Hinkley- A cost effective solution?

Hello, after last week’s rather sombre blog about Chernobyl I thought this week I would start on a slightly lighter note, not an easy thing to do when your weighing up the twin threats of nuclear power and climate change, but I’ll try!

So what better place to start given its contemporary relevance, than last week’s news that the government has given the go-ahead for the UK’s first new nuclear power station in a generation, and the first in Europe since Fukushima;  welcomed in typically mixed fashion by the British press. Funnily enough very little of the debate even mentioned what it could mean for global warming, I heard the words ‘carbon free’ a couple of times, but most of the time the debate focused on the figure of £90, which is still ringing in my ears a week on.

Hinkley Point in Somerset-already the site of the disused Hinkley Point A and the still operational B power stations (Source: Guardian,2013)

So what is this £90 figure, well it is £92.50 to be precise and is the strike price of every megawatt hour of energy the new power station will generate; basically the fixed price, at which EDF (the French energy giant building the power station), has agreed to sell to the government, not the consumer!

Now many newspapers/analysts have lamented this figure and at face-value it can’t be denied it looks bad. It is three times more than the EDF’s original proposal and over £30 more expensive than the current wholesale price, which in the context of the recent price hikes by companies such as British Gas isn’t exactly music to the ears of consumers moving into winter (BBC, 2013).

However before we judge Hinkley C as an economic, consumer and environmental failure as John Sauven executive director of Greenpeace did  last week (Greenpeace, 2013). It should be remembered that the plant will not be in operation until 2023,when hopefully we will all be much richer and the cost will not differ so greatly from good old gas/coal generated energy. Also when compared with other carbon free alternatives it is around a similar price to wind and a staggering 3 times cheaper than tidal and wave.

Some of the high costs of renewables are due to lack of investment, in the future prices for tidal, wave and solar may well fall (Source:BBC, 2013)

It cannot be denied that cost is a huge issue in tackling climate change; if renewables and carbon-free energy were cheap I’m sure we would see a lot more wind turbines and solar panels around us, but as the infrastructure isn’t in place rising energy prices are perhaps an obstacle that cannot be avoided.

The deal at Hinkley does not look water tight, the loan guarantees given to EDF and the Chinese are ambiguous and if they amount to 70% of the debt raised to fund the 14 billion cost of the reactors, they could force George Osbourne to go back on his promise to British tax payers (Guardian, 2013).

"If it wasn't Chinese investment or French investment, it would have to be the British taxpayer. I would rather British taxpayers were spending their money on our schools and hospitals and those things, and let's get the rest of the world investing in our energy"

There is also uncertainty about how fixed the price of £90 will remain with inflation and changes in the uranium price.  Yet despite all this I tend to share the view of Simon Jenkins in the Guardian who referred to Hinkley as:

"a messy and bad deal for UK energy users, but it’s a decision. And it’s cheaper than wind".

It is a gamble but it is also a major switch to a ‘greener’ energy source albeit a non-renewable one. The station will generate 7% of Britain’s electricity and release no CO2, something that has been widely ignored in the media. It is also creating 25000 jobs, which surely can’t be a bad thing.

Hinkley C is a microcosm of course of a much larger debate, how we combat climate change and how we will generate energy with ever diminishing coal and natural gas reserves. Nuclear is obviously an option and I am pleased at least that the government is investing in a carbon free energy source. However how the UK and other countries choose to partition their energy usage in the future is the real burning issue (no pun intended!). With more nuclear power stations throughout Europe and the world  surely comes more environmental risk.

This video brings up some of the key issues surrounding Hinkley and nuclear power.

Thanks for reading!