The government's willingness to fork over billions of pounds in billpayers' money to French and Chinese remains shrouded in confusion
We can only hope the eventual quality of the engineering will be higher than the quality of the debate that swirls around the controversial Hinkley Point nuclear project.
On one side of this long-running argument, anti-nuclear campaigners remain implacably opposed to everything to do with the project and are currently digging out the padlocks and superglue as they prepare for a last ditch attempt to stop the plant being built. Hinkley Point is too expensive, too dangerous, too unnecessary, they argue. Meanwhile, pro-nuclear boosters, which somewhat bizarrely take in the French state, the Chinese state, and UK ministers who are so confident about the prospects for a nuclear renaissance they want other governments to build reactors for them, insist Hinkley Point is a great deal, completely safe, and utterly essential.
For the rest of us, there is nothing but confusion. Who should we believe? Is £92.50/MWh for 30 years, as Hinkley Point has been guaranteed, far too much for clean power or does the need to decarbonise and deliver baseload power negate cost concerns? Is it wise, from a security perspective, to give Chinese state-owned firms control over nuclear assets on the UK mainland, or should we acknowledge that the Asian superpower is now a valuable and trusted strategic ally? Why is a Conservative government handing money to companies owned by other governments while letting private sector UK clean tech firms go to the wall? No wonder the public is so confused, declaring itself pretty evenly divided between supporting the project, opposing the project, and not having a clue either way.
If you start from the position of climate hawk first principles - i.e. how can we decarbonise as quickly and cost effectively as possible - there is a compelling and credible argument that nuclear power can play a crucial role in a low carbon energy mix. As environmental campaigners, such as George Monbiot, Mark Lynas, and Chris Goodall, have long argued the scale of the climate change threat makes dispensing with the world's main source of low carbon baseload power a perverse thing to do. The problem, as Monbiot, Lynas, and Goodall have also pointed out, is that the Hinkley Point project is so "overpriced, overcomplicated and overdue" that it remains extremely difficult to justify, even if you think nuclear projects are critical to global decarbonisation efforts.
Today's announcement of Chinese investment in Hinkley Point, which drastically increases the chances of the project now going ahead, suggests the government is pretty relaxed about these concerns and is confident the remarkably generous £92.50/MWh price support contract represents a good deal, despite the fact it is double the current wholesale cost of power and higher than the level of support required by new onshore wind and solar projects, both of which are seeing costs continue to fall.
Ministers might yet be proved right, after all we need to decarbonise and there is a credible argument for paying a premium to deliver a stable, secure, and environmentally sustainable energy system. But, as with so much of the government's energy strategy at the moment, they have done a staggeringly bad job of explaining and justifying their underlying rationale.
For me, three big questions hang over the whole Hinkley Point debate, all of which are being glossed over and all of which should be addressed by a democratic government tackling topics as important as climate change, energy costs, and nuclear security.
The first is whether the level of subsidy being offered to EDF and its Chinese partners is really competitive?
At face value £92.50/MWh for 30 years from 2025 is eye-wateringly expensive, particularly when set against the fact new onshore wind and solar farms can be built for around £85/MWh now and renewable energy costs are widely expected to continue fall over the intervening 10 years, as they have done over the past decade. It even looks expensive when set against a projected cost for floating offshore wind farms of £85/MWh from 2025. And it looks wallet-emptyingly extravagant when set against the lowest cost form of carbon saving, namely energy efficiency measures leading to reduced energy use.
But the government argues, quite rightly, that we should not consider these figures at face value. We need to appreciate the fact Hinkley Point promises reliable base load low carbon power at scale, Ministers say, while renewables offer intermittent power spread over a huge area with all the additional grid costs that implies.
These are fair points, but they do not answer the question of whether or not this deal is competitive. For that we need to see some projections as to how £92.50/MWh, and any additional costs that may accrue, compare with projected costs for technologies that more closely match the advantages nuclear can offer. For example, could carbon capture and storage plants undercut new nuclear and offer the baseload power Hinkley Point promises? Similarly, could the recent sharp reduction in energy storage costs continue and marry with the falling cost of wind and solar to deliver reliable renewable power at a cost well below £92.50/MWh?
The truth is no one knows for sure, just as no one knows whether Hinkley Point will be delivered on time or on budget or go the way of the embarrassingly delayed EPR plants in Finland and France. But if the government wants to convince people the Hinkley deal is a good one it needs to at least attempt to provide some credible projections that demonstrate why it presents reasonable value. The absence of such projections only fuel fears this is a staggeringly bad deal for bill payers and a complete contradiction of the government's purported commitment to cost effective decarbonisation - a contradiction that leaves its accompanying efforts to strip renewables of subsidy support looking like an ideologically motivated hit job.
The government should show the working that underpins the £92.50/MWh figure, assuming of course such calculations both exist and can withstand independent scrutiny.
The second question relates to David Cameron's current favourite topic: security. Is the UK risking national security by giving the Chinese such influence over nuclear assets?
It can easily be argued that in a globalised world where we urgently need to tackle carbon emissions we should take much needed investment from wherever it is offered and seek to build trade relations with the world's emerging clean tech superpower. But plenty of other countries would balk at the idea of handing quite so much power and influence to a foreign government. Moreover, there is a glaring inconsistency in the Prime Minister's Jeremy Corbyn-baiting assertion we need an independent nuclear deterrent because it is an unpredictable world and the failure of imagination that suggests there is negligible risk involved in giving a foreign government control over civilian nuclear assets.
EDF today revealed the security services would be able to inspect the site, but the government needs to be aware that many people believe the crucial question over the level of security safeguards attached to new nuclear projects is yet to be answered satisfactorily?
The third and most important question addresses how Hinkley Point fits into an anticipated wave of new nuclear projects. In short, what happens next?
One way to justify the high cost of Hinkley Point is to see it as a fore-runner for a series of new nuclear projects that will lead to lower costs in the future and will ultimately deliver a cost effective, near zero emission power mix for the 2030s and beyond. This is the same argument used to justify the first wave of offshore wind farms, the expensive deployment of prototype wave energy systems, the proposed Swansea Bay Tidal Lagoon, and the long-awaited CCS demonstration projects. The government has said it envisages Hinkley Point being followed by new reactors at Bradwell, Sizewell, and beyond, while the promise of next generation integral fast reactors lingers, as always, in the background. But details on this crucial next wave of nuclear development remain extremely hazy.
If subsidies worth £92.50/MWh, plus loan guarantees, make sense for a trail-blazing project like Hinkley Point what price does the nuclear industry have to get down to for additional reactors to be developed? We know offshore wind has been told to get its costs down below £100/MWh by 2020 and developers are continuing to invest in the sector on the basis they think this is achievable. But what is the magic figure for the next wave of nuclear reactors? The government and EDF have said the price support for Hinkley Point would fall to £89.50/MWh if Sizewell C goes ahead and the company is able to share the first of a kind costs of the EPR reactors across both sites. But this is still a much higher cost than we'd expect renewables projects to be delivering power at by 2020, let along 2025. And what happens to the subsequent nuclear reactors the Chinese government wants to build in the UK? The government can't seriously be considering backing three or four of the 'most expensive power plants ever built', can it?
The last government's vision for the power sector appeared to be a series of subsidised proof of concept projects for the big three low carbon options - renewables, nuclear, and CCS - followed by intense cost competition between the different technologies through the 2020s in order to deliver the optimal mix. Is this still the government's strategy, because investors and developers right across the energy industry would love to know?
One of the many tragedies of the government's energy policy blitz is that just as competitive auctions for subsidy support were being shown to push down the cost of clean energy this approach was paused. The worry now is that without much clearer commitment to restoring a degree of competition to the clean energy sector as soon as possible, the UK risks being burdened with a scenario whereby a limited subsidy pot is lavished on a wave of high cost nuclear projects at a time when increasingly cost competitive renewables are denied the relatively modest support they require to scale up.
In addition to offering a detailed explanation as to how it came to conclude such expensive subsidies for a mature nuclear technology were justified, the government really needs to confirm that all forms of clean energy will soon have to compete on a level playing field for support. Such an approach may risk Hinkley Point ending up as the white elephant its critics predict, but it would also allow the nuclear industry to demonstrate once and for all whether it can play a key role in delivering the government's much trumpeted, but increasingly tarnished, cost effective decarbonisation strategy.
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