Just two weeks ago, energy minster Greg Barker laid down a crystal clear challenge to the solar PV sector. The only way to maximise solar’s contribution to the 2020 renewables target would be to “squeeze out subsidy” and to “compete like-for-like with fossil fuels”, he said. That’s some challenge, but it is one that is not being extended to any other low carbon technology. Certainly not to nuclear. The contrast between the minister’s uncompromising message to our industry on 8 October and the Hinkley Point C deal announced by DECC this week could not be any clearer.
The very suggestion from energy secretary Ed Davey in the House of Commons on Monday, that the nuclear price “is competitive with projected costs for other plants commissioning in the 2020s", is frankly absurd. Indeed it is so absurd that I had to check and double-check Hansard to make sure that that was really what his speech writers at DECC had written for him. Nuclear industry claims that this deal makes its technology the “cheapest” low carbon energy technology are even more outrageous, confusing, as they do, the headline £92.50/MWh CPI-linked 2023 nuclear strike price with next year’s draft renewables strike prices. The correct comparison is with projected costs for renewables projects completing in 2023 and beyond not in just six months’ time.
The nuclear lobby and its supporters also assume incorrectly that the renewables strike prices proposed by DECC are those that will actually be set. In fact, such is the projected pace of cost reduction in the solar PV sector that the Solar Trade Association (STA) has been able to ask for a strike price of £91 in 2018. It is inconceivable in my view that DECC will now set a higher solar strike price than £91 in 2018. If they were to do so, it would be the first time to my knowledge that the energy department had ever told a main trade body, “Thank you so very much for asking for a lower level of support than we proposed but we insist that you have more”.
So even if we were to leave out the multi-billion loan guarantees and the other sweeteners required for new nuclear, solar PV will be beating nuclear on strike price alone by 2018, some five years before Hinkley Point C is due to be completed. By 2019, the Solar Trade Association predicts that the industry will require a strike price of £86, falling year on year thereafter, paid over 15 not 35 years and with no nuclear-style small print permitting a possible increase in strike price once those terms are set.
For those who say that none of this matters, there’s plenty of funding room for both nuclear and renewables, it’s important to sound a serious note of caution. We do not yet know what will replace the current Levy Control Framework funding envelope for low carbon generation that runs to 2019, but the Treasury will be examining very closely the implications for bill payers of the nuclear deal. This process will have profound implications for renewables support into the 2020s, now that the government has locked us into a more expensive form of low carbon generation from 2023.
Solar and nuclear: some facts
When the government announced the strike price for Hinkley Point C on Monday, it also published an infographic comparing the amount of land required by solar and wind farms to generate the same amount of electricity as the proposed Somerset nuclear power station. Although DECC said the graphic was only intended to be illustrative, it was seized upon by certain parts of the press as evidence of the "blight" of renewable energy. In our own graphic we present some other facts and figures about nuclear and how it compares with solar. Illustration by Viki Hämmerle.