A Price Worth Paying? The Cost of Nuclear

Britain needs to keep the lights on, and this week’s announcement of a £2bn guarantee for Hinkley Point nuclear project, aims to help make that happen. The proposed construction of Hinkley Point C – a £16 billion project – will also secure thousands of jobs across the country, provide 7 per cent of the UK’s electricity; and it will also get the ball rolling on a whole new generation of civil nuclear energy infrastructure in the UK, says David Mowat MP, who co-chairs the All Party Group on Nuclear energy. The announcement makes clear that Britain is moving to re-start its civil nuclear industry. Here, the drivers behind that decision will be explained.

New nuclear energy– why we need it in 2014 around 65 per cent of UK electricity was produced by fossil fuels (increasingly these are now being imported, with gas coming from Qatar, Norway and Russia). A further 20 per cent is produced from nuclear. The remainder comes from renewables, in particular biomass.

However, already 20 per cent of the UK’s electricity capacity has closed in the last ten years. Between now and the end of 2030, a further 35 per cent of our electricity generation will be lost, partly the result of ageing and partly the result of commitments on emissions to which we have tied ourselves. Hard choices must now be made if the infrastructure is to be ready when needed to fill the gap. Furthermore, it is estimated that electricity generation will have to be doubled over the next 30 years if transport is to be de-carbonised (which the 2008 Climate Change Act obliges).

Without a significant proportion of new nuclear energy, there would be no possibility of meeting our emissions targets or developing an acceptable degree of energy security. Hinkley Point alone will produce roughly 7 per cent of Britain’s electricity but it is only a start.

Overseas expertise, overseas funds: why are they needed for Hinkley Point C? Today, Britain is confronting the consequences of failed policy since the 1980s. Key parts of the nuclear industry were mothballed as successive governments made significant errors of policy. The viable parts were sold off and Britain’s leadership ceded to others – particularly France. Right now, France has much cheaper electricity than the UK and far lower emissions per capita.

However, Britain still has a vibrant nuclear supply chain and nuclear supports more UK jobs per kilowatt than other forms of low carbon production. UK businesses will benefit from this project. EDF Energy, the company that will provide Hinkley, has already announced the preferred bidders for more than £1.5bn worth of contracts, and estimated that UK companies will be providing at least 60 per cent of the £16bn construction value. The proportion of UK-sourced work for nuclear is higher than other low carbon forms.

The decision by China to assist in the financing of Hinkley Point should also be welcomed. China has its own rapidly growing industry, with over 50 stations planned or under construction. More importantly, it has many trillions of dollars of foreign currency reserves to invest. It is good that the UK will be part of this.

Dear at the price? The strike price for electricity produced from Hinkley is about double the current price achievable by fossil fuels. Furthermore, the Government is guaranteeing it for 35 years. Part of the reason for this cost is that all project financing, as well as the building risk and waste disposal risk, reside with the main contractor, EDF. That said, the price is still as low or comparable to other forms of low carbon generation and the key point remains that generation at scale is needed for this country to remain an industrial economy.

It must therefore be a Government priority that future nuclear generation does become cheaper. The expectation is that future deals (Wylfa, Sizewall and Moorside) must have a lower price. The indications are that this will be the case.

Is it safe? The safety record of the industry in the UK (and the west generally) is very strong. Since Chernobyl there have been no deaths from nuclear – by contrast with that from fossil fuels it replaces. The UK regulatory environment is (rightly) particularly strong. Furthermore, every operator shares a sense of a collective responsibility to ensure safety. Each knows that any nuclear incident could be catastrophic for the industry as a whole.

Whichever nation or company provides the design and construction, they will have to work within the UK’s strict safety regime.

Managed waste? The cost quoted by EDF covers all waste disposal. This is an important principle, and lesson learned, from earlier phases of the nuclear industry in the UK.

However the industry does produce highly toxic and unpleasant waste products, which will be with us for thousands of years. For some, this is a showstopper. I believe it is manageable and preferable to the threats from climate change, which is unpredictable and unmanageable.

Nuclear v renewables? Does nuclear displace renewables? This should not be the case.

The inconvenient truth is that we need both renewables and nuclear. Without nuclear generation, there is no chance of the world reaching its decarbonisation objectives. In the UK, Hinkley alone will generate more electricity than all our offshore and onshore wind combined. Furthermore, they complement each other – nuclear providing reliable base load, and renewables being intermittent.

A model to emulate is Sweden, with over 40% nuclear and nearly 30% renewable generation. The reality is that it is not nuclear versus renewables but nuclear versus coal, as the base load which works together with renewables.

If Britain is to keep the lights on, nuclear must play a part. This week’s £2bn guarantee to get the new project going at Hinkley point C is a start. It has been welcomed by many – scientists, engineers and the industry as just that: the chance to bring nuclear in from the cold

 

David Mowat

David Mowat was the Member of Parliament for Warrington South between 2010 and 2017, serving as the Parliamentary Under-Secretary of State for Care and Support in the Department for Health between 2016 and 2017. He served as vice-chairman of the All-Party Parliamentary Group on Nuclear Power and for Politeia was co-author of Nuclear Options: Powering the Future (2014) and Freedom, Responsibility and the State: Curbing Over-Mighty Government (2012).

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