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UK Tories wake up to nuclear folly, as wind and solar found to be cheapest

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The decision by the UK’s Tory government to put a hold on approval for the world’s biggest single energy investment – the Hinkley C nuclear plant – may have less to do with concerns about the potential role of Chinese state companies and more to do with the realisation that new nuclear is a horrendously expensive boondoggle.

The fact that the cost of wind and solar is falling and the cost of nuclear is moving in the opposite direction is of little surprise to anyone involved in the energy markets, even if the nuclear industry and its supporters wish it were not so. But it is news, apparently, to the Tories.

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New data uncovered from a previously unheralded National Audit Office report shows that the UK government is now advised that the cost of wind and solar could be around half that of new nuclear by 2025 – between £50-£75/MWh compared to between £80 and £125/MWh for nuclear.

The Guardian reported that previous forecasts, made in 2010 and 2013, showed that the two renewable technologies were expected to be more expensive than nuclear or around the same cost by the time that Hinkley was built. This is the first time the government has shown it expects renewables to be a cheaper option.

The Hinkley Point nuclear project has already blown out in costs and relies on significant government guarantees and subsidies over and above the £92.50/MWh tariff it promises to pay should it ever get built. That tariff then rises with inflation over the course of the 35-year contract, meaning it could more than double in price by 2050, even as the cost of wind and solar fall even further.

“The [energy] department’s forecasts for the levelised cost of electricity of wind and solar in 2025 have decreased since 2010. The cost forecast for gas has not changed, while for nuclear it has increased,” the NAO said, with a degree of understatement. The detailed energy department findings have yet to be released.

The assessment is important because the UK, like Australia, is facing major decisions about its generation fleet over the next decade. Unlike Australia, the UK has decided to end coal-fired generation within a decade, and for the last two months the amount of solar production has beaten that of coal production.

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Before the Brexit vote, the UK Tories had appeared entirely smitten by new nuclear, despite the evident folly of the project, which had not just blown out in cost from £16 billion to £24.5 billion, but because of the falling price of wholesale electricity, would require a lifetime subsidy of £29.7 billion compared to original estimates of £6.1 billion.

As Bridget Woodman from the University of Exeter wrote recently, accommodating Hinkley meant that the UK government had to essentially redesign the electricity market over the past few years in an effort to create a situation where investment in a new plant looked attractive.

“Pretty much every major policy design has been geared towards creating a perfect environment for Hinkley Point C. That’s why it’s such a surprise to see the government has now stepped back – a bit – from the brink,” she wrote.

And what the UK government was proposing to build was in sharp contrast to what is being recommended. The head of National Grid, for instance, had last year called for a complete rethink about the nature of energy systems.

“The idea of baseload power is already outdated,” he told Energy Post.

“I think you should look at this the other way around. From a consumer’s point of view, baseload is what I am producing myself. The solar on my rooftop, my heat pump – that’s the baseload.

“Those are the electrons that are free at the margin. The point is: this is an industry that was based on meeting demand. An extraordinary amount of capital was tied up for an unusual set of circumstances: to ensure supply at any moment. This is now turned on its head.”

Those thoughts are now being echoed by other experts. David Elmes, the head of Warwick Business School Global Energy Research Network, wrote in the UK edition of The Conversation that the UK had painted itself into a corner, and needed to get over the idea that megaprojects were the solution to everything.

“Instead, it should think of a new mix between smaller and larger, be more joined up in considering consumption as well as supply and think more decentralised than central. That expands the industries, companies, institutions and government departments involved.”

This has important implications for Australia, whose official energy blue-print, apart from ignoring climate change, appears fixated with a fascination for nuclear energy and large centralised power plants.

It’s an idea that the coal generators are happy to go along with, even encourage, because it necessitates a push-back against the decentralised energy that is now emerging as an obviously cheaper and cleaner alternative to the current business models, and promises to extend the life of their assets.

Slowly, however, it is dawning on more and more conservative politicians that the smaller, distributed energy is the smartest way forward. Not just because solar, particularly in Australia, offers the cheapest technology, but because in combination with storage and smart technology it can offer an alternative to the centralised, gold-plated networks that account for half of consumer electricity bills.

The recent price surge in gas and the concentration of market power that transferred this cost, and a whole lot more, to wholesale electricity prices, particularly in South Australia, means that distributed energy is becoming an increasingly attractive option, because it also adds to competition.

That puts South Australia at the forefront of how Australia proposes to move forward. It has dabbled with the idea of nuclear power, it has suffered from the forces of a powerful oligopoly. Its consumers are being burnt by retailers.

What it and other states need most is a long-term vision for the future, and to not fall into the trap of power system security, which is usually just a euphemism for the status quo. This Friday’s meeting of state and federal energy ministers will give us a taste of whether this is possible or not.  

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  • Rob G

    Nuclear is one of those things that countries blunder into. Europe is slowly learning that it is a waste of money and time. And yet, here in Australia ignorance reigns supreme, some political advocates suggesting ‘We need to look at nuclear”, completely unaware that the world has been unwinding from nuclear power for some time.

    • Charlie

      I believe nuclear fusion is the ultimate solution but this is beyond a fathomable future (but who knows). Before the fusion age coming let’s hold on renewable.

    • Concerned

      The World? Apart from China,India ,Russia (Even recently completed Commercial GenIV),Korea,Japan,Saudi Arabia.UAE et al.

    • Concerned

      Apart form China,India,Russia, Korea Saudia Arabia,UAE,Japan et al?

      • Rob G

        Yes more examples of countries that have blundered into it. And now countries such as Germany and France are moving away from them as renewables take hold. Countries like India can ill afford nuclear plants -they are as water thirsty as coal fire power stations – especially as india is a agricultural country facing water shortages already… The blunders will continue a while yet – Hinkley being the most expensive and recent example.

        • Concerned

          Germany replacing nuclear with 10 new lignite powered generators .Purely political.
          France?Wind and solar produce 4% of output.If you replaced 63GW of Nuclear.how would you do that?

          Nuclear like coal does not need water cooling ,as was latest coal powered station in Qld,air cooled.
          And ,how is all this a blunder.Await your detailed analysis.
          Apparently you know more than the Chinese,Indians,Russians et al?

          • You just make this stuff up don’t you.
            Would you like to name those 10 lignite power stations, and suggest which – if any – were approved after Germany made its commitment to phase out nuclear post Fukushima.
            EPRs, such as Hinkley, are water cooled. that’s why further delays caused in their hoses, and why they need to build 11km long tunnels to siphon water from the severn estuary. Kogan Creek uses less water, not no water.

          • Concerned

            Oh my dear,I have been following the drama for years,and all you have to do is some research.They are opening lignite powered stations every year.
            And any coal or nuclear power plant can be air cooled as you well know.
            Case in point,Kogan Creek ,in Queensland.
            As to Hinkley,being a one off,I doubt it will see light of day,bad engineering.Stupid economics.
            I would build a brace of AP1000’s for a fraction of the cost.

          • Then you should have no problems naming those 10 lignite plants that you were so definite about. You probably wouldn’t need to do any research, seeing you have been following the drama for years. I found two, both approved in 2005.

          • Concerned

            Actually.I left kindy when I was 5 years old.You look it up.

          • Not so sure you ever did leave Kindy. You can’t back it up, so please take your nonsense to another forum.

  • Megs

    How about the matter of defense security. Easy to knock out a centralised big power plant. Vs tens of thousands of distributed systems. Ditto water, sewerage, food, internet. How much are those submarines to cost again ?

    • Alan S

      Ah, but Chinese PV panels have chips implanted to render them useless in times of war. Malcolm Roberts said so.

      • Megs

        Good one Alan. You are funny. Malcolm Roberts is not. I see that George (below) has missed the joke and given a completely sane and useful dissertation to our non opinion ? . Onward and upward ho.

      • john

        This would be exactly the level of knowledge Mr empirical evidence would espouse.
        If ever i have seen a person who represents the 77 first preference votes this individual is it. Q and A Monday night link here.
        http://iview.abc.net.au/programs/qanda/NC1603H029S00

        • Concerned

          Actually,one Nation received 9% of the vote in the election,entitling them to 2 positions.Same rules for everyone.

          • john

            Yes correct One Nation did get enough votes for 2 positions, however the situation is that the Mr Empirical Evidence got 77 first preference votes.

          • john

            Yes correct One Nation did get enough votes for 2 positions, however the situation is that the Mr Empirical Evidence got 77 first preference votes.

          • Concerned

            You show an appalling ignorance regarding the preferential voting system.

      • Ren Stimpy

        Everybody should climb up on their roof ASAP and cover their solar panels with aluminium foil to block transmission. We’ll show them how to play hardball.

        • solarguy

          Just turn off the switch! Far easier.

    • Jorome

      Further on security: Do the costs of nuclear factor in the costs of the militarisation of the site and its surrounds for the lifetime of the plant and its decommissioning?

      • Concerned

        Militarisation?Where does that come from?

    • JHM

      Let’s replace nuclear subs with solar submarines. Think about it.

      • Ren Stimpy

        I was going to suggest krill powered submarines, but then we’d have to add the Japanese to the list of potential threats.

  • George Michaelson

    The demonizing of chinese industry and investment overseas is hugely counter productive. As an example, There is a well known book in Iran: “my uncle napoleon” which is about a man who loves napoleon because he hated the british. This resonates with Iranians, because of the historical investment practices of the British Imperial Oil organization and its effect on the Persian/Iranian economy and political stability. Britain treated Iran like China during the Opium wars, in the minds of most Iranians. And.. China can of course point to the Opium wars.. forcing trade at the muzzle of a Gun.

    The accusations of malign political intent are really silly. All nations exploit trade for political gain and all nations exploit politics for trade advantage. This has always been so.

    Chinese nuclear companies want to invest in Britain because they want to make money. Its the same reason Huawei invested in the UK for technology/comms business. As Deng Xiaopeng said “it is glorious to grow rich” -People may have legitemate concern over the business ethics, reporting structures and public governance but most of the responses I read online regarding the Chinese and Hinkley C are pretty much racism front and center.

    I don’t deny that solar or wind is better economics (I don’t know. They may be, they may not be) as much as ask we stop imposing some western anti-communist paradigm on everything trade related, facing China.

  • john

    This whole energy use situation has been described as the thin wire solution.
    Thin as in the size of the wire needed to deliver 35 to 65 KWh to the average household.
    If delivered from a long distance to a large number of users a large wire is needed, if done locally to a low number of users a small wire is needed.

    The inherent advantage in having distributed sources of energy within the system has large advantages in the savings in the need for new infrastructure from a central location.

    For this to work enough very distinct sources of production have to be in place over a wide area to mitigate the interment factor.

    Obviously this is where storage comes into the picture to take into account those down periods of production of energy.

    To go down the nuclear direction has been shown to be extremely expensive.
    The only reason to go this path would be to develop weapon grade material hardly an excuse frankly.

  • Brunel

    In 2006 I was ok with nuclear power in AUS.

    There was talk about it:

    http://www.abc.net.au/news/2009-10-13/people-open-to-nuclear-power-carr/1101420

    There was a Q and A episode in 2006 or 2007 in which Turnbull promoted nuclear power.

    But in 2014 or earlier I knew that solar panels + batteries will kill the grid.

  • Stuart Morris

    duhhhhhh thats a no brainier when you just consider that wind and sunlight will never need to be renewed until our Star dies, are you kidding me with this are people so blinded by their own little worlds they do not see the big one

    • jgbreezer

      The solar panels and turbines will still need servicing and replacing eventually, and solar in particular uses rare earth metals which depends on mostly Asian and South American countries not witholding access to them (where they’re mostly mined from).

      • Stuart Morris

        and your point is exactly what, with Nuclear their is contamination to the environment and not to mention the nuclear waste, or the cost of running nuclear power, i can also guarantee you that replacing a motor or a blade on a wind turbine is far cheaper than replacing Plutonium, you should also do some research into Solar panels, their as cheap as chips, some are really expensive , but this is pure and utter greed, the same greed we see around the world. the same greed that is destroying this world, a world by the way that was built without spending a single penny

        • Concerned

          How does Nuclear contaminate the environment? And how is waste a real problem?
          Properly implemented Nuclear is indeed economic.

          • Stuart Morris

            have you seen the environmental damage that Nuclear has done over the decades are you insane,

          • Concerned

            No ,I rely on facts.
            Gen III and Gen IV will provide an outstanding level of safety.High Level Nuclear waste is not a real problem at all,and will in the future be consumed as fuel.

            Re Fukishima.UN Report
            http://www.unscear.org/unscear/en/fukushima.html

            Re Chernobyl ,UN Report.
            Conclusions

            The accident at the Chernobyl nuclear power plant in 1986 was a tragic event for its victims, and those most affected suffered major hardship. Some of the people who dealt with the emergency lost their lives. Although those exposed as children and the emergency and recovery workers are at increased risk of radiation-induced effects, the vast majority of the population need not live in fear of serious health consequences due to the radiation from the Chernobyl accident. For the most part, they were exposed to radiation levels comparable to or a few times higher than annual levels of natural background, and future exposures continue to slowly diminish as the radionuclides decay. Lives have been seriously disrupted by the Chernobyl accident, but from the radiological point of view, generally positive prospects for the future health of most individuals should prevail

            Re deaths ? Virtually none,but if you want real problems ,look at this.
            http://www.businessgreen.com/bg/news/2468253/study-coal-causing-over-360-000-premature-deaths-in-china-each-year

            Even in Australia,there are over 3,000 deaths a year from particulate inhalation caused by motor vehicles.

            And if you want real environmental damage ,look at other parts of human endeavor.

            Nuclear provides a unique opportunity for safe Virtually CO2 free power production.

          • Stuart Morris

            i said have you seen the damage , you said you rely on facts , and give me this crap , your insane stop reading crap and go out and use your eyes

  • Guest
    • Concerned

      The silliest thing I have ever read.

      • Guest

        I’d sincerely like to share your view, too.
        Perhaps you could enlighten us as to why it’s not so.

        • Concerned

          That technology has been in continuous development for decades.It is being built now,last year and next year.And the need for nuclear powered submarines for nuclear deterrence and SSK would exist in any case.

          • Guest

            Precisely. That`s why a very highly skilled workforce and key productive capabilities must be available throughout the decades still to come.

            As aging nuclear power plants finally come to an end faster than they can timely be replaced by new ones, there`s a risk that critical precious expertise (mostly in the minds of highly trained and experienced retiring nuclear workers), as well as must have home industrial capability may dwindle as well, so as to jeopardise a key component of long term full-spectrum dominance objectives.

            Therefore the imperative to keep a minimum of thriving nuclear civilian technology and expertise always ready to be properly mobillsed by the defence sector when necessary.

            Btw: https://www.gov.uk/guidance/successor-submarine-recruitment

          • Concerned

            BS.

          • Guest

            Elaborate.