The Government published its long-awaited Energy White Paper on 14th December. After a string of earlier announcements including Boris Johnson’s Ten Point Plan, the National Infrastructure Strategy report plus the Government’s announcement of a new greenhouse gas target for 2030, there were relatively few surprises. Details are presented in nuClear News No.130 available here: https://www.no2nuclearpower.org.uk/wp/wp-content/uploads/2020/12/nuClearNewsNo130.pdf
Future of new nuclear power in the UK
I’m writing to you in connection with the Government’s discussions on the financing of new nuclear power stations. We understand that you are meeting EDF’s CEO Jean-Bernard Lévy on 30th September. It is reported that EDF are ‘demanding clarity’ on how financing is to take place for the proposed Sizewell C plant. It is absolutely critical that the Government is not bounced into taking a hasty decision, particularly given the extent to which renewables, effective storage and energy system management technologies have advanced in recent years.
It is unclear that new nuclear power will really be needed. The proportion of zero carbon power that can be delivered by renewables with full system security has climbed as smart technology and understanding of how to manage the system has improved. Even in 2018 (before the latest drops in the costs of offshore wind), the National Infrastructure Commission advised that only one more nuclear power station should be approved before 2025. So, even for those who see the nuclear issue as purely one of cost (ignoring those issues of waste management, accident risk, proliferation etc), there is simply no rush to strike a financing deal with EDF for Sizewell.
Nuclear supporters have often made demands for urgent Government decisions to be made to provide more support. However, being pushed into a decision at this stage could have a heavy cost – both to UK consumers and taxpayers, and to the UK Government’s wider credibility in delivering an industrial strategy that is in line with the direction of the 21st century economy.
I enclose a briefing that sets out the key issues which the Government should fully account for. In the case of Sizewell, these issues also extend to the nature of EDF’s proposed EPR reactor, and EDF’s ability to construct new reactors within acceptable costs and timeframes.
Whatever one’s views of nuclear power, nothing should be agreed in haste given the amount of time the National Infrastructure Commission advise is available. The UK Government first needs to take a long hard look at the future of the energy system, and the trajectory for power sector costs and innovation up to 2034, when Sizewell might – according to EDF’s proposal – actually open.
John Sauven Executive Director, Greenpeace UK
CC Minister Kwarteng and Minister Zahawi, BEIS CC Advisors in the Prime Minister’s office
Why the UK should not rush a decision on Sizewell
With an upcoming White paper on Energy this Autumn, expected to lay out the UK position on new nuclear power, there appears to be a prospect that the UK government will agree a financing deal with EDF who are ‘demanding clarity’ over funding for Sizewell nuclear power station.1 There are many good reasons for the UK Government to resist this. The Johnson/Sunak government could well be in line for the condemnation which greeted the decision to go ahead with Hinkley Point nuclear power station. Theresa May’s government approved this in 2016, and it is seen as a ‘dreadful deal’.2
Will Sizewell be needed?
The UK Government has commendably set a ‘net zero emissions’ target in law. Electrification of sectors including heat and transport is a central part of the decarbonisation strategy, and so zero carbon power is essential to making it happen. The case nuclear advocates make is that the grid system will not be able to cope with only having variable renewable power like wind and solar. However, the proportion of zero carbon power that can be delivered by renewables with full system security has climbed as smart technology and understanding of how to manage the system has improved.
In the early noughties, single figure percentages of variable renewables on the grid seemed to be the upper limit.3 In 2015, National Grid scenarios anticipated the range of possibilities for renewables in 2030 at 33-48%.4 But by 2020, the National Infrastructure Commission (NIC) said 65% renewables by 2030 is cost-effective5 – not the limit of what is achievable. The proportion of wind and solar that the grid can accommodate is only likely to keep increasing as the collapsing cost of batteries6, other forms of storage7 and green hydrogen8 allow ever greater proportions to be managed. Insisting on a nuclear component for this purpose is a punt on saying that the innovation process will slow or stop.
Given the earliest a Sizewell reactor would be supplying power would be 20349, is the Government really going to commit to something where technological advances would make it a white elephant before it opens? Even in 2018 (before further drops in the costs of offshore wind) the NIC advised that only one more nuclear power station should be approved before 2025.10 So, even for those who see the nuclear issue as purely one of cost (ignoring those issues of waste management, accident risk, proliferation etc) there is simply no rush to strike a financing deal with EDF for Sizewell.
There are of course a number of global energy scenarios (often broken out into countries and regions), which say that 100% renewables is perfectly feasible.11
The reactor EDF proposes – the EPR
The proposed reactor at Sizewell, the EPR, has a dismal performance record on costs and punctuality. Both Hinkley Point C12 and Flamanville13 EPR reactors are late and over budget. Flamanville is 5.8 times the original quoted cost and 12 years late. The EPR being built at Olkiluoto in Finland is now 13 years late14 and costs have roughly tripled. This matters because any financing by HMG of a Sizewell project, either directly or via Regulated Asset Base (RAB) type mechanism would make these cost-overruns the government’s (& the taxpayers) problem.
Note that a mechanism similar to the RAB was used to finance a nuclear power station in South Carolina, which collapsed and will not be built. Payments for a nuclear power station that will never generate power still make up about 18% of customers’ bills.15
There are now demands for a decision to be made quickly on the Sizewell project16. This is not surprising. Saying such decisions are ‘urgent’ is the stock in trade for supporters of an industry that doesn’t want anyone to step back and consider.17
Hoping to strike a good deal with EDF should not rely on their analysis or assurances. EDF was fined €5 million by France’s financial markets authority for spreading false information about the terms of the Hinkely deal.18 19 As the report around this event puts it:
“The fine was handed down amid growing frustration in France over the “unacceptable” delays and cost overruns at [Hinkley], which EDF is building alongside the Chinese nuclear company CGN.”
In part, this is because France’s state auditor has questioned the ability of EDF to construct new reactors within “acceptable” costs and timeframes.20
If a decision is taken to finance an EDF EPR at Sizewell, either by RAB or direct funding, these problems become the UK Government’s problem, not those of EDF or the French government.
The Government risks making the same mistakes as it did with Hinkley
The failure to take a considered look at Hinkley rather than always ‘urgently’ trying to press ahead meant a heavy cost – both to UK consumers and taxpayers, and to the UK Government’s wider credibility in delivering an industrial strategy that is in line with the direction of the 21st century economy. As the Economics Editor of the Telegraph put it in 2016:
“[Hinkley] risks degenerating into an epic white elephant as we pay fat subsidies into the second half of the 21st Century….The energy world has changed utterly over the last decade as climate policy drives a massive global push for renewable power, transforming the calculus of future costs. “It looks like a contract that was written five years ago on a business case that was probably pulled together 10 years ago.”21
However, the Cameron and May Governments steadily allowed themselves to be drawn in and dug themselves into a hole, from which they could not climb out. As the National Audit Office (NAO) rather more gently put it:
“In September 2016, HM Treasury highlighted how the value-for-money case for HPC had weakened. But it concluded that the legal, reputational, investor and diplomatic ramifications of not proceeding meant it was, on balance, better to continue.”22
However, the NAO also point to a more fundamental flaw in the Government’s approach:
“In a 2008 white paper, the government set out its strategic case for new nuclear build….Since then, the economics of nuclear power have deteriorated.”
It is 12 years since there was a proper case made for new nuclear compared to the alternatives in delivering a reliable, affordable and efficient zero carbon power system. The case for new nuclear power was very poor well before the 2016 Hinkley decision was made, but it is now disintegrating by the week as cheaper renewables, more effective storage and better system management becomes available.
The current Government has the opportunity now to review the latest trends and take stock of which technologies truly will serve the UK best in delivering on net zero reliably, and levelling up across the country without placing unnecessary additional financial burdens on households. In this light, it is particularly critical that Ministers resist jumping into a rash decision in the face of EDF demands for clarity.
11 See for example Stanford University https://web.stanford.edu/group/efmh/jacobson/Articles/I/CountriesWWS.pdf? Lappeenranta University https://www.lut.fi/web/en/news/-/asset_publisher/lGh4SAywhcPu/content/can-we-get-100-of-our-energyfrom-renewable-sources-new-article-gathers-the-evidence-to-address-the-sceptics Greenpeace International https://issuu.com/greenpeaceinternational/docs/energy-revolution-2015-full-hr One Earth http://oneearth.uts.edu.au/
13 https://www.neimagazine.com/news/newsflamanville-3-startup-pushed-back-to-2024-7853088 and https://www.lemonde.fr/les-decodeurs/article/2019/06/24/epr-de-flamanville-visualisezcomment-le-cout-et-la-duree-du-chantier-ont-triple-depuis-2007_5480745_4355770.html 14 https://www.world-nuclear-news.org/Articles/Further-delay-in-commissioning-of-Finnish-EPR
16 For example see https://www.reuters.com/article/britain-nuclearpower/update-1-edf-energy-says-ukshinkley-point-b-nuclear-plant-could-close-earlier-than-planned-idUSL8N2G65F8 and https://www.cityam.com/hitachi-set-to-withdraw-from-wylfa-nuclear-power-plant/
17 See for example ‘urgent’ needs for decisions years before they were actually made https://www.thetimes.co.uk/article/pay-up-for-nuclear-or-britain-could-run-out-of-energy-families-arewarned-rc8tr7jt8fh
There has been no sight yet of the £9.2 billion Boris Johnson pledged to spend on energy efficiency measures. Yet, energy efficiency has emerged as the lead theme in post-lockdown green recovery stimulus packages put forward by organisations from all sides of the political spectrum to help meet climate change targets and create green jobs. Spending on energy efficiency can deliver a ‘quick payback’, says the CBI in its proposed green recovery package. It describes a national energy efficiency programme as a ‘long overdue’ and an essential element of reaching the 2050 net-zero emissions target. (1)
According to the FT the £9.2bn spending pledge is snarled up in a Whitehall turf war after Downing Street chief adviser Dominic Cummings sought to water down the policy. There is still enthusiasm for the scheme in the Treasury and the business department (BEIS), but several Whitehall figures have blamed Mr Cummings for the deadlock, saying he has described it as “boring old housing insulation”. Cummings is said to believe that new housing is a bigger priority and should take the lion’s share of the £9bn capital spending. (2)
80% of homes today will still be around in 2050 when the UK aims to reach net zero emissions. Heating our buildings accounts for over a third of emissions. There are 2.5 million UK households in fuel poverty – 25% of households in Scotland, and 11.3% in extreme fuel poverty. The Scottish Government’s Just Transition Commission calls energy efficiency “a good example of Just Transition in action”.
But Dominic Cummings thinks a Just Transition to zero carbon is boring.
The Scottish Fuel Poverty Act has a statutory target to reduce fuel poverty to no more than 5% of households by 2040, and extreme fuel poverty to no more than 1% by 2040. Though exactly why we should accept any level of fuel poverty in an advanced western country is difficult to comprehend. Energy Action Scotland has been campaigning for the elimination of fuel poverty since the 1980s, yet the level of fuel poverty today is around the same level it was 40 years ago, with families having to choose between going hungry and staying warm.
But Dominic Cummings calls tackling fuel poverty boring.
Scotland has a relatively good energy efficiency programme compared to England. But even that needs to be doubled in size if Scotland is to meet its climate change commitments. 6,000 new jobs could be created in Scotland. The Scottish Existing Homes Alliance is calling for the fuel poverty programme to upgrade 30,000 homes every year, including the installation of renewable heating systems supported by grants for the fuel poor. There should also be a statutory target for Energy Performance Certificates (EPC) of band C for the vast majority of homes by 2030, and zero carbon by 2045. Around 40,000 homes were upgraded in Scotland last year. The EPC target would mean this would have to be doubled to just over 80,000 renovations on average each year to the end of 2030 –about 200 per day. (3)
But Dominic Cummings calls meeting climate change commitments boring.
The path to better insulated and lower carbon homes is strewn with failed policies and rollouts – not least the disaster that was the Green Deal. Over the past decade progress has gone backwards. Energy efficiency needs a very practical road map. There is no point setting rules and then not providing the money to do it and training for the workforce.
After a spending boost delivered by the last Labour government, the Committee for Climate Change (CCC) calculated that the annual number of installations has crashed to an estimated 90 per cent of 2012 levels as the Green Deal programme backfired spectacularly. Since then, the main support for energy efficiency has come from the industry funded and organised Energy Companies Obligation (ECO) scheme, the level of which has plummeted in recent years. The experience has been “tremendously disillusioning” for the industry’s supply chain.
Energy efficiency investment has the potential to unlock substantial long-term economic returns – for every £1 spent on insulating the fabric of a building, £3 is generated in economic benefits. The job creation benefits would be spread over the whole of the country. The added twist in the wake of the pandemic is the health benefits that energy efficiency can deliver. And while the current phase of the pandemic has hit as the weather has been warming, next winter is likely to see a second wave. The prospect of respiratory conditions being exacerbated by poorly insulated buildings during a second wave doesn’t bear thinking about.
The energy efficiency industry is reliant on a host of small-scale contractors. These companies may have secured a respite during the lockdown through the employee furlough scheme but will nevertheless be at risk of going under unless they can secure new orders. Spending has to start now because otherwise we are in severe risk losing the skill base we already have in the industry. It’s all very well £9.2 billion being there somewhere in the kitty but it needs to be produced now or people will be at risk of losing their jobs.
But, according to Utility Week “Dominic Cummings is looking for the next big shiny things and energy efficiency is not as sexy as technological or glamorous projects”. Small Modular Reactor anybody?
(1) Utility Week 27th June 2020 https://utilityweek.co.uk/build-back-better-the-9-2-billion-energy-efficiency-question/
(2) FT 29th June 2020 https://www.ft.com/content/d4035d01-e33e-473a-81ea-93125a69942e
(3) Existing Homes Alliance Sept 2019 http://existinghomesalliancescotland.co.uk/wp-content/uploads/2019/09/Pathway-to-zero-carbon-homes_EXHA_Sept2019.pdf
It has been another bad week for EDF with the cancellation of power sales contracts in France and the emergence of another safety issue with its EPR design chosen for Hinkley and Sizewell (Times, June 4). EDF was in dire financial straits long before Covid-19 and would have required a massive government bail-out before losing much revenue due to plummeting electricity demand and prices across Europe have made the bail-out even more expensive. In Finland, the Olkiluoto EPR, now at least 12 years late and three times over-budget, suffered another setback with the discovery of a leak with the pressuriser safety valves with significant safety implications for other EPRs.
Covid-19 restrictions seem certain to delay Hinkley’s completion and make it more likely it will be a loss-maker. EDF’s only hope is to persuade the British government to increase the power price above the £92.50 (2012 prices) negotiated for a power plant that it is increasingly clear is not needed. It would be a kindness to EDF and British consumers if Hinkley was abandoned before costs mount further and it is still not too late to negotiate a mutually beneficial deal.
The Sizewell project is more attractive to EDF. For Hinkley, EDF is facing the likelihood of serious long-term losses. For Sizewell, under the Regulated Asset Base (RAB) model, EDF and its Chinese partner, CGN, would not own the plant (owned by institutional investors), but would supply, build, operate and maintain the reactor under profitable cost-plus terms. All the risk would fall on consumers. So the Government’s long-awaited verdict on the RAB financing proposals must be a rejection. The Bradwell project will be no more attractive to consumers and abandoning it now would obviate the need to agonise over China’s role in electricity infrastructure. The government should stop wasting time and money on nuclear and focus on energy efficiency and renewables to meet our climate change goals cheaply and effectively.
The poor state of EDF’s finances is threatening to leave UK and French taxpayers and electricity consumers with a huge bill if construction of Hinkley Point C (HPC) is not stopped as soon as possible, according to a new report by Emeritus Professor of Energy Policy, Steve Thomas.
The 2017 National Audit Office (NAO) report noted that the outlook for EDF and its ability to finance its investments had changed significantly for the worse since the project was initiated. The cost of life extending its 58 operating reactors in France is much higher than expected – at least €4bn per year till at least 2030. The financial collapse of Areva in 2015 has left EDF with the unwelcome requirement by the French government to take over its unprofitable reactor division. The problems at the two EPRs under construction in Finland (Olkiluoto) and France (Flamanville) continue to get worse and even the two Chinese reactors of the same type as HPC have suffered significant delays. The emergence of quality control (QC) problems including falsification of QC documentation going back 50 years at Areva’s key forge facility, Creusot Loire and the quality issues with the reactor vessel installed at Flamanville and the vessels made for HPC have left the reputation of Areva NP in tatters.
EDF has been unable to take up the offer of UK Government loan guarantees because its Flamanville reactors won’t be in commercial service by the end of 2020 – a condition of the loan guarantee. This has left EDF with the serious problem of how to raise the capital it needs to build Hinkley Point C.
By the end of 2018 EDF claimed to have spent €7.5bn (£6.25bn) on HPC but with borrowing costs of only €108m (£90m) suggesting virtually all expenditure to date had been paid for by equity. The expected remaining cost at the end of 2018 using the most recent cost estimate is £15.3-17bn and if the project is to be completed by end 2026 as EDF now claims, this implies an average annual spend of £2.2-2.4bn of which two thirds (£1.45-1.6bn) would come from EDF, significantly more than its total net profit (€1177m or £980m) for 2018.
It has long been clear that the record of nuclear projects being built to time and cost is so poor that no bank will lend money for one unless the risk falls on someone else, by, for instance, a government providing sovereign credit guarantees, according to the report.
This begs the question: how is the EDF consortium expecting to finance construction of Hinkley?
Stop Hinkley spokesperson, Roy Pumfrey said:
“Taxpayers and consumers should be told how EDF intends to fund its share of Hinkley Point C construction costs. If it can’t come up with a satisfactory answer, which at this stage looks extremely unlikely, it should be told by the Government and regulators to cease construction immediately. We already know that HPC would add about £50bn to consumers’ bills. Whilst cancelling the project now might incur a cancellation cost of a few billion pounds, consumers could save almost £1.5bn per year for 35 years from 2027 if the deal is scrapped.”
It is clear now that EDF is unsustainable because it cannot finance life-extension, clean-up liabilities and HPC. As well as finding £1.45-1.7bn per year until 2026 to finance the construction of Hinkley Point C, EDF has to find money to upgrade its 58 French reactors, as well as for funding decommissioning and waste management amongst other things. It seems that completing Hinkley will need an open-ended commitment by both the British and French Government’s. The sensible course is to abandon the plant now before more public money is wasted. The EDF consortium has already spent about £6.5bn on HPC but with £18bn or more to spend, writing this off is a much better option than completing a loss-making plant. The EPR technology has failed and EDF should abandon it. The French public will have to pump tens of billions into EDF to keep it afloat and the additional burden of financing Hinkley would impose would be unwelcome. The only logical decision is to abandon Hinkley and all the successor projects now.
The report “Financing the Hinkley Point C project” by Steve Thomas is available at https://www.nuclearconsult.com/wp/wp-content/uploads/2020/01/HPC-finance-Steve-Thomas.pdf and https://teags.org/core/wp-content/uploads/2020/01/HPC-finance-final.pdf.
I was quoted in the Herald this morning (5th June) warning that a nuclear accident on the scale of Chernobyl is not impossible in the UK.
The Herald pointed out that I had recently warned Hunterston could cause a Chernobyl after The Ferret’s investigative journalism team, revealed operator EDF had found 350 graphite cracks in Reactor 3 (It’s now up to 370). I told the newspaper “That we don’t have this kind of reactor in the UK was always the get-out clause of the British industry. But that does not mean we cannot have another kind of accident.”
People are talking about nuclear power and the possibility of an accident all because of the latest TV drama – the last episode of which was screened on Tuesday 4th June.
Without fanfare, Chernobyl has become unmissable TV, according to Sky. The show is harrowing and unrelentingly bleak, with some complicated science to get to grips with. It is a western-made drama about a disaster that occurred in the Soviet Union more than 30 years ago, and we already knew the ending. But seemingly from nowhere, this five-part mini-series is now the show that everyone is talking about. (Sorry, Game Of Thrones). After just three episodes, Chernobyl topped film and TV database IMDB’s list of the greatest 250 TV shows of all time – quite an accolade.
When there was still one episode to go The Economist said it was the highest-rated television series of all time.
Dr Ian Fairlie says overall the drama is remarkably truthful and reliable in its depictions. Perhaps the most important aspect, he says, is that it informs a new generation about the potential dangers of nuclear reactors. The UK still has 15 of them operating, with 2 more under construction and the Government thinking about more. Another aspect is that they educate people about the dangers of radiation, a subject on which most people are very poorly informed, and which the Government and its agencies takes great pains to avoid discussing honestly. He says an accident like Chernobyl is unlikely here, but not out of the question. For example, UK reactors do not have positive void coefficients, which means the potential for runaway-reactivity type of accidents is very low. But 14 of the UK’s reactors still use graphite as a moderator and Chernobyl’s 8-day graphite fire was perhaps the single most important contributor to the massive effects of the Chernobyl disaster across Europe.
The author of a new book called Chernobyl “Manual for Survival” which has also been receiving many rave reviews is coming to Edinburgh on 19th July. Dr Kate Brown is the author of Plutopia, which has won seven awards, including the Dunning and Beveridge prizes from the American Historical Association for the best book in American history. She is the first historian of the Soviet Union to be nominated to the honorary Society of American Historians, and her research has been funded by the American Academy in Berlin and by Carnegie and Guggenheim fellowships. She teaches environmental and nuclear history at the Massachusetts Institute of Technology, and lives in Washington, DC.
Come and hear her speak on Friday 19 July 2019 15:00 – 17:00. Room 1.20, Dugald Stewart Building, 3 Charles Street, Edinburgh, EH8 9AD
Free Admission but booking is required.
Dr Ian Fairlie will also be at the meeting and will be able to update us on development at Hunterston. EDF Energy is currently hoping to re-open Reactor 4 on 24th June and reactor 3 on 31st July.
Pete Roche 5th June 2019
Dave Toke, reader in energy politics at Aberdeen University, says the Committee on Climate Change’s (CCC’s) recent technical report has effectively sunk nuclear power in the UK.
A careful reading of the evidence produced by the CCC completely upends the former received wisdom that renewable energy could not, on its own, achieve the UK’s long term carbon emission reduction targets. The old argument that large quantities of nuclear power are necessary has been quietly side-lined. Rather, the evidence presented by the CCC says that not only can renewables do the whole job, along with energy efficiency, on their own, but they can do things much more cheaply than either nuclear power or carbon capture and storage.
The CCC argues that investment in renewable energy will save consumers money, whilst investment in nuclear power and carbon capture and storage will cost a lot more.
The CCC estimate renewable energy resources to be very large – 29-96 of GW of onshore wind, 145-615 GW of solar power and 95-245 GW of offshore wind.
Using the lower end of the range, the electricity would be enough to provide all of the electricity needed for a net zero energy economy in the UK. That’s not even counting other renewable energy sources, including biomass and marine renewables.
See nuClear News No.117 for more.
Is the tide turning against the new nuclear programme? The UK’s first National Infrastructure Assessment, published by the National Infrastructure Commission (NIC) says the shift to greener energy is a “golden opportunity” – the UK can move to “highly renewable, clean and low-cost energy”, while ending the use of gas for heating and shifting to 100% sales of electric vehicle (EVs) by 2030. It says a “quiet revolution” in renewable costs means government should prioritise wind and solar, echoing new scenarios from the Committee on Climate Change (CCC) (see below). It also calls for investment in energy efficiency to triple and for no more than one new nuclear plant to be agreed before 2025.
The Building Magazine website says NIC’s prediction is that the cost of an energy system heavily reliant on nuclear will, on current terms, be marginally more expensive than one powered 80%-90% by other renewables, and – importantly – that the cost of renewables is much more likely to fall in future and thus ultimately work out significantly cheaper. It is only because of all the uncertainties inherent in these predictions that it recommends continuing with nuclear at all. The assessment says a minimum of 50% and as much as 90% of UK electricity should come from renewables such as wind and solar power by 2050. Few outside of environmental lobby groups have ever proposed a UK electricity generation sector reliant 80%-90% on renewables before.
The magazine quotes Consultant Alistair Smith, formerly nuclear development director at contractor Costain, who says most contractors have already lost faith. “Aside from those involved in Hinkley, contractors have lost interest and have moved on to more exciting things. Everyone’s been burnt so many times that it would take a lot to convince a chief executive to go for another project again.”
The NIC’s assessment makes clear beyond any doubt that renewable energy has arrived in a way few thought possible even a decade ago. Spending money on more renewables and energy efficiency measures would create far more stable and certain construction work than lumpy, hard-to-fund nuclear projects.
Meanwhile, in what Emeritus Professor Dave Elliott calls ‘another blast of sense’ the Climate Change Committee’s annual progress report, says apart from Hinkley, “limited progress has been made with other new nuclear projects”, but “if new nuclear projects were not to come forward, it is likely that renewables would be able to be deployed on shorter timescales and at lower cost”
For more on this see the latest issue of nuClear News here.
Stop Hinkley Campaign submits response to the Helm ‘cost of energy’ review.
The Stop Hinkley Campaign has submitted a joint response, with the Nuclear Free Local Authorities (NFLA), to the UK Government’s call for evidence on Professor Dieter Helm’s review of the UK energy market and the financial costs of energy to consumers and businesses. (1)
The joint submission argues the best way for the Government to keep electricity costs to consumers as low as possible over the coming decades, while reducing carbon emissions, and providing secure electricity supplies, is to cancel Hinkley Point C, scrap the new nuclear programme, launch a much more comprehensive energy efficiency programme and expand renewable energy ambitions.
The response also notes:
• Cancelling Hinkley Point C now might incur a cancellation cost of around £2bn, but consumers could save around £50bn over its lifetime. (2)
• Offshore wind is already approaching half the cost of nuclear power and Bloomberg New Energy Finance (BNEF) predicts costs will drop a further 71% by 2040.
• Removing the current block on onshore wind could save consumers around £1bn.
• Solar power is expected to be the cheapest source of energy (not just electricity) anywhere in the world by 2030 or 2040.
• Cost-effective investments in domestic energy efficiency between now and 2035 could save around 140 terawatt hours (TWh) of energy and save an average of £270 per household per year at current energy prices. The investments would deliver net benefits worth £7.5bn to the UK.
• Renewables could soon be producing enough electricity to power the grid from April to October. If the Government continues with the nuclear programme then Ministers will have to explain to consumers why they are having to pay for expensive nuclear electricity when cheap renewables are being turned off.
• The UK has the technology to match green power supply and demand at affordable cost without fossil fuels – by deploying the ‘smart grid’, using ‘green gas’ made from surplus power, and raising energy efficiency.
• Baseload is not helpful in balancing a variable energy supply – it simply leads to further overproduction of energy at times when renewables can meet demand on their own.
Just before the Christmas holidays the two organisations also submitted a joint response to the UK Government’s Clean Growth Strategy. (3)
Instead of funding R&D on new nuclear technology and Small Modular Reactors to the tune of around £460m, this called for more funding for low carbon heat and energy efficiency. In particular the Government should be investigating power-to-gas (P2G) technology which can produce renewable hydrogen, using surplus renewable electricity, which could then be fed into the gas grid for storage or used for producing renewable heat.
Stop Hinkley Spokesperson Roy Pumfrey said:
“The cost of renewables is declining rapidly, and it is becoming increasingly clear that there are lots of ways of dealing with intermittency issues. It now looks as though Hinkley Point C won’t be online before 2027. Several financial institutions have predicted that large centralised power stations are likely to be obsolete within 10 to 20 years, because they are too big and inflexible, and are “not relevant” for future electricity. (4) So Hinkley Point C and the rest of the UK’s ill-conceived new nuclear programme will be too late, too expensive and too problematic. Wind and solar are cheaper more flexible and much quicker to build. It is time to cancel Hinkley Point C now before consumers are saddled with a needless bill for £50bn not to mention the nuclear waste which we still don’t know what to do with.”
(1) The Stop Hinkley and NFLA joint submission on the Government’s call for evidence on the Helm Review is available here.
(2) See Time to Cancel Hinkley Point C by Emeritus Professor Steve Thomas available here.
(3) The Stop Hinkley and NFLA joint submission on the Government’s Clean Growth Strategy is available here.
(4) See Stop Hinkley Press Release 28th August 2014
The Department for Business, Energy and Industrial Strategy (BEIS) now expects renewable power deployment to be significantly higher than previously thought after 2020, primarily due to the plummeting cost and surging popularity of solar power and storage technologies. BEIS’ projections now expect cumulative new build renewables capacity from 2016 to 2035 to reach 45GW, marking a sharp increase in the 2015 projection for 33GW of new capacity. The energy supply gap expected from Hinkley Point C (HPC) delays is already narrower than feared just a few months ago. And later this autumn the results of the government’s latest clean power contract auction for offshore wind projects is expected to be extremely competitive, promising to deliver offshore wind at a price well below the guaranteed rates being offered to HPC. (1)
The falling cost of offshore wind power could mean that it turns out to be 25% cheaper than energy from HPC. Developers behind a series of proposed offshore wind farms are vying to secure government contracts that will guarantee a price for the electricity they generate for 15 years. Dermot Nolan, chief executive of Ofgem, said he hoped the winning projects would emerge at a price of “£70 or less” per megawatt-hour (MWh). That would compare with £92.50/MWh that was last year awarded to Hinkley Point for a 35-year contract. Just a few years ago offshore wind was one of the most expensive technologies in the market. In 2014 the government awarded some projects a price of £150/MWh. Technological advances, including bigger, more efficient turbines, economies of scale in manufacturing and the introduction of a competitive “reverse auction” process to award subsidies to the cheapest projects have helped to bring costs down rapidly. (2)
Solar power, once so costly it only made economic sense in spaceships, is becoming so cheap that it will push coal and even natural-gas plants out of business faster than previously forecast according to the Bloomberg New Energy Finance (BNEF) outlook. The research group estimated solar already rivals the cost of new coal power plants in Germany and the U.S. and by 2021 will do so in quick-growing markets such as China and India. Green energy is taking root more quickly than most experts anticipate which means fossil fuels may decline after 2026 – a contrast with the International Energy Agency’s central forecast, which sees consumption rising steadily for decades to come. Electricity from photovoltaics costs almost a quarter of what it did in 2009 and is likely to fall another 66% by 2040. Onshore wind, which has dropped 30% in price in the past eight years, will fall another 47% by 2040. (3)
Last autumn, Michael Grubb, Professor of International Energy and Climate Change Policy at University College London, told the House of Lords Selected Committee on Economic that, although he had supported new nuclear during his time on the Committee on Climate Change, he felt “times and conditions had substantially changed … renewables are now clearly cheaper. Committing to a 35-year contract at that level was economically inappropriate” (4)
He continued: “renewable energy costs … appear almost to have halved in the past few years … We now have more than 10 gigawatts of solar, when the cost projections were that we would get 1.5 gigawatts by about this time … It is now clear that in the electricity sector we will be delivering more renewables than the Government planned for or expected by 2020.” (5)
The electricity system has changed radically in the years since the project to build new third-generation nuclear in Britain was initiated, says Grubb. National Grid’s (NG) Future Energy Scenarios (2016) show a steadily declining need for ‘baseload’ generation. By 2030 there will be growing periods when wind and solar meet all projected demand. The capacity of ‘firm’ inputs (like gas, nuclear, biomass, interconnectors, storage etc) required to operate more than half the year is reduced to 20GW overall. (6) On June 17th Tom Burke of the E3G Consultancy told the CND “No Need for Nuclear” Conference that renewables could soon be producing enough electricity to power the grid from April to October. (7) The implication is that for most of its contracted operating life (which will run out to c.2060), HPC would increasingly be competing with other, lower cost low-carbon sources.
For efficient system operation either HPC would have increasingly to ‘load follow’, adjusting its output up and down to follow changes in demand, or alternately, baseload nuclear would displace other and cheaper sources, for example forcing wind and solar off the grid, if it cannot operate flexibly, or if the £92.50/MWh (indexed) contract is allowed to determine its operation (the plant with biggest payment has most incentive to run). By 2030, around 20GW of capacity is required for less than 10% of year, to cover peak net demand, for which nuclear power is manifestly unsuitable. The dominant need in the majority of National Grid scenarios post 2030 will be for adequate responsive capacity displacing coal and gas, and more efficient approaches to balancing demand and supply. (8)
Michael Grubb told the House of Lords: “If you are worried about how to provide power during winter periods when there is a cold dark windless night, you do not want to build a spanking new plant designed to run 100% of the time; you build something that is cheap to construct and expensive to run.” (9)
Andrew Warren, chairman of the British Energy Efficiency Federation argues that when the UK government first endorsed Hinkley Point C, (HPC) it was projecting an increase in electricity consumption of 15% by now, whereas in practice we are consuming 15% less than a decade ago. In other words it made a 30 % error. This is despite a 13% increase in GDP over the last decade and the increase in the number of gadgets we all own. HPC is only due to deliver 7% of consumption. So we don’t need to keep arguing for new power stations to replace the gap left by HPC – there isn’t one. (10)
Tom Burke points out that: “If there is even a feeble effort to improve energy efficiency electricity demand will fall further below the 30% Andrew Warren has pointed out. This means that a future energy minister will face the daunting task of explaining to consumers why he or she is having to pay renewable generators to switch off cheaper electricity in order to take the expensive electricity we have already bought from HPC. Imagine how much more difficult that task will be if we have by then bought the rest of the Government’s proposed programme.” (15)
For a longer version of this article see nuClear News No.97 July 2017
- Business Green 6th July 2017
- Times 30th June 2017
- Bloomberg 15th June 2017
- The Price of Power: Reforming the Electricity Market, House of Lords Economic Affairs Select Committee. Feb 2017.
- House of Lords Select Committee on Economic Affairs, The Economics of UK Energy Policy 18th October 2016
- Hinkley Point C and other third-generation nuclear in the context of the UK’s future energy system, CEE Briefing Note 20160915 AZPS1; Andrew ZP Smith, Michael Grubb, September 2016
- See http://cnduk.org/component/k2/item/2712-no-need-for-nuclear
- Hinkley Point C and other third-generation nuclear in the context of the UK’s future energy system, CEE Briefing Note 20160915 AZPS1; Andrew ZP Smith, Michael Grubb, September 2016
- House of Lords Select Committee on Economic Affairs, The Economics of UK Energy Policy 18th October 2016
- Guardian 5th July 2017
- Pers Com