Hitachi’s decision to freeze its $28 billion nuclear power project in Britain strengthens the hand of France’s EDF and its Chinese partner in talks with the government on how to finance new reactors. Funding new nuclear plants has become critical as Hitachi became the second Japanese firm to say its British nuclear power project had hit the buffers over financing. The two projects would have covered about 13 percent of Britain’s power needs. EDF and its partner China General Nuclear Power Corporation (CGN) want to use a financing model under which investors in their nuclear projects receive payment from the moment they start construction, reducing their risk. But to proceed with this approach, the government must first win over lawmakers and consumers, already frustrated by hefty energy bills and costly nuclear projects that often face delays. “The question is whether it is sellable to parliament that all the risks go to the public. But if that is not the case, they will get no investors,” said Stephen Thomas, emeritus professor of energy policy at Greenwich University. EDF is negotiating with the government on funding the Sizewell C project using the so-called regulated asset base model in which investors earn a government-set fixed return from the start, instead of waiting years until construction is completed before receiving a return.
Reuters 17th Jan 2019 read more »
All sources of electricity face the same trilemma in the 21st century: carbon emissions, continuity of supply and cost. The UK government has placed a big bet on nuclear power, but reactors meet only two of the three challenges. Nuclear power is low carbon and a secure source of electricity – but it is hugely expensive. The ability to provide “baseload power” is not always an advantage either. Modern electricity grids with growing amounts of renewable energy need flexibility and nuclear power is anything but.
Guardian 17th Dec 2019 read more »
Ever since Tony Blair rebooted support for nuclear power 13 years ago, British governments have been committed to a new generation of reactors to secure supplies and cut carbon emissions. However, those ambitions have yielded only one project under construction, Hinkley Point C in Somerset, south-west England. That begs the question: is it time to rethink plans for new nuclear or redouble our nuclear efforts? With the cost of wind, solar and batteries dropping rapidly, have renewables and smart technologies matured enough to fill the gap? The Green party and groups such as Greenpeace advocate ditching nuclear in favour of more renewables, energy efficiency and flexibility through imports, batteries and other technologies. However, most energy industry experts think the future involves some new nuclear. The government has already restated its commitment to new nuclear power. “It’s difficult to see a low-carbon energy system in the future which has no new nuclear,” says George Day, the head of policy and regulation at the government-funded Energy Systems Catapult. “If you try to rely on just renewables and storage, without carbon capture and storage or nuclear, you are looking at a very challenging transition and one that is more costly than a balanced mix [of supplies].” All of National Grid’s four future energy scenarios envisage some new nuclear, although the amounts differ considerably. Peter Atherton, an analyst at Cornwall Insight, said it was hard to imagine an energy system without the baseload power – or continuous electricity supply – provided by nuclear. There is a school of thought that says baseload is a 20th century thing. They might be right – but it would be a big call by government to bet baseload won’t be a thing by 2025.” The government has already downgraded the amount of new nuclear it expects to be built in the future. It assumes 13 gigawatts of new nuclear capacity by 2035, implying three further nuclear power stations in addition to the 3.2GW plant at Hinkley. The Department for Business, Energy and Industrial Strategy has created a whole division to develop RAB, where a regulator would set a fixed sum for the power station’s costs and fixed returns for the developer, paid for by energy billpayers or taxpayers. Officials are assessing RAB’s viability, with a decision expected this year. But critics say the approach loads the risk of nuclear plant construction delays, such as those seen in France and Finland, on citizens. Returns would also be paid for years before any electricity was generated. EDF Energy backs the RAB model and the Chinese have said they would look at it. The influential government adviser Dieter Helm, professor of energy policy at Oxford University, has called it “plausible and preferable” to the Hinkley approach if the UK wants new nuclear. Day believes it could produce the power stations that ministers want. Labour, which is pro-nuclear, has branded the approach risky and reckless but has not put forward an alternative. Given the uncertainty over new nuclear, could the UK manage without it? Maybe. The obvious route is a lot more renewable power capacity than currently planned. Filling the 9.2GW-sized hole left by Moorside, Wylfa and Oldbury would require 14GW of offshore wind power, according to the Energy and Climate Intelligence Unit thinktank. That is equivalent to more than 20 of the world’s biggest offshore windfarm, which consists of 87 turbines. According to Atherton, the only way renewables and storage could plausibly fill the nuclear gap would be to “spend a vast amount of money on saturating the UK with offshore wind”. That could end up with enough turbines in enough different locations to replicate the “always-on” nature of nuclear. Large-scale batteries will help with the variable nature of renewable s and are expanding fast. But they will not address the fact that electricity demand is much higher in winter than summer, or solve long windless spells. The other big techno fix in the arsenal of low-carbon energy options is carbon capture and storage (CCS). However, many years of government efforts to kickstart it failed and ministers have switched their focus away from CCS for power stations to CCS for industrial uses. Day said gas power stations with CCS still looked “pretty promising” but significant policy changes would be needed to enable firms to invest in it. Others, however, are more dismissive. Atherton said: “People have been working on CCS gas for 20 years and nobody has got within a mile of it yet. People will tell you the technology works … that doesn’t mean I can do it on a budget.”
Guardian 17th Jan 2019 read more »
The scrapping of three nuclear power station projects in just over two months should prompt immediate and serious thought about the future of energy in this country. Hitachi expects the axing of the Wylfa plant on Anglesey in Wales to cost it £2.14bn. Around 300 people at its UK subsidiary Horizon will lose their jobs along with around 1,000 in the supply chain, and a second Hitachi power station in Gloucestershire will never be built. That another Japanese company, Toshiba, pulled the plug on another nuclear project in Cumbria in November, after trying and failing to sell it, makes the need for a considered response from policymakers all the more pressing. The problem, in a nutshell, is that the new generation of nuclear power stations is proving too expensive. Hitachi walked away from a package including a guaranteed price for its electricity of £75 per megawatt hour for 35 years, well above the wholesale price of around £50, but still below the £92.50 awarded to EDF Energy for power generated at Hinkley Point C. With the price of offshore wind as low as £57.50 and expected to fall further, and with renewables now supplying 33% of power (up from 6.7% in 2009), the contrast with nuclear is increasingly unflattering, as business secretary Greg Clark acknowledged when he told MPs that nuclear is being “outcompeted”.
Guardian 17th Jan 2019 read more »
Climate change: Is nuclear power the answer? Nuclear is good for the environment. Nuclear is bad for the environment. Both statements are true. Prof Jim Watson, director of the UK Energy Research Centre, told BBC News: “Most analysts now have accepted that we don’t need 30% of energy from nuclear – renewables can take a substantially bigger share. But taking any option off the table makes the job of meeting essential carbon targets even harder. It would certainly be hard to do without nuclear altogether.”
BBC 17th Dec 2019 read more »
One thing that all these new power plants had in common was a reliance on foreign money. The same is true for proposed plants at Bradwell B and Sizewell C. Hitachi, too, was involved in a proposed plant in Gloucestershire, which is now unlikely to progress. Such is the vast cost of nuclear projects that few companies in the world can afford to finance them alone, and even governments struggle. In today’s money, Hinkley C is expected to cost twice as much as the Channel tunnel. George Osborne, as chancellor, guaranteed a return of £92.50 at 2012 prices per megawatt hour (Mwh) generated. For context, one Mwh of offshore wind power, once thought ridiculously expensive, guarantees suppliers £57.50. Britain now finds itself with a headache. With many already regarding the Cameron government’s trust in Chinese involvement as a potential compromise of national security, it is unlikely that there would be further appetite for a replacement Chinese partner, even if one could be found. The French may also consider themselves already overcommitted to British projects. Ministers will be wary, at any rate, of offering guarantees as expensive as Hinkley. Greg Clark, secretary of state for business and energy, confirmed yesterday that the government planned an energy white paper in the summer to propose new methods for attracting nuclear financing. Pressing ahead without new nuclear capacity is plausible, but not without a considerable expansion of renewable energy and its storage capabilities. Customers may need to pay more for energy at busier times or invest in domestic storage of their own.
Times 18th Jan 2019 read more »
Hitachi’s decision to abandon plans to invest in Wylfa, a new nuclear power station in North Wales, and write off $2.8bn of work in progress, all but sounds the death knell for the UK’s 2013 energy strategy. This is even more worrying than Toshiba’s decision to pull out of the Moorside nuclear plant in Cumbria last November because it reflects an embarrassing failure by the government to provide firm financing commitments to Hitachi. It begs the question whether nuclear is an affordable part of the UK’s energy strategy. At the very least it should prompt the government to re-examine whether nuclear power is needed and if so whether the inevitable cost to taxpayers is justifiable. A comprehensive, independent and strategic review of energy policy should establish whether the case for nuclear power – based on the intermittency of renewables and the need for a zero carbon base load – survives these recent project failures. The review should consider the falling price of renewables, prioritise cost-effective ways of reducing emissions and challenge the Treasury to provide better incentives and make more government funding available. To be confident that the street lamps will remain lit in the decades to come, the government needs a more flexible, affordable and realistic energy strategy.
FT 17th Jan 2019 read more »