Utility Week

20 | 8TH - 14TH FEBRUARY 2019 | UTILITY WEEK Operations & Assets Analysis B ritain currently has eight operational nuclear power stations with a com- bined capacity of 9GW. Together, they produced 70TWh of power in 2017 – more than a fi•h of the total 336TWh of power gen- erated in the UK during the year. They also provided around two-fi•hs of the country's low- carbon generation. With the exception of Sizewell B, they are all currently scheduled to close by the end of the next decade. Along with the phase-out of the last remaining coal plants by 2025, their loss will leave a large gap in Britain's genera- tion capacity. For a long time the government intended to replace this lost capacity with a fleet of new nuclear power stations. Plans have been developed for a total of six: Bradwell B, Hin- kley Point C, Moorside, Oldbury, Sizewell C and Wylfa Newydd. But we are still yet to see the nuclear renaissance that was promised. More than two years a•er the contracts were signed, Hinkley Point C remains the only one of the six actually being built. EDF originally expected the power station to be up and run- ning by 2017 but is now aiming for 2025 at the earliest. Following a long and fruitless search for a buyer, Toshiba finally decided to pull the plug on its Moorside project in November. Just a few months later, in January, Hitachi shelved Wylfa Newydd and Oldbury a•er failing to negotiate a satisfactory deal with the government. These last three alone were to have pro- vided 9.2GW of capacity and could have been expected to produce 70-80TWh of electric- ity a year – around the same amount as the whole of the existing nuclear fleet. Low-carbon alternatives In its 2018 progress report, the Committee on Climate Change (CCC) forecast that 120TWh- worth of low-carbon generation would be up and running by 2020 and remain online until the end of the following decade. By 2030, the climate watchdog said, the UK would need at least another 130-145TWh to meet the fi•h carbon budget covering 2028 to 2032. Of this, the committee expected current policies to deliver 70TWh, leaving a gap of 60-70TWh. Yet none of the committee's six possible scenarios for meeting the budget are espe- cially reliant on Moorside, Wylfa Newydd or Oldbury. Given the repeated setbacks to the nuclear programme, most feature only Hin- kley Point C and Sizewell B, with the remain- ing scenarios also assuming the presence of one further new-build project. The shortfall le• by their absence only fully materialises in the 2030s. Neverthe- less, this gap will still need to be filled in the meantime. According to analysis by the Energy and Climate Intelligence Unit (ECIU), replac- ing a shortfall of 73TWh would require an additional 14GW of onshore wind, 28GW of offshore wind, or 104GW of solar. For com- parison, current capacity stands at 7.9GW, 12.9GW and 13GW respectively. In practice, the gap would probably be filled by a mix of all three. ECIU says this could be done, for example, with 11.3GW of offshore wind, 5.7GW of offshore wind and 20.8GW of solar. This would cost on average between £50-£65 per megawatt-hour (2012 prices), including £5-£20/MWh for system integration costs. With the government offering Hitachi a strike price of up to £75/ MWh for Wylfa Newydd, ECIU concludes that renewables have now become the cheaper option. Cost containment Increasingly, it is a view that appears to be shared by ministers. In a statement to par- liament explaining the failure to reach an agreement with Hitachi, business and energy secretary Greg Clark said a higher strike price could not be justified "given the declining costs of alternative technologies". ECIU head of analysis Jonathan Marshall says: "In recent years government has qui- etly cut back its expectations for nuclear new build, and that's looking more and more realistic as the price of renewable generation falls and the benefits of the flexible smart grid become more apparent. "Filling the nuclear gap with renewables would indeed require an increase in rollout, but one that is well within UK capabilities." However, Thomas Edwards, senior con- sultant at Cornwall Insight, believes that this kind of expansion could not be achieved under current policies. In particular, onshore wind and solar lack a proper route to market due to their ongoing exclusion from auctions of contracts for difference (CfD). "The key thing is that renewables are relatively cheap," he explains. "But every technology needs some certainty in revenue. At the moment, because there is no support scheme for anything other than offshore wind, everybody else has to take the mer- chant risk." Price cannibalisation Edwards says the problem of price canni- balisation – whereby wholesale power prices are depressed by existing renewables with low marginal costs and access to subsidies – means few developers will be able to deliver projects without access to some form of rev- enue stabilisation. Gareth Miller, chief executive of Corn- wall Insights, recently wrote to energy and clean growth minister Claire Perry to sug- gest onshore wind and solar developers be allowed to bid for "floor price" contracts guaranteeing a minimum price for the elec- tricity they produce but allowing them to keep any excess once previous subsidies have been repaid. He says this would mini- mise costs for consumers while protecting investors against price cannibalisation. The closure of the Renewables Obliga- tion scheme (a support mechanism for large- scale renewables projects) to new applicants has already led to a collapse in onshore wind installations. Last year, they plunged 80 per cent to the lowest level since 2011 following a rush to secure subsidies the year before. In response to Clark's statement, Emma Pinchbeck, deputy chief executive of Renew- able UK, says there is now a large backlog of "shovel-ready" onshore wind projects able to "provide cheap power to consumers and help close the gap on our carbon targets". Edwards says ministers could also accel- Who will fill the nuclear gap? With the UK's plans for a new fleet of nuclear power stations looking to have decisively stalled, can renewables bridge the looming power generation gap? Tom Grimwood reports

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