Hinkley C – The PFI of Energy

The United Kingdom could be facing a power crunch within years if more isn’t done to increase energy generation. This problem stems from a series of continuous power plant closures, the UK is set to lose over 12 gigawatts of power generating capacity over the next two years with roughly half of the UK’s coal plants due to close. To make matters worse all but one of the UK’s nuclear power plants are due to close by 2023, together they currently provide 20% of our electricity supply.

Our power plants are shutting down for a variety of reasons, all of which have been a long time coming. Whilst some power companies point the finger at government backed renewables (A cruel joke?), it is the European laws on climate change and pollution levels which are finally seeing the closure of the UK’s most polluting coal & oil plants. Other power plants are naturally coming to the end of their lifespan with infrastructure becoming outdated and potentially dangerous. Like the housing crisis, the general public are falling victim to poor government planning and vested financial interests with a drastic shortage of cleaner energy being fired up to replace the power plants shutting down.

To remedy our power shortage this government is tripping over its own feet to push through the Hinkley Point C project; a massive undertaking bogged down with political and economic problems. The first thing that should hit any reader is the gargantuan price tag on this project, at £24.5bn the nuclear plant will cost almost x4 the amount of large American reactors (priced at $10bn or £6.5bn each).

 

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If the initial price tag wasn’t enough to put you off the Hinkley Point C project, it doesn’t get better. The Conservative government have negotiated for the public to pay over DOUBLE the current wholesale electricity price. This contract would guarantee payments on the energy generated by Hinkley C for 35 years, protected against inflation. This surely doesn’t provide value for public money. Wouldn’t our tax money be better placed into renewable sources?

There are now many conflicting sources circulating online on the cost benefits of energy sources compared to each other. Some sources such as Brookings Institution will tell you nuclear & hydropower are the cheapest. An EU analysis will then tell you onshore wind is the cheapest form of energy generation by far, once health and pollution related costs are factored in. The exact numbers are insignificant, it’s the long term which we must consider. EDF, the energy company owned by the French state which is behind the Hinkley Point C project makes a reasonable claim; ‘The consumer price is competitive with other forms of major low-carbon generation’. What this claim fails to factor in are the drastic increases in cost efficiency and energy generation capabilities renewables will develop within the next 35 years. As a relatively new technology, huge advances are made in the renewables sector every year. For example the price of a commercial solar project has fallen by 45% in just three years, is predicted to fall another 40% in the next two years. The cost of solar energy is already competitive against traditional forms of energy generation in countries such as Germany and Spain, with solar expected to become the cheapest source of energy worldwide by 2025. Fast forward to 2060 (when the Hinkley Point C contract would expire, including construction time), it’s very clear that the Hinkley Point C project will become the PFI-disaster of energy generation.

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Money is not the only factor to consider regarding the Hinkley Point C project, there are many out there who will argue that nuclear is the greenest bridge to transition from fossil fuels to renewables, or that we must have Hinkley C to keep the lights on. On the first point they have some merit, but one has to question if an energy source which can take 10 years to construct will be up and active to act as the bridge? After all onshore wind is already relatively cheap today & solar is set to become the cheapest energy source worldwide in the 10 years required to build Hinkley. We would argue that the UK simply needs to get their hands dirty pushing forward the renewables transition with the aggression being seen in Germany’s Energiewende.

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