So with China’s investment announced last week, construction on Britain’s new nuclear power station looks one step closer to starting. I suspect there may be a couple more rolls of the dice just yet, but the government is committed. Yes, funding the world’s most expensive building project will break their own promises to keep bills down. Yes, it is hypocrisy to insist that solar must “stand on its own two feet” as a technology while nuclear never has. And yes, it breaks the free market principle of not picking winners. Regardless, committed they remain.
Even without all this, there’s a simple reason why the new power station at Hinkley Point is a very bad idea: it’s simply out of step with trends in energy. It will be uneconomic by the time it comes online, and will remain so for as long as it operates.
Here’s a useful graph from Bloomberg New Energy Finance, showing the projected changes in the cost of various kinds of energy.
As you can see, between now and 2040 the cost of wind and solar power fall, while the price of coal and gas rise. With advances in storage and base load management, in a decade there will be no reason to build new coal and gas power stations – renewable energy will be cheaper. This is, incidentally, the main reason why fracking isn’t as exciting as some people think either.
Now, this is an imperfect image to be making this point, I realise. It’s Europe rather than UK prices, it doesn’t have the full range of technologies, etc. But taking it as broadly illustrative, let’s add Hinkley Point in there. The government has already signed off at a guaranteed minimum price of £89.50 per Megawatt hour, for 35 years. That’s $137 in today’s exchange rate, so let’s crudely stick that in here and see where it falls.
Hinckley Point is due to start generating power in 2023. It’s probably safe to assume it will be delayed, as nuclear power stations generally are. But even giving it the benefit of the doubt, it’s expensive energy when it comes online and it becomes a worse and worse deal with every passing year. Over the next 20 years the price of renewable energy continues to fall, and that fixed price for nuclear power soon makes it the most expensive form of energy.
That’s not an argument against nuclear power generally, just against this particular proposal. It might be possible, eventually, to build economically and environmentally viable small-scale nuclear power plants – maybe. But the government’s current policy of slashing support for renewable energy and turning to new gas and nuclear is profoundly misguided.