Britain needs dash for gas

THE cost of nuclear power keeps going up, and the cost of solar power keeps coming down. So you want to be in solar, not nuclear, don’t you? Unfortunately, poor Toshiba made the mistake of going nuclear.

We think of Toshiba for its laptops – rather good ones, actually – though we are probably aware that the company does a lot of other things.

Back in 2006 it bought control of Westinghouse, the nuclear power group. Now it has had to write off more than £4.8bn of losses, and is trying to sell its interest. Its chairman duly resigned.

This affects us in the UK directly because Toshiba has a majority stake in NuGen, which is building a power station in Cumbria alongside Sellafield.

With the other big nuclear project, Hinkley Point C, in doubt, our whole electricity generation strategy is in big trouble.

But there is an even bigger story here, in that the plight of Toshiba reminds us yet again that nuclear power has consistently failed to live up to its potential. There was the famous quote in 1953 of Lewis Strauss, chair of the US Atomic Energy Commission: ‘Our children will enjoy in their homes electrical energy too cheap to meter.’

Nuclear power now produces less than 5pc of global primary energy, down from a peak of around 7pc in the 1990s, and is projected obvious reasons, though wind and solar will chip in a bit. So, if as seems inevitable the UK nuclear programme disappoints yet again, how do we keep the lights on?

Well, here’s a clue from that BP report. Gas provides around 22pc of primary global energy at the moment and is projected to increase its share steadily right through to 2035. We know what is going to happen.

It will be another dash for gas. But it isn’t yet politic to admit it.

Engineer must keep up

WHAT’S important about Rolls-Royce is not the headline loss, embarrassing though it is, because it is an inevitable counterpoint to the additional revenues the company will receive as a result of sterling’s fall.

You hedge to protect yourself against currency swings, so that if you lose on the actual contracts you gain on the hedge ones – and as here, vice versa.

The big issue is the long-term strategy for the next generation of aircraft engines.

We tend to forget just how wonderful aircraft engine technology has become. They are hugely powerful with the largest producing more than the engines of the Titanic.

They run 20 hours out of the 24, and failures are so rare that it is a news story when a plane has to divert because of one.

Thanks to three companies, Rolls, GE and the United Technologies’ subsidiary Pratt and Whitney, 750,000 people stay up in the air at any one time.

Rolls has the solid business of powering 30pc of the world’s wide-body fleet, a proportion that will rise to more than 50pc by the early 2020s.

It is a nice business in that half the turnover comes from supporting engines already in service, rather than building new ones. So there is a known steady flow of revenue.

But it has to keep up with American competitors, and it is standalone business, rather than part of a larger conglomerate group.

It also has to do so out of a European base and for various reasons seems to be becoming more dependent on Airbus than on Boeing – though of course it supplies both.

That is a strength if Airbus continues to nudge ahead of Boeing in sales, but it is a potential vulnerability too.

But the greatest challenge is to keep level, or ideally nudge just that tiny bit ahead of the two US rivals, GE in particular.

Will the next big development in aircraft engines work? This is putting in a gearbox so that the big fan at the front of the engine runs at an optimal speed.

Rolls calls its version the Ultrafan and hopes it will reduce fuel burn by 20 to 25pc. If this is successful then the company pushes ahead. If not, well we’ll see.

This matters for Rolls. It matters for Britain for this is our premier engineering company, and it matters for the world because more efficient aircraft will keep us travelling with a smaller environmental footprint.