Professor Paul Dorfman (UCL Energy Institute) argues the market is clear that new large nuclear plants are a thing of the past. He explains that as ’old nuclear’ goes offline, it should be replaced with quick-to-build renewables.
We need to secure clean, safe, affordable, sustainable, low-carbon electricity to power industry, transport, homes, hospitals and businesses. The good news is we can achieve this through a set of technically and economically viable renewable options and, some argue, nuclear power.
Yet, of the six designated sites for new a UK nuclear plant, three have been abandoned, two are in doubt, and only Hinkley Point C is under construction, albeit subject to escalating costs, time-slippage, and security concerns about Chinese involvement.
That Hitachi has just run out of patience and decided to quit the UK nuclear new-build stage is an obvious blow. But does it signal a fundamental change in our energy policy, or has Hitachi’s new nuclear project been put to the sword in order to plunge on with EDF’s plans for two EPR reactors at Sizewell C?
The market view
Well, if there’s such a thing as a coherent evidence-base, the market is clear that new large nuclear plants are a thing of the past.
Standard and Poor’s, the global credit-rating agency, sees "little economic rationale for new nuclear build in the US or Western Europe, owing to massive cost escalations and renewables’ cost competitiveness, which should lead to a material decline in nuclear generation in those countries by 2040."
Meanwhile, Lazard, the world’s leading financial advisory and asset management firm, says the cost of large-scale wind and solar is a fraction of the cost of new nuclear, even if the cost of decommissioning or the ongoing maintenance for nuclear is excluded. Bloomberg New Energy Finance shows market prices for renewables broadly similar to Lazard’s.
Very recent UK Government department reports and earlier parliamentary committees agree with market analysis. The Department for Business, Energy and Industrial Strategy has just confirmed that renewables would be at least one third cheaper than a Hinkley C-type nuclear project, even without the cheapest available storage technologies.
The National Audit Office has said that the economic case for new nuclear at Hinkley Pont C was both "risky and expensive for the UK taxpayer and energy consumer", warning that the cost of decommissioning our old nuclear plant has risen by £3bn since 2017, with "inherent uncertainty" over the final bill. Meanwhile, the National Infrastructure Commission reported that new renewable energy represented the least cost for consumers.
So the last chance saloon for new UK nuclear now seems to be the fiscally dexterous Regulated Asset Base scheme, or RAB. However, under RAB, the plan is for the very great financial burden of nuclear construction risk to be passed on to hard-pressed UK consumers and taxpayers in the form of a blank cheque. Not a happy prospect, politically.
And experience with the US Early Cost Recovery (ECR) version of RAB is not encouraging. Despite expenditure exceeding $20bn (£15.4bn), no new US nuclear plant has entered into service, and US electricity customers have been left with a $10bn (£7.7bn) debt for a cancelled nuclear plant and another $13.5bn (£10.4bn) in cost over-runs.
Of course, the Government could have taken a direct stake in Sizewell, locking the British public into the very great inevitable cost over-runs - but even that policy was not enough to stop Hitachi walking away from new nuclear plans at Wylfa, Anglesey.
Perhaps the key argument for new nuclear is that it might help with meeting our carbon reduction commitments. But climate change poses a number of unique challenges.
One of the most difficult is that we need to be carbon neutral and soon, otherwise the policy has failed. So it’s worrying that EDF admits that it will take 20 years after Sizewell C starts construction to pay off its own carbon bill.
Not only that, but the UK Institute of Mechanical Engineers has voiced concerns that "projected sea level rise could significantly redraw the map of the UK, as well as power station sites such as Sizewell." It adds: "Nuclear sites such as Sizewell, based on the coastline, may need considerable investment to protect against rising sea levels, or even abandonment and relocation in the long term."
What to do? Well, the Energy and Climate Intelligence Unit recommend that, as old nuclear comes offline, it is replaced with quick-to-build renewables. And this makes sense given, for the first time ever, solar and wind make up the majority of the world’s new power generation - marking a seismic shift in how we get our electricity.
As proof of principle, BP now says that up to 550 gigawatts of new wind and solar will be added each year to the global energy mix, and has itself invested $1.1bn (£854m) in offshore wind power.
So, worldwide and in the UK, the fate of new nuclear is inextricably linked to, and determined by, renewable energy technology roll-out. Market trends for new nuclear are in stark decline and renewables are markedly rising.
Meanwhile, renewables are an exponentially growing economic sector with huge potential for job creation alongside electricity grid up-grade, energy efficiency and management, new storage technology, and market innovation from supply to service provision.
It’s time to get real. Yes, we can modernise our electricity system, and resolve the real energy trilemma - it’s an economic, technological and political win-win.
This article was first published in the Telegraph on 18 September.