In the era of cheap renewable energy, new nuclear plants don’t add up

The Chair of the National Infrastructure Commission says the energy market has changed dramatically in a short time, and this should be reflected in how Britain plans its future energy supply.

Sign Up

Get the New Statesman's Morning Call email.

For many years I’ve been an advocate of nuclear energy – I oversaw the development of Sizewell B – but I’ve started to change my mind. I’m not the only one; Toshiba abandoned its plans for a nuclear power station in Moorside, in Cumbria, last November, and last week Hitachi suspended its proposals for new plants in Wylfa in Wales and Oldbury in Gloucestershire.

The reasons for this is that new nuclear power plants are no longer adding up. As the Business Secretary told the Commons on Thursday, the falling costs of renewable energy sources have significantly altered the economics of the energy market both here and abroad.

This new reality inevitably leads to the wider question of whether we can truly rely on the nuclear industry to meet the UK’s future energy needs, and if this is the right direction for the government’s policy to take - or if cheaper, more reliable solutions, such as renewable energy sources, may provide a better answer for the long term.

To meet current carbon reduction targets – let alone the more stringent ones that may be applied in future – we need to reduce our reliance on fossil fuels.  So far, the signs are positive: just over half of our electricity comes from low-carbon sources, with more than 30 per cent coming from renewable sources such as wind turbines and solar panels. And our analysis at the National Infrastructure Commission shows that we can go further, and we can do so without customers in 2050 paying any more in real terms for their energy than customers today.

Our National Infrastructure Assessment – the first of its kind for the UK – highlights the golden opportunity for the UK to move towards a highly renewable energy mix. We recommend that the government aim for 50 per cent of our electricity to come from renewable sources by 2030, and that ministers should approve support for no more than one further nuclear power plant after Hinkley Point C between now and 2025. This would not shut the door to nuclear completely – but it would mean that we could keep all options open, while at the same time making the most of the falling costs and improving technologies that renewables increasingly offer.

Even without considering the environmental imperatives, the economic case for this is compelling. Cost reductions for renewables have exceeded expectations in recent years, with the cost of offshore wind dropping from £114/MWh in the 2015 Contracts for Difference auction to £58/MWh in 2017. In stark contrast, we at the Commission could find no clear evidence of cost reduction for nuclear power generation. As a result, when we examined scenarios ranging from 40 per cent renewable generation to as high as 90 per cent, the balance of costs and risks increasingly favoured a system that was predominantly based on renewable energy sources.

The practical challenges that were once held to make renewables impractical are becoming less relevant as new solutions are developed. Technologies such as battery storage make it increasingly viable to balance electricity supply and demand with variable generation. Even extended periods of low sun and wind in winter can be met by a range of flexible technologies, or by using limited amounts of gas-fired backup. These events are rare, so the impact on emissions would remain small. 

Alongside their benefits to the environment and consumers, renewables also offer a real boost in delivering the government’s industrial strategy. While urgent action is needed to address the local impact of nuclear projects running aground, renewables offer the greatest overall employment opportunities. In 2016, the Office for National Statistics found that renewable energy companies were employing nearly twice as many people as nuclear suppliers, while Renewables UK has reported that its members currently employ a quarter of a million staff. Further support for this sector could see these figures rise even further.

Investment to increase our use of renewables could help to position the UK as a world leader in developing and running renewables-intensive energy systems, and support wider efforts to export our expertise around the world – giving us the edge in a relatively new and evolving market.  Not only is this an area in which we have real manufacturing capability – through facilities such as the Siemens facility in Hull, which employs more than 1,000 people making blades for offshore wind turbines – but it is also one which draws upon longstanding strengths for the UK in software, regulation and systems design.

In stark contrast, the market for nuclear power appears to be shrinking, with countries the world over looking beyond nuclear to meet their energy needs. Germany announced in 2010 that it would build no more nuclear plants, and South Korea announced its own switch away from nuclear in 2017.

We therefore await with interest the planned offshore wind sector deal, and this year’s Contracts for Difference auctions, which we hope will be the next phase in a rolling programme aimed at accelerating deployment of renewable technologies over the coming years.

All this means that nuclear may not need to play the central role in our future energy system that once appeared inevitable. Renewables, previously dismissed as an environmentalist pipe dream, may well become the largest part of our energy mix, offering low-cost, low-carbon power.  Our National Infrastructure Assessment outlines how that can happen, for the benefit not just of our environment and future energy supply, but also for consumers and our economy.