The government has given EDF permission to build 2 new nuclear reactors at Hinkley Point, Somerset, at a predicted cost of £14 billion. The new plant is expected to take a decade to build, and will replace the existing reactor at Hinkley when it closes in 2023. EDF says the new plant will generate enough electricity to power 5 million homes – around 7% of the UK’s households – making it 4 times more powerful than the present reactor. The project is also expected to create between 20,000 and 25,000 construction jobs, and around 900 full-time jobs when it becomes operational.
Despite the scepticism that often surrounds nuclear energy, the government thinks these plans are a step in the right direction towards reaching a diverse, sustainable and low-carbon energy system. Indeed, the government hopes that this new plant will pave the way for other new nuclear projects, bringing us lower energy costs. Vincent de Rivaz, EDF Energy’s chief executive, said “the success of this pioneering project will kick-start the new nuclear programme in the UK and is expected to lead to lower costs for successive UK nuclear plants.”
The prospect of sustainable and affordable energy will be a welcome one to many of us – especially given the gloom that currently hangs over the energy market. Only last week, our gas reserves dropped to just 2 days’ supply following an unseasonal cold snap. Then, after that, a key pipeline from Belgium closed when one of its components broke and caused gas prices to double for a short while. Amid all this, SSE boss Ian Marchant told us of “a very real risk of the lights going out” in Britain, reflecting Ofgem’s recent forecast of an incoming energy crisis in which they warned of plummeting supplies and rocketing bills.
What will the plant cost us?
There is still no real certainty of whether the new nuclear build at Hinkley will even go ahead – let alone of whether it’ll lead lower energy bills. First of all, EDF needs to provide £14 billion up front to pay for the construction at Hinkley, which is only possible if their investors are confident they’ll get a nice return when the plant begins to operate. To secure investors, EDF will need to fix the price of the plant’s energy at a profitable rate known as the ‘strike’ rate. So far, EDF have told the government that they’re looking for a strike price of £100 megawatt-hour (MwH) – over twice the current cost for wholesale electricity.
Unsurprisingly, the government hasn’t readily agreed to double the public’s electricity costs, and so negotiations to settle on an acceptable price are still on-going. Putting it simply, if no deal is reached, the UK’s dreams of energy independence and decarbonisation will take another blow; if a deal is reached, we as consumers may well end up paying £90 billion in subsidy during the 60 year lifespan of the plant.
Is it worth it?
It won’t come as news to you that nuclear plants are very expensive, and take a long time to set up in comparison to the average plant’s lifespan. We only need to look to the reactors currently being built around the rest of Europe to see that they are all over-budget and behind schedule. Then there’s the delicate issue of dealing with waste, and of the massive costs involved in eventually decommissioning the plant. As far as decarbonisation is concerned, Keith Allot of WWF UK asks “if we do spend so much money on a project lasting just 60 years, with such significant environmental risks, are we really pursuing long-term sustainable goals to reduce carbon emissions? I think not.”
What about renewables?
The fact of the matter is nuclear energy keeps getting more expensive, albeit safer. On the other hand, the cost of renewable energy is decreasing thanks to greater investment and government incentives. In fact, by 2020, before the nuclear plant at Hinkley comes on-line, the price off-shore wind will be fixed at £100 MwH. This means that renewable energy will be cheap enough to really compete with the benefits of nuclear. Keith Allot explains that “focusing on renewables and energy efficiency, where the UK has huge potential to be an industrial leader, could deliver both huge cost reductions and a substantial boost to UK economic growth and manufacturing.”
If the nuclear build at Hinkley goes ahead we can rejoice in having at least one more source of secure energy for the future, which is important at a time when supply shortages are becoming a real worry. However, just as a final thought: given the costs involved, which will inevitably end up being paid by us, maybe it’s time we focused more on developing new and cheaper renewables with the same urgency that politicians and industrialists have shown new nuclear.