Hinkley C and the Trap

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.

Figure 1: Even thought “Official” approval hasn’t been given, work on Hinkley C is well advanced [Credit: The times.co.uk (2013)]http://www.thetimes.co.uk/tto/business/industries/utilities/article3774858.ece

Figure 1: Even thought “Official” approval hasn’t been given, work on Hinkley C is well advanced [Credit: The times.co.uk (2013)]

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.

Figure 2: The estimated overnight costs of various energy options [Credit: BBC, 2011]

Figure 2: The estimated overnight costs of various energy options [Credit: BBC, 2011]

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.

Figure 3: Nuclear decommissioning costs [Source: NDA, 2011]

Figure 3: Nuclear decommissioning costs [Source: NDA, 2011]

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.

Figure 4: The likely impact of Hinkley C on the local landscape and Severn estuary [Source: The Guardian, 2013]

Figure 4: The likely impact of Hinkley C on the local landscape and Severn estuary [Source: The Guardian, 2013]

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).

Figure 5: Tidal energy, while still some way of maturity, is certainly an option worth investigating

Figure 5: Tidal energy, while still some way of maturity, is certainly an option worth investigating

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).

Figure 6: The impact of wind on birds has to be put in the proper context [Source: Sovacool, 2012]

Figure 6: The impact of wind on birds has to be put in the proper context
[Source: Sovacool, 2012]

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).

Figure 7: The bulk of the UK’s nuclear plants will be in they’re grave before Hinkley C comes online [Credit: Protons for breakfast, 2012]

Figure 7: The bulk of the UK’s nuclear plants will be in they’re grave before Hinkley C comes online [Credit: Protons for breakfast, 2012]

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.

The Trap

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.

Figure 8: Zinc Air batteries is one of a number of emerging technologies [Liverpool University, 2013]

Figure 8: Zinc Air batteries is one of a number of emerging technologies
[Source: Liverpool University, 2013]

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!

About daryan12

Engineer, expertise: Energy, Sustainablity, Computer Aided Engineering, Renewables technology
This entry was posted in climate change, economics, efficiency, France, Fukushima, Global warming denial, nuclear, peak oil, politics, power, renewables, subsidy, technology. Bookmark the permalink.

19 Responses to Hinkley C and the Trap

  1. neilrieck says:

    Thanks for this. My wife and I were shocked to see the nuclear-outsourcing announcements by Osborne and Cameron on BBC and, obviously, that news bite didn’t contain this level of detail found here. Not sure why they didn’t do a deal with France after watching other successful joint projects like the Concord, Airbus, Chunnel + Eurostar, etc.

    • daryan12 says:

      The French are still involved, it will be a French designed reactor, but to what degree its French built we’ll have to see.

      The major problem was that EDF and AREVA couldn’t get the project financed on their own, even given the very high level of subsidy they were originally offered. From what I was hearing around the campfire, the banks were still reluctant to put up the cash, which is hardly surprising given the mess they’ve made in Finland and the fact that AREVA has huge debts. Ordinarily the French or British gov would step in with a loan guarantee, but it seems that neither was willing. As a result of this all sorts of rumours have been flying over the last few months ranging from the whole thing being called off or that the 2 reactor project was going to be cut to one reactor or that the whole project was being moved to a different site with a different supplier.

      So essentially the Chinese are part of the project as they were willing to fund it without said guarantees (more money than sense?).

      • neilrieck says:

        Well, I guess it is one way for China to fund the advancement of China’s nuclear industry. It all starts with on-the-job training. Thanks for your perspective on this issue.

      • ontspan says:

        Yes, the UK govnt has provided a loan guarantee, up to 10 billion it seems.

        The strike price (a FIT essentially) is also corrected for inflation, so you probably pay an even higher price per MWh when the reactor goes online.

        Lastly, EDF continues to be paid when the reactor is curtailed.

  2. John ONeill says:

    Congratulations on sorting out your spelling! Still a few glitches in the photo captions though ( remember ‘ though ‘ without a ‘ t ‘ on the end rhymes with ‘throw’, and ‘ thought ‘ with a ‘ t ‘ on the end rhymes with ‘ sort ‘. Also the AGRs will be in ‘ their ‘ graves, not ‘ they’re ‘. I think theres an ‘ off ‘ instead of an ‘ of ‘ somewhere as well, but overall, a 99 percent imporvement!
    As for the content – if zinc air batteries, Cornwall geothermal, and tidal are producing a tenth as much power between them in twenty years as Hinckly C, I’ll eat my hat. And here for your deletcation is a huge shit fight between Benjamin Sovacool and his many detractors over the suggestion that nuclear plants kill more bird than wind farms do.
    http://atomicinsights.com/sovacool-vs-lorenzini/

    • daryan12 says:

      Perhaps you should have read the article and not worried about the spelling. My point about Hinkley point C (spelt Hinkley, like Hinkley) is that’s its in the wrong place. Its unlikely that any of these renewable options will get build because the pro-nuclear lobbyists in that part of the country will object to anything not nuclear. Equally however, there’s limits to what we can achieve with nuclear. Even a like for like replacement of the UK’s existing fleet is highly improbable.

      And there’s still the outside chance that Hinkley C might get killed by a future government (in the UK, France or China) so you might want to start thinking of what kind of sauce to go with the hat!

      As for Sovacool, yes I am aware of a number of egotistical types who feel the need to “prove” that their precious nuclear is better than anything else and they get really upset at any suggestion to the contrary…even when the data comes from IAEA! While I’m not exactly keen on Sovacool’s methodology, I would note that his final values (for Carbon footprints) is not that far removed from other studies (such as Bilek etal 2008). Furthermore, as I often point out to my students, even if we take the worst case scenario for nuclear or renewables (Varun etal 2009 gives a good range of figures, including some worst case scenario values for renewables) be it in terms of Carbon emissions, environmental impact, bird deaths, etc. they always work out an order of magnitude lower than any option that involves fossil fuels. So such “debates” are literally splitting hairs and ignoring the wider issue.

      Now if some childish people what to throw their toy’s out of the pram, go let them, but I’m not going to get involved. Why that would almost be as immature as running around the internet acting like a grammar nazi!

  3. stan says:

    storing electricity is a waste of money .people can run appliances when power is available.Inflation will make nuclear cheaper in @ 20yrs.

    • daryan12 says:

      “storing energy”
      Is entirely necessary as the demand varies constantly throughout the day and seasonally. Currently this isn’t an issue for some energy sources, such as nuclear or renewables in most countries, but once you go over a certain threshold it becomes a major issue.

      “inflation”
      Unfortunately this one cuts both ways. While it will bring the costs of electricity up, inflation will also increase the costs of building nuclear plants in future, as well as the costs of decommissioning them at the end of their lives. This is why we see the situation where it costs a few hundred million to build many of the UK’s reactors and its now going to cost around 2 billion a pop to tear them down, plus another couple of tens of billions to deal with the fuel related wastes.

  4. Re Sizewell and the attendant need for 1.3GW backup. This means no evaluation of such a plant is meaningful without considering the backup required. In fact, this sounds much like windbaggers claims for wind energy backup needs. The difference is, unplanned NPP outages are just that, unplanned, or completely unpredictable. Wind can be forecast. It also illustrates how illusory and meaningless obsession with capacity factor, cost per MWhr, or per MW are. These are only meaningful to engineering and financial professionals who know to view them in the context of the overall system goals, rather than in isolation.

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