The UK government stunned the energy world by announcing a review of the proposed building of the Hinkley Point nuclear power station. I applaud the bravery of the British Prime Minister Theresa May and her “11th hour” decision which will not only be good for the British consumer but also for the future of nuclear.
The reality is the decision to offer EDF and its Chinese backers a power purchase agreement ten years in advance of the plant actually being built at price levels over twice the current wholesale price (£92.50 or $122 per megawatt-hour) was not only unheralded in the history of the power industry but also showed no understanding of the technology changes going on in energy, let alone the conventional alternatives.
The Hinkley Point nuclear power station which is due to be completed sometime after 2025 (but we are not sure when as the deadline keeps slipping) will cost circa £18bn ($24.7bn) or £5.6m ($7.5m) per MW as opposed to a similarly sized gas powered station which would cost one fifth of that amount, or a MW of solar or wind at £1m per MW. Thank God the British Government is reviewing Hinkley!
The decision to go ahead with Hinkley Point decision also impacted new nuclear build throughout the Western world and effectively put stop to all new nuclear power stations builds in Europe and North America. The UK government with it £92.50 per megawatt hour decision effectively set a benchmark which is so expensive than no-one else can afford to build at those levels!
The promise of nuclear power lies in its energy density. Nuclear reactors release a staggering amount of energy equivalent. In practical terms, one kilogram of uranium can power a 100 watt light bulb for 182 years, whereas the same amount of coal or oil can manage only 4 or 5 days of power respectively. However, the real issue with nuclear is that new build costs have gone up as the years have gone by, as have decommissioning costs. In effect, nuclear has had a positive experience curve. The more we build, the more problems we realize the technology has and the higher costs are.
My own view is that we are in an energy revolution that will change our energy world forever. A revolution caused by a mix of new business models and four key technologies: solar, software, semiconductors and storage. For instance, it would have been unthinkable a decade ago, that the US would not only increase oil and gas production but that it would also become the world’s biggest producer of both fuels. Similarly, every utility thought that solar was a bit of joke ten years ago. This year there will be over 50GW of solar installed globally more than any other power generation technology. And there is more to come. Solar costs will continue to fall; and we will see increasingly cost competitive storage in the form of batteries in coming years. And I am sure there will be other technologies such as fuel cells that will come our way over the next decade. Point being that by the time Hinkley Point C will be built it will be an old and outdated technology, based on a design that is close to 20 years old, and it will run for 35 years and then have to be cleaned up! Does anyone out there want to buy a ten year old mobile phone?
Let’s hope the UK government say no to Hinkley. Not only will it be good for the British customer but it will force the nuclear industry to focus on reducing costs and to investing in next generation technologies such as thorium and cold fusion. And that can only be good for the consumer and for society.