Jeremy Warner's Outlook: Nuclear obsolescence threatens an energy crisis that renewables cannot fully address

Is Britain facing a future of power failures and electricity blackouts? The question was raised afresh this week in a report by the House of Commons Public Accounts Committee. This found that even if renewable energy achieves its planned contribution to reducing carbon dioxide emissions, the Government will need to encourage investment in other low carbon generating capacity, and in particular nuclear, to stand any chance of meeting its overall emissions target.

Perhaps oddly for a Labour administration, the Government's approach to the energy market thus far has been to let the market provide. If there is a threatened shortage in generating capacity, then prices will rise, encouraging the private sector to finance new capacity. That's the theory anyway. The big exception to this hands-off approach is in measures, forming part of the Government's wider climate change programme, to encourage the supply of renewable sources, such as wind, wave and biomass.

The Government's target is to supply 10 per cent of Britain's electricity from renewable sources by 2010, with the aspiration of doubling this share to 20 per cent by 2020. But this is more than just a target. To ensure that it is met the Department of Trade and Industry has placed a Renewables Obligation on suppliers to derive a growing percentage of their sales each year from such carbon-free sources.

Since it is taken as read that renewables are a more expensive form of power, at least initially, suppliers are able to pass on the cost of meeting the obligation to consumers. The Committee reckons the renewables obligation will cost consumers £1bn a year by 2010 rising to £1.5bn per annum by 2015.

Is this value for money? The Committee doubts it. The programme only really makes sense in terms of cost effectiveness if it helps industry to lower the cost of renewable energy to levels which approach the combined financial and carbon dioxide costs of other forms of generation.

As things stand, renewables are at least four times more expensive as other means of reducing emissions, such as levying a charge on non-household users of energy or controlling the emissions of key industries. The money might also be more effectively spent on reducing household emissions.

Yet even if the Government meets its targets and renewable energy becomes more economic than it is at present - high oil and gas prices are certainly narrowing the gap - a much bigger problem awaits. Britain's nuclear industry, which currently accounts for about a fifth of total power generation, is ageing fast. Over the next 10 years, its contribution to Britain's electricity needs will halve, as old nuclear stations are decommissioned. By 2020 it is expected to halve again in the absence of new nuclear build.

If the Government's targets are met, the growth in renewables should roughly compensate for the decline in nuclear, but with nuclear the only other completely carbon-free source of power generation, it's going to be a zero-sum game as far as emissions are concerned. What's more, nuclear generation fits into the category of base load capacity, in the sense that it is always on and can provide the national grid with 24 hour juice. The same is not true of many forms of renewable energy. Wind farms produce electricity only when the wind is blowing.

There are other big drawbacks with wind power too. Most people say they are in favour of renewables until permission is sought to site a wind farm somewhere close to them. Already they are proving a planning nightmare, threatening to derail the Government's renewables target.

Add in the fact that much of the present generation of coal-fired stations would become redundant if carbon constraints are imposed as planned, and it is plain that Britain may be facing a serious energy crisis 10 years down the line.

As things stand, the difference is being made up with the construction of gas-fired stations, but it hardly fits with the Government's aim of ensuring diversity of supply if Britain becomes entirely dependent on gas-fired capacity. Furthermore, because our own North Sea supplies of natural gas are running out, the country would become ever more dependent on imported gas, much of it from politically unstable regions of the world.

All this brings us to the question of whether the Government should be sponsoring a new generation of nuclear plants. Whatever the Government's emissions targets, past experience would argue against it. With the possible exception of the early magnox stations, Britain's post-war experiment with nuclear power has been a hugely costly mistake. There have been no serious accidents to speak of, but there have been leaks from the Sellafield reprocessing plant and no long-term solution has yet been found to the problem of how to dispose of nuclear waste.

Nor could any supposed strategic advantage possibly have justified the cost, which ran to tens of billions of pounds more than any equivalent non-nuclear capacity. The need to put away further sums for eventual decommissioning adds even more to the marginal cost of the electricity produced. Even after privatisation, with the initial capital costs written off by the Government, the nuclear industry struggled to remain solvent in a soft market for electricity prices.

The nuclear industry claims that today the situation is completely different. Technical advances mean the latest generation of designs are more fuel efficient and therefore produce less waste. Certainly at the present level of energy prices they are more than economic. Furthermore, the uranium feedstock can be accessed, unlike gas, from reliable and friendly nations like Australia and Canada.

Even so, it's impossible to believe that any new nuclear build could be privately financed without some form of government guarantee. Given the long lead times involved, financiers would have to be certain of the price that could be charged. Any mishap on the costs of decommissioning or safety would also have to be underwritten by the Government.

Might Labour be persuaded? The time to have announced a new programme of nuclear build, or at least a consultation on it, was immediately after the election, when politically the controversies involved would have easier to weather. The closer the Government gets to the next election, the more reluctant it will be to brave the waters.

Tony Blair was once all for it, then he seemed to lose his enthusiasm, conceding that the public may not be ready for it yet. The minister responsible, Alan Johnson, Secretary of State for Trade and Industry, is in any case keen to give renewables a chance before venturing into the nuclear debate. Few would want to invest in renewables, he would argue, if they knew there was a Government-underwritten programme of new nuclear heading down the road.

Other countries are proving more decisive. Both China and India have announced massive nuclear programmes in an attempt to address their growing energy needs. Our own energy requirements are expected to grow far less dramatically. Indeed, with the right cocktail of incentives on energy efficiency, particularly in the household sector, they might even decline.

All the same, ministers would be ill-advised to rely entirely on renewables and the market to solve our long-term energy needs. If the lights go off, it will be the Government that gets the blame. On a number of occasions of peak demand in recent years, the industry has come perilously close to ordering blackouts. It's only a matter of time the way things are going.

j.warner@independent.co.uk