Has DECC finally had a light-bulb moment about power from Hinkley?

Is reality finally starting to dawn about Hinkley Point inside the corridors of DECC? The reference in Secretary of State Amber Rudd’s letter last week to Angus MacNeil, Chair of the ECC Select Committee, to a “potential delay or cancellation” is the first faint hint that it may be.

Nobody will be more disappointed than NNWE if the UK’s flagship nuclear project is derailed. This would not only be bad news for EDF, whose excellent team have worked tirelessly for a decade to get construction under way, but also an extremely unwelcome setback for the whole industry which would be greeted gleefully by the anti-nuclear brigade.

However, facts have to be faced. Even if the French Government now agrees to sign a blank cheque in favour of EDF there are still significant technical challenges to overcome. The risk that these could impose fresh delays of months or even years is real.

The need for a swift and hard-nosed look at what this means for UK energy policy is therefore more urgent than ever. The three key issues are security of supply, de-carbonisation and affordability. Whether such an analysis is being conducted isn’t clear from Amber Rudd’s letter however.

DECC claims that the capacity market is adequate to manage security of supply. But it does not spell out what sources of electricity generation would or could make up the shortfall that inevitably results from further delay or cancellation of Hinkley.

This will rightly worry critics who have pointed out that the operations of the capacity market so far have subsided some of the most polluting technologies. The letter is at least frank in its admission that UK de-carbonisation targets could be put at risk by problems at Hinkley. This should worry anyone committed to tackling climate change.

On the question of price government thinking appears contradictory. One sentence claims “alternative sources of supply would be unlikely to present a significant increase in cost to the consumer”, but the next one warns “alternative capacity could still be sourced if a risk of delay or cancellation emerged but this may come at a higher cost”.

Concerns already understandably exist about the £92.50 strike price for Hinkley. The prospect that replacement capacity may be even more expensive is worrying for consumers and unlikely to be popular in the Treasury.

Equally important is where the generating capacity that’s needed will actually come from? The statistics on DECC‘s own website show that new nuclear build is essential if carbon emissions reduction targets are to be met. Indeed, Amber Rudd confirms that those targets are one of the key reasons for the Government’s tenacious support of Hinkley.

So if it’s going to be nuclear then where and when? Government hopes appear fixed on Nugen and Horizon. Both these projects are planning their future progress but at this relatively early stage many uncertainties remain including the need for investors. They cannot yet be depended on to get the UK through the second half of the 2020s.

The UK is not short of sites for new nuclear plant and it is regarded as one of the most attractive markets for potential nuclear developers. Maybe our leaders should be trying to exploit these circumstances more aggressively?

NNWE believes in the merits of a competitive approach. The successful deployment of alternative technologies in countries like China, Finland and the UAE suggests that casting the net as widely as possible might deliver lower prices for consumers and more jobs for British workers.

Is the time approaching when the Government should invite nuclear vendors from around the world to bid to provide UK consumers, domestic and business alike, with the reliable baseload low carbon electricity they need? Light bulb moments require reliable power supply after all.