Explanation 3 and 4 can largely be combined and better understood by the cost to the consumer. The primary reason for the weakening of supply chains is the high cost of infrastructure. The current regulatory system sets use-of-system charges based on the regulated asset value (RAV), meaning that a more expensive asset base results in higher consumer bills. This is further exacerbated by the fact that the RAV is linked to inflation. Network companies are required by their license conditions to run an economically efficient network, which means reinforcement is generally only carried out when necessary (e.g., on customer request or when an asset no longer meets the Electricity Safety, Quality, and Continuity Regulations 2002). As a result, infrastructure is only procured when necessary and at the lowest possible cost in order to minimise the impact on consumer bills. Additionally, as a natural monopoly, the network effectively sets the cost of infrastructure, subject to business performance and inflation.
The ED2 price control introduced a "Save Now, Pay Later" economic model, which is based on the depreciation rate (i.e., the lifespan) of the assets in an attempt to keep consumer prices low. However, as a result of the network expansion required for CP30 will inevitably necessitate faster cost recovery anyways, particularly as inflation continues to rise and impact to intergenerational inequality. However, due to the current cost of living crisis, consumers will struggle to afford these increases, which may, in turn, limit the ability to expand the network for CP30. Useful article on intergenerational debt by Maxim Frerk: https://www.ofgem.gov.uk/sites/default/files/2022-07/GEP%20Understanding%20Asset%20Lives%20260122.pdf
Look at any pathe film of the 1920's grid build and you will see the men just handballing the steelwork up the towers building them in hours. Now every tower has to be built using mobile cranes and they need temporary access roads building to get them in adding hugely to the costs. Also lets be clear Elf & Safety wasn't uppermost in the minds of our 1920's engineer it now is and be under no illusion how much cost that adds and how destructive of productivity it has become. It was absolutely correct that H&S was improved too many people lost lives and limbs but an underpinning principle of the 1974 H&S at Work Act is now plain disregarded across all UK industries. That is the principle of ALARP (As Low as Reasonable Practical) in favour of zero accidents or incidents but laudable though that is driving it from <1% to zero is taking a huge amount of time and effort for very little benefit. Another area which massively influences managements behaviour now is the ever present threat of litigation leading to a risk off approach to everything they do.
Stagnating productivity in construction makes construction relatively much more expensive since the costs mount. This is because it has to pay the costs due to the gains in income for those parts of the economy that have improved their productivity. It is called the 'Baumol effect' after the economist of that name. Nuclear power, being maninly a construction activity, is also afflicted by this, its position made worse by the fact that other energy technologies have greatly improved their productivity in terms of their manufacture. Unless AI can work miracles in construction (???) this situation is likely to get worse rather than better.
Explanation 3 and 4 can largely be combined and better understood by the cost to the consumer. The primary reason for the weakening of supply chains is the high cost of infrastructure. The current regulatory system sets use-of-system charges based on the regulated asset value (RAV), meaning that a more expensive asset base results in higher consumer bills. This is further exacerbated by the fact that the RAV is linked to inflation. Network companies are required by their license conditions to run an economically efficient network, which means reinforcement is generally only carried out when necessary (e.g., on customer request or when an asset no longer meets the Electricity Safety, Quality, and Continuity Regulations 2002). As a result, infrastructure is only procured when necessary and at the lowest possible cost in order to minimise the impact on consumer bills. Additionally, as a natural monopoly, the network effectively sets the cost of infrastructure, subject to business performance and inflation.
The ED2 price control introduced a "Save Now, Pay Later" economic model, which is based on the depreciation rate (i.e., the lifespan) of the assets in an attempt to keep consumer prices low. However, as a result of the network expansion required for CP30 will inevitably necessitate faster cost recovery anyways, particularly as inflation continues to rise and impact to intergenerational inequality. However, due to the current cost of living crisis, consumers will struggle to afford these increases, which may, in turn, limit the ability to expand the network for CP30. Useful article on intergenerational debt by Maxim Frerk: https://www.ofgem.gov.uk/sites/default/files/2022-07/GEP%20Understanding%20Asset%20Lives%20260122.pdf
Look at any pathe film of the 1920's grid build and you will see the men just handballing the steelwork up the towers building them in hours. Now every tower has to be built using mobile cranes and they need temporary access roads building to get them in adding hugely to the costs. Also lets be clear Elf & Safety wasn't uppermost in the minds of our 1920's engineer it now is and be under no illusion how much cost that adds and how destructive of productivity it has become. It was absolutely correct that H&S was improved too many people lost lives and limbs but an underpinning principle of the 1974 H&S at Work Act is now plain disregarded across all UK industries. That is the principle of ALARP (As Low as Reasonable Practical) in favour of zero accidents or incidents but laudable though that is driving it from <1% to zero is taking a huge amount of time and effort for very little benefit. Another area which massively influences managements behaviour now is the ever present threat of litigation leading to a risk off approach to everything they do.
Stagnating productivity in construction makes construction relatively much more expensive since the costs mount. This is because it has to pay the costs due to the gains in income for those parts of the economy that have improved their productivity. It is called the 'Baumol effect' after the economist of that name. Nuclear power, being maninly a construction activity, is also afflicted by this, its position made worse by the fact that other energy technologies have greatly improved their productivity in terms of their manufacture. Unless AI can work miracles in construction (???) this situation is likely to get worse rather than better.