensive. They contracted £92 for Hinkley Point. And the last one for offshore windmills was around 120 – 130, which is significantly more. And that is in the interest of the electricity market reform.
The contract for difference is, in fact, an accounting exercise, because as operator you have to open your books and it takes long to review your figures. That is what happened with EDF Energy (the future operator of Hinkley Point C). The operators of renewables also had open books. And at the end of the day, they contracted with a price, which is significantly higher than the price of nuclear. In fact, they demonstrated that under the current system, nuclear is competitive even for new-build.
Hungarian MEP Benedek Jávor (Greens) says nuclear has been subsidised for decades. Contrary to nuclear energy, renewables are an immature technology whose cost curve is constantly falling. Are continued subsidies for nuclear energy justified after 60 years?
First, you will never hear me criticise the support for renewables. We need them as well as we need – if we can make it – CCS and maybe a new technology – if by chance we find one. Even if we add all this, we will have difficulties decarbonising the economy. I will never criticise the principle, but let us have a look at the modalities.
The British system is not a subsidy to nuclear. It is purely a convention between the government and the company. The main goal is to ensure a minimum price. If the operator is able to live with this and produce electricity at a cheaper price, the margin will be taken by the government and will serve to compensate in the other situation where the operating cost would go beyond the price. And the consumers are going to pay, not the citizens.
The issue of renewables now is that it is not reasonable to go with the current system for the very good reason that the guaranteed price is not linked to any other constraints. If you create a new IT device, which is expensive as a prototype, it makes sense to give a subsidy for the development. But it would be normal for the government to say ‘OK, I will support you, but in the course of the next two, three, five, ten years, you have to improve the process, reduce the cost by 10, 20% and be competitive.’
You will never find subsidies for renewables with such a system. The best demonstration is that the price is guaranteed for 10, 15 or 20 years without any complementary conditions. They are not asked to improve the efficiency or technology.
But Hinkley Point has a guaranteed price for 35 years.
Yes, because that is a long-term investment. You were asking about subsidies to nuclear energy, when it started. In fact, the renewables were in the same situation. If you compare the price of electricity produced by a reactor at that time and now, it was a significant improvement in efficiency, competitiveness and safety.
My point is that a support for new technology is justified, but it has to be limited in time and supported by additional measures to improve the technology. That is something we miss. Many windmill farms were financed by financial companies, not operators. Because it was an opportunity in the financial sector to get revenue.
The biased system had another consequence. We deregulated the electricity markets in the last 10 years and we did not give a chance to what we decided. In fact, we had expected deregulation would increase competition and reduce costs. But we did not give it a chance. Because in the upcoming years, due to climate change constraints, we immediately used the market to improve the share of hugely subsidised renewables.
That is a pity. The conclusion today is obvious. We have to reconsider it and make it work. Otherwise, we are under a command economy.
What do you expect from the European Commission regarding the new market design?
I expect they open books, discuss and reconsider what they did.
What does it mean?
It means they have to look at the actual cost of all technologies. So far, many new technologies are not charged for the cost they produce in the system. That is typical for the electricity sector. If you build a windmill in the North Sea, there is no way to use it, if you do not build a high-power line to the continent.
Who pays for it? So far, the ones responsible for the investment are not charged for the infrastructure. If you have a gas turbine, you need a dedicated supply of gas you will pay for. If you are responsible for a cost beyond your own investment, which is necessary for the facility to be used and made profitable, normally, you should be charged for it. And not socialise it the way we are doing it.
Look at the Belgian region of Wallonia. They decided to subsidise photovoltaic panels on the roofs. Most of the beneficiaries are not the poorest, but the richest, because there were tax subsidies. So it was already socially inequitable. The outcome: there is a debt of 350 million euros. This will be allocated to everybody. They are socialising to everybody a benefit for a very small part of the population, which, by the way, is wealthy enough to pay for it.
But do we know the exact cost of nuclear energy? We do not know yet the solution and cost for the back end of the cycle. There are estimates. In the Nuclear Illustrative Programme (PINC) report, the Commission said states are running behind schedule in saving the money, so there are not enough funds.
The lack of funds is actually one of the outcomes of the German phase-out. The utilities in Germany were planning to use their reactors for 30 or 40 years. And before the end, they were told by the government on the basis of a political decision they cannot operate it anymore. But they had planned to build the provisions during the entire lifetime of the plants.
It is not just Germany. Slovakia, too.
I know the German case. With the other ones, the principle is that with each kilowatt hour produced by the system, there is normally a charge for the cost of decommissioning, on one side, and for the cost of waste management, on the other side. That is a system, which has normally been applicable everywhere in Europe.
We can discuss at length the status of this money, if it is on the account of the company or the government, but that money exists. And in many states, there is a regular reviewing process led by a public body. The difficulty is that among the Member States, there is not a real harmonisation. But the principles are the same: The consumers pay at the very start of the process for the cost of dismantling and waste management.
We have good experience in decommissioning. And we even have experience on facilities that were – radiation considered – much more dangerous than nuclear reactors. The former OECD reprocessing plant in Belgium is now a green field. Totally decontaminated.
It is a very good question, but not a nightmare. We have progressively accumulated experience and the more we will decommission, the cheaper it will be.
There is an uncertainty on the other part, the waste management. It is mainly coming from the lack of decisions by governments. Many governments just do not dare to tackle this. The Finns and Swedes did. It is strange enough that both nuclear countries do not reprocess and get rid of the fuel elements going out of the fuel reactor. They chose the site and they are now in the process of implementation. If you look at the polls, two thirds of the population support nuclear. They showed there is a way to go.
Public support is a big issue for the nuclear industry in Europe, especially after Fukushima. Can the nuclear industry win back the public opinion in Europe?
I think we have an easy challenge.
An easy one?
Yes, I am happy to say this. Even though I am expected to be the voice of the nuclear industry, the best thing to do is to build reactors on time and on budget.
Are you criticizing EDF and Areva because they are not building reactors on time or on budget in France and Finland?
No, I am not criticising the first-of-a-type. And I would be happy to spend with you some time explaining why there were delays in Olkiluoto, Finland. My point is we cannot repeat this. We have to learn from this – and we do – so that the Hinkley Point case is the best demonstration to learn from the Chinese, Finnish, French experience and hopefully build it according expectations.
So you believe it is not an issue of safety? The public, especially in Germany, is concerned by safety.
Would you argue the German decision was based on safety?
It was a political decision.
But the government has a public support.
In no way it was an economics-based decision. I am not criticising it. It is a democracy. The Chancellor had the support of the parliament. But economically it is a stupid catastrophe. They destroyed value.
But how can the nuclear industry convince the European public?
That is what we are doing today. Participating in a discussion. And I have to confess that decades ago, many industry leaders would say, do not bother me with this, I know what is good for me. This has deeply changed.
In Europe, we have been operating more 138 power plants without a single accident. I do not say we will never have one. But we have a record. There was an accident in the United States, in the Soviet Union and in Japan. We never got one.
Not a major one.
Not a major one. We are an industry. We have to be efficient, performant and just do what we say we want to do.
Regarding safety, maybe the public does not know well what we did after the Fukushima accident. But it was significant progress in Europe. Under the peer-review system, for the first time, there was a review by regulators from other countries. Thanks to whom? The Commission, the industry and the regulators. Each incident is an opportunity to learn something.