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Whatever next?

By Dave Elliott

Simon Taylor’s The Fall and Rise of Nuclear Power in Britain’  (UIT Cambridge) is a readable scamper through the history of the UK nuclear programme, warts and all, with much detail on who did what. The government’s Chief Scientists, Sir David King and Sir David MacKay, are seen as having played key roles in recent years, and Taylor seems to accept the resultant official view that renewables won’t be sufficient: During those inevitable dreary November days when the UK has grey skies and no wind, it will be thermal power, whether gas-fired or nuclear, which keeps the UK moving, lit and warm. Nuclear therefore has a place in the mix for the foreseeable future’. 

However, things are changing fast.  Renewable costs are falling rapidly, with solar PV and onshore wind projects going ahead with UK CfD strike prices, won under competitive auctions, of under £80/MWh, much less that the Hinkley nuclear project at £92.5/MWh. Renewables are now supplying around 25% of annual UK power, having already over-taken nuclear (at under 20%), with new flexible grid balancing options emerging and being given support in the Capacity Market – including 3.2GW of storage, 2.3GW of interconnectors and 1.4GW of demand management.

The new Department of Business, Energy and Industrial Strategy seems to be taking renewables more seriously these days given the price falls, with new estimates of levelised costs. It sees onshore wind and large PV running neck and neck with gas CCGT costs by 2020, and beating all by 2025, nuclear included. Moreover, BEIS says that based on previous experience, there is a risk that some of the projected cost reductions assumed going forward may be conservative for some technologies, especially renewables’, noting that ‘there have been large reductions in projected costs versus our previous estimates, for all commissioning years. This reflects unanticipated cost reductions and technological improvements for these technologies, reduction in hurdle rates, and/or this progress occurring faster than previously estimated (for example due to accelerated global and domestic deployment).’

As I noted in my last post, BEIS has also climbed down a bit on renewable heat, abandoning the idea of withdrawing Renewable Heat Incentive support for solar heat. Biomass tariff reductions are also less drastic than previous proposals and there is much talk about more backing for heat networks and green gas.

However, although renewables are winning back some support, the preoccupation with their costs, and micro-management of programmes, is slowing their development and deployment, with regular sudden cutbacks in support and constantly shifting eligibility criteria. The overall funding caps are going to bite increasingly hard on most projects. The Green Alliance says that investment in wind, solar, biomass and waste-to-energy projects will decline by 95% between 2017 and 2020.

Effective programme management is of course necessary (as the mess with Northern Ireland’s RHI illustrates) and the UK does also have high domestic power costs compared with most other EU countries, but it also apparently has the lowest energy taxes, according to BEIS.

That may be surprising, but in reality the UK government has been chipping away at green subsidies. The BEIS data do not yet include the subsidies for the Hinkley nuclear project – or for shale gas fracking. But everything else has tight caps, controls and cash limits. Relatively well developed PV and onshore wind have struggled on nevertheless, while onshore wind has also just about managed to cope, but it’s much harder for new as yet less developed projects – tidal lagoons, for example. To get the Swansea Lagoon project off and running (with subsequent projects expected to be cheaper), its developers have called for a CfD contract at £123/MWh, comparable with what offshore wind is getting, but to run for 90 years, not 15 years as with the wind projects, given that civil engineering-based tidal projects have very long operating lives. However, Jesse Norman, an energy minister, told MPs last December that agreeing to this proposal ‘would be a very significant deviation from current Government policy’. Charles Hendry’s new very positive report may challenge that (see my next post).

For the moment, however, some tidal stream turbine projects are doing well. Following on from the 1.2MW Renewables Obligation-supported Seagen device installed by MCT in Strangford Lough in Northern Ireland in 2008, there are new private sector-led projects being installed by Atlantis in Pentland Firth in Scotland, with some government and EU grant aid, as part of the proposed 398MW MeyGen project. Some of these turbines will presumably be eligible for CfD support – although the protected capacity slot earmarked for wave and tidal projects within the CfD competition has been abandoned. They were deemed too expensive, given the ever tightening overall renewables programme cost caps.

Not so for nuclear – more projects are on the way, with, apparently, no caps. The Hinkley EPR was awarded its £92.5/MWh CfD without having to go through a contract auction process, and what was expected to be the next in line, another EPR, this one at Sizewell, was also awarded an outline CfD contract at a nominal £89.5/MWh, on the assumption that cost for the second in the series would be lower. That is far from clear, or even whether Hinkley will get built.  It could be that the emphasis will shift to the other allegedly cheaper options: ABWRs for Oldbury and Wylfa and the AP1000 for Moorside in Cumbria, plus possibly a new Chinese plant for Bradwell in Essex – although it’s not clear whether any of these will in fact be any cheaper. Or faster to build.

What is clear is that wind and PV are getting cheaper, with Danish offshore wind projects going ahead (off the Dutch coast) at around £56/MWh and on-shore and PV projects at good sites elsewhere in the world getting contracts at £20-30/MWh. Even if you add 10% extra for grid/balancing costs, that means that new nuclear is beginning to look even more like a wild outsider.

And talking of wild outsiders, E.On, Shell and Schlumberger have invested £5m in British start up Kite Power Systems (KPS), which makes high-altitude wind power generation technology. It plans to deploy a 500kW system at West Freugh in Southwest Scotland, leading to an onshore demonstration array of multiple 500 kW systems within the next four years. After that KPS will develop a 3 MW onshore system and then deploy a similar sized power system in offshore waters.

Kite power may seem very exotic, but it is being talked up since it’s claimed it has very high Energy Returns on Energy Invested, with low mass (no towers are needed) and so low embedded energy. It also gives access to much higher and more consistent wind speeds. In the KPS system, a kite, tethered with a cable that raps around a rotating drum, is allowed to rise, so generating power on the ground as the cable winds out. The kite is then stalled to fall back to a lower level, the cable being re-spooled, this needing only a little power, ready for a repeat up and down cycle. Two units run on opposing up/down cycles can supply power continuously. And cheaply!

Kite power ideas are also being developed elsewhere, including flying-wing type systems with rotors attached, sending power to the ground on their tethers, with the huge wind potential at very high altitudes being a long-term attraction, although there’s the obvious issue of collision risks with aircraft. But if located well away from flight paths, who knows this may yet be a winner, offshore especially, but also for remote sites.  A huge resource.

Meanwhile, though, conventional offshore wind is also a large source and, as indicated above, progress is being made on getting costs down. Solar too is progressing rapidly – with storage offering an extra boost; see my next but one post. There is all to play for.

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