It’s no secret — I love chatting with Michael Liebreich and covering his panels, presentations (off the stage and on), and soundbites. Since December or January, I’ve been planning a piece on the top 4 cleantech communicators in the world, and I’ll leak right now that he’s one of them. (See our full Michael Liebreich archives for a lot of cleantech fun.)
I don’t always agree with the founder of New Energy Finance (now Bloomberg New Energy Finance), but even on the topics where I don’t, I’d say that he presents strong arguments. On the topic of Hinkley Point C, however, we agree completely — as any sensible person who can do simple math and isn’t heavily biased would. [Thanks to reader Karl Graves for passing along his two latest takes (paywall) on the extremely expensive and controversial proposed nuclear power plant, which is a hot topic right now since France-based energy giant EDF just approved the project — after a very notable resignation — but the UK government responded that it was putting the project under (yet another) government review.]
First of all, it’s important to recognize that Hinkley Point C, if approved and built, would sell electricity to the UK for much, much more than solar or wind power plants would. It’s a bloody expensive choice of electricity. (We’ve covered that here, here, here, and here — that last article is one of my favorites in the history of CleanTechnica, so I strongly encourage reading at least that one, but note that it was written in 2013 and the price of power from Hinkley Point C has climbed since then.)
Why the UK would heavily subsidize nuclear energy when it could get much more electricity from clean, economy-boosting, safe solar and wind energy for the same price has bewildered many an observer — even nuclear advocates! And that’s the essence of Michael Liebreich’s recent pieces.
Getting to the £s and Sense
Michael notes that the £18 billion Hinkley Point C power plant, if it goes through, would become “the world’s most expensive power station.” Here are a few key excerpts of that piece, since I can’t say it better than Michael has:
“It’s easy to forget, Hinkley C was the future once. After a decade of dithering, in 2006, the Blair government laid out the case for nuclear new build, estimating its cost of power generation at £38 per MWh. They promised the first new nuclear power station could start operation in 2017, in time to fill a supply gap caused by the retirement of the UK’s ageing nuclear plants and filthy coal plants.
“The Conservatives agreed with the need for nuclear, but stated explicitly “we rule out subsidies and special favours.” Despite this, seven years later, in 2013, the price UK electricity consumers would pay for Hinkley C’s power was revealed: £92.50 per MWh – more than double the wholesale power price, adjusted for inflation and guaranteed for 35 years. And the earliest possible commissioning date, assuming no further delays, would be 2026.
“The obvious question is why this train-wreck of a project was not killed long ago. To answer this, you have to delve into the politics of the Conservative Party. In 2010, Tory support was being hit by defections to Ukip, whose average member was an older white guy: implacably anti-EU and hence anti-renewable energy, and very keen indeed on nuclear. A strong pro-nuclear position was seen as one way of shoring up the party’s right flank.”
Let’s just repeat that in simpler and more concise terms: This nuclear power plant would be guaranteed payments equal to twice the current wholesale price of electricity (i.e., what it would get without subsidy) for 35 years! And why? For nonsensical political reasons.
Solar and wind power could provide much, much more electricity to the UK if they were given the same amount of subsidy.
Furthermore, the nuclear power plant is currently 9 years behind schedule.
The chart below is from 2011, but it showed even then that building solar power plants (which are very quick to build) would be cheaper than a new nuclear plant by the time the plant opened (since this chart was created, the price of solar power has dropped much faster than expected, and is sitting around $5–7¢/kWh, even better than the 2020 projection, while the price of nuclear power has apparently risen):
For some more chart fun, here’s a chart on the levelized cost of electricity (LCOE) of solar, wind, nuclear, and other sources of electricity (with the dashed lines and arrows added by me to highlight the low cost of solar power and the recent record-low solar bid from a Masdar consortium in the Middle East):
Note that the guaranteed price of £92.50 ($122.40) per kWh offered to Hinkley Point C falls in the middle of the LCOE for nuclear power presented in that chart.
Here’s a bit more from Michael:
“What follows should be taught for generations as a case study in how not to run a procurement process. Between them, chancellor George Osborne and DECC secretary Ed Davey agreed that the private sector would bear the risk of constructing and operating the project, at a stroke doubling its cost of capital and cost of power. They shoehorned it into the Electricity Market Reform process in order to maintain the pretence that it was being given no special treatment, slowing it for years. When all the bidders bar one dropped out, they doubled down: agreeing to extend the CfD’s lifetime 20 years beyond that enjoyed by renewable energy. Osborne provided a £2bn debt guarantee, and then brokered a controversial deal to bring in the Chinese as part owners.”
Will British leadership be idiotic or corrupt enough to approve a 35-year, £37 billion subsidy to a French energy giant? One would hope not, but hey, it’s been a crazy year for politics and logical thought.
Good luck to all of our British readers and friends, and to the rest of society of course, since this is essentially just another way to slow action on the critical challenge of stopping catastrophic global warming and climate change.
Early Fossil Fuel & Nuclear Energy Subsidies Crush Early Renewable Energy Subsidies
Oil & Gas — Over 13 Times More in Historical Subsidies than Clean Energy
I don't like paywalls. You don't like paywalls. Who likes paywalls? Here at CleanTechnica, we implemented a limited paywall for a while, but it always felt wrong — and it was always tough to decide what we should put behind there. In theory, your most exclusive and best content goes behind a paywall. But then fewer people read it! We just don't like paywalls, and so we've decided to ditch ours. Unfortunately, the media business is still a tough, cut-throat business with tiny margins. It's a never-ending Olympic challenge to stay above water or even perhaps — gasp — grow. So ...
Sign up for daily news updates from CleanTechnica on email. Or follow us on Google News!
Have a tip for CleanTechnica, want to advertise, or want to suggest a guest for our CleanTech Talk podcast? Contact us here.