In this issue:

  • Nuclear power would be part of a failing grid
  • What’s the use of an insurance policy that covers 25%?
  • There is only one way out of this mess

Are you hoping for a nuclear power revival in the UK? Enough baseload power to save us from the intermittency of renewables sounds like a good idea. Even politicians have cottoned on.

Yes, the same government that is unable to cut immigration to reach its target, build enough houses to reach its target, or build a nuclear power plant on budget, has a plan for nuclear….

Having cut nuclear power to the bone, the government now wants to ramp it back up again. Its target is about 25% of energy demand.

But I don’t think it’s going to work.

The reason why is very simple. Nuclear power plants would still be part of a failing grid. Adding 25% buoyancy to the Titanic would not have changed the outcome when the hole was below the waterline.

Sure, nuclear power has the merits which renewables lack. But nuclear power plants don’t stand alone. They provide their electricity to a grid that feeds the nation, if not Europe. And if that grid is still dominated by renewables in the future, then what are you really achieving by adding a chunk of nuclear?

Not much, if you ask me. Because 25% nuclear power still won’t be enough to power the country during a period of renewables intermittency. But it will be enough to sit expensively idle when renewables are overproducing more power than we need.

Nuclear and renewables don’t match

Nuclear will be like an incredibly expensive insurance policy that only pays out a quarter of the value of your home. What’s the point? Even if your house does burn down, the payout won’t be enough to buy you a new one. You’ll still be stuck in the cold.

Of course, given the nature of weather patterns, renewable energy is going to leave you in the dark a lot more often than your house is likely to burn down. The result is that we’ll be sitting on a ticking timebomb. It’ll only be a matter of time before it’s dark and windless. Then we’ll need to run the country on some fraction of its usual energy demand.

Yes, 25% nuclear might reduce the chances of such an event. Perhaps even substantially. And at least we’ll have that 25% to lean on when the sun doesn’t shine and the wind doesn’t blow.

But is a grid that runs out of juice less often really that much more viable? Would you want to run a business in that sort of economy?

So, adding 25% nuclear is not much of an improvement, if you ask me. Especially when you’re planning on the electrification of our other energy use. If you can’t use your car or heat your home during a blackout, it raises the risks substantially.

If all this seems a little abstract, consider Europe’s grid. It has plenty of nuclear in the mix, thanks to France. But the renewables boom is still causing chaos.

Europe’s grid is flickering already

Blackouts are bad. The UK had one in 2019.

But electricity grid problems aren’t binary. It’s not just a case of blackouts or no blackouts. There all sorts of other crises. Not all of them are obvious. And some of them can be downright insidious to the economy without ever making headline news.

One of those is called frequency deviations. That’s when the Hertz of the grid is too high or too low because electricity supply and demand are out of balance.

When this happens, it can cause a lot of damage to the things around us that use electricity. That’s why grid management systems prefer to cut the power rather than supply power at too high or low a hertz. We call these rolling blackouts.

How common and severe are such frequency deviations? It would be quite an understatement that these have become an enormous problem in Europe.

This extraordinary chart shows how “European frequency incidents” have grown rapidly as the energy transition welcomes a lot of intermittent power. It’s becoming ever more difficult to balance the grid when energy supply is fluctuating in unpredictable ways.

You’ve probably heard that German industry is packing up and heading overseas. It’s not just their unaffordable energy bills. Heavy industry needs stable power. Machinery’s life cycle is cut expensively short if the electricity it uses is unstable.

Frequency deviations like those in the chart are an example of this. And buying the equipment needed to stabilise your electricity locally is very expensive.

Germany’s famous small family-owned Mittelstand companies can’t afford that sort of gear. But they can’t afford to replace their machinery every ten years instead of 20 either. And so we have the deindustrialisation of Germany.

What’s gone so terribly wrong? It’s to do with a lack of dispatchable power. The sort you can use to fine tune the grid to make sure frequency deviations don’t occur. Right now, that means gas. Which is why the UK and German governments are scrambling to build more gas plants.

Adding nuclear doesn’t help at the margin

The trouble with nuclear power is that it’s not very good at being dispatchable at the margin. Just as we cannot control renewable energy’s output, nuclear’s output is difficult to fine tune. That means it can’t be used to stabilise the grid.

Adding lots of nuclear baseload power is therefore not helpful when your problem is being able to produce a lot of power that can be fine tuned. And, because of vast amount of renewables, we need a lot of dispatchable power to fine tune the grid.

Here’s how to think about it…

Power demand tends to fluctuate in predictable ways. We know it’s cold in winter. We know when factories use power. And we know when everyone charges their EVs (at the same time).

A grid that has a lot of baseload power can match this predictable demand with supply. It can do so well in advance too, leaving little to chance. That’s why such a system doesn’t need much dispatchable power to cover for any surprises.

But intermittent power supply from renewables is tough to predict. This introduces a lot of uncertainty. We need dispatchable power to cover any surprise shortfalls. The more renewables we have, the bigger the backup plan needs to be. Gas is best at that.

But notice how intermittent supply from renewables makes baseload power from nuclear a lot less valuable. It can’t be used to cover for renewables. So what is it for? In a system that sees renewables always produce either too much power or not enough, what will nuclear’s role be?

To sum up, once you accept renewables as a large chunk of the national energy grid, you undermine the use case for nuclear power. Similarly, if you’re going to have nuclear, there’s no point in having as much renewables. The two don’t match well on the same grid.

That is why renewable energy advocates fear nuclear so much.

There are only two rays of hope

The obvious answer is to cut renewables and their absurdly large grid and storage requirements in favour of building a lot of nuclear power. But I don’t know of many governments planning on this, other than France.

The second ray of hope is more intriguing.

In the latest issue of The Fleet Street Letter I reveal how the failure of the energy transition is triggering an energy revolution in its stead. A change in the very nature of how we produce and distribute electricity.

Governments once played a central role in our railways, mail, airlines, steel and petroleum. People believed that, without government involvement, these industries couldn’t exist. But they were wrong.

I predict that the government has fouled up our electricity grid badly enough to trigger the latest epiphany of the same sort. If people want electricity, they’re going to have to come up with something better than what the government plans to give them.

There is only one option, in my view. And my friend Sam Volkering has figured out how you could profit from this revolution.

Until next time,

Nick Hubble
Editor, Fortune & Freedom