This week the French Finance Director of EDF resigned over his company’s decision to build the British nuclear reactor at Hinkley Point C. He believed that the expensive project could threaten the group, already stretched by rising debt.
Professor Cashmore writes…
If Britain and the world are to curtail greenhouse gas emissions and avoid the potential impact on climate change and global warning, more electricity must be generated in the next decades. Nuclear generation will play an important role in this task.
Indeed right through to the 2020s nuclear energy will continue to be particularly important just as many of the country’s existing nuclear power plants reach the end of their operational lives leaving the country facing a severe shortage of electricity.
The difficulty which EDF and the French government (which owns 85 per cent of EDF) appear to have in reaching a decision to begin construction of the Hinkley Point EPR reactors, is therefore very worrying. Hinkley would be the first of our ‘New Build Reactors’, since Sizewell B came into operation in 1995. It is all the more worrying given that on current timescales, Hinkley could only provide electricity in 2025 at the very earliest.
The conclusion can only be that the UK model for providing large scale and essential infrastructure, of which electricity generation is one example, is flawed. Such large scale, long term projects, which do not provide financial returns in the short term, cannot be left to the ‘market’.
If the UK is to stand any chance of reaching our emission reduction targets (agreed at the 2015 Paris Climate Conference in December last year, and known as COP21) take a lead in the Global Climate Change initiative and (more importantly for business and the consumer) provide the future UK with sufficient electrical power, HMG must review its approach.
David Mowat writes…
10 or even 20 years ago, Thomas Piquemal’s resignation from a major energy company might not have made quite the same headlines – or attracted the same amount of comment on the state of the UK’s energy sector.
The truth is that the furore surrounding M Piquemal’s departure is, at least in part, a reflection of just how high the stakes have become in the nuclear industry and how little margin there is for error or delay.
To be clear – we should have been building Hinkley Point C 10 or even 20 years ago, so that it was being switched on just as the UK starts to decommission its older nuclear reactors. Over the next 15 years, all but one of our existing nuclear reactors are due to be decommissioned – equating to more than a third of the UK’s electricity generating capacity. And that is on top of the 31 power stations (or 30 per cent of our generating capacity) that have closed or announced closure plans since 2010.
Because of the length of time it takes to plan, gain approval for, build, test and bring on-stream a nuclear reactor, decisions need to be taken well in advance, by politicians with clear long term goals, rather than focusing on what looks cheap and popular. Sadly, Governments of all colours have ducked the big decisions for decades, meaning that the Hinkley process is far more crucial (and any delay far more critical) than it should be.
EDF has been at great pains to assure shareholders that M Piquemal’s resignation is not a cause for delay and both the French Government (which owns 85 per cent of the company) and British Government have reiterated their support for the project. Let us hope that they are sincere because the UK badly needs this investment.
To illustrate the importance of Hinkley, consider this simple fact: when it comes on-stream, Hinkley C will generate 7 per cent of the UK’s electricity. That’s more electricity from a single reactor than from every single onshore and offshore wind turbine put together. And of course Hinkley will be able to maintain that output regardless of whether the wind is blowing or the sun is shining.
According to the Government’s estimates, if Hinkley Point is delivered on schedule in 2025, the wholesale cost of electricity from gas-fired power stations will be around £94/MWh. The cost of a Megawatt Hour from renewables in 2021 is estimated to be around £130.
The strike price agreed between the UK Government and EDF Energy is £92.50/MWh – falling to £89.50/MWh if and when EDF delivers the new reactor at Sizewell in Suffolk. If the wholesale cost of electricity is lower than that level in 2025, billpayers must make up the difference – if the cost is higher, EDF must refund the difference to billpayers.
As the station is being built and financed by the private sector, there will be no costs to taxpayers or billpayers until the plant is generating electricity.
None of this means that the UK should abandon its efforts to increase the amount of electricity it generates from renewable sources. On the contrary, a successful nuclear strategy and a successful renewable strategy should go hand in hand in a bid to cut carbon.
Renewables alone cannot generate sufficient capacity reliably to fulfil the country’s needs – to take one example, the coldest days this winter coincided with low winds. Some other form of generation needs to make up the ‘baseload’ capacity which will always be available. At the moment we are providing this mostly with a mixture of coal and gas. Replacing our coal and gas with nuclear would be the biggest contribution we could make to decarbonising our electricity.