Friday, August 5, 2016

The Hinkley debate must be about energy

Paul McLaughlin, BESA Chief Executive

The political furore over the proposed new nuclear plant at Hinkley Point in Somerset threatens to overshadow the real debate about the UK’s energy future.

Theresa May is coming under increased pressure to give it the green light on the basis that she has to demonstrate that Britain is “open for business” in the wake of Brexit and committed to its infrastructure goals. All of that, frankly, pales into insignificance alongside the importance of the country’s energy supplies.

Last year saw the closure of 10% of our national energy generation capacity as ageing coal and gas-fired plants were mothballed.  This winter, according to the National Grid, we will have just 5.5% spare electricity capacity, which is a perilously slim margin for error if we have a lengthy severe spell of weather. We need more and more reliable sources of energy.

Hinkley Point C would meet around 7% of national energy needs; it would operate for about 60 years; produce no CO2 emissions; reduce our need to import gas; lead to the recruitment of nearly 1,000 apprentices; and be built (in the main) by UK-based businesses while generating welcome economic activity for thousands of local employers. 900 people are already employed on the site preparing it for construction.

On the flip side, it is very expensive. The estimated construction cost is £24bn and the price for energy charged to the UK consumer is already pegged at £92.50 per megawatt hour (MWh) – the current price is £37 – and that will rise with inflation to beyond £120.

Delays

There are also major concerns about the technology itself. The particular reactor proposed for Hinkley C has run into difficulties at two other sites – Flamanville, France and Olkiluoto, Finland – where technical difficulties have led to serious delays and rising costs. The Finnish reactor is nine years late already.

There is a whole debate to be had here, which does not involve Chinese finance or ‘Brexit’:

We need a balanced energy sector with a range of technologies and sources. The big question is: ‘Does Hinkley Point C fit into the equation?’

We have a Climate Change Act that commits us to cutting carbon emissions by 80% by 2050. Currently it is hard to see how we can achieve that goal without more nuclear. However, renewables are already providing 25% of our electricity needs and this percentage will accelerate as the market grows and costs continue to fall – in some parts of the country it has already surpassed 50%.

UK electricity demand has dropped by 6% in the past three years as the energy efficiency of appliances and systems has improved. The building engineering services sector has long argued that we can go much further and faster with energy efficiency. For example, replacing heating and cooling equipment with more energy efficient modern equivalents can deliver energy savings of between 25% to 40% and payback times of five to 10 years depending on the type of building.

Upgrading the envelope of the same building through improved thermal insulation and airtightness can deliver even higher savings – over 50% – but with longer payback of 24 to 28 years.

Energy storage technology is also extremely promising and offers the prospect of even better returns on renewables by smoothing out peaks and troughs in their generating cycles.  The cost of li-ion batteries is predicted to drop by more than 60% and flow batteries by 40% by the end of this decade.

So, could we meet our needs and climate change responsibilities without Hinkley C? Is nuclear a better long-term bet than energy storage? And, if we speed up cuts in energy demand, how do the costs of the different technologies stack up?

These are the real questions and answering these will give us a more measured and responsible basis on which to decide whether Hinkley C goes ahead or not. The same should apply to all our infrastructure spending. We definitely need decisiveness and speed in the wake of the EU vote so our companies can plan and feel confident about our economic future; but we do not need to be bounced into a decision that does not consider all the financial and technical implications.

Mrs May has, rightly, re-opened the debate, but time is not on her side. The building engineering sector has years of technical experience and has done many of the necessary sums. We will do our utmost to make your voice heard above the clamour in this crucial debate so that the decision makers have a fuller and more balanced picture.

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