[noemon]

France's nuclear meltdown has big implications for Britain
Nuclear comes with its own set of problems, but UK must press ahead with smaller reactors

France’s nuclear industry is in slow-motion meltdown. A fifth of the country’s 56 reactors are currently shut, mostly because of corrosion and welding problems in the safety injection system.

The scale of outages this winter has reached the point where it is tightening Europe’s interlinked energy market, adding to the extreme pressure on electricity, gas and coal prices.

It comes at the moment of peak seasonal demand, during the worst global gas shock since the Second World War. The French power network is firing up its old coal plants. These emit 62 times as much CO2.

French nuclear output has fallen by 28pc since 2015 and is now at the lowest level in 30 years. The state-owned nuclear company EDF has just cut its target for this year by 10pc to 300-330 terawatt hours (TWh). It will have to buy back the deficit at nose-bleed market prices. The energy minister has warned of possible power rationing for industrial users.

The loss of French gigawatts comes on top of the closure - for disastrously ill-timed ideological reasons - of three relatively ‘young’ reactors in Germany at the start of the year.

The erosion of Europe’s nuclear base is not the chief cause of the energy crisis but it is not trivial, and it is certainly more relevant than any shortfall in renewable power.

The International Energy Agency says European solar power was up 20pc in the fourth quarter compared to a year ago, and wind was up 3pc.

Nuclear power will have to play a role in Britain’s decarbonisation drive, if only to ensure basic energy security in a disintegrating geopolitical world order.

We are already locked into Hinkley Point. But what is now happening in France is a cautionary reminder that nuclear comes with its own trail of problems.

It is not the easy way out on climate change that some fondly hope. The French crisis is doubly disturbing since EDF is supposed to be spearheading Britain’s nuclear revival.

The structural faults in the French plants first began to appear at the bigger 1.5 gigawatt reactors, some of recent 1990s vintage. Similar flaws have since been detected in a smaller work-horse reactor. There is clearly a systemic problem. The whole French fleet will have to be checked.

When you thought it could not get any worse, EDF has announced a further delay for the new European Pressurised Reactor at Flamanville until 2023, 12 years late and at four times the original budget. This third generation technology is the same prototype as Hinkley 2 under construction in Somerset.

One stated reason for the delay is that EDF has been ordered by French regulators to take account of “feedback” from the Taishan 1 sister plant in China, which was closed last July due to damaged fuel rods.

Taishan is the only plant using this new technology anywhere in the world. EDF says the Taishan issue “does not question the design of the EPR” - which is supposed to be safer than older variants and therefore fit for post-Fukushima use. This assertion is hotly disputed.

Radio France has aired allegations by a French nuclear whistleblower warning that the issue runs deeper than the Chinese authorities have revealed, and stems from a “design flaw” in the hydraulic system that applies just as much to the European models.

It is an open question whether EDF (84pc state-owned) can survive without a large rescue from the French taxpayer. The share price has crashed by 20pc since Friday morning.

EDF's share price plunge

Vincent Ayral from JP Morgan said EDF's latest travails could cost the company up to €10bn (£8.4bn). “We believe that a capital increase is likely,” he wrote in a note aptly titled From Heaven to Hell.

Standard & Poors warned that the damage could reach €13bn and has placed the company’s BBB+ debt on negative watch, with junk status drawing closer.

Far from a rescue, EDF is now being gouged by Emmanuel Macron in order to avert a violent jump in electricity prices and to head off a second gilets jaunes uprising before the French elections. Prices will rise by just 4pc with no review until February 2023.

The company has been ordered to sell a further 20 TWh of power to rivals at a giveaway price of €46.20 per MWh so that they can pass this on to households.

EDF will have to buy this power on the market at nearer €200 per MWh. The company is already saddled with €40bn of pure and hybrid debts, more than its shrunken market worth.

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So what should the UK now do about its nuclear plans? Weeks ago the Government was preparing to sign off on two further EPR reactors at Sizewell C in Suffolk, costing £20bn or more. They will not be ready until the early 2030s even if all goes perfectly.

This cannot be justified. The better policy is to press ahead harder and faster with the UK SMR consortium, a project spearheaded by Rolls-Royce (I own shares) to build compact reactors using British intellectual property and skills.

There is a budding export market for these small modular reactors. The jury is out on how cheap they will be but the components can be built relatively quickly in factories.

The UK should also push harder for leadership in generation IV mini-reactors using molten salt and or high temperature gas technology, which are potentially cheaper, cleaner, and safer.

Some designs operate at atmospheric pressure with less need for protective domes. They are ‘dispatchable’ and can be dialled up and down quickly to buttress renewables.

If we drag our feet, the US will run away with the prize. The US energy department is already funding advanced research at top US labs, and has backed plans for mass production of 80 megawatt (MW) mini-reactors, with cost claims that render Flamanville and Hinkley Point insane.

The global nuclear industry is in ferment and it is likely that the whole EPR misadventure - the Concorde of our time - will be obsolete before the 2020s are over.

In the meantime, we should keep rolling out our offshore wind turbines, storing some energy in cryogenic compressed air, and building the infrastructure to produce green hydrogen and ammonia from excess wind in the future.

Many readers dislike wind, but don’t be distracted by five-year-old cost data and subsidy arguments that no longer hold. Technology and scale is making offshore wind extremely cheap. It is where the UK’s competitive advantage currently lies.