"The market is simply not able to send firm signals to investors"by Malcolm Grimston / March 22, 2016 / Leave a comment
On the face of it, a new nuclear power plant at Hinkley Point in Somerset—home already to two nuclear power stations, one operational and one disused—would have a lot going for it. If built, Hinckley Point C’s 3.2 gigawatts capacity would generate around seven per cent of the UK’s electricity over a 60 year period, and would mean we could avoid importing equivalent amounts of natural gas. It would create thousands of high quality jobs and reduce our greenhouse gas emissions by an estimated nine million tonnes per year. By contrast, the early closure of nuclear plants in Germany looks likely to increase emissions by anything up to two billion tonnes in total, given the growth in coal use (brown and hard) as a substitute. The Hinkley project has had enviable degrees of durable political support from the very top of the governments of the UK, France and China. It is still standing despite a series of challenges thrown up by the financial crisis, the fall in wholesale power prices (notably as a result of the unexpected fall in the oil price) and the accident at Fukushima.
All this comes at a time when the problems besetting electricity supply in the UK look enormous. A huge volume of “dispatchable” generating capacity which does not depend on weather conditions will be needed relatively soon to replace plants going off line by 2030: all of our coal capacity, most of our current nuclear plants and even some of the early CCGTs (Combined Cycle Gas Turbines). Power demand itself is not growing as expected (indeed it has been shrinking), which gives us a breathing space, but not permanently. Much of the new capacity will inevitably be CCGT, but to replace all our nuclear plants in this way would bring penalties both…