Johnson’s energy policy: picking the losers

Johnson’s political cowardice applies the brake to cheap energy as he bets nuclear 

Nils Pratley 

The two main criticisms of the government’s new energy security strategy are fair. The tiptoeing around onshore wind, which got gentle words of encouragement but no change to planning regulations, looks a case of political cowardice. It is perverse to apply a handbrake to “one of the cheapest forms of renewable power”, to use the government’s own description, when public opinion is broadly supportive of turbines on land. Objections from Tory backbenchers should have been ignored.

Equally, the lack of new measures on energy efficiency is bizarre since every serious body, from the International Energy Agency to our own National Infrastructure Commission, has been banging the drum for ages. “A gradual transition following the grain of behaviour” translates as a win for the cold hand of the Treasury.

There were two clear positives in the mix, it should be said. First, the target for more offshore wind is genuinely ambitious. A fivefold increase in capacity to 50 gigawatts by the end of the decade is a significant upgrade on the previous aim of 40GW. The target may even be achievable given the current rate of progress. And from the perspective of energy security – the focus of this policy, don’t forget – offshore’s bigger turbines and higher load factors are always going to score well versus onshore.

Second, solar was given a boost with the aim (though not a target, note) to increase capacity fivefold by 2035. It is illogical that the government seems more willing to flex planning rules for solar than for wind, but solar is the quiet success story of the renewables revolution. It has outpaced every cost projection over the past decade. Expansion looks the easiest to deliver.

Then, though, one comes to the meat of the plan. The big bet on nuclear is, to put it mildly, hopeful. The government is trying to replace current capacity that will largely go offline by 2050 and also double nuclear’s share of electricity supply versus today’s position. The plan strains credibility. Up to eight new reactors – call it four new two-reactor plants the size of Hinkley Point C – is an enormous undertaking.

The best that can be said is that it is possible to imagine how events could, possibly, run favourably. Hinkley could arrive within its revised timetable without further cost hiccups. Sizewell C in Suffolk, the next plant on the block, could attract the desired rush of private-sector investors under a new financing model that would allow the juice to be priced within the £60-£70 a megawatt hour range of political acceptability. And success in financing Sizewell could breed confidence and get the show rolling.

There are, though, a lot of assumptions in that list. The biggest unknown is whether the government is prepared to back the EPR design – the one used at Hinkley and set for Sizewell – for all the new plants. Logic says it should because mixing and matching designs is a recipe for higher costs and surprises, a point stressed by the energy analyst Peter Atherton. The productivity gain in constructing Hinkley’s second reactor, for example, is said to be 15%. In a complex process, replicating one design has demonstrable value.

The government is not, though, at the stage where it can have sufficient confidence to back EPRs wholeheartedly and mean it. Talk of “leading the world” in nuclear construction should therefore be filed under “believe it when you see it”. You have to know what you plan to build to make such boasts. There is an alarming nuclear-sized question mark at the heart of this strategy.

Seve Bell’s cartoon comment:

The Economist noted: Copy, paste,repeat

(It’s supposed to provide benefits)

Owl notes that the only EPR nuclear reactors generating any power yet are the ones built by the Chinese in China, operating commercially from 2018 and 2019.

The construction of the Olkiluoto 3 power station in Finland commenced in August 2005. It is late and over budget. Olkiluoto 3 achieved first criticality in December 2021. Grid connection has just taken place with regular generation finally expected in July.

Construction of the French EPR at Flamanville started in December 2007 is also late and over budget. After many problems, including the late discovery of welding issues, the revised schedule fuel loading is to take place in mid 2023. 

At Hinkley Point C, final government approval was given in September 2016 and, after the (now usual) set of cost increases and delays, has an expected operational start date of June 2026. In the light of Olkiluoto and Flamanville this still looks optimistic to Owl