More nuclear power would boost Britain's economyby Malcolm Grimston / March 5, 2013 / Leave a comment
Is electricity a commodity, to be delivered within a market context with minimal state interference? Or is it a social service, with long-term implications so great for the economy and the environment that policy needs to be coordinated centrally?
Neither the previous government nor the present one has seemed to have an answer to the question, which can perhaps be restated as “who is the ultimate guarantor of secure, economic and environmentally acceptable electricity supplies—commercial companies or the government?” So they have set up a “market,” then intervened heavily in that market on a regular basis to persuade companies to deliver on social and environmental goals. The outcome is a situation in which companies are nervous to invest but government no longer has the levers to dictate outcomes.
Left to itself, the market would build very little but gas-first power stations. They are relatively cheap and quick to construct (so investors get their money back quickly), and if the gas price increases so does the power price, protecting their profitability. Government has to work very hard to persuade the market to build low-carbon sources, which are cheaper to run but much more expensive to build and so much riskier.