Hinkley vs. solar - what the future could hold

There’s some severely mixed messages coming out of the UK energy landscape this week and unsurprisingly, it’s down to the hulking shadow of Hinkley Point C. Ever since a strike price of £92.50/MWh was announced, alarm bells went off across the UK and since then, opposition to the nuclear scheme has grown.

But this week seemed to see a step-change in the debate over the UK’s first new nuclear site in 20 years. While Greenpeace went down the traditional route with a bold statement at the Houses of Parliament (see below), anti-nuclear protestors occupied EDF’s Cannington offices in a show of defiance against the scheme. 

 

But aside from the ever-more public demonstrations against the project, questions marks have grown ever bigger this week over the economic future of Hinkley. French energy utility EDF has continued to postpone making the final investment decision reportedly due to the small matter of stumping up the best part of £18 million for the project.

Despite wooing Chinese investors with a 33.5% stake in the project, the financials still don’t look great for the Somerset power station, particularly as EDF saw its profits drop by 68% in 2015 and cut its annual dividend.

It might be premature then to believe EDF’s chief executive when he says the investment decision is “coming closer” as reported by Reuters, especially with the board-level opposition to the project. Six union member of the 18-strong board said earlier this month they’d vote against plans to build the two reactors needed for Hinkley, instead asking the scheme be postponed until the next generation are developed.

So when EDF released the following statement today, it does border on the unlikely.

“Hinkley Point C is a strong project which is fully ready for a final investment decision and successful construction. Final steps are well in hand to enable the full construction phase to be launched very soon.” 

While many expected a final decision, EDF instead announced that it would be extending the lifespan four other UK plants. A cynical person might suggest this is to take up the slack of a delayed Hickley project - with two of them pushed back to 2030 - but as energy minister Amber Rudd tried to suggest today, the extensions are just a sign of a strong UK nuclear programme.

“The extension of these four nuclear plants is part of our plan to deliver long-term energy security for our families and businesses - taking decisions today for the good of tomorrow and tackling the legacy of under-investment so that they have secure, affordable and clean energy supplies they can rely on in the years ahead,” she eulogised.

“The UK is open for business and EDF’s decision is a vote of confidence in our support for the nuclear industry. It will safeguard thousands of jobs, meaning more financial security for working people, and nuclear, as a low-carbon source of electricity, will also help us to reduce our emissions.”

Despite these warms words, the fact remains that the UK’s renewable energy policy may not be able to rely on nuclear in the way Rudd would like. The fact is the project may not be completed till 2030, by which time public support, which only stood at 54% at its height, will have dropped even more.

The question is; what will UK solar look like by 2030? It’s hard to say, but the 3.2GW that Hinkley is expected to generate will have been met by solar well before, so maybe it’s not necessary to look that far ahead.

DECC recently upgraded its forecasts for solar, suggesting that 13GW will be connected by 2020. Considering installed capacity has already hit 10GW, and the Department of Energy and Climate Change has a history of upgrading its forecasts on a regular basis (36% increase in the last six months), solar is surely on course to provide the power Hinkley will likely be late in delivering.

The argument remains though that solar can’t provide base load power in the way nuclear can. However, there are companies working around the clock to address this issue, with predictable rise of battery storage systems making it an economic proposition worth exploring.

James P. McDougall, chief executive of storage and grid solutions provider Younicos, recently outlined the possibilities of utility-scale PV plus storage to sister title PV Tech. With weather forecasts becoming more reliable and the need to only store between a third and a quarter from any given system, McDougall claims solar power is just as predictable as conventional generation.

By his own calculations, he claims the cost of this would be around £80/MWh for dispatchable solar base-load; a “veritable bargain” compared to the £92.50/MWh of Hinkley.

This all comes with the range of caveats related to market flexibility, rules and regulations, and a list of other considerations but the point is that the longer Hinkley is delayed (or even shelved), the more time solar technologies have to catch up. It’s an unlikely possibility that the UK’s nuclear programme will be put on hold indefinitely and that either EDF or the UK government will find the cash needed to get the project on the way.

But with similar projects around the world running well behind schedule, there is a glimmer of hope that solar in the UK will return and offer some sort of alternative to a 30 contract made at a higher price than solar could offer.