Plan for new UK nuclear plant under intense scrutiny

On England’s east coast, a 32 hectare piece of land surrounded by marshes and woods has become the latest focus for the fierce debate about the future of nuclear power in the UK.

France’s EDF and China’s CGN last week submitted a planning application to a government agency for a 3.2 gigawatt atomic power plant on a site called Sizewell in Suffolk, which could produce about 7 per cent of the Britain’s electricity. The location is already home to another plant operated by EDF.

Since the former prime minister Tony Blair in 2006 endorsed a set of new nuclear power stations, politicians, industrial groups and environmentalists have repeatedly clashed over the technology, which has been used to generate electricity in Britain since the 1950s but was dropped by countries including Germany after the 2011 Fukushima disaster in Japan. 

The planning application by EDF and CGN for the Sizewell C plant has unleashed fresh questions over whether Britain needs more large nuclear plants, and stirred controversy about China’s role in critical UK infrastructure as diplomatic relations between the two countries cool, notably over Hong Kong.

It also comes at a time when the government is focused on pumping money into infrastructure, including energy, potentially as part of an economic stimulus package that chancellor Rishi Sunak is set to unveil in July in response to the coronavirus crisis.

How the Sizewell C nuclear plant is expected to look © EDF Energy

CGN is the junior partner to EDF on Sizewell C, but the Chinese company is aiming to lead on another proposed atomic plant at Bradwell in Essex, using its own reactor design.

Several Conservative MPs with a sceptical stance on Beijing have drawn comparisons between CGN’s involvement in the UK’s nuclear sector and the controversy over the role of Chinese telecoms equipment maker Huawei in supplying kit for Britain’s 5G mobile phone networks.

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“It is a really important decision: do we want to regain the ability to build our own nuclear power stations . . . or are we happy to get supply from friendly third countries, or are we happy for anyone to control it?” said Tory MP Neil O’Brien.

In 2011, former prime minister David Cameron outlined eight sites that would potentially be suitable for large new nuclear plants before the end of 2025 but of those, only one is under construction: Hinkley Point C in Somerset.

Another proposed plant in Cumbria was shelved by Japan’s Toshiba in 2018. Japan’s Hitachi froze its plans for a plant on Anglesey last year, although it has continued to pursue planning permission.

Map showing the status of UK’s existing and proposed nuclear power stations

EDF said Sizewell C will be a “near identical copy” of Hinkley Point C, helping it to make a 20 per cent saving on construction costs, but the company does not yet know how the project will be funded. EDF has also been reluctant to give a total cost estimate as it continues design work and negotiates with suppliers.

Backers of nuclear power insist Britain needs to replace existing nuclear plants, given the UK is committed to net zero emissions by 2050, and the country cannot rely on wind and solar power all of the time.

“I’ve not ever heard anybody serious or credible suggesting that there’s any way you’re going to get to net zero . . . without nuclear being part of it,” said Tom Greatrex, chief executive of the Nuclear Industry Association, a trade body.

Environmentalists insist cheaper, green technologies such as wind, solar and batteries should take precedence over nuclear. There is also growing interest among policymakers in small reactors — dubbed “mini nukes” — under development by companies including Britain’s Rolls-Royce.

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“Nuclear just isn’t cost-effective,” said Doug Parr, chief scientist for campaign group Greenpeace.

Chart showing UK’s energy mix – electricity generated by fuel source

Amid delays partly stemming from technology challenges, the constructions costs of Hinkley Point C and other plants using a design called the European pressurised reactor, such as EDF’s Flamanville power station in France, have spiralled.

EDF said last year that Hinkley could cost as much as £22.5bn. Two-thirds of that expense will be borne by EDF and the remainder by CGN, and executives at the French company have made clear it cannot afford to shoulder that level of construction risk again.

But the electricity produced by Hinkley Point C will come at a high cost to consumers. The government guaranteed EDF and CGN would receive £92.50 per megawatt hour for the power generated at the plant for 35 years in return for the companies taking on all the construction risk, including any cost overruns. That deal was based on 2012 prices and rises each year with inflation. By comparison, offshore wind developers have agreed to build projects for prices as low as £39.65/MWh in 2012 terms.

Against this backdrop, the government last year launched a consultation on a possible new funding model for new nuclear plants.

The so-called regulated asset base model is attractive to developers because it would cut the cost of capital for a new nuclear plant, reflecting how consumers would pay upfront for the project through their energy bills. These consumers could be left picking up the tab for cost overruns.

Construction work at Hinkley Point C nuclear power station in Somerset © Ben Birchall/PA

Nuclear industry leaders privately admit there are doubts over the regulated asset base model, given reactors are much riskier than other infrastructure that has been financed in this way.

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“One wonders — and presumably the Treasury is wondering — whether passing the burden of risk to energy consumers labouring under post-Brexit and Covid conditions may or may not be acceptable,” said Paul Dorfman, research associate at University College London’s energy institute. 

Nuclear industry executives said if the government wants more large nuclear plants, it may have to take significant equity stakes in projects.

Humphrey Cadoux-Hudson, nuclear development managing director at EDF’s UK arm, said the company was not wedded to one particular funding model, adding “the most important thing is to get the lowest cost of capital”.

The Department for Business, Energy and Industrial Strategy said new nuclear “has an important role to play in providing reliable, low carbon power as part of our future energy mix as we aim to achieve net zero carbon emissions by 2050”.

But it added that “any energy project must offer value for money for consumers”.



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