Britain’s flawed energy strategy

26th January 2019 | Commercial Energy

Last week Hitachi became the second big Japanese company in months to pull out of building a new UK nuclear power plant because it couldn’t make the sums stack up – a decision that raises fundamental questions about the direction of the UK’s whole energy strategy. Hitachi pulled out of its £16bn Wylfa project in north Wales, as well as a smaller project at Oldbury in Gloucestershire, because it failed to reach agreement with the government over a guaranteed electricity price and terms for the UK stake in the project. It can’t have been an easy decision: cancelling the projects meant Hitachi writing off £2.1bn, having failed to find investors to help fund its share. But the market clearly felt it had made the right call: its shares promptly jumped 13% in a week.

Britains flawed energy strategy

It follows the withdrawal of Toshiba from a similar nuclear project at Moorside in Cumbria in November. Between them, the two power stations would have generated 15% of the UK’s electricity (and without emitting any carbon dioxide). But their abandonment leaves UK nuclear policy – and overall energy strategy – in a mess. Currently, the UK’s nuclear power stations supply about a fifth of electricity supplies, but the existing plants (With the exception of Sizewell B in Suffolk) will all need to be decommissioned over the coming 15 years or so. Since the start of the century, successive governments have spent 13 years devising a new nuclear policy, and they eventually selected six sites for new nuclear power stations. The promise was that 35 gigawatts of new capacity would be onstream by the mid-2030s, more than replacing the decommissioned capacity.

Of the six sites, three have now been abandoned, and two (Sizewell C in Suffolk and Bradwell in Essex) have yet to get the final go-ahead. Only one, the French and Chinese-backed Hinkley Point C in Somerset, is proceeding – but on terms that will force UK consumers to buy some of the most expensive electricity on the planet (and inflation-linked £107 per megawatt-hour in today’s money, guaranteed for 35 years).

More information available on the website below