Why oh Why Are We Spending Billions on Nuclear?

At the energy and climate change select committee this week, energy minister Andrea Leadsome was up before the board to try and shed some light on current Government policy. Apart from her annoying habit of prefacing important points with the governmental staple ‘absolutely’ (as in ‘we absolutely have no plans to reduce subsidies’), she did say a few revealing things.

When asked if government was unnecessarily frugal with renewable subsidies but prone to be a lot more lenient when it came to nuclear, she replied that they were committed to addressing the energy security of the UK. A strange confession when the plant is going to be largely part owned by French and Chinese interests with subsidy payments over and above anything that the renewables industry has ever achieved.

It caused a damning comment from Friends of the Earth CEO, Greg Bennett who said:

“Ministers defend this with tired old language about ‘bill-payers’, ‘hardworking families’ and solar needing to ‘stand on its own two feet’. But they are applying exactly the opposite logic for new nuclear, where they’re happy to guarantee inflation-proof taxpayer subsidies at twice the market rate for the next 35 years.”

The Cost of Going Nuclear

The Hinkley Point nuclear power station is perhaps one of the most divisive developments on the books at the moment. It is owned by the French company EDF and looks as though it will cost at least £24.5bn. The government has promised to pay £92 per MW hour which is twice the current market price.

Not only that, they will be paying it for the next 35 years.

To add insult to injury, the Government is banking on the Chinese putting in some £11 billion of investment. The truth is the new Hinkley Point power station will not belong to us and we may well have no say over the rise in fuel bills produced by it over the next three or four decades.

The reason that the UK has gone to China for more investment is that because investors close to home are concerned about project overrun and rising costs. The technology that is going to be used has encountered problems before and is indeed not going to be used by EDF on future building projects. According to the Telegraph:

“The troubled European Pressurised Reactor (EPR) technology that is due to be used at Hinkley is to be ditched by EDF for future projects in France in favour of a cheaper and better model the company is now developing, Jean-Bernard Levy, the French energy giant’s chief executive disclosed.”

In the end, building a power plant at Hinkley Point could well cost more in the long run than the whole of the renewables industry put together.

Is Nuclear Being Developed at the Cost of Renewables?

Despite the Government guaranteeing a loan of £2bn for the project to help boost investment, you’d be hard pressed to find takers in the current climate. It seems odd that they are on this path when most of the general public are not in favour of building new nuclear power plants. Whilst cutting the subsidies for renewables through the Feed in Tariff there seems, as the parliamentary select committee voiced, a disconnect between the nuclear and fossil fuel industries which have always benefited from such measures and the cleaner, perhaps more economical green energy market. It isn’t helped by wild assertions that the renewable industry costs a large amount in subsidies. One report stated that the wind farm sector adds some £250 onto an average duel fill bill. The correct figure is actually around £18.

Add onto that the fact that many people in the country support the renewables industry and it is a mystery why the Government is so keen to build expensive and potentially dangerous power plants that are set to cost more.  At the parliamentary committee, Leadsome spouted the old tired rhetoric concerning the need to keep spending under control. It seems that the DECC’s energy policy is becoming more confused than ever.

The shining light on the horizon may well be the consultation on changes to renewable subsidies that ends shortly. Leadsome has said she is ‘open minded’ about the findings. But, as with most things concerning this government and the future of energy, nobody is quite sure what she actually means.

 By Steve M.

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