For months I’ve been predicting that despite all the obvious reasons not to allow this project to go ahead, as well as all the negative news coming out about it (such as EDF starting to lay off staff related to Hinkley C), the project seems to have been given the official go ahead.
Both parties, EDF and the Tory government had too much to loose from the collapse of another nuclear energy deal. The efforts engaged in to support this plant (which included Osborne, the Chancellor flying all the way out to China) could not have resulted in a negative outcome, or it would have been curtains for the nuclear industry in the UK.
While environmentalists will be inevitably aghast at this, and no doubt we’ll be looking at a protracted period of civil disobedience and protests. However, I tend to see the silver lining in that by agreeing to the terms of this deal, the government had laid a trap for themselves.The Terms
The deal will see a subsidy paid to the operators of Hinkley C in the order of £92.50 per MWh for 35 years. For EDF energy this is a major climb down, as at the start of negotiations they were looking for up to £140/MWh for 40 years. However, from the Government’s point of view this is still twice the present wholesale rate for electricity and higher than the rate of subsidy given to renewables such as biomass and onshore wind. Indeed its entirely probable that sources such as offshore wind and solar will be at a similar cost (£110-100/MWh) by the time Hinkley C starts operating.And before anyone starts mumbling about “intermittency” and renewables and the high costs of “backing them up”, the overnight costs listed above account for that (although they don’t quite square the circle with nuclear as its still unclear how much the decommissioning costs for any future plant will be and who is going to pay). Furthermore, nuclear also needs to be backed up by something. Ask the national grid and they’ll tell you that the largest intermittent load in the UK is Sizewell B NPP, as they need to keep about 1.3 GW’s in reserve just in case it or any other power station needs to shutdown unexpectedly. By contrast, while certainly wind turbines don’t generate any power on still windless days, given that we have this thing called “weather forecasts” such periods of low wind can be predicted well in advance. Does anyone fancy a Chinese?
Of course predictably the aspect of this deal the media focused much on was the fact that it is a consortium of French and Chinese state owned companies who will be building and operating Hinkley C. Glancing at various comment strings last Monday, I found that this is probably what had people most upset. Does the UK really want to hand its energy policy (and the price of electricity in the UK) to foreign governments?
However, the involvement of these state companies was inevitable. The markets have long lost faith in nuclear, Fukushima hardly helped. But even before then, the debacle that is Olkiluoto in Finland had them spooked. A quick read of Citigroup’s opinion on new nuclear reads along the lines of “fool us once, shame on you, fool us twice shame on us”….and these are the people who thought sub-prime mortgages and junk bonds were a good safe investment!
Thus only state owned companies or governments themselves were ever going to get involved in Hinkley point C. But one has to still question why the Tories didn’t just stump up the cash and pay for the plant itself? After all if we’re going to spend £50 billion on a new High speed rail network and possibly £40 Billion on a new London airport, why not cut out the middle man and end up owning this plant? This would allow the government to run the plant at a loss, but providing cheaper electricity (as the French do with their nuclear stations).
Of course, obviously this was off the cards as this would involve saying that dreaded word “nationalisation” which is taboo for tories. I’ve long noticed this contradiction, in which the Tories are pro-nuclear (possibly, I’ve contemplated because so many on the left are against it) yet they stubbornly refuse to accept that it is a technology intimately tied to “big government”.
The Merchant of Paris
I’m reminded about how back in the middle ages the then interpretation of Christian doctrine forbade the payment of interest. So Christians forced the Jews (who perhaps unfortunately for them had a loophole of sorts) to do the lending for them, and then hated them for it.
We can see something similar with Hinkley C. The Tories are basically hiring the Chinese and French to do this “nationalisation” thing for them, as its against their religion of Thatcherism…and no doubt when the usual delays start to creep in, the plant goes over budget, utility bills soar the tabloids will hate the French and the Chinese for it.
The Somerset Mafia
I’ve known Hinkley C would go ahead come what may since about 2004, when someone in a position of authority let slip to me that it had to go ahead, the nuclear industry would have been finished in the UK if it didn’t. For a good decade, the supporters of nuclear energy, or as I refer to them, the “Somerset Mafia” have been going around breaking legs and back stabbing anyone looking at building renewables in this part of the country and thus treading on the forbidden lawn.For example, in 2010, a proposed tidal energy project in the Severn was cancelled (again!) As I pointed out in my blog at the time, tidal energy (which unlike wind and solar power is regular and predictable) technology has moved on from a Barrage. Tidal stream turbines or lagoons would be much cheaper, less of an issue for the environment and offer a pay-as-you-go option rather than an all-or-nothing barrage (or nuclear plant). Indeed there are proposals to build just such systems in the Pentand Forth and a tidal lagoon in Swansea is being taken forward as we speak).
However, killing tidal energy in the Severn, even though it could potentially yield more energy capacity as well as the ability to store energy to back up renewables, was always necessary in order to make Hinkley C viable. Similarly there was a proposal to build a wind farm back in the 2000’s right on the very site where Hinkley C will now sit. Pro-nuclear groups such as Countryside Guardian began to cry crocodile tears about the “risks” to birds…ignoring the fact that the RSPB wasn’t particularly bothered (the RSPB is in favour of wind power, although they reserve the right to object to individual wind power projects that encourage on rare bird habitats).So they changed tack and succeeded in getting it killed (with the aid of cronies on the local council who were pro-nuclear) on the basis that it would “harm the cultural heritage of the region”….yet they’ve been strangely silent since the land was quietly sold to EDF and “the biggest industrial project in recent British history” (to quote the Tory government) was committed to be built on the site. The word “Irony” doesn’t quite just do it.
Right Royal Scaremongering
And of course another element of the nuclear lobby, the much discredited Royal Academy, were out banging the drum last week, raising the spectre of “the lights going out”, with the risk of power shortage as early as the winter of 2015 and they were urging for more nuclear power. Now while it is true that the UK is facing the potential for some major power shortages in a few years time, I would argue that this is largely because of a failure of the nuclear industry to deliver on its promises (as well as their habit of objecting to anything that isn’t nuclear).Furthermore, Hinkley C will arrive a good decade after the 2015 period when power cuts become a risk, so unless the Royal Academy is proposing we huddle around a candle for 8-10 years I fail to see what relevance nuclear has to this issue.
Also its worth remembering what nuclear power can do and can’t do and as I described in a prior post, the first bit of the grid to trip in the event of a power crisis, would be the UK’s nuclear plants and they would also be the last bit of the grid to be restarted.
Indeed in last night’s storm, only a handful of the UK’s wind farms actually had to be taken off-line (despite wind speeds of over 80 mph), while at least two of the UK’s nuclear reactors had to shut down during the same period.
Nuclear has its place in the grid yes, but like I said, its important to realise what they can do and can’t do.
But like I said, the Tories have in effect laid a trap for themselves. Obviously if anyone else can come along and propose to provide renewables with a similar level of online grid availability, then they will argue that they too are entitled to £95.50 per MWh.
Price drops for renewable installation, along with its high installation rate (as I mentioned before, 10 times higher than nuclear power worldwide, even when we account for average capacity factors) means it’s getting to the stage where by the time Hinkley C comes on stream it may be undercut and facing a scenario where renewables on the grid outnumbers nuclear. Also new low cost low carbon energy storage technology is under development. This can include simple pumped storage (by adapting existing hydroelectric reservoirs) or using Zinc-Air Battery technology or Liquid Air Energy Storage.And recall that not all renewables are as variable as wind power. I’ve highlighted the large potential of tidal power both in Scotland and the Severn. I was reading recently about an estimated 5 GW’s of geothermal potential available in Cornwall.
Thus it’s entirely possible that the costs of providing a sizable capacity of renewables with good load following capability or coupled to energy storage, on a scale similar to (or exceeding) Hinkley C will be a possibility at around the same time it goes online for a similar price (or possibly less).
And similarly if the environmental impact benchmark is now Hinkley C, stopping future wind energy is going to be a lot harder. And the Tories can rule out that EU referendum they’ve wanted as Hinkley C amounts to a sort of “shotgun wedding” between the UK and France. And for the Tories, it’s not a matter of dealing with a few hippies, if they try and pull a fast one here. No, these days renewables is big business.
Indeed their new Chinese friends happen to be major players in the industry (while we hum and haw about a few GW’s here and there the Chinese are looking at having 300 GW’s worth of wind power operating in China by the time Hinkley C opens!) and they will get the lawyers involved if they suspect the Tories are up to their old tricks, or even potentially take the UK to the WTO. And the pressure the Chinese are in a position to exert on the Tories (as again witnessed by Osborne’s shuttle diplomacy) is considerable.
And already, the secret negotiations surrounding Hinkley C have attracted some disquiet and might be challenged in court by green groups or renewable companies. It also has to get past the European competition committee.
The last battlestar
So in effect Hinkley C sets a trap which makes it very hard for the Tories, or any future Labour government to extract themselves from. A trap which more or less guarantee’s they’ll be forced into backing some major renewable energy projects in the future.
And if, as I’ve highlighted, renewables do take over the UK’s grid, then nuclear will inevitably get squeezed out. Its entirely possible Hinkley C will be the last nuclear plant ever built in the UK…assuming it actually gets built of course!