Does nu­clear power have a fu­ture in the UK’s en­ergy mix?

Ja­panese firm’s with­drawal from Wylfa project drives a hole in UK’s en­ergy pol­icy, writes

The Daily Telegraph - Business - - Front Page - Rachel Mil­lard

One week af­ter Ja­pan gave Bri­tish in­dus­try a morale boost by agree­ing a £1.5bn trade deal, one of its biggest con­glom­er­ates – Hi­tachi – has thrown our en­ergy pol­icy into dis­ar­ray. The £26.4bn busi­ness has fi­nally walked away from plans to build a nu­clear power sta­tion in Wylfa, An­gle­sey, with the firm blam­ing a “se­vere” in­vest­ment en­vi­ron­ment cre­ated by Covid-19. The de­ci­sion to throw in the towel – as­sum­ing it’s not just a hard-ball tac­tic – comes 20 months af­ter it sus­pended the project amid ris­ing costs.

It raises fur­ther doubts over the fu­ture of nu­clear power in the UK and ex­actly how the Gov­ern­ment plans to meet the coun­try’s power de­mands, while hit­ting legally bind­ing tar­gets to reach net zero car­bon emis­sions.

Wylfa is one of eight sites ear­marked for new nu­clear power sta­tions to re­place the UK’s cur­rent age­ing fleet, which pro­vides about 20pc of the na­tion’s elec­tric­ity but al­most all of which is set to come off­line within the decade.

Devel­op­ment of those sites is look­ing un­likely, how­ever, given both pri­vate com­pa­nies and gov­ern­ments are wary of the huge costs of nu­clear power and long pay­back time.

Toshiba aban­doned plans for a new sta­tion in Moor­side, Cum­bria, amid fi­nan­cial trou­bles in 2018 and a po­ten­tial res­cue by the South Korean group Kepco went nowhere.

It leaves only EDF and its Chi­nese state part­ner CGN now de­vel­op­ing new nu­clear power plants in the UK – Hink­ley Point C in Som­er­set and, they hope, Sizewell C in Suf­folk.

CGN’s in­volve­ment comes with huge po­lit­i­cal bag­gage given ris­ing con­cerns over China, and the Gov­ern­ment may have to try to take an eq­uity stake in Sizewell C to re­duce Chi­nese in­flu­ence, the BBC re­ported on Wed­nes­day. Sizewell C is un­likely to get off the ground with­out some form of UK gov­ern­ment back­ing.

EDF and oth­ers in the in­dus­try have backed a con­tro­ver­sial pro­posed fi­nance model that sees con­sumers pay­ing up­front dur­ing con­struc­tion, bring­ing down the cost of cap­i­tal.

Re­spond­ing to Hi­tachi’s an­nounce­ment, the Gov­ern­ment

‘Pri­vate firms and gov­ern­ments are wary of the huge costs of nu­clear power and long pay­back time’

stressed that nu­clear would play a “key role” in the UK’s en­ergy mix and said it had of­fered the com­pany un­prece­dented sup­port, in­clud­ing tak­ing a one-third eq­uity stake.

Yet the Gov­ern­ment’s fail­ure so far to com­mit to the new fi­nanc­ing model – known as reg­u­lated as­set base – since a con­sul­ta­tion launched more than a year ago raises questions over its en­thu­si­asm for large power plants.

It ap­pears to be tak­ing an in­creas­ingly favourable view on small-mod­u­lar nu­clear re­ac­tors be­ing de­vel­oped, though a long way off, by

Rolls-Royce and oth­ers. Ei­ther way, its long-term en­ergy strat­egy re­mains mys­te­ri­ous as it has still not pub­lished a de­layed White Pa­per. De­ci­sions on nu­clear take place against sig­nif­i­cant gains in wind and so­lar power, lead­ing en­vi­ron­men­tal ac­tivists such as Green­peace to de­clare that Hi­tachi’s de­ci­sion is a fi­nal con­fir­ma­tion that “Britain’s fu­ture is re­new­able”.

Yet many ex­perts say that wind and so­lar can­not pick up all of the slack, and more gas-fired power is likely to be needed if nu­clear is not re­placed.

Gas-fired power means more car­bon emis­sions, a blow for a gov­ern­ment strug­gling to reach its net zero car­bon goals. Some are pin­ning their hopes on car­bon cap­ture sys­tems to make gas-fired power plants more car­bon­friendly, but these are also a long way off at scale, and very costly.

There are no easy an­swers amid a rapidly chang­ing en­ergy sys­tem and pres­sure to slash car­bon emis­sions with­out hit­ting power sup­ply. None the less, Hi­tachi’s de­ci­sion is a fur­ther sign that in­vestors won’t sit around for too long waiting for the Gov­ern­ment to work out how it wants to get there.

Hink­ley Point C in Som­er­set is one of the last nu­clear plant de­vel­op­ments left stand­ing

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