The National Infrastructure Commission’s landmark report this month seemed to sound the death knell for nuclear energy new-build, calling for a large-scale shift to renewables by 2050 – and for only one more nuclear power station approval by 2025. But are we really likely to get 90% of Britain’s electricity from green sources within a generation?
The publication earlier this month of the National Infrastructure Commission’s first 30-year assessment of the UK’s infrastructure needs has the potential to be a landmark moment for construction. The commission (NIC) was set up by former chancellor George Osborne in 2015 to take the politics out of big infrastructure decisions – no longer, in theory, should big calls be subject to ministerial fiat on the basis of opaque advice from civil servants given behind closed doors. Rather, experts should scientifically consider all the options, publish their conclusions and dare the government to differ.
All in all, it is the epitome of evidence-based policy-making that the industry has been arguing for. “It’s a hugely important document, and something we’ve campaigned for the best part of a decade for,” says Alasdair Reisner, chief executive of the Civil Engineering Contractors’ Association (CECA).
But here’s the rub: the NIC’s assessment appears to contradict the government’s avowed policy on building a new generation of at least five nuclear power stations, which had been set to deliver a £45bn pipeline of work with just the first three. Instead, the National Infrastructure Assessment (see “Key recommendations”, below) concluded that investment in renewable technology – particularly offshore wind turbines – was the most cost-effective way to meet future demand for low-carbon power.
Its publication comes less than a month after the government pledged £200m of funding for a “sector deal” for the nuclear industry, predicated on building up the skills necessary for this new-build programme. And just five weeks ago, business secretary Greg Clark announced that the government was considering taking a direct stake in construction of the next power station in the pipeline, proposed at Wylfa in north Wales. Clearly, this publication raises all sorts of questions about whether the government will remain committed to this programme, or whether new-build nuclear is instead a zombie sector just waiting to be officially killed off.
The National Infrastructure Commission was set up in 2015 by then chancellor George Osborne with a primary task to provide recommendations for delivering improvements to the country’s infrastructure network up to 2050. Central to this job is the preparation of 30-year National Infrastructure Assessments every five years, of which this month’s publication is the first.
The government does not legally have to implement the NIC’s recommendations, but it has a duty to respond to them within a year and justify a decision to take a different course. Aside from its recommendation on expanding renewables and limiting nuclear, the assessment called for:
- £3.8bn investment to 2030 in improving energy efficiency of existing buildings
- £43bn invested in cities by 2040 to improve connectivity
- Backing for Crossrail 2 and Northern Powerhouse Rail
- End to carbon capture and storage projects
- Testing the feasibility of relying on hydrogen as the primary source of heat power, rather than natural gas
- Roll out of a national network of electric vehicle charging points
The NIC’s assessment does not call for the end of all nuclear new-build aspirations. But the direction of travel is clear: its prediction is that the cost of an energy system heavily reliant on nuclear will, on current terms, be marginally more expensive than one powered 80%-90% by other renewables, and – importantly – that the cost of renewables is much more likely to fall in future and thus ultimately work out significantly cheaper. It is only because of all the uncertainties inherent in these predictions that it recommends continuing with nuclear at all, albeit on a “go slow” basis, so as not to entirely lose capacity in the industry in case the programme has to be fired up again.
The assessment says a minimum of 50% and as much as 90% of UK electricity should come from renewables such as wind and solar power by 2050. And hence, that no more than one further nuclear reactor should be given the go-ahead before 2025. This, it says “will allow the UK to maintain, but not expand, a skills base and supply chain [and] to pursue a high renewables mix […] without closing off the nuclear alternative”.
This may sound like a nuanced shift, but for those in the sector it is very radical. Few outside of environmental lobby groups have ever proposed a UK electricity generation sector reliant 80%-90% on renewables before. Richard Lowe, director of power in Aecom’s environmental division, welcomes the emphasis on renewables but questions how realistic it is. “Others such as the Committee on Climate Change have done their own projections as to what is realistic, and I wouldn’t say this is the midpoint of the range – it’s very much at one end of the scale.”
What the NIC’s team has reacted to is a dramatic fall in the price of renewable technologies, particularly offshore wind, alongside a steady maturation in the technologies needed to balance the inevitable intermittency of renewable power generation. Around 30% of UK electricity now comes from wind and solar – up from 12% just five years ago. And where nuclear power station Hinkley Point C required a guarantee of being paid £92.50 for every megawatt-hour (MWh) of electricity produced to secure investment, the most recent offshore wind farms brought to market, Moray Offshore and Hornsea 2, required a “strike price” of just £57.50 per MWh. This is a fall of more than 60% compared with the first offshore wind plants developed four years ago.
Furthermore, the NIC says it has factored into its assessment the cost of balancing the intermittency of renewables through storage, smart grids and interconnectors that will allow energy to be imported when necessary. Paul Dorfman, senior research fellow at the UCL Energy Institute, says: “The notion that renewables are too intermittent, or too hippy or too lefty, is gone. The technology is there.”
What many supporters and critics of nuclear power agree on, too, is how radical the NIC’s prescription would be for the nuclear new-build sector, which has benefited from cross-party political support for the best part of a decade. Nuclear critic Dorfman says: “The NIC has clearly stated it’s time for everyone to get out of nuclear and embrace the renewables revolution.”
Horizon Nuclear Power’s Wylfa scheme, as the only one in the pipeline to have advanced far enough to submit a planning application, would be the one further reactor beyond Hinkley allowed. This means that plans from the likes of EDF, China General Nuclear, Horizon and Korean state nuclear firm Kepco for power stations at Moorside, Sizewell, Bradwell, and Oldbury (see “New nuclear projects”, overleaf), could all effectively be put on hold.
While none of these were expected to submit planning applications imminently, neither were they expecting to have to wait seven years to do so. Former MP Tim Yeo, chair of pro-nuclear lobby group New Nuclear Watch Europe, says: “If this is taken on by government, it’s a serious blow. You’re not going to get people to invest in their supply chains on the basis of only one nuclear plant coming forward. The existing investors might just walk away if the government is essentially saying ‘forget it chaps, there’s no future for you here’.”
New nuclear projects
Hinkley Point C EDF and China General Nuclear started construction in 2017 of the first new nuclear power station in a generation, due to deliver 3.2GW of power to the grid at a cost of £20bn
Wylfa Newydd In June, Horizon Nuclear Power, a wholly owned subsidiary of Hitachi, submitted a planning application – known as a development consent order – for construction of a 2.7GW power station at Wylfa on Anglesey. It is in negotiations with government over a funding package
Bradwell China General Nuclear has rights to build a reactor at Bradwell in Essex, and has said it is looking to make a final investment decision after receiving regulatory approval in 2021
Moorside South Korean nuclear operator Kepco is the preferred bidder for the Toshiba-owned NuGen business whose plans to develop a 3.8GW power station on the Cumbrian site are on hold
Others EDF has plans to build a 3.2GW reactor at Sizewell in Suffolk when it has completed Hinkley, while Horizon has plans to build a new reactor at Oldbury on the Severn Estuary when it has completed Wylfa
Aecom’s Lowe says it could have a chilling effect on those working up plans. “This sort of message would have a lot of shockwaves,” he says. “You would have to presume that schemes at Oldbury, Sizewell, Bradwell and Moorside would be affected. Most are expecting to submit applications in the next couple of years. It’s going to cause Korean and Chinese investors to have a long, hard look at whether they still make that investment.”
This, of course, could be damaging to those construction companies that have set their sights on winning the big civil engineering and building contracts that inevitably accompany the construction of new nuclear power stations. CECA’s Reisner says this presents his organisation with a dilemma. “As an industry we’d prefer that new nuclear goes ahead, but, having campaigned for the independent infrastructure assessment, we recognise the importance of not reopening the debate in one area just because we don’t like the answer. If we challenge one thing, then the whole document becomes open for debate.”
It’s already clear, however, that other supporters of the nuclear sector will not share Reisner’s reticence in challenging the NIC’s findings. The government has between six months and a year to respond formally to the NIC’s assessment, but does not have to implement its conclusions, meaning opponents have an opportunity to make their case. Aecom’s Lowe says the report takes “an optimistic view” of the potential for interconnector and battery technology to solve the intermittency issues inherent with renewables. “Batteries are getting better but it may be 10-15 years before we can deploy them at scale. At current prices they’re simply not deployable.”
New Nuclear Watch’s Yeo says the report’s conclusions, if implemented, would pose a “significant risk” to the UK’s energy supply. “It’s premature and dangerous to think a modern economy can run on renewables without significant alternative supply. There seems to be slight underlying bias in this report.”
Tim Stone, chair of specialist insurance firm Nuclear Risk Insurers, says he was “rather surprised” by the assessment’s views on new nuclear, which he says “don’t at all correspond with work by the Energy Technology Institute on Nuclear Cost Drivers nor the experience in Abu Dhabi, where a previously entirely non-nuclear country has delivered exceptionally good outcomes in both cost and schedule”.
He says: “The NIC views seem somewhat ill-informed, misunderstood or perhaps out of date. It seems as if they don’t believe that the UK, with its nuclear history and supply chain, can ever match what Abu Dhabi has achieved.”
Stone adds that it doesn’t appear the assessment has taken whole system design into account in its costing of renewables, and points to recent power outages in South Australia where there is a high reliance on renewables.
One senior industry source goes further, describing the assessment as “garbage” and predicting that the government will ignore it.
The NIC, of course, disagrees. A National Infrastructure Commission spokesperson points out that its assessment allows for one further power station and that the “pause” on others is designed to give the UK flexibility to respond in the best way to future energy needs. He says: “Our findings are based on the latest robust evidence that takes into account the evolving technologies, falling prices in the renewables sector and relatively small comparative price falls in nuclear generation.”
But while the assessment is getting the nuclear sector hot under the collar, some say the timeframe indicated by the report for new projects simply reflects the reality of how long these schemes take to plan and finance. The experience of Hinkley Point, now under construction, is of such protracted delays that the original date for it to be up and running, 2017, passed before even the first concrete was poured. EDF now says it won’t be generating power until at least 2025.
In the 12 years since the then prime minister Tony Blair reversed government policy to back new nuclear, Hinkley is the only deal to have got over the line. The other schemes have faced major challenges, with many changing ownership in recent years. Consultant Alistair Smith, formerly nuclear development director at contractor Costain, says this experience means most contractors have already lost faith. “Aside from those involved in Hinkley, contractors have lost interest and have moved on to more exciting things. Everyone’s been burnt so many times that it would take a lot to convince a chief executive to go for another project again.” UCL’s Dorfman says: “The market is in flight from nuclear.”
Ironically, the sluggish progress on developing nuclear projects may give the government room to continue its current policy without requiring an embarrassing outright rejection of the NIC’s findings. Considering that it took Hinkley six years from submission of planning application to final go-ahead, developers might be tempted to push on with plans despite a prohibition until 2025, if given enough reassurance from government that it will look favourably on nuclear plants after that. Ben Lewis, infrastructure and energy director at planning consultant Barton Willmore, says: “I don’t think the government will have to change tack. In reality the projects have been coming forward in a trickle not a flow. You could say this timing is just a reflection of reality.”
The NIC’s assessment makes clear beyond any doubt that renewable energy has arrived in a way few thought possible even a decade ago. The likes of Dorfman say spending money on more renewables and energy efficiency measures would create far more stable and certain construction work than lumpy, hard-to-fund nuclear projects. But uncertainties remain around the ability of renewables to provide a base load of energy generation, despite technology advances. The government has a year to decide whether it thinks it can trust the NIC’s advice.