The UK government has given the green light to the Hinkley Point nuclear power plant, but is this little more than a £30 billion bribe to the French and Chinese to be nice to us, post Brexit?
Arguments made in the Telegraph this morning (16 September) in support of the Hinckley Point nuclear power plant project were a tad odd. “Forget the economics of Hinkley Point, the politics are convincing,” said Matthew Lynn. He continued: "In truth, the economics of the new power station are not completely convincing. But post-Brexit, the politics are absolutely spot-on. It shows the UK is not afraid to start new projects; that we can work with global partners; and that we are able to renew our infrastructure to help businesses to grow.”
Also writing in the Telegraph, Ambrose Evans-Pritchard, a man who is normally very pro new technologies such as renewables made a similar argument. “Hinkley Point will be obsolete before it even starts,” he said, “but Theresa May had no choice.”
Meanwhile, writing in the FT, Jonathan Guthrie took a quite different approach, he tried to conjure up the spirit of Isambard Kingdom Brunel and Ferdinand de Lesseps, the French diplomat who advanced the cause of the Suez Canal. In Jonathan Guthrie’s fictitious tale, he had de Lesseps saying: “Since time immemorial stick in the muds have met the question ‘what is the way out of this mess?’ with the response: ‘do not start from here.’”
Truth is, there is a mess. By 2030, roughly 60% of the UK’s electricity capacity in 2010 will probably have disappeared. So we need an alternative. But the stick in the muds are not the ones who are anti Hinkley Point.
There were two major fears relating to Hinkley. The first one related to security and handing China too much control over UK’s electricity supply. Mrs May appears to have overcome this problem with the UK government to take a golden share in future nuclear power projects.
The second problem relates to cost: The Hinkley Point deal guarantees electricity produced by the plant at £92.50 a megawatt hour – higher than the current wholesale price of electricity – and for a period of 35 years.
Whether this deal makes economic sense depends on your point of view on technology.
If you believe that future shortages of fossil fuel and climate change fears will push up on energy costs, then it is a good deal.
But the truth is, the cost of energy generated from renewables has fallen incredibly rapidly for years. The cost of energy storage is falling too, with the cost of lithium ion batteries falling roughly 10 fold between 2008 and 2015.
There are alternatives too. A company called RedT is promoting a new form of energy storage called Vanadium Redox Flow Battery, which can store energy in massive liquid batteries. They claim that the technology is ideal for wind farms.
Linear thinking would suggest that Hinkley Point makes sense, but renewable and energy storage technology does not develop at a linear rate. It follows a Moore’s Law type trajectory, as such it develops at an exponential rate.
And if you are pro-nuclear, wait a little longer for molten salt reactors – this is a much more exciting technology.
It has been calculated that that the government is in effect subsiding Hinkley by £35 billion. The economic case doesn’t add up. And there is a danger that other, more compelling technologies, will be neglected as a result. But an insecure UK, fretting over the effect of Brexit, may want to go ahead anyway in an effort to try and ensure that China and France will be more accommodating to us, post-Brexit.
