While media attention was focused on the economic consequences of triggering Article 50 of the Lisbon Treaty, the UK economy quietly suffered a far greater shock. Tucked away in the business pages was the news that Toshiba is placing its Westinghouse US nuclear unit into bankruptcy protection.
At face value, this doesn’t seem to affect the UK at all. However, according to Theo Leggett at the BBC:
“The bankruptcy could still have far-reaching consequences for the UK’s future nuclear plans. Toshiba has a 60% stake in NuGen, a joint venture with France’s Engie, which has the contract to build a new nuclear power plant in Cumbria in the UK. As part of Toshiba, Westinghouse was due to build the reactors for the new plant. A collapse of the firm could delay the project or even put its future in limbo.”
This is disastrous news for an economy that is increasingly dependent upon energy imports to keep the lights on. The Moorside plant in Cumbria was intended to supply seven percent of the UK’s energy in the second half of the 2020s. If Toshiba cannot deliver, the UK’s projected energy gap for the mid-2020s will likely grow beyond repair. And as we have pointed out before, Toshiba is not alone:
“The key problem with nuclear, however, is the same as that for renewables – At £18bn a time, nobody has the cash to pay for it up front. The pseudo-solution to this problem has been for government to load the build cost onto future bill payers. In effect, guaranteeing a minimum price for future electricity generated by the new power stations. However, there are two serious flaws with this plan. The first, and now glaringly obvious, problem is that the corporations with the necessary expertise to build the UK’s new nuclear plants are more or less insolvent. This feeds into the second problem – confidence. Concern over the ability of companies like Toshiba, Hitachi and EDF to bear the cost of major projects at a time when they are struggling to avoid bankruptcy has a knock-on effect on investor confidence. Why would anyone in their right mind invest their savings in a company that might already be bankrupt today, solely on the promise of some kind of return on investment in the 2020s?”
For an economy that is increasingly dependent on digital services – including those in the banking sector – the prospects of a near future in which we have insufficient electricity generating capacity to keep the lights on is truly devastating. Indeed, even the relatively conservative Financial Times is ringing alarm bells over Britain’s energy predicament:
“Ministers need to recognise the reality: without government support, private capital markets will not finance projects with enormous upfront capital costs, huge construction risks and very long-term pay-offs…
“If the government now believes it can meet the UK’s future energy needs by other means, it should explain how it plans to do so. If it is still relying on nuclear expansion to plug the gaps in supply that will open up, it will need to be open to funding it directly.”
It is increasingly clear that the UK government has no serious plan for keeping the lights on in the next decade. This, in turn, means that an economy that is highly dependent upon (electric-powered) information and communications technology cannot hope to survive. For this reason, devolved and local authorities will need to go their own way; taking advantage of renewable technologies to develop local direct current (DC) grids separate from, and in competition with the (privately-owned) National Grid. In this way, it will be possible to develop hot-zones within urban areas in which a thriving digital economy might just be able to continue.