Following Hinkley, the UK nuclear industry is now at a turning point
Last week’s announcement by Greg Clark, Business and Energy Secretary, clearing the way for Hinkley Point C to proceed has been widely and rightly welcomed.
A swift end to the uncertainty created by the British government’s last minute intervention in the approval process for this project was essential to reassure investors. The fact that the Ministers recognised this augurs well for the future.
Full marks also to EDF. Their calm public reaction in July to the news that Prime Minister Theresa May had ordered a review of the HPC decision was exemplary, even though an event to celebrate the signing of the contract had to be cancelled at very short notice.
Clearing this final political hurdle is not only good news for EDF and its Chinese partner but also for the nuclear industry in general. Details of how the proposed golden share will work remain to be clarified but imposing conditions on the transfer of large shareholdings should not deter any long term investor, whether foreign or domestic.
EDF’s Chief Executive Vincent de Rivaz was therefore justifiably upbeat in his speech on Friday at the World Nuclear Association Symposium in London. In view of the constant carping of the anti-nuclear brigade about the price of new nuclear he rightly highlighted the cost of their favoured alternative – offshore wind farms.
NNWE has always maintained that nuclear power and renewable energy are not in competition but instead complement each other. Decarbonising electricity generation, which must be achieved over the next twenty years to prevent dangerous irreversible climate change, requires big contributions from both nuclear and renewables.
For too long however the opponents of nuclear have regularly and misleadingly attacked new nuclear power on cost grounds by comparing the HPC strike price of £92.50 per MWh with the current low price of gas. The correct comparison is not with any fossil fuel but with alternative low carbon sources of electricity.
Vincent de Rivaz pointed out that, despite claims of falling costs in the renewable industry, the average price at recent UK offshore wind auctions has been £137 per MWh.
Add in another £10 for system integration costs shows that consumers will be paying the (often short term) wind farm investors a whopping 60 per cent premium over the price for new nuclear even though the supply of electricity generated offshore will be far from continuous.
This comment is not based on any hostility towards renewable energy but on objective analysis of its costs. Onshore wind and the latest solar technologies are starting to offer value for money. By contrast offshore wind on which Ed Davey, Energy Secretary in the former coalition government, prematurely splurged billions is a long way from doing so.
Amid all the optimism now understandably surrounding the prospects for HPC it is also important to remember that technical challenges remain. A wary eye still needs to be maintained on the progress of the EPRs being built at Flamanville and Taishan.
The other welcome aspect of last week’s news is that it appears to leave the door open for foreign investors in UK nuclear infrastructure. It followed hot on the heels of a report by Andrew Ward, the new energy editor of the Financial Times, that KEPCO is talking to the NuGen consortium. Since Andrew was recently the FT’s man in Seoul it’s likely this was well sourced.
Let’s hope that the UK nuclear industry is now at a turning point. An open minded, level headed approach to security issues, supply chain opportunities and value for money should encourage Ministers to cast the net as widely as possible.
With the protection of their new golden share and the reassurance provided by the rigour and integrity of the Office of Nuclear Regulation the Government should now make it possible for British consumers, employees and taxpayers to benefit from the best nuclear technology available regardless of its country of origin.