Hinkley Point was born a decade ago, when the world energy order was entirely different
By Ambrose Evans-Pritchard
15 September 2016 • 5:26pm
The £18bn Hinkley Point nuclear plant will be overtaken by a host of cheaper technologies before it is even opened in the late 2020s, and risks degenerating into an epic white elephant as we pay fat subsidies into the second half of the 21st Century.
Theresa May inherited a poisoned chalice. The energy world has changed utterly over the last decade as climate policy drives a massive global push for renewable power, transforming the calculus of future costs. “It looks like a contract that was written five years ago on a business case that was probably pulled together 10 years ago,” says ScottishPower.
Theresa May with Chinese president Xi Jinping at the G20 summit in Hangzhou, China
Cancellation of the project would have led to a diplomatic rift with China and France at moment when Britain needs friends to manage the fall-out from Brexit. It would have fed a global perception that the UK was walking away from commitments, and left the Treasury open to very costly lawsuits. The Prime Minister’s hands were tied.
Offshore wind contracts in Holland and Denmark are already coming in far below the Hinkley strike price of £92.50 per megawatt hour, even allowing for hidden subsidies. The same companies say they can match this relatively quickly in Britain.
The industry has vowed to reach a target of £69 per MWh by 2025, driven by economies of scale. Aerodynamic ‘smart blades’ guided by computers can capture changes in air flow, greatly raising efficiency. Capacity use has soared from 30pc a decade ago to 50pc in the latest ventures.
The new turbines are five times taller than their 20th Century ancestors, generating eight megawatts each. The US Sandia Laboratories are working on 50 MW monsters designed to halve costs again.
It is much the same story across the nexus of clean energy technologies. The US and China were shocked by the energy crisis in 2007-2008, fearing a threat to national security. Each has since launched a massive push for alternative home-grown sources of power and fuel, and for ways to cut use.
The US Energy Department is funding 541 projects in league with Harvard, MIT, and the world’s top universities, a push in some ways comparable to the war-time Manhattan Project. The human effort that has gone into this is different from previous cycles of renewable energy, which repeatedly fizzled out. This time they are over the hump.
Some 75 of these projects are for cheap batteries and storage, what it describes as the ‘Holy Grail’ of the energy revolution. Nobody knows which will win the race: organic flow batteries, or those using zinc-air, among others, but Washington estimates that several could cut energy storage costs by 80pc to 90pc.
Once electricity can be stored at viable cost, the ‘intermittency’ problems of wind and solar fade away. This alone could render Hinkley Point an anachronism by 2025.
Britain will always need reliable ‘base-load’ power to supplement renewables but big nuclear reactors are a poor way to do this. They cannot easily be switched on an off.
Parliament’s Oxburgh inquiry reported to the Government this week that it would be cheaper to rely on clean gas, capturing the C02 from power plants and piping it for storage in disused North Sea oil wells. This would provide a ‘dispatchable’ source of clean electricity whenever needed.
Carbon capture would have big spin-off benefits once climate accord start to raise the penalty on carbon, revitalizing the industrial hubs of the North East by giving them access to Europe’s lowest cost source of clean energy. It could also lift North Sea oil output by using the CO2 to extract more crude.
Even if Britain was to opt for nuclear power, a new generation of small molten salt reactors promise a cheaper, safer, and cleaner form of doing so. The French-built EPR reactors Hinkley Point are a refinement on an inherently dangerous technology from the 1950s, and it is the cost of trying to make them absolutely ‘Fukushima-proof’ that is so crippling.
We are now stuck with this unhappy fait accompli. It is not a project that would ever have been approved in the new energy order of 2016.
Tags: big nuclear reactors, Britain, cheap batteries and storage, China, EPR reactors, France, organic flow batteries, renewable energy, Renewable power, ScottishPower, Theresa May, Theresa May inherited a poisoned chalice, transforming the calculus of future costs, U.S., Xi Jinping, zinc-air batteries