Utility Week

Finance & Investment UTILITY WEEK | 18TH - 24TH MARCH 2016 | 17 Head to head Hinkley Point C With the future of Hinkley Point C seemingly once again up in the air, two experts go head to head on whether EDF should move forward with building the new nuclear power station. T he Hinkley Point C (HPC) project is in trouble. The UK's first new nuclear pro- ject in a generation was meant to generate 25TWh of electricity a year – 7 per cent of UK power demand – but there are growing doubts over whether it will pro- ceed. Can clean energy fill the gap quickly enough if it fails? The UK's recent experience on demand reduction, wind and solar power, interconnection and demand flexibility suggests the answer is a clear yes. The HPC project was announced in 2007, the site approved in 2010, and gen- eration originally scheduled to start in 2017. While the official start date is now 2025, it looks unlikely that it will come online much before 2030. When HPC was first pro- posed, electricity consumption was forecast to rise sharply. Instead, it fell. Since 2010, power demand has reduced by more than a Hinkley. Electri- cal appliances are becoming more efficient and the cost of LED lighting has fallen by 84 per cent in the past five years. McKinsey estimates more demand reduction measures could lead to a fall in power consumption equivalent to six Hinkleys by 2030. Since the start of the decade, a Hinkley's worth of wind power has been added to the UK grid. HPC hasn't even signed a final contract. Onshore wind costs have fallen by a fi™h in the past Against Jonathan Gaventa, director, E3G five years. As a result, onshore wind is now much cheaper than Hinkley and is cost-com- petitive with new gas power. Offshore wind is growing fast, and on track to be cheaper than HPC well before it generates a single watt. In 2010, there was almost zero solar generation in the UK. There is now around a third of a Hinkley worth of photovoltaic. The cost of new solar generation has fallen by half in five years and is now cheaper than HPC. Since 2010, the UK has also added around a third of a Hinkley of new interconnec- tion capacity to other European countries. By 2025, the best-case completion date for HPC, the UK is on track to build intercon- nection capacity equivalent to a further two to three Hinkleys, to countries such as Norway, Denmark and France. Demand flexibility and stor- age are also growing fast. New research for the National Infra- structure Commission indicates that increased system flexibility could avoid the need for more than four Hinkleys and save the UK £8 billion a year. Based on these experiences, it is clear that a combination of demand reduction, renewa- bles, interconnection and flexibility would be more than enough to fill the gap if HPC is withdrawn – and could do so more quickly, more reliably and more cheaply than the original HPC project plan. A cross all the recent cover- age on Hinkley Point C (HPC), there has been no dispute about the need to replace 21.4GW of generation capacity that has gone offline (or is about to) since 2010 with secure and reliable power. The question is, as ever, how best to do so, using the optimum mix of available and develop- ing technologies. While some noisily assert a commitment to intermittent-only generation combined with energy efficiency will be enough, detailed projec- tions from National Grid, among others, suggest otherwise. Utility Week's photo graph of the Queen Elizabeth II reservoir project last week showed that 23,000 floating photovoltaic panels covering the equivalent of eight Wembley pitches will produce a peak of 6.3MW of electricity. A positive innovation to reduce Thames Water's power requirements from the grid while the sun shines, it also illustrates the difference in concentration of low-carbon power sources, with Hinkley set to generate 3,200MW. There is a continuing need for a balanced generation mix and, as the only viable high- density but low-carbon baseload provider, for nuclear to be part of that mix. Comparisons with the current wholesale power price are hardly a reputable guide in assessing the value of the prospective prices paid for power from 2025. New infrastructure costs money For Tom Greatrex, CEO, Nuclear Industry Association – and with only one combined cycle gas turbine power station being built, as developers await incentives while the gas price is low, and when a large offshore wind project is granted an index- linked strike price of £140/MWh, the comparison points on cost alone are less simplistic than recent headlines. If anybody could be certain what the price of gas will be for the next 50 years, they would not be reading (or writing) this column. What is certain are the targets we have to cut emissions, and the scale of that challenge in power generation, let alone heat and transport. We can be sure that importing power from whatever source, and whatever carbon intensity, does nothing to improve energy security. Storage technology and demand-side measures, as they develop, will help to make baseload power, as well as intermittent sources of genera- tion, more efficient. But to store power, first we need to be able to generate it. Of course, circular and end- less technology versus technol- ogy debates are a comfortable place for staunch advocates to bury their heads. But they do little to recognise or communi- cate the scale and urgency of the UK's energy challenge. The energy industry needs to help set the lead in developing the optimum lower carbon mix of how we generate, use, store and save energy for the future.

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