Scrapping plans for new nuclear reactors at Hinkley Point in Somerset and building huge amounts of renewable power instead would save the UK tens of billions of pounds, according to an analysis that compares likely future costs.
The Intergenerational Foundation thinktank calculated that Britain would pay up to £40bn less for renewable alternatives that would generate the equivalent power to Hinkley over the plant’s planned lifetime.
A final investment decision by EDF on the nuclear power plant’s expansion is expected in May. The deal involves the government committing £92.50 per megawatt hour over 35 years for its electricity output, more than twice the current wholesale price.
But a report published on Tuesday by the thinktank, which campaigns on fairness between generations, found that onshore windfarms would cost £31.2bn less than Hinkley, and solar photovoltaic power £39.9bn less over 35 years to build and run. The estimate is based on both the value of subsidies paid by the taxpayer for the electricity and the cost of building the infrastructure.
The analysis is based on the government’s ‘contracts for difference’ subsidy levels for the technologies and projections by Bloomberg for how the cost of wind and solar power will fall in the future.
Andrew Simms, one of the report’s co-authors, said: “The government’s current plans for new nuclear power will break spending records, and pass both high costs and large, unknown economic risks onto every UK child for generations to come.
“But, readily available, cheaper, safer and quicker renewable energy options would help Britain live both within its economic and environmental means, while also protecting and providing for future generations.”
The report says that at £24bn, Hinkley Point C would be the “most expensive building on Earth”, and argues that the new reactors would pass not just economic costs to future generations, but the burdens of nuclear waste and climate change because nuclear is not quick enough to build at scale to stave off dangerous global warming.
“An over-reliance on new nuclear capacity is expensive, poor value, slow, insecure and an obstacle to better alternatives. Without a rethink we risk passing on a huge intergenerational economic burden in which known costs are high, and risks exist heavily on the downside,” the report’s authors said.
Tom Burke, chairman of the environmental thinktank E3G and a former government adviser, said that while the report’s precise figures for costs were debatable, the broad thrust of its analysis was correct.
“The government essentially is pushing this cost on to future generations. It’s a terrible thing to do to your kids. There are a lot of kids not born yet who will end up paying for this,” he said.
Lower wholesale electricity prices in future would mean that because of the way the contracts for difference work – by topping up payments for electricity to a guaranteed amount, or ‘strike price’, currently well above the wholesale price – the true cost could be much higher.
“Trying to get a 35-year projection of your electricity price correct would have been like asking Tony Benn as energy minister in Harold Wilson’s government what the electricity price would be in 2013,” said Burke.
Renewable power has grown in the UK to the point where more electricity was generated from biomass, wind, hydro and solar power in 2015 than nuclear power stations. But it is unlikely the Intergenerational Foundation’s report will shift minds in government, which has cut subsidies for both solar and wind power while pressing ahead with the Hinkley project.
The analysis assumes the level of subsidy for solar and wind under the contracts for difference subsidy regime would remain constant, though in reality this would likely decrease as more capacity was built.
A Department of Energy and Climate Change spokesperson said: “Nuclear can provide continuous power, irrespective of whether the wind is blowing and the sun is shining. The industry will also create thousands of jobs and benefit companies in the supply chain, meaning financial security for working people and their families across the UK.
“We don’t recognise the figures presented in the report for the Intergenerational Foundation. Hinkley Point C is a good deal for consumers and, once operational will provide 60 years of secure, reliable and low-carbon electricity for the cost of 35. This will help us to keep the lights on while meeting our emissions targets in the most cost-effective way.”
Posted on Wednesday Apr 6