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After Hinkley

By Dave Elliott

Battles continue over the economic viability of the proposed £18bn Hinkley nuclear project, with EDF still saying it can go ahead, despite the resignation of two key senior executives, opposition from the French trade unions and even doubts now emerging from the French Government. Energy minister Ségolène Royal said: ‘This project must offer further proof that it is well-founded and offer a guarantee that the investment in this project will not dry up investments that must be made in renewable energies.’  It is interesting then that EDF’s recent R&D Paper ‘Technical and Economic Analysis of the European Electricity System with 60% RES’, by Alain Burtin and Vera Silva, looks at an EU future dominated by renewables, with nuclear only playing a moderate role, 90GW total.

The EDF team bases its High Renewables scenario on the EU Energy Roadmap 2011, with 60% of electricity coming from renewables by 2030. 20% would be hydro and biomass, 40% would come from variable renewables – 700GW, with 220GW of solar, 280GW of onshore wind and 205GW of offshore wind. EDF calculates that wind and solar would displace 160GW of baseload capacity, but would require 60GW of backup, so the net reduction is only 100GW, with all of that being due to wind, since PV only displaces 20GW and needs 20GW backup, its capacity credit being zero, while that for wind is 20%. Coal capacity is reduced by 170GW from 250GW to 80GW. CCGT is increased by 15GW from 70GW to 85GW. OCGT is increased by 65GW from 35GW to 100GW.

In the study it was assumed that in 2030 total demand is 3600TWh/year with a peak demand of 600GW met with 1440TWh/year from variable renewables, 720TWh/year from hydro, biomass and geothermal and 1440TWh/year from fossil fuels and nuclear. However, demand will vary all the time, as will renewable supply, so there will be a need for balancing systems, with surpluses at times being available for storage to meet shortfalls at other times, some of this being shifted via inter-connectors, and hydro providing some backup, gas plants a little bit too. Some large supply swings would have to be dealt with – with 700GW of wind and PV they could, the report says, amount to the equivalent of 50% of total demand within a 24 hour period. The EDF team says that storage and flexible demand can help a bit with balancing, but there will still be a need for back-up plants. See this review: The full report:

Studies like this are helpful, but can sometimes err on the cautious side, for example in terms of new technologies. The huge wind capacity would at times generate a very large surplus of electricity, so that, all other things being equal, there would have to be a lot of curtailment, especially given the still quite large inflexible nuclear contribution – EDF does not see large-scale storage as being very viable. But what about Power to Gas Conversion? That could turn the surplus ‘problem’ into a balancing ‘solution’. I have looked at options like that in my new IoP ebook on ‘Balancing Green Power’.

The UK government, however, seems wedded to an expanding programme based on large nuclear plants, as a follow up to the 3.2 GW Hinkley project, although it is also now looking at small modular reactors for the longer term with an initial £30m enabling programme. As for Hinkley, there is a let-out clause for EDF and its backers, in case things go seriously wrong. DECC said  ‘in certain, highly unlikely scenarios where there is a political shutdown of [Hinkley] by a UK, EU or international competent authority, payments could be up to around £22 billion excluding non-decommissioning operational costs that may be incurred after any shutdown’. 

It’s not that unlikely that a new UK government would decide to phase out new nuclear – e.g. after another major accident somewhere or clear indications that it was uneconomic. Some would say that is already clear, with on-shore wind and solar PV projects already getting CfD contracts for under £80/MWh compared to the £92.5/MWh (index-linked) penciled in for Hinkley, if it goes ahead, by around 2025/6.  The recent budget also offered a CfD strike price of £85/MWh for offshore wind projects starting up then, by which time the cost of onshore wind and PV are likely to have fallen even more.  As a result, this study says that long-term Hinkley will cost £40bn more than the equivalent output from wind and solar:

However, PM David Cameron has said  ‘if we want low-cost, low-carbon energy, we need strong nuclear energy at the heart of the system’, and some say he won’t be moved on Hinkley since there is promise of Chinese money for this and subsequent nuclear projects, including possibly some using Chinese nuclear technology. Hence, some say, the reticence about challenging China over steel dumping. Though Chinese support may actually not be as forthcoming as expected. Here’s an interesting Chinese nuclear insight: 

China is, of course, only one source of money and there are other nuclear technologies. Given the continuing long delays and large budget overspends at Flamanville in France  and Olkiluoto in Finland, some now see EDF’s EPR as an old failed option. NuGeneration (NuGen), and Horizon Nuclear Power have said they were learning from EDF’s experience with Hinkley and are offering (respectively) the Westinghouse AP1000, for Moorside, Sellafield, with a Final Investment Decision planned for 2018, and Hitachi’s Advanced Boiling Water Reactor at two sites – Wylfa Newydd, on the Isle of Anglesey, and Oldbury-on-Severn:

The situation remains in flux, with much depending on what happens with Hinkley. The evidence on Hinkley from a range of experts to the Select Committee makes fascinating reading. From different perspectives they all seemed to agree it wasn’t a sensible option, though some felt other nuclear options might be, if (unlike Hinkley) they were  subject to competitive tendering:

The end game seem to be approaching. It is certainly getting urgent. Even if a decision to go ahead with Hinkley finally emerges, construction won’t start until 2019:  That gets perilously close to the UK government’s loan deadline: it has offered £2bn in a loan guarantee, but indicated that this ‘must be repaid by December 2020 by the shareholders of the project company’, adding that ‘there is no further obligation to issue guarantees after that date’.

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