May is right to review Hinkley Point contract
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Sir, The UK government is entirely right to review Hinkley Point. The fundamental economic problem is that it offers last century’s answer to this century’s energy system, and the misfit is now inescapable.
I was a member of the Climate Change Committee which in 2008 recommended that the government develop capability for a new generation of nuclear stations. At that time, Hinkley’s two precursor reactors — widely hailed developments from older designs — had been initiated with promises of costs far lower than the big renewable energy options. Neither of those precursors is yet operating and in the years since our recommendation the price of Hinkley has risen by 50 per cent while the price of major renewables (including offshore wind) has almost halved. The economic balance has thus reversed.
Moreover it was projected that a new nuclear fleet could have many years of operating to provide baseload electricity 24/7. But the dramatic expansion in renewables makes it implausible that the UK will need any such baseload power by the time Hinkley Point could come on stream, let alone for the subsequent 35 years of its fixed-price contract. Already by the mid-2020s, there will be periods in which renewables output can meet electricity demand, and Hinkley Point (because of its bigger subsidy) would simply displace cheaper plants — wind or solar, and indeed any subsequent nuclear.
The need will be for flexible plants that can economically vary their output and hence balance the system. That could include gas, biomass, and storage among others. If EDF believes that Hinkley Point can be viable in such a role the contract could be restructured accordingly. But for a new government not to review a 35-year contract committing an estimated £30bn of subsidy, given all that has changed, would surely be a gross dereliction of duty.
Professor of International Energy and Climate Change Policy,
Institute for Sustainable Resources,
University College London, UK
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